Published on Policy and Procedure Manual (https://mainsl.annkissamprojects.com)

Home > FMS Policies and Procedures MN > Accounting

Accounting

Reconciliation of F/EA Operating Bank Account

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.

Reconciliation of Service Claim Accounts Receivable

Policy: 

F/EA reconciles the accounts receivable service claims account <<GL Account Number>> monthly. Reconciliation of this account is completed by the 10th of the month following the month for which the reconciliation is performed. 

The complete reconciliation process is the result of 6 segregated processes. A single individual does not control the entire process.
 
  1. Enter Weekly Billing to YTD Accounts Receivable, performed weekly
  2. Post Accounts Receivable to General Ledger, performed weekly
  3. Post Accruals to General Ledger, performed monthly
  4. Reconciliation of Program Payments to Billing Claims, performed weekly (or when payment is received)
  5. Post Payments to General Ledger, performed monthly
  6. Reconcile Accounts Receivable to General Ledger, performed monthly
  • Results should be escalated to Controller or CFO for stale items
These reconciliations are performed to ensure that the F/EA is appropriately submitting service claims to the participant and tracking payments and receivables. 
 
After performing the reconciliation, a reconciliation statement is prepared by the F/EA Accountant (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<file path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
Procedure: 

Reconcile Accounts Receivable to General Ledger

Performed Monthly

Insert F/EA specific process here.

Internal Controls: 

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

 
  1. <<Staff Title>> reconciles supporting documents to ensure billing is submitted appropriately and payments are applied to claims appropriately.
  2. <<Staff Title>> creates journal entry templates.
    • Each journal entry template is used as a control document.
    • Each reconciliation document is prenumbered.
    • <<Staff Title>> signs and dates verifying accuracy.
  3. F/EA Accountant reviews supporting documents and journal entry template for completeness and mathematical accuracy.
    • F/EA Accountant signs and dates journal entry template.
  4. <<Staff Title>> reviews supporting documents and journal entry template for completeness and mathematical accuracy.
    • <<Staff Title>> signs and dates journal entry template.
  5. <<Staff Title>> posts journal entries.
  6. <<Staff Title>> reconciles General Ledger to appropriate supporting documents at each month.
  7. <<Staff Title>> produces reconciliation documents, verifies, signs and dates.
  8. <<Staff Title>> reviews, verifies, signs and dates reconciliation documents
  9. CFO or Controller reviews uncollectible items after <<Staff Title>> prepares and <<Staff Title>> verifies for accuracy.
  10. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

Reconciliation of General Ledger Liability Account for FICA

Policy: 

A reconciliation of FICA workers and employer tax is performed monthly. A reconciliation of Form 941, including FICA taxes, is performed quarterly.

These reconciliations are performed to ensure payments made for employment tasks are appropriately accounted and tracked and to ensure that the reporting agent withholds and remits payments to tax agencies accurately and timely.

After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<file path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.

Procedure: 

 

Reconciliation of FICA Payments to General Ledger
Performed Monthly
Account <<GL Account Number>>
 
