16.30 Account Reconciliation

1. A reconciliation can be performed most efficiently if the responsible person for an account maintains complete and accurate records of the transactions initiated for the account. These records may be maintained in a manual filing system or on a supplemental computer program.

2. Departments may develop their own filing and record keeping systems as long as they provide an effective means of reconciling the accounts on a monthly basis. The following files are recommended, and are used to discuss the reconciliation process.
   1. Open Transaction Files: Use these files to hold all source documents that you have initiated for the account, but that have not yet been processed. Examples of these source documents include Distribution of Deposit Forms (for cash receipts), Check Requests, Purchase Orders, Prepaid Purchase Orders, Interdepartmental Billing Forms, Merchandise Orders and Travel Authorizations.

   2. Pending Files: Use these files to hold source documents that have resulted in some activity being posted on the FRS report, but are pending further activity before they are completed. For example, an encumbrance may have been posted in FRS, but the related expenditure has not been processed. Examples of these source documents include Purchase Orders, Interdepartmental Billing Forms (if an encumbrance was generated), Travel Authorizations and Travel Expense Reports.

   3. Closed Transaction Files: Use these files to hold source documents that have been fully processed in FRS. Refer to the Records Retention policy, to determine how long documents must be maintained on file.

3. Accounts must be reconciled to the monthly reports, which are distributed shortly after the end of each month or are available on line (http://www.fso.arizona.edu/isw). Generally, hard copy reports for a department are sent to the department head or the departmental business manager. The FBM090, Account Statement, and the FBM091, Report of Transactions, should be distributed to the responsible person for each account (for sponsored accounts, this is the principal investigator).

4. Compare the open transaction and pending files to the FBM091, Report of Transactions. This is the report that has a detailed list of the transactions that were posted in a given month.

   NOTE: Users that have on-line access may access Screen 023, Transaction Inquiry to review the transactions posted to the account before the monthly reports are received. Use of the on-line screens to monitor the transactions processed during the month can speed up the month-end reconciliation process significantly. For information on obtaining on-line access, see section 6.52.

5. Receipts: Compare Distribution of Deposit Forms to the report to determine if the deposits were posted to the correct account and object code for the appropriate amount. If transactions have posted properly, transfer Distribution of Deposit Forms to a closed transaction file. If transactions have not posted yet, return to the open transaction files. If errors are noted, correct with a Request for Accounting Assistance.

6. Encumbrances: Compare source documents to the report to determine if the encumbrance was properly established, adjusted or canceled (depending on what action you requested) in the correct account and object code for the appropriate amount. If transactions have posted properly, transfer the source documents to the pending files. If transactions have not posted yet, return to the open transaction files. If errors are noted, contact the unit who established the encumbrance, refer to section 16.70, Batch Reference Source Codes for contacts.

   Encumbrances are created for the following transactions.

   1. FRS establishes an encumbrance when your department creates a dPR (on-line Purchase Requisition).

   2. Purchasing establishes an encumbrance when a Purchase Order is issued for goods or services, based on a Purchase Requisition (dPR) created on-line by your department.

   3. The Travel Office establishes an encumbrance when a Travel Authorization from your department is processed. If the travel will be charged to more than one object code, the encumbrance is posted to the object code with the largest amount.

   4. The Telecommunications Office establishes an encumbrance for the estimated expenses for telephone equipment charges that will be charged to an account. This encumbrance is established automatically at the beginning of each fiscal year and is automatically adjusted each month to reflect the estimated encumbrance for the balance of the fiscal year.

   5. Facilities Management establishes encumbrances for blanket service agreements requested using an Interdepartmental Billing Form.

   6. Other interdepartmental billing units may establish encumbrances based on a request for goods or services received on an Interdepartmental Billing Form.

7. Expenditures: Compare source documents to the report to determine if the expenditures were posted to the correct account and object code for the appropriate amount.

   1. If an encumbrance was established, determine if the encumbrance was properly liquidated. If the expenditure should only partially liquidate the encumbrance, determine if the current balance of the encumbrance is correct. Check the Open Commitments Status section of the FBM090, Account Statement (on-line users can check Screen 020, List 10 Digit SL-OC or Screen 021, List OC File.

   2. When the final expenditure is processed against an encumbrance, the encumbrance should be fully liquidated. Determine if the current balance of the encumbrance is reduced to zero (check the Open Commitments Status section of the FBM090, Account Statement; the word "Completed" should appear to the right of the Current Amount column).

   3. If transactions have posted properly and are completed, transfer the source documents to the closed transaction files. If transactions have not posted yet, or are pending further activity, return to the open transaction or the pending files, as appropriate. If errors are noted, correct with a Request for Accounting Assistance.

8. Payroll Expenses: Every pay period the Payroll Representative will receive the Payroll Expenditure Listing (PEL) and Encumbrance Status Detail reports.
   1. The Payroll Expenditure Listing (PEL) details employee payroll expenses and ERE by account and object code. These amounts are fed into FRS as lump sums and can be reconciled to the FBM091, Report of Transactions. For more information, refer to 16.52, Payroll Expenditure Listing. If errors are noted, correct with a Payroll Expense Transfer.

   2. The Encumbrance Status Detail (PSOS090) details the payroll encumbrance and expense for a department. The subtotaled amount of the remaining encumbrance for each object code for the last pay period in the month should tie to the FBM090, Account Statement. Direct questions regarding this report to Systems Control.

9. Other Transactions: Determine if the correct action has taken place. For example, if a Request for Accounting Assistance (RFAA) was initiated to request a distribution of expense, determine if the appropriate correcting transaction was posted ( for example, a journal entry). If transactions have posted properly, transfer the source documents to the closed transaction files. If transactions have not posted yet, return to the open transaction files. If errors are noted, correct with a Request for Accounting Assistance.

10. Requests for error correction should be maintained in the open transactions file until corrected.

11. Note on the report that it has been reconciled and file.