Step 3. Clear Withdrawals, Data Entry Errors, and Bank Errors

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1 Reconciling Bank Statements If this is the first time you have reconciled a bank statement for this company, you must prepare your bank accounts. See Chapter 4, Setting Up Bank Services, for the procedure. Post all transactions in the subledgers that affect the bank account. Post all batches for the fiscal period you are reconciling. Gather the bank statement and related source documents, such as canceled checks, credit memos, debit memos, etc. Compare the source documents to your bank statement. If you find any errors or discrepancies, mark the incorrect item on the bank statement, and make a note of the error on the source document. Notify the bank of their errors. Sort the canceled checks into numerical order. Follow the next eight steps to reconcile bank statements. If you are reconciling a statement downloaded from your bank s Web site, see the steps beginning on page 6 of this checklist. Step 1. Fill in Summary Information Double-click the Bank Reconciliation icon in the Bank Services folder, then double-click the Reconcile Statements icon and enter the bank code for the bank account you are reconciling. Fill in the following fields on the Summary tab: Statement Reconciliation Year/Period Reconciliation Click Save. Click the Entries tab and continue with Step 2. Step 2. Record Bank Entries You enter transactions originating at the bank (for example, service charges) on Entries tab. Fill in the following fields: Transaction Transaction Type (indicates the account to post the offsetting entry to) Debit/Credit Amount (from the bank statement) Reference Description Click Save to add each new transaction. Click the Calculate button on the Summary tab to update the bank summary. Click the Withdrawals tab and continue with Step 3. Step 3. Clear Withdrawals, Data Entry Errors, and Bank Errors On the Withdrawals tab, you clear checks, as well as data entry and bank errors that appear on the bank statement. The following instructions explain how to clear a range of checks sorted in numerical order, individual checks in the order they appear on the bank statement, and checks from a list of outstanding checks. Filename: rec-bank.pdf Page 1 of 9

2 Clear a range of checks Clear checks in the order they cleared the bank Select the Direct Mode option on the Withdrawals tab. Type the first and last check numbers in the Clear From Check and To Check fields. Click the Clear button. For all checks in the range that are dated earlier than the reconciliation fiscal year and period, and that have an Outstanding status as of the fiscal period end date, the program changes the status of the checks from Outstanding to Cleared and inserts the amount in the Withdrawal Amount column into the Reconciliation Amount Cleared column. In a multicurrency bank, the program inserts the amount that is in the Functional Check Amount column into the Reconciliation Amount Cleared column. The Withdrawal Amount column displays the withdrawal amount in the source currency. To change a check s status back to Outstanding, highlight the line for the check, then press Delete. If a check cleared the bank with an amount other than the Withdrawal Amount, type the bank statement amount in the Reconciliation Amount Cleared column. Type a comment in the Reconciliation Description column for any unusual transactions. When you are satisfied with the cleared check information, choose Save. To update the summary, click the Calculate button on the Summary tab. Repeat these steps to reverse another range of checks. After clearing checks (and data entry or bank errors, if any), go to Step 4. Select the Direct Mode option on the Withdrawals tab. Press the Insert key. In the highlighted blank line that appears, fill in the following columns: Check Number Reconciliation Amount Cleared (from the bank statement) The Reconciliation status will display as Cleared, Cleared With Write-off, or Cleared With Bank Error, depending on the difference between the bank statement amount and the Bank Services amount. If a check cleared the bank with an amount other than the Check Amount, type the bank statement amount in the Reconciliation Amount Cleared column. Type a comment in the Reconciliation Description column for any unusual transactions. When you are satisfied with the cleared check information, choose Save. To update the summary, click the Calculate button on the Summary tab. Press the Insert key to clear another check that appears on the bank statement. After clearing checks (and data entry or bank errors, if any), go to Step 4. Clear checks Choose the Select Mode option on the Withdrawals tab. from a list of Scroll through the list of outstanding checks until you see the check you want to clear. outstanding checks Highlight the line. Change the Reconciliation Status to Cleared by double-clicking in the column and selecting the status from the list that appears, or by typing the letter C in the column and pressing Enter. The amount that is in the Check Amount column is inserted into the Reconciliation Amount Cleared column. In a multicurrency bank, the amount in the Functional Check Amount column is inserted into the Reconciliation Amount Cleared column. If a check cleared the bank with an amount other than the Check Amount, type the bank statement amount in the Reconciliation Amount Cleared column. Filename: rec-bank.pdf Page 2 of 9