  1. F/EA Accountant reviews bank account transactions for FICA payments processed from program operating account
  2. Sum all payments made for FICA from program operating account found here: <<file path>> bank download
  3. Subtotals with description “IRS USATAXPYMT” are weekly Federal Income Tax, and Employer and Employee FICA payments
  4. Obtain report from www.eftps.gov called EFTPS Batch Provider Payment Inquiry Report
  5. Compare payments made within the month from the bank account to payments made weekly as shown on EFTPS Batch Provider Payment Inquiry Report
  6. Identify, research and resolve any discrepancies
  7. Open the reconciliation worksheet found at <<file path>>
  8. Enter sum of FICA payments from bank account on bank account transactions sheet
  9. Ending balance and sum of payments should match
  10. Research and correct any discrepancies
  11. Make necessary adjustments to general ledger if required
  12. All adjustments must be reviewed by <<Staff Title>>
  13. <<Staff Title>> signs and dates control document notating any adjustments
  14. <<Staff Title>> signs and dates reconciliation sheet
  15. <<Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>><<Staff Title>> verifies completeness and mathematical accuracy
    1. <<Staff Title>> signs and dates reconciliation sheet
Reconciliation of FICA and Federal Withholding Returns and Payments
Performed Quarterly (See Policy and Procedure 8.1)
        1. F/EA makes deposits per deposit frequency after each payroll.
  • 941 deposit includes FICA (Social Security and Medicare tax) withheld from workers pay, FICA (Social Security and Medicare tax) paid by the employer on workers pay and Federal Income Tax withheld from workers pay
  •  Payroll Department sends a weekly payment breakdown for 941 payments to Accounting <<Staff Title>>
2.      Each quarter, Payroll Department sends a quarterly payroll summary of 941 payment
3.      Each quarter Payroll Department sends a copy of form 941, Schedule B, and Schedule R, to Accounting Department after submitting it to the IRS
4.     <<Insert reconciliation process here>>

 

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 General Ledger Liability Account for FICA are:

  • Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  • Each reconciliation document is prenumbered

  • Each party initials and dates each reconciliation document displaying confirmation of their review

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

  • All adjustments require supervisory review and approval

 

Reconciliation of General Ledger Liability Account for Unemployment Tax

Policy: 

Monthly general ledger reconciliation is completed to ensure that State Unemployment Tax (SUTA) and Federal Unemployment Tax (FUTA) liabilities are accurately recorded in the general ledger. Quarterly these general ledger balances are reconciled to SUTA and FUTA payments made on behalf of employers.

Reconciliations of the employer Federal Unemployment Tax (FUTA) payments and State Unemployment Tax (SUTA) are performed quarterly. A reconciliation of the Federal Unemployment filing, Form 940, is performed annually.
 
These reconciliations are performed to ensure payments made for the employer-related tasks are appropriately accounted and tracked.
 
After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff), verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
Procedure: 

Reconciliation of FUTA and SUTA Liabilities to General Ledger

Performed Quarterly

<<GL Account Number>>
1.      F/EA Accountant prints General Ledger balance for account <<Account Number>>
2.      F/EA Accountant (or assigned staff member) open reconciliation sheet found at <<File Path>>
3.    Enter ending balance for account
4.      Enter sum of each type of tax liability for FUTA and SUTA from F/EA payment documents
5.    Ending balance and sum of liabilities should match
6.    Research and correct any discrepancies
7.    Make necessary adjustments to general ledger
8.      <<Staff Title>> signs and dates reconciliation sheet
9.     <<Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>>
10.      <<Staff Title>>verifies completeness and mathematical accuracy
11.  <<Staff Title>> signs and dates reconciliation sheet
 
 
Bank Reconciliation of FUTA and SUTA Payments
Performed Quarterly
Account <<GL Number>>
 
1.       F/EA Accountant (or assigned staff member) review bank account transactions for FUTA and SUTA in Program Operating Account
2.     Sum all quarterly payments made for each tax type from workers F/EA Payment Account found here: <<File Path>> bank download
3.    Create subtotals of payments for each tax type Subtotals with description “IRS USATAXPYMT” are FUTA or 941 payments.
4.    To identify FUTA payments as separate from 941 payments, compare values to EFTPS Batch Provider Payment Inquiry Report
5.     Identify FUTA payments
6.    Payroll department will send a report of the payments made on behalf of all employers with SUTA liabilities for the quarter
7.      Verify these payments have cleared the bank account
8.      After verifying payments have cleared the bank, these payments must be posted to the General Ledger
9.    Compare payments for each tax type to the sum of monthly liabilities for the quarter 
10.  Make applicable adjustments
11.     <<Staff Title>> prints reconciliation sheet and supporting documents
12.   <<Staff Title>> reviews for accuracy and signs
13.   <<Staff Title>> reviews for accuracy and signs
14.   Signed copy is stored for a minimum of 7 years per File Retention Policy
 
