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The New Approach – Month-End Reconciliations Checklist

Author: Steve L. Seawall, CPA Copyright 2019 Custom Micro Works All rights reserved

Revised 2/16/2020

Banking and Budgetary Accounting

Close the Books on Cash Receipts.

Reconcile Bank Accounts.

Update Changes to Investments.

Print Composition of Cash.

Print Month-End Fund Summary Financial Statements – 1) Cash Basis Fund Summary and 2) Budgetary Basis Fund Summary.

Tie total ending cash to total composition of cash on the Cash Basis Fund Summary.

Tie total ending unencumbered cash on the Cash Basis Fund Summary to the same total on the Budgetary Basis Fund Summary.

Payroll

Tie Payroll Costs to Budgetary Accounting Fund Charges (refer to related month-end reconciliation document).

Reconcile Payroll Clearing Fund (refer to related month-end reconciliation document).

Accounts Receivable

Print Monthly Accounts Receivable Summary Report (AR/Reports).

Print Monthly Customer Payment Reconciliation (AR/Reports). Two reconciliations:

1) Customer payments (per AR) to Budgetary Accounting cash receipts.

2) Customer payments (per AR) to OTC cash receipts.

Print Customer Payment Allocations (Summary) By Fund (AR/Reports).

Print Monthly Customer Deposits Report (AR/Reports).

Print Monthly Customer Deposit Transactions Detailed Report (AR/Customer Deposits). Enter Date Range for month and Click on Print.

Tie the ending cash balance for the customer deposit clearing fund to the ending cash balance per the BA Cash Basis Fund Summary printed above.

Tie the customer deposit payments on the Monthly Accounts Receivable Report to the monthly customer overpayment Refunds (Monthly Customer Deposits Report).

Tie amount allocated to Deposit Clearing Fund (Customer Payment Reconciliation 1 above) to the monthly deposits amount in the Monthly Customer Deposits Report.

Tie the customer net deposits less refunds (Customer Deposits Report) to the change in the cash balance for the Deposit Clearing Fund (Customer Deposit Transactions total).

Month-End Reconciliation Documentation

The above checklist serves a couple of purposes. First, it identifies the reconciliation procedures that must be performed after the end of each month. And it provides a checkbox to check off the procedures as they are completed. Second, it provides an overview of the detailed auditing procedures that are being conducted throughout the entire year to provide a very high level of assurance regarding the accuracy and completeness of the financial statements and reports.

Banking and Budgetary Accounting Month-End Procedures. These procedures reconcile the total cash in the custody of the entity per banking records, to the total cash being reported in the financial statements. These same banking records and the underlying financial transactions supporting the financial statements are immutable. This allows the same reconciliation to be completely repeated with regenerated bank statements and regenerated entity financial statements and reports. In turn, this provides the independent auditor clear and convincing evidence that the underlying cash transactions have not been altered.

Important. The immutable nature of the underlying cash financial transactions represents a significant feature in NA designed to prevent and detect embezzlement and related financial statement reporting fraud.

Payroll Month-End Procedures. These procedures have a major focus on the Payroll Clearing Fund monthly reconciliation. The procedures provide documented verification that payroll related cash disbursements from the Payroll Clearing Fund are restricted to salaries and wages, and remittances for employee deductions and fringe benefits (i.e., employer contributions).

Accounts Receivable Month-End Procedures. These procedures have an emphasis on customer cash payments on account (i.e., accounts receivable paid in cash). These payments are tracked from the first entry in NA, the Electronic Cash Receipt Book (CR Book), to the customer payment entry in AR, to the posted cash receipt entries in BA, and finally to the deposit entry in Banking. Each step in the tracking process is carefully monitored and verifiable using the month-end procedures.

External Accounting Procedures. Any accounting procedures external to NA, and therefore, not integrated within NA, increase the risk of mis-statements in the financial statements and reports. Such mis-statements might be intentional or unintentional, but is not acceptable in either case. Additional reconciliation procedures might be needed.

Upon Completion. When completed, the checklist should be dated, initialed, and filed with the printed documents, including notes, such as memos to file (MTFs), that were created during the month-end reconciliation.

Customer Deposits. Customer deposits are common to both governmental and business entities. Cities collect deposits related to utility operations, such as for gas, electric, water, and sewer services. Such deposits typically include security deposits and customer overpayment deposits. The critical nature inherent in the collection of customer deposits is how to account for cash that belongs to the city separate and apart from the cash that belongs to customers. It is important that financial statement users not be misled in any way regarding cash in the custody of the city which is not legally available to finance expenditures of the city. The New Approach, with its unique financial accounting, auditing, and reporting capabilities can provide appropriate assurances to both customers and the city itself.

Reconciliation Documents – Download from Website

There are numerous reconciliation procedural documents that can be downloaded from the CMW website. These documents provide detailed guidance for all of the above procedures.

• Banking and Budgetary Accounting – Month-End Reconciliation Procedures.

• Banking – Reconciling Bank Accounts.

• Payroll Month-End Reconciliation Procedures.

• Accounts Receivable – Month-End Reconciliation Procedures.

• Customer Deposit Clearing Function.

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