Reconciliation of F/EA Operating Bank Account

Submitted by admin on Tue, 05/04/2021 - 15:37
Policy: 

The F/EA maintains a separate operating account for each program the F/EA serves.

Each account is exclusively for depositing all reimbursements from Program Administrator for participant services and any other refunds or reimbursements received for participant services. In accordance with the terms of the contract with the F/EA's participant(s), only payments for participant services and employer-related expenses are disbursed from this account.
 
F/EA reconciles General Ledger account <<GL Account Number>>, the Program Operating Account, held with <<Bank>>, monthly. Reconciliation of this account is completed by the 10th of the month following the month for which the reconciliation is performed. This process reveals any discrepancies between F/EA’s records and the bank statement. To prove the accuracy of both records, reconciling differences and open items must be identified, aged and any necessary entries made. 
 
After performing the bank reconciliation, a bank reconciliation statement is prepared by the <<Staff Title>> verified, reviewed by <<Staff Title>>  who signs the bank statement, and stored at <<file path>>. Signed reconciliation sheets are stored for a minimum of 7 years.
Procedure: 

General description 

Each month all cash receipts and disbursements transactions booked in the general ledger account <<GL Account Number>> will be compared with the details reported on the bank statement of the program operating account.
 
Unmatched and mismatched transactions are used to reconcile the book and bank balance.
 
Data or records required to perform this reconciliation:
 
  •   The bank activities for the month including the ending bank balance on the last day of the month.
  •  The check file for all checks processed from the program operating account
  •  A copy of the detailed General ledger Account <<GL Account Number>> for the month.
 
Preparing the Bank Reconciliation
1.      Obtain monthly bank statement for program operating account
2.      Transactions will have been downloaded from bank into a csv file on a daily basis for the month and saved
3.      Sort the daily bank transactions using the <<template>>
4.    Identify and obtain transaction totals for
  •  Automatic transfers to payroll account
  • Checks cashed
  •  Funds transfers (if any) from F/EA corporate account  
  • Payments from participant 
  • Interest received 
  • Any other check deposits 
  • Bank service charges or fees
5.      <<Staff title>> prepares the journal entry to record the transfers to the workers F/EA Payroll Account and the interest earned.
6.      F/EA Accountant posts the entries to the general ledger and prints the Detailed General Ledger Account after entries are posted.
7.      Obtain the monthly check file  for all checks processed from the participant direction program perating account
8.      The check file includes the payments from account workers F/EA Operating Bank Account (Trust Account) for the month, sorted by check number and check amount.
9.      Compare the check file to the general ledger account
10.  Create list of outstanding/uncashed checks
 
Completing the Bank Reconciliation Form
 
This is the summary form for the Bank Reconciliation
 
Enter General Ledger Balance as at end of month
Enter Bank Statement Ending Balance
Enter outstanding checks amount
 
  1. Any discrepancies on the amount is researched and correctly booked  
  2. If a discrepancy is determined to be a bank error, the bank must be notified
  3. The error must be recorded on the bank balance side of the reconciliation form
  4.  If an error is found to be F/EA’s, it is recorded on the general ledger balance side of the reconciliation form with an appropriate adjusting entry in the General Ledger as needed
  •    Any debit or credit memoranda on the bank statement are identified.
  •   These charges and credits are recorded as adjustments to the general ledger of the bank reconciliation form.

  5.    The reconciliation form is printed.

  •   The <<staff title>> reviews the sheet and verifies that all entries and mathematical calculations are correct.
  •   After verifying, the <<staff title>> signs and dates the reconciliation sheet.
  •  The <<staff title>> provides the reconciliation sheet, bank statement, check file and daily bank downloads to <<Staff Title>>
  •   <<Staff Title>> reviews all documents for completeness and mathematical accuracy.
  •   After verifying, <<Staff Title>> signs and dates the reconciliation sheet.
  •  <<Staff Title>> stores this reconciliation in applicable file folder.
Internal Controls: 

The internal controls used by F/EA to monitor this process establish responsibility, segregate duties, document procedures and ensure independent internal verification.

The methods of internal control utilized by F/EA in the reconciliation of program operating account are:
 
  1. F/EA Controller or Chief Financial Officer are the only individuals within F/EA authorized to transfer funds into and out of program operating account
  • These individuals are the only check signatories on the trust account

   2.  The <<staff title>> performs the bank reconciliation.

  • The <<staff title>> verifies the supporting documents, the bank statement and check file for accuracy.
  • The <<staff title>> enters all transactions on a control document, the reconciliation sheet. This sheet is prenumbered.The <<staff title>> signs and dates the control document, the reconciliation sheet

. 3. Prior to making a posting to the General Ledger, the <<Staff Title>> reviews the reconciliation statement, including the bank statement and check file.

  • The <<Staff Title>> verifies not only completeness, but also validity.
  • The <<Staff Title>> reviews the supporting documents, the bank statement and check file, for mathematical accuracy.
  • After reviewing, the <<staff title>> signs and dates the control document, the reconciliation sheet.

  4.  All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.