3 Type a comment in the Reconciliation Description column for any unusual transactions. When you are satisfied with the cleared check information, click Save. To update the summary, click the Calculate button on the Summary tab. Continue scrolling through the list to clear other checks that appear on the statement. After clearing checks (and data entry or bank errors, if any), go to Step 4. Clearing Data Entry Errors If the bank statement shows a different amount than the amount in the Withdrawal Amount column because of a data entry error in the originating subledger, and the error is too large to post to the Clearing Errors account, you can use one of the following methods to correct the error in Reconcile Statements. Method One: Reverse Checks Method Two: Make Adjustments Select the code for the bank account from which the check was issued. Fill in the following fields on the Summary tab: Statement Fiscal Year/Period Reconciliation Display the Withdrawals tab, then choose the Select Mode option. Scroll the list of checks, highlight the check you want to reverse, place the cursor in the Status column, and change the Reconciliation Status to Reversed. The check information is returned to the originating subledger, the check is reversed, and the amount the check paid is restored. Choose Save, then close Reconcile Statements. Re-enter the check with the correct amount and post it in the subledger where it originated. (Do not print the check.) Re-open Reconcile Statements and choose Select Mode. The new check appears in the list on the Withdrawals tab. Change the status of the corrected check to Cleared, then choose Save. Display the Summary tab, and click the Calculate button to update the summary. Make an adjustment on the Entries page for the amount of the error. Make a corresponding adjustment in the originating subledger. Change the check s status to Cleared and click Save. The program enters the amount that is in the Withdrawal Amount column into the Reconciliation Amount Cleared column. Display the Summary tab, and click the Calculate button to update the summary. Clearing Bank Errors Bank accepts responsibility Bank does not accept responsibility Clear the check or deposit by changing the Reconciliation Status to Cleared. You do not need to adjust the book balance. Clear the check or deposit by changing its Reconciliation Status to Cleared. Make a bank entry for the error to adjust the book balance. After clearing checks and bank errors, go to Step 4. Filename: rec-bank.pdf Page 3 of 9

4 Step 4. Clear Deposits and Deposit Errors If there is an NSF check in the batch Part of deposit posted to an error batch Or On the Deposits tab, scroll through the list of deposits until you reach the line for the same deposit as on the bank statement, then change the Reconciliation Status to Cleared by typing the letter C and pressing the Enter key, or selecting the status from the list. The amount that is in the Posted Batch Total column is automatically inserted into the Reconciliation Amount Cleared column. Enter the deposit amount from the statement in the Reconciliation Amount Cleared column. Record the return, following instructions in Chapter 3. On the Deposits tab, change the status of the full deposit that contains the NSF item to Cleared. You must clear the NSF item itself, following the instructions in the section Step 5, Clear Returns. However, before you do this, finish clearing all deposits that appear on the bank statement. If the sum of the two Posted Batch Totals matches the amount on the bank statement, assign a status of Cleared to both the original (partial) batch and the error batch. If you wish to record a comment with a deposit (recommended for any unusual transaction), type the comment in the Reconciliation Description column. When you post the reconciliation, this description is sent to General Ledger and to the subledger where the deposit originated. When you are satisfied with the cleared deposit information, click Save. Display the Summary tab and click the Calculate button to update the summary. To clear deposit errors or deposit errors caused by NSF items, follow the steps in the next section, Clearing Deposit Errors, and in Step 5. After clearing deposits (and returns, if any), go to Step 6. If deposit cleared with a different amount than posted Clearing Deposit Errors Deposits may have cleared through the bank in a different amount than the amount posted in the subledger. Follow the appropriate steps below, then display the Summary tab and click Calculate to update the bank summary. If you have NSF items to clear after you clear other deposit errors, go to Step 5, Clear Returns. If there are no returns to clear, go to Step 6. Type the bank statement amount in the Reconciliation Amount Cleared column. The Reconciliation Status changes to reflect the amount of the difference. In a multicurrency bank, the amount you enter is compared to the amount in the Posted Functional Batch Total column. If the difference is less than the error spread, the deposit is marked Cleared with Write-Off. If the difference between the Posted Batch Total and the Reconciliation Amount Cleared is greater than the error spread, the deposit is marked Cleared with Bank Error. The difference is displayed as a Bank Error amount on the Summary tab, and is carried forward to your next reconciliation. For instructions to clear the error amount, see the section Clearing Bank Errors. If you decide to write off the difference even though it is greater than the error spread, simply change the deposit s status to Cleared with Write-Off. Filename: rec-bank.pdf Page 4 of 9

