service bureau general ledger jennifer duff, cpa director of financial solutions [email protected]...

Service Bureau General Service Bureau General LedgerLedger

Jennifer Duff, CPADirector of Financial [email protected] ext. 236

How to develop a reconciliation program to account for client funds.

460 Totten Pond Road Suite 450 Waltham, MA 02451

Service Bureau General Service Bureau General LedgerLedger

Overview Processing Reports


Service Bureau General Service Bureau General Ledger OverviewLedger Overview

Process payroll in M3 ACH files are

created and transmitted

Funds are collected from client and disbursed to employees

M3 ledgers are updated to reflect client cash held and liabilities due to agencies

Client’s Bank

Service Bureau’s

Bank

Employees’ Bank

ACH

Client Balance Sheets



Paying taxes in M3 ACH Credit

file, EFT Debit file, or check is created and transmitted

Funds are disbursed to tax agencies

M3 ledgers are updated to reflect new cash balances and relieve liability balances

Client’s BankService

Bureau’s Bank

Employees’ Bank

ACH

Tax Agencies’ Bank



Service Bureau General Service Bureau General Ledger OverviewLedger Overview 460 Totten Pond Road Suite 450 Waltham, MA 02451


Bank Reconciliation Electronic bank

statement is imported into M3

Transactions are matched automatically

Exceptions are matched manually

Bank reconciliation report is produced


Bureau’s Bank

BAI Employees’

Bank

ACH


Reconciliation Reports


Service Bureau General Service Bureau General Ledger OverviewLedger Overview 460 Totten Pond Road Suite 450 Waltham, MA 02451


Internal Controls Reports are

produced on a daily basis to maintain controls

– Balance Sheet– Negative Liabilities– Uncleared items– Returned ACH items


Bureau’s Bank

Employees’ Bank

Tax Agencies’ Bank

ACH

BAI


Reconciliation Reports

Internal Control Reports



Chart of Accounts – GL1Chart of Accounts – GL1

Each account number consists of “GL1”, “GL2”, and “GL3”

GL1 designates which of the four client ledgers is affected



Billing (GL1 = 1)– Tracks entries made when invoices are created

– Only ledger that tracks service bureau, not client, funds

Direct Deposit (GL1 = 2)– Tracks entries made when service bureau impounds direct deposit

funds and then sends those funds out to employees

Trust (GL1 = 3)– Tracks third party agency funds impounded by service bureau

– Tracks ‘trust’ account checks (checks cut to employees and drawn on service bureau bank account)

Tax (GL1 = 5)– Tracks tax funds held in escrow for the client



GL2 designates whether the item is an asset or liabilityCash (GL2 = 1)A/R (GL2 = 2)Payable (GL2 = 3 or 4)

– GL2 = 3 indicates that the liability has not been assigned a due date (i.e. FUTA, SUI taxes)

– GL2 = 4 indicates that the liability has been assigned a due date; however, the deposit has not been created in M3


Chart of Account – GL3Chart of Account – GL3

GL3 is used with liability entries (GL2 = 3 or 4) Indicates to whom the liability is payable In the tax ledger (GL1 = 5), GL3 is equal to the

tax code Examples: FITW, FUTA, CA, CASUI


Chart of Accounts – User Chart of Accounts – User Defined AcctsDefined Accts

User Defined AccountsSB can customize chart of accounts Used for unique needs of service bureau

– Example: ZBA Transfers

GL2 = 5SB defines the GL3User defined account can be set up as

– Asset

– Liability

– Revenue

– Expense


Chart of Accounts – Suspense Chart of Accounts – Suspense AccountsAccounts

Suspense AccountsClearing accountsUsed by M3 as a temporary holding accountBalance should always be $0 at the end of the payroll

processingGL2 = 9

Closed Reconciliation ProgramClosed Reconciliation Program

Ledger Entries•Entries are posted to the ledger through payroll processing, creating an ACH file or printing a check

•Items that occur outside of M3 (i.e. wire transfer, NSF) are posted manually to ledger


Internal Control ReportsInternal Control Reports460 Totten Pond Road Suite 450 Waltham, MA 02451


Internal Control ReportsInternal Control Reports

There was no tax deposit created for the 10/1/05 liability created during conversion. Need to draft client or reduce 11/11/05 deposit.




Bank Reconciliation•Bank file is matched against all entries posted to Cash in the ledger

•Items on the bank statement are marked as cleared

•An outstanding items report is produced to identify all entries posted to cash that have not cleared the bank


Internal Control ReportsInternal Control Reports460 Totten Pond Road Suite 450 Waltham, MA 02451




Bank Reconciliation•Bank file is matched against all entries posted to Cash in the ledger

•Items on the bank statement are marked as cleared

•An outstanding items report is produced to identify all entries posted to cash that have not cleared the bank

Ledger Reconciliation•Bank data is reconciled to ledger:

Ending bank balance

+/- outstanding item

Equals ledger cash balance


Internal Control ReportsInternal Control Reports

Ledger Reconciliation:

Ending Cash Balance

+ ZBA Balances (if applicable)

+/- Outstanding Items

Equals Ledger Cash Balance

Ending Cash Balance: 0.00

+ ZBA Balances 814.28

+/- Outstanding Items: - 797.96

Equals Ledger Cash Balance: 16.32



Q & AQ & A

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service bureau general ledger jennifer duff, cpa director of financial solutions [email protected]...

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