Balance sheet account reconciliation tutorial

1. Definition of a Reconciliation

2. Importance of a Reconciliation
3. When to Prepare a Reconciliation
4. Items Needed to Prepare a
Reconciliation
5. Key Terms
6. Example of a Reconciliation
7. Reconciliation Instructions
8. Approval and Submission
9. FAQs


In accounting, Reconciliation refers to the process of
ensuring that two sets of records are in agreement.
Reconciliation is used to ensure that the transactions
going through an account match the actual money
spent.

The objective is to report the correct amount

in the general ledger.
the

balances

match

This is done by making sure
at

the

end

of

a

particular

accounting period.
For example, we reconcile the balance in the general
ledger account ” Cash “ to the balance shown on the bank
statement.




Two Records - A proper reconciliation requires
obtaining all of the activity in two records (department
sub-ledger and the general ledger) since the last time
they were reconciled and comparing them to find where
any difference(s) occur.



Difference in Two Records - A difference between the
two records can highlight a posting error within your
department; internal entities, such as Payroll or

Disbursements; external entities, such as the bank or
loan company; or even something much more
significant: fraud.


Timeliness- It is best practice to reconcile an account
monthly, following month-end close.





◦

If the account has been reconciled monthly, then only the activity in
the last month must be reconciled.

◦

If the account has not been reconciled monthly, you will need to
reconcile back to the last month that it had been reconciled. If you
cannot locate a reconciliation for the account, you should complete
a reconciliation for the current fiscal year.

◦

Reconciliations are much easier to do, and differences are easier to
resolve, if they are done monthly. Doing reconciliations monthly
will save time and effort and any corrective action can be taken to
resolve issues.

Submission - General Accounting requires balance sheet
account reconciliations be submitted on a quarterly basis.


Access to:
1. FinancialLink – make sure you are set up with an access login
through your department’s DSA (Departmental Security
Administrator).

2. Microsoft Excel

3. Department’s Sub-ledgers


Balance Sheet Accounts are
used in the general ledger and
represent the assets and liabilities
of the University.
Asset accounts start with 1, and
liability accounts start with 2.

Balance Sheet Reconciliation is a template in which data
from a balance sheet account is entered from the Department
Sub-ledger and the
General Ledger in order
to analyze and identify
any differences.

{ A } Department Sub-ledger
refers to the sub-system,
list, record, external
statement, etc. maintained
by a department detailing
the balance in the account.
Example: A key deposit account should have a sub-ledger that lists all outstanding deposits by amount, name, and date.

{B } General Ledger is a record of financial transactions at UCSD used to
produce financial reports, such as a balance sheet and income statement.


{C } Variance is any
difference(s) between

items listed on a {A }
Department Sub-ledger

and the {B } General Ledger.

{D } Reconciling Items
are any items from the
{A } Department Subledger and {B } General
Ledger that do not
match. These items
need to be researched to
ensure they are
legitimate and will be
matched in a future
month. Any errors need

to be corrected.





A proper reconciliation is comprised of four parts:
◦ { A } Dept Sub-ledger Account Balance
◦ { B } General Ledger Balance
◦ { C } Variance
◦ { D } Reconciling Items






Items on the { A } Dept Sub-ledger are matched against the
items on the { B } General Ledger .
The { C } Variance should be zero.
Any remaining items that are not matched are classified as
{ D } Reconciling Items .


Take items from your dept sub-ledger and enter them into the section
of the reconciliation sheet called { A} Dept Subledger Account Balance .


Next, get the account balance per the General Ledger in
FinancialLink. Recommended: do not limit your search to

only one fund.

1. Log into FinancialLink.
FinancialLink
2. Click Reports.
Reports


3. Click the dropdown arrow next to Ledger and Detail
Reports.
Reports
4. Click General Ledger.
Ledger


5. Update the accounting
period to reflect the
period you are
reconciling.
6. Type the Account #.
#
7. Click Submit Form.
Form

Recommended: Check
the boxes to see Db/Cr
Indicators.


Take the balance from the general ledger report and enter it into

section {B} General Ledger Balance on the reconciliation sheet.






Analyze section { C} Variance between the {A} Dept Sub-ledger and
the {B} General Ledger.
Ledger Is the variance zero? If so, you are done!

If the {C} Variance is NOT zero, you need to identify the {D} Reconciling
Items. These items can be journal entries not recorded in that period in

FinancialLink or timing differences that will clear in future months. After the
reconciling items have been identified, Unreconciled Balance should be zero.




Once the reconciliation(s) are completed, the
reconciliation must be verified and approved.



The review and approval is typically performed by a
supervisor to verify that the reconciliation meets the
standard as outlined.



A link to the form is included in the email you receive
from the Balance Sheet Coordinator. If you are unable
to locate that link, go to Blink and search for
Confirmation of Balance Sheet Account . A new form is
posted for each quarter.



Type directly into this document, then save and print.


Type the Account information
- number and title.




The next portion is for the
Reconciliation Preparer and
Supervisor signatures. By
signing the form, you agree
that the reconciliations are
complete and accurate. Please
note that for audit purposes,
the Preparer and Supervisor
(Approver) need to be two
different people.



The bottom of the form
reminds you where to submit
your reconciliation(s).




Make sure to submit a copy of the reconciliation for each account
named on the form as supporting documentation.



You can submit one
confirmation form for
multiple account
reconciliations provided
the account numbers are
all listed on the form in
the proper location and all
reconciliation supporting
documentation is
attached.

Please send all submissions to:



Question: Who should do the reconciliation?
Answer: This varies from department to department. The person

responsible for updating the General Ledger (and/or keeping the
department schedule up to date) should NOT be the same person
performing the reconciliation.
Question: The worksheet I receive each quarter listing the accounts and
owners is incorrect or incomplete.
Answer: Please email with the necessary
corrections. Please correct the worksheet and send it back, with
corrections highlighted in yellow.


Question: I receive the worksheet each quarter asking for a
reconciliation, but the account has a zero balance.
Answer: A certification should still be sent to General Accounting
stating the account has the correct balance, in this case, zero. If
the account has activity within the quarter even with a zero
balance, a reconciliation still needs to be completed.
Question: The account I am being asked to reconcile will not be
used again, and has a zero balance.
Answer: Please email and we will
inactivate the account. Once the account has been inactivated,
you will no longer be asked to provide a reconciliation.


Q uestion: Why does each account have a Preparer and O wner
field?
Answer: Each reconciliation must be signed off by two
different people. The person who does the reconciliation; and
the person that approves the reconciliation. One person
cannot both prepare and approve the reconciliation.
Q uestion: Our account is much more difficult than the

exam ple in this tutorial. We could use additional help.
Answer: General Accounting offers training on Balance Sheet
Account Reconciliation upon request. Please email



Please

email