understanding general ledger reconciliations

UnderstandingGeneral Ledger Reconciliations

Why Do We Reconcile GLs?

Happy Members

Can Prevent Losses to the Credit Union!

Write-Offs

VISADisputes

ATM Cash

ACH Exceptions

Stale Dated Transactions

Total

0

10000

20000

30000

40000

50000

60000

70000

Inter-Department Cooperation?

Back Office or Operations Department

Accounting Department

Accurate Financial

Statements

Happy Auditors

Personal Pride

Questions?

Required Elements

• Face sheet (the recon)

• Date, GL number,

• GL Balance & Statement/backup balance

• Stale days counter & clear dates

• GL Transaction Register (forward)

• Proper Backup

• GL Transaction Register showing items cleared

SAMPLE CREDIT UNIONACCOUNTING SUSPENSE

870008October 31, 2006

Stale

Date   Days Debit Credit Clear

11/30/2005 ADP Payroll pending refund 335 100.00   11/20/2006

7/24/2006 Staff Ded R. Rabbit 9.75 S/B 9.74 99 0.01   11/20/2006

7/31/2006 Investment Income Clearing 92   1,575.81 11/20/2006

8/24/2006 Expense Reimbursement Staff M.Mouse 68 1,246.38   11/20/2006

8/24/2006 Expense Reimbursement Staff M.Mouse 68 137.81   11/20/2006

8/28/2006 #12345 Disp Members CU/GNL/RBL 64 460.00   11/20/2006

8/31/2006 INV CLR Aug 2006 61 2,795.35   11/20/2006

8/31/2006 INV CLR Aug 2006 61   2,652.17 11/20/2006

8/31/2006 Reverse ADP Benefits 61 550.00   11/20/2006

9/1/2006 #23456-00 C. Robin (offset missing) 60 20.00  

9/5/2006 #34567 (offset missing) 56 10.00    

10/31/2006 Recon Balance (1,051.27)

10/31/2006 GL Balance     (1,051.27)

Difference -0-

Stale Dated 2

Prepared by: __________________ Date _________

Approved by: __________________ Date _________

• Helpful tip• Add footnotes to face sheet indicating required

backup for each recon.

Accounting Detectives

Tools of the Trade

• Transposition Errors • If the difference on

a recon is evenly divisible by 9,

• It may be a transposition error.

• If the difference is 63• 63 / 9 = 7, 7 X 9 = 63

Know Your Times Tables

• 1 X 9 = 9• 2 X 9 = 18• 3 X 9 = 27• 4 X 9 = 36• 5 X 9 = 45• 6 X 9 = 54• 7 X 9 = 63• 8 X 9 = 72• 9 X 9 = 81

Finding the Error

• 9 / 9 = 1

• The difference between the numbers transposed must be 1

• 12 transposed with 21 (difference = 9)

• 23 with 32 (difference = 9)

• 34 & 43, 45 & 54, 56 & 65,

• 67 & 76, 78 & 87, 89 & 98

• There are eight possible transpositions

Another Example

• 18 / 9 = 2• The difference between the • numbers transposed must be 2• 13 transposed with 31 (difference = 18)• 24 with 42 (difference is 18)• 35 & 53, 46 & 64, 57 & 75, • 68 & 86, 79 & 97• Only seven possible transpositions

A Third Example• 81 / 9 = 9

• The difference between the

• numbers transposed must be 9

• 09 transposed with 90 (difference = 81)

• This is the only possible transposition

• For example: 109 transposed with 190

• The number of possible transpositions decreases as the difference increases