Reconciliation of FUTA Quarterly and Annual Returns and Payments
Performed Quarterly and Annually
1.      Per IRS Guidance (Proposed Rules REG-137036-08-1) F/EA makes one aggregate payment per quarter for Federal Unemployment Tax on behalf of all consumers represented by F/EA
  •  A report showing the FUTA liability for each participant employer is produced by the payroll department and attached to the proof of payment
2.      At year-end, form 940 is compared to sum of quarterly FUTA payments
  •   Ensure that line 3 of Form 940 matches sum of gross payment from F/EA Payroll Journal quarterly reports
3.      Obtain an EFTPS Batch Provider Payment Inquiry report for the year for F/EA’s separate F/EA EIN from EFTPS website
4.    Compare Line 13 to EFTPS Batch Provider Payment Inquiry report which shows all payments processed through EFTPS and recorded by the IRS
5.  Ensure line 13 is greater than or equal to line 12 on form 940
 
Reconciliation of SUTA Quarterly Returns and Payments
Performed Quarterly
  1. Quarterly, payroll department makes payments to tax agency for State Unemployment Tax (SUTA)
  2. Each quarter payroll department produces a Transmittal Report for showing the employer, state ID, State Unemployment tax payment, total wages, excess wages, taxable wages, tax rate, Federal ID and monthly workers counts
    • Payments reported on this report have been made to the State Unemployment Agency for SUTA for the quarter
  3. Compare the sum of payments on the Transmittal Report to the amount withdrawn from the program operating account and paid to the State Unemployment Tax Agency
  1. Compare the amount on the “Payment Check Listing” to the amount coming from bank and being paid to State Division of Unemployment Assistance or equivalent on paper check

 

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 General Ledger Liability Account for Unemployment are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier.
  2. Each reconciliation document is prenumbered.
  3. Each party initials and dates each reconciliation document displaying confirmation of their review.
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.
  5. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.
 

 

Reconciliation of General Ledger Liability Account for Federal Withholding Tax

Policy: 

A reconciliation of workers Federal Withholding Tax is performed monthly.

A reconciliation of Forms 941, including Federal Withholding Tax taxes, is performed quarterly.
 
These reconciliations are performed to ensure payments made on behalf of employers represented by the F/EA are appropriately accounted and tracked.
 
After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>>.  Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
Procedure: 

Reconciliation of Federal Withholding Tax Payments to General Ledger

Performed Monthly
<<GL Account Number>>
  1. <<Staff Title>> reviews bank account transactions for Federal Withholding Tax payments process from program operating bank account
  2. Sum all payments made for Federal Withholding Tax from program operating bank account
  3. Subtotals with description “IRS USATAXPYMT” are weekly Federal Income Tax, Social Security and Medicare Tax payments
  4. Obtain report from payroll department called EFTPS Batch Provider Payment Inquiry Report
  5. Compare payments made within the month from the bank account to payments made weekly as shown on EFTPS Batch Provider Payment Inquiry Report
  6. Identify, research and resolve any discrepancies
  7. Communicate with payroll department as necessary
  8.  Direct payroll department to make adjustments to their records as necessary
  9. Print reconciliation sheet for <<GL Account Number>> found at <<File Path>>
    • Enter ending balance for account

 10. Enter sum of Federal Withholding Tax payments from bank account on bank account transactions sheet

  • Ending balance and sum of payments should match
  • Research and correct any discrepancies
  • Make necessary adjustments to general ledger if required

 11.  F/EA Accountant signs and dates reconciliation sheet

 12.  F/EA Accountant passes reconciliation sheet and supporting documents to <<Staff Title>>

 13.  <<Staff Title>> verifies completeness and mathematical accuracy

 14.  <<Staff Title>> signs and dates reconciliation sheet

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 General Ledger Liability Account for Federal Withholding Tax are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

Reconciliation of General Ledger Liability Account for State Withholding Tax

Policy: 

A reconciliation of State Withholding Tax (SWT) liability is performed monthly.

