FIACCT 19-01_01 Bank Accounts – Depository Bank Accounts and FINET Bank Codes – Reconciliation

Effective: July 1, 1994
Revised: October 1, 2009
Reviewed: October 1, 2009

Purpose

This policy explains the procedures for the monthly reconciliation of depository bank accounts and FINET bank codes.

Definitions

Bank Account Code

The two-digit code used in FINET to correspond to a state agency’s
depository bank account, to a FINET clearing account that should net to zero, or to a subsidiary ledger. This code is assigned by the State
Treasurer’s Office.

Bank Reconciliation Report

The document sent by the Division of Finance that shows the
transactions that have posted to FINET for a specific bank code during a given period of time.

Bank Statement

The document sent by the financial institution that shows the transactions that have taken place for a specific account during a given period (usually one month).

Depository Bank Account
Reconciliation form

Finance form FI 57, used to summarize the bank reconciliation
information.

Background

For all FINET bank codes a monthly reconciliation should be performed comparing FINET activity to the applicable bank statement. This reconciliation is designed to ensure that all entries recorded in FINET are accurate and that all cash is properly accounted for. In addition, the reconciliation is designed to detect any errors made by the bank.

Policy

For FINET bank codes, it is the responsibility of each state agency to complete the Depository Bank Account Reconciliation, form FI 57, each month (a similar worksheet containing the same information is acceptable if approved by the Division of Finance). The completed form should be sent to the Division of Finance no later than the last business day of the month following the period reported. Attached to the form should be copies of the related bank statement, related FINET Bank Reconciliation report, and any supplemental schedules with supporting documentation.

It is also the responsibility of each agency to process any necessary transactions to correct errors found in the reconciliation process.

Procedures

Responsibility

Action

Department

Compare detail (both credits and debits) between the current bank statement, the current Bank Reconciliation Report, and the previous month’s bank reconciliation to determine which items match.
List on the Depository Bank Account Reconciliation form any deposits that do not have a corresponding entry, including current or previous ones that have not cleared. Deposits on
the bank statement not having a corresponding deposit in FINET should be listed in section 1 of the reconciliation form. Deposits on the Bank Reconciliation Report not having a corresponding deposit on the bank statement are listed in section 5 of the form. Generally, deposits in the bank match a CR entered by the department.
If there were any returned checks on the bank statement that have not been recorded in FINET, including current or previous ones that have not cleared, list them in section 2 of the reconciliation form.
List any withdrawals that do not have a corresponding entry, including current or previous ones that have not cleared. Withdrawals on the bank statement not on the Bank Reconciliation Report should be listed in section 3 of the reconciliation form, and withdrawals on the Bank Reconciliation Report not on the bank statement should be listed in section 6 of the form. Generally, withdrawals are funds transferred to the state’s general account and match a JVCO entered by the Treasurer’s Office.
If there are previous or current differences or errors, record them under section 4 or section 7 of the reconciliation form.

If the bank is in error, contact the Treasurer’s Office to find out who to contact at the bank to clear up the error. Check the next month’s statement and ensure that the error is corrected.

If a FINET entry is in error, have a correction made. If an incorrect bank code has been used, contact the Division of Finance for assistance in making the correction. Check the next month’s Bank Reconciliation Report to ensure that the error is handled properly.
Resolve any reconciling items within 90 days or by fiscal year closeout. It is critical that all banked items are accounted for in the same fiscal year. That may give less time for resolving reconciling items that occur at the end of the fiscal year. Listed below are explanations of appropriate ways to clear common reconciling items.

a. Withdrawals or deposits recorded in FINET (description on the Bank Reconciliation Report says bank name sweep) that don’t show up on the bank statement, or withdrawals or deposits appearing on the bank statement (usually denoted by wording
such as ZBA transfer or funds transfer) which are not on the Bank Reconciliation Report need to be reported to the State Treasurer’s Office, who records the bank transfers.

b. If there are service charges, contact the bank or the Treasurer’s Office and have these charges reversed. If the bank will not reverse the charges, the department must account for them.

c. Any unidentified items on the bank statement that do not have backup can be researched through the Treasurer’s Office. If there are unidentified items on the Bank Reconciliation Report, call the Division of Finance person responsible for reviewing the bank reconciliations for assistance.
Submit the reconciliation and supporting documentation to the Division of Finance.

Banking Codes of Clearing Accounts

In the case of clearing account bank codes, submit the bank reconciliation report along with the depository bank account reconciliation form, noting any entries that do not net to zero on FINET. Correct any errors as soon as possible.

State Treasurer

Work with agencies in clearing up bank problems, as needed.

Division of Finance

Run the Bank Reconciliation Report after each month-end and send to the person at each agency responsible for doing the reconciliation.
Keep a current listing of all current bank account codes (information will come from the Treasurer’s Office) and periodically compare that with the listing from the Bank Table in FINET. Use this report as a master list of bank reconciliations that need to be submitted to the Division of Finance. If agencies do not submit their reconciliations on time, continue to contact them until all reconciliations are received.
Review the reconciliations. If there are errors in the reconciliation process, follow up to ensure that they are corrected. If there are outstanding items over 90 days that need to be corrected, follow up to make sure corrections are made.