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9.03 – Reconciliations

Bank Reconciliations

  • Bank statements are to be opened by the Receptionist. The Finance Manager should, at a minimum, review the contents for inconsistencies, check numbers, cash balances, vendor payments and endorsements. After this cursory review is conducted, the Finance Manager should initial and date the bottom right hand corner of the first page of each bank statement reviewed.
  • The Finance Manager reconciles each account promptly upon receipt on the bank statement. All accounts will be reconciled no later than 30 days after the end of the month. When reconciling the bank accounts, the following items should be included in the procedures:
    • A comparison of dates and amounts of daily deposits as shown on the bank statement with the cash receipts journal.
    • A comparison of inter-organization banks transfers to be certain that both sides of the transactions have been recorded on the books.
    • An investigation of items rejected by the bank (i.e. returned checks or deposits).
    • A comparison of wire transfer dates received with dates sent.
    • A comparison of canceled checks with the disbursement journal to verify number, payee, and amount.
    • An accounting for the sequence of checks both from the month-to-month and within a given month.
    • An examination of canceled checks for authorized signatures, irregular endorsements, and alterations.
    • A review of voided checks.
    • A review of checks which have been outstanding for more than six months.
  • The Finance Manager prepares any general ledger adjustments once the bank reconciliation is completed. Copies of the completed bank reconciliation will be reviewed by the Finance Director.

Reconciliation of Other General Ledger Accounts

  • Each quarter, the Finance Manager and Finance Director should review the ending balance shown on the balance sheet accounts such as the cash accounts, accounts receivable, accounts payable, and deferred revenue.
  • The Finance Manager and Finance Director should review the bank reconciliations, schedules of accounts receivable and deferred revenue, and the aging of accounts payable to support the balances shown on the balance sheet.
  • Assets: These accounts will include accounts receivable, cash, petty cash, prepaids, property, equipment and fixtures, security deposits, and intangible assets.
    • Cash: The balances in cash accounts should match with the balances shown on the bank reconciliations for each month.
    • Prepaids: The amounts in these accounts should equal advance payments paid to vendors at the end of the accounting period.
    • Property, Equipment, & Fixtures: The amounts in the account should equal the totals generated from the audited depreciation schedules. When additional purchases are made during the year, the balances in the accounts may be updated accordingly.
    • Accounts Receivable: The amounts in these accounts should equal amounts received by the company from billing.
  • Liabilities: These accounts are described as accounts payable, accrued liabilities, payroll tax liabilities, loans and mortgages payable, and amounts due to others.
    • Accounts Payable: The balance in this account should equal amounts owed to vendors at the end of the account period and the aging report.
    • Accrued Liabilities: The balance in this account should equal amounts which have occurred but have not been paid or logged under accounts payable at the end of the account period and the aging report.
  • Income/Expenses: These accounts are described as income from membership, contributions, publications, and other expense line items such as salaries, consulting fees, etc.
    • Income: The amounts charged to the various cash accounts should be reconciled with the funding requests, funders reports, draw down schedules, etc.
    • Consulting: The amounts charged should be reconciled to the contracts.

For additional information, refer to the Chart of Assets.

Last Revised: 4/30/21

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Next 9.04 – Petty Cash Fund
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