A reconciliation of SWT returns and payments is performed quarterly.
 
These reconciliations are performed to ensure payments made on behalf of employers represented by the F/EA are appropriately accounted and tracked.
 
After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>> Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
Procedure: 

Reconciliation of State Withholding Tax Payments to General Ledger

Performed Monthly
<<GL Account Number>>
  1. F/EA Accountant (or assigned staff member) reviews bank account transactions for State Withholding Tax (SWT) payments processed from the program operating bank account.
  2. Sum all payments made for SWT from workers F/EA Payroll Account found here: <<File Path>> Payroll download
  3. Subtotals with description “<<STATE DOR>> EFT WITH TAX” are SWT payments
  4. Obtain reports from payroll department showing state tax withholding payments on a weekly basis
    • These reports are separated by employers who remit payments weekly, monthly and quarterly (depending on the employer's individual tax deposit frequency)

  5.  Compare payments made within the month from the bank account to payments made as reported on weekly SWT tax payment reports

  6.  Identify, research and resolve any discrepancies

  7.  Communicate with payroll department as necessary

  8.   Direct payroll department to make adjustments to their records as necessar

  9.   Print reconciliation sheet for account <<GL Account Number>> found at <<File Path>>

 10.   Enter ending balance for <<GL Account Number>>

 11.   Enter sum of State Withholding Tax quarterly payments from bank account on reconciliation sheet

 12.   Ending balance and sum of payments should match

 13.   Research and correct any discrepancies

 14.   Make necessary adjustments to general ledger if required

 15.   <<Staff Title>> signs and dates reconciliation sheet

 16.  <<Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>> (or assigned staff member)

 17.  <<Staff Title>> verifies completeness and mathematical accuracy

 18.  <<Staff Title>> signs and dates reconciliation sheet

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 General Ledger Liability Account for FICA are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

Reconciliation of General Ledger Liability Account for Workers' Compensation

Policy: 
<<Insert how Workers' Compensation is priced and paid for here.>>
 
 
After performing the reconciliation, a reconciliation statement is prepared by the F/EA Accountant (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
Procedure: 

Reconciliation of Workers’ Compensation Liability to General Ledger

Performed Monthly
<<Insert GL Account Number>>
  1. Obtain General Ledger ending balance for <<GL Account Number>>
  2. <<Insert Staff Title>> print reconciliation sheet for account found here: <<File Path>>
  3. Enter ending balance for account
  4. Enter sum of Workers’ Compensation liability from Payroll Journal Summary
    • Ending balance and Payroll Journal Summary should match
    • Research and correct any discrepancies
    • Make necessary adjustments to general ledger

  5.  <<Insert Staff Title>> signs and dates reconciliation sheet

  6.  <Insert Staff Title>> passes reconciliation sheet and supporting documents to <<Staff Title>>

  7.  <<Staff Title>> verifies completeness and mathematical accuracy

  8.  <<Staff Title>> signs and dates reconciliation sheet

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 General Ledger Liability Account for Workers’ Compensation are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

Reconciliation of Uncashed Checks

Policy: 

F/EA reviews uncashed checks monthly in conjunction with the monthly reconciliations. After one year, any checks that have not been cashed are removed from the bank reconciliation uncashed checks list (<<GL Account>>) and recorded in General Ledger account <<Account No,>>. F/EA follows unclaimed property procedures for the state in which employees being paid reside.

 
After performing the reconciliation, a reconciliation statement is prepared by the F/EA Accountant (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>>. Signed reconciliation sheets are stored for a minimum of 7 years.
 
Procedure: 
  1. On a monthly basis, F/EA Accountant prints ending balance for account <<GL Account Number>> (uncashed checks GL account)
  2. Enter ending balance to reconciliation sheet for applicable account found here: <<File Path>>
  3. Open F/EA Uncashed Checks spreadsheet found here: <<File Path>> 
  4. Open tab for applicable month
  5. Sum uncashed checks for the month
  6. Enter sum of uncashed checks for month on reconciliation sheet
  7. Ensure the sum of uncashed checks amount matches the ending balance
    • Any discrepancies should be researched and corrected
    • Applicable adjusting entries should be posted to account

  8.  F/EA Accountant signs and dates reconciliation sheet

  9.  F/EA Accountant passes reconciliation sheet and supporting documents to <<Staff Title>>

 10. <<Staff Title>> verifies completeness and mathematical accuracy

 11. <<Staff Title>> signs and dates reconciliation sheet

 12. Signed reconciliation sheet is scanned and saved here for at least seven years: <<File Path>>

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 Uncashed Checks are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.

Reconciliation of Administrative Claim Accounts Receivable to General Ledger

Policy: 

This is a reconciliation of the F/EA's Accounts Receivable for claims submitted by the F/EA for the F/EA's Administrative Reimbursement.

F/EA reconciles the accounts receivable administrative account <<GL Account Number>> monthly. Reconciliation of this account is completed by the 10th of the month following the month for which the reconciliation is performed. 

The complete reconciliation process is the result of 5 segregated processes. A single individual does not control the entire process.
 
  1. Post Admin Accounts Receivable to General Ledger is done whenever a Administrative fee billing is done or at minimum monthly (See Policy and Procedure Document 21.1)
  2. Reconciliation of Administrative Payments to Billing Claims, performed whenever a payment is received
  3. Post Payments to General Ledger, performed whenever a payment is received or at minimum monthly
  4. Reconcile Accounts Receivable to General Ledger, performed monthly
  5. Results should be escalated to Controller or CFO for claims unpaid for over 90 days or reconciliations not completed within 10 days of month end 
These reconciliations are performed to ensure that the F/EA is accurately and timely submitting Administrative claims to the participant and tracking payments and receivables. 
 
After performing the reconcilation, a reconciliation statement is prepared and signed by the F/EA Accountant (or assigned staff) verified, reviewed by <<Staff Title>> (or assigned staff) who signs the reconciliation and stored at <<File Path>>. Signed reconciliation sheets are stored for a minimum of 7 years per File Retention Policy.
 
 
Procedure: 

Reconcile Accounts Receivable to General Ledger

Performed Monthly
  1. <<Staff Title>> (or assigned staff member) opens billing system
  2. Run aging report
  3.  Copy these results into excel
  4. Sort by bill date to determine aging
  5.  Subtotal accounts receivable to show aging receivable for 0-30 days, 31-60 days, 61-90 days and more than 90 days
  6. The total of aging Accounts Receivable is the current Accounts Receivable balance
  7. Total current Accounts Receivable should match the Accounts Receivable balance in the control sheet saved here: <<File Path>>
  8. <<Staff Title>> prepares an aging report saved here <<File Path>>
  9. <<Staff Title>> provides aging report and supporting documents to <<Staff Title>> for verification
  10. <<Staff Title>> reviews for mathematical accuracy
  11. <Staff Title>> (or assigned staff member) prints ending balance for G/L Account
  12. <<Staff Title>> compares the ending balance from the General Ledger to the aging report prepared by <<Staff Title>>
  13. Any discrepancies must be researched and resolved
  14. <<Staff Title>> completes the Accounts Receivable reconciliation form for account <<GL Account Number>> saved here <<File Path>>
  15. Enter GL Ending Balance for account on reconciliation sheet
  16. Enter aging detail prepared by <<Staff Title>>
  17. The open balance in the billing system must match the ending balance in the GL Account 
  18. Any discrepancies must be researched and resolved
  19. After reconciling the GL ending balance for the month to the billing system open balance, <<Staff Title>> prints the reconciliation sheet
  20. <<Staff Title>> verifies and signs the reconciliation sheet
  21. <<Staff Title>> reviews reconciliation sheet and supporting documents for mathematical accuracy and completeness
  22. <<Staff Title>> signs and dates reconciliation sheet and returns to <<Staff Title>> for storage
  23. <<Staff Title>> identifies all open items for uncollectible claims over X months old
  24. <<Staff Title>> prepares a report of uncollectible claims and submits to F/EA Chief Financial Officer
Internal Controls: 

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

  1. <<Staff Title>> reconciles supporting documents to ensure billing is submitted accurately and timely and payments are applied to claims accurately and timely.
  2. <<Staff Title>> creates journal entry templates.
    • Each journal entry template is used as a control document.
    • Each reconciliation document is prenumbered
    • <<Staff Title>> signs and dates verifying accuracy
  3. <<Staff Title>> reviews supporting documents and journal entry template for completeness and mathematical accuracy.
    • F/EA Accountant signs and dates journal entry template.
  4. <<Staff Title>> reviews supporting documents and journal entry template for completeness and mathematical accuracy.
    • <<Staff Title>> signs and dates journal entry template.
  5. <<Staff Title>> reconciles General Ledger to appropriate supporting documents at each month..
  6. <<Staff Title>> produces reconciliation documents, verifies, signs and dates.
  7. <<Staff Title>> reviews, verifies, signs and dates reconciliation documents
  8. CFO or Controller reviews uncollectible items after <<Staff Title>> prepares and <<Staff Title>> verifies for accuracy.
  9. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations.
 

Reconciliation of Forms W-2

Policy: 

F/EA reconciles the Year-End Payroll Journal Summary report for the calendar year provided by the payroll department to forms 941 for the calendar year. This reconciliation is performed between January 1 and January 31 of the year following the calendar year for which forms W-2 are produced. 

Due to the large number of workers paid by F/EA, Forms W-2 must be filed electronically with the Social Security Administration (click here for instructions from the SSA). As a result, Form W-3 is not required and a reconciliation of form W-3 is not meaningful. The reconciliation of forms W-2 to the quarterly 941 filings meets the requirement to reconcile both W-2 and W-3 information returns.
 
The complete reconciliation process is the result of 4 segregated processes. A single individual does not control the entire process.
 
  1. Enter Weekly Tax Amounts from payroll reports, performed weekly 
  2. Reconciliation of FICA and FIT Returns (941) and Payments, performed quarterly
  3. Reconciliation of FICA, FIT and SIT payment to General Ledger, performed monthly
  4. Reconciliation of Year End Payroll Journal Summary report to Forms 941 for calendar year, performed annually
 
This reconciliation is performed to ensure that the F/EA is submitting forms W-2 for the correct amount of wages, FICA, Federal Income Tax, and Earned Income Credits as reported to the IRS on form 941 and State Income Tax. This reconciliation is also performed to ensure that payments have been accurately made for income tax and FICA withheld from workers wages. 
 
After performing the reconciliation, a reconciliation statement is prepared by the <<Staff Title>> (or assigned staff). It is then verified and reviewed by <<Staff Title>> (or assigned staff) who signs the bank statement, and stored at <<File Path>> Signed reconciliation sheets are stored per Retention Policy for a minimum of 7 years.
Procedure: 

Reconcile Forms W-2 Payroll Journal Summary to Forms 941

Performed Annually between January 1 and January 31
1.      <<Staff Title>> (or assigned staff member) obtains Year End Payroll Journal Summary Report from payroll department
  •  This report shows wages, workers Social Security tax, workers Medicare tax, Federal withholding tax, Earned Income Credit, state wages and state withholding tax for each workers paid in the calendar year.
2.      <<Staff Title>> collects receipt from payroll department showing that the electronic file of forms W-2 was submitted to the Social Security Administration via Business Services Online by March 31
  •  Receipt is scanned to <<File Path>>
  •  Receipt is stored for a minimum of 7 years per File Retention Policy
3.      <<Staff Title>> collects reconciled Forms 941 for the calendar year
4.      A pre-numbered reconciliation sheet is used for this reconciliation

<<F/EA should create a reconciliation sheet that to compare 941 amounts to amounts actually paid throughout the year.  F/EA should also reconcile Form 941 to Schedule B and Schedule R.  Create a process and insert that process here.>>

5.   <<Staff Title>> prints the reconciliation sheet

6.  The <<Staff Title>> reviews the sheet and verifies that all entries and mathematical calculations are correct.

7.  After verifying, the <<Staff Title>> signs and dates the reconciliation sheet.

8.  <<Staff Title>> reviews all documents for completeness and mathematical accuracy.

9.   After verifying, <<Staff Title>> signs and dates the reconciliation sheet.

10.  <<Staff Title>> stores this reconciliation sheet by scanning it to <<File Path>>

 

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 are:
  1. Each of the supporting documents are reviewed for mathematical accuracy by each verifier
  2. Each reconciliation document is prenumbered
  3. Each party initials and dates each reconciliation document displaying confirmation of their review
  4. All control documents are password protected and access is restricted to F/EA Assigned staff with responsibility for account reconciliations

Write off Unpaid Claims

Policy: 

F/EA shall prepare and review an aged trial balance of the accounts receivable as often as necessary, but at least annually at year-end, in order to determine if any delinquent receivables must be written off as bad debts.

The F/EA Accountant will send the request to the <<Staff Title>> and the Chief Financial Officer for authorization to write-off receivables as bad debts. The request shall be supported by sufficient evidence that the claims are uncollectible.

Procedure: 

 

  1. Each month, <<Staff Title>> will save an Accounts Receivable Aging Report to <<File Path>>
  2. The spreadsheet is sorted by bill_date
    • Receivable are categorized based on aging: 0-30 days, 31-60 days, 61-90 days, and over 90 days 
  3. Any receivables over 30 days old are researched
  • If the claims are denied because of eligibility or any failure by F/EA to comply with program rules and regulations, the claims will be deemed uncollectable from the participant.
  • These claims will be written-off per this procedure
  1. <<Staff Title>> prepares a spreadsheet called Write-off MMYY saved in <<File Path>>. 
  2. Each entry to be written off is entered in the spreadsheet
  3. For each claim that will be written off, the remittance advice claim number is entered into the spreadsheet for the claim
  4. <<Staff Title>> prepares a cover letter and the Write-Off report
  5. Cover letter and Write-Off report are submitted to the <<Staff Title>> and or the Chief Financial Officer for authorization to write off the claims.
  6.  <<Staff Title>> and or the Chief Financial Officer approves the write off by signing the report and returning it to the F/EA Accountant.
 
Post Bad Debt Write-Off For Reimbursement from F/EA
 
  1. <<Staff Title>> will copy the authorized Write off Report and forward it to the <<Staff Title>> to adjust the claim in the billing system.
  2. <<Staff Title>> adjusts claims in the billing system.
  3. <<Staff Title>> prepares a journal entry to record the write off and record the reimbursement due to the Cash Advance Account from F/EA
  4. The General Ledger Account receivable account <<GL Account>> is credited and the General Ledger Account # Due to/Due From Service Account <<GL Account Number>>.
  5. <<Staff Title>> signs and dates the journal entry.
  6. <<Staff Title>> forwards to <<Staff Title>> for approval
  7. <<Staff Title>> signs and date the journal entry
  8. <<Staff Title>> returns to <<Staff Title>> for posting
  9. <<Staff Title>> posts the journal entry to the General Ledger
  10. <<Staff Title>> emails Chief Financial Offcier to request reimbursement for the bad debt written off.  
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 are:

  1. An Aging Report of denied claims is produced and verified monthly
  2. Each denied claim is individually researched by the <<Staff Title>> and reviewed by the <<Staff Title>>
    1. Any claims that are deemed unrecoverable at the fault of F/EA are reported on the Write Off report
  3. The F/EA Accountant prepares, signs and dates a journal entry template and the Write Off report
  4. The <<Staff Title>> or CFO review and sign the Write Off report
  5. <<Staff Title>>  verifies that the deposit for the Write Off amount was made to the program operating account from the F/EA account