5 Bank deposit amount lower Bank deposit amount higher To record the receipt of the difference, create and post a new batch in A/R. On the Deposits tab, change the Reconciliation Amount Cleared status to Cleared for both the original and new deposit batches. Make an adjustment for the amount of the error on the Entries tab of the Reconciliation Statements form. Make a corresponding adjustment in the originating subledger. Change the deposit s status to Cleared, then click Save. The amount that is in the Posted Batch Total column is entered into the Reconciliation Amount Cleared column. The deposit is offset by the adjustment on the Entries tab, thus equaling the amount on the bank statement. Step 5. Clear Returns Display the Returns tab in Reconcile Statements. A list of returned NSF customer items (as of the fiscal period end date) appears. Reconcile each returned customer check to the bank statement by scrolling through the list for the checks, then changing the Reconciliation Status to Cleared. Click Save, then click the Calculate button on the Summary tab to update the summary. After clearing returned items, you balance the reconciliation. Go to Step 6. Step 6. Balance the Reconciliation Leaving Reconcile Statements open, double-click the Reconciliation Status icon in the Bank Reports folder and print a record of your reconciliation entries. Return to the Summary tab and click Calculate. The left column should now display the bank account s Statement Balance, less outstanding checks, plus deposits in transit, plus or minus bank errors. The Adjusted Statement Balance should equal the Adjusted Book Balance for the bank account, leaving an Out Of Balance amount of zero. If the two amounts are equal, you have balanced the reconciliation. If the two amounts are not equal, compare your printout of the Bank Reconciliation Status report to the bank statement. Make any necessary corrections. When the Adjusted Statement Balance on the Summary tab equals the Adjusted Book Balance for the bank account, click Save, then click Close. You must now follow the procedures in Step 7 to post the reconciliation. Step 7. Post the Reconciliation After reconciling and balancing bank statements, you can post reconciliations for several banks at once. Double-click the Post Reconciliation icon from the Bank Reconciliation folder. Select Range, then type the bank code(s) in the From and To fields. Choose Post to post the reconciliation for the bank account. Posting: Sends information to subledgers for records that were cleared or reversed. Sends reconciliation descriptions to the subledgers and to G/L. Filename: rec-bank.pdf Page 5 of 9

6 Creates a General Ledger transaction batch (if you selected the option to Create G/L Transactions During Posting) for amounts that are written off, for exchange gains and losses, and for checks and deposits created in Bank Services, and dates the transactions in the batch with the fiscal period end date for transactions entered on the Bank Statement Entries tab. Sends the Reconciliation Amount Cleared to subledgers for entries that have the status Cleared with Bank Error, and creates a new transaction for the error amount. The Reconciliation Status is set to Outstanding or In Transit, and the transaction has the check or deposit status of Cleared with Bank Error. You now print reports and check data integrity. Go to Step 8. Step 8. Print Reports and Check Data Integrity Create G/L Transactions on Request Create G/L Transactions During Posting Double-click the Reconciliation Posting Journal icon in the Bank Reports folder. Type the Posting Sequence number in the From and To fields. If you wish to reprint posting journal records for bank reconciliations that have not been deleted, select Reprint Previously Printed Journals. Select Clear All Printed Journals to clear bank reconciliation information. Choose Print to print the Bank Reconciliation Posting Journal. (This journal lists all the checks and deposits cleared during reconciliation and lists NSF checks and bank entries.) Print a list of outstanding checks and deposits by choosing the Checks Status icon or the Deposits Status icon in the Bank Reports folder. If (in Bank Options), you selected the option to Create G/L Transactions On Request Using Create G/L Batch Icon: Double-click the G/L Transactions icon in the Bank Reports folder. Choose Print to print the Bank G/L Transactions report using the default settings. If you now want to send reconciliation transactions to G/L: Double-click the Create G/L Batch icon from the Bank Reconciliation folder. Choose Process to transfer the bank reconciliation entries to General Ledger. If you selected the option to Create G/L Transactions During Posting: Print the Bank Services transaction batches in General Ledger by choosing the Batch Listing report in G/L Reports. Post the batches in General Ledger using the Post Batches function. File the reconciliation records and reports together. You have now completed a manual bank reconciliation. Repeat these steps for each bank account that you are reconciling. If you are reconciling a statement downloaded from your bank s Web site, see the following section. Filename: rec-bank.pdf Page 6 of 9

7 Downloading and Importing Bank and Credit Card Statements for Reconciliation You can automate much of account reconciliation by importing bank and credit card statements that you have downloaded from your financial institution's Web site. A. Downloading Bank Statements Activate A/R and A/P Enter correct account and transit numbers Currency concerns You can download statements from your bank if it offers online services and supports the Open Financial Exchange (OFX) data format. Follow the bank's instructions on their Web site for the download. Install and activate ACCPAC Accounts Payable and Accounts Receivable modules, and also activate Bank Services in order to use ACCPAC s Import Downloaded Statements feature. Before downloading statements, open the Banks dialog box to check that you have entered the correct numbers in the Bank Account Number field (with no punctuation, no dashes, and no spaces) and in the Transit Number field (if it isn't a credit card account) for each bank that has statements you will download. The account number can be up to 22 characters. The default currency for your downloaded bank statement must be the same as the source currency for that bank in your ACCPAC database (or at least one of the source currencies in the ACCPAC records for that bank). If your database is single currency. First, select exchange rates for the company's default rate type (in the Company Profile) to act between the OFX statement/transaction currency and the ACCPAC bank statement currency. Ensure that the exchange rates are available for each transaction's posting date. This way, although imported transactions may be unmatched due to currency differences, they will be entered into the Entries tab of the Reconcile Statements form, with the amount converted to the ACCPAC bank statement currency. B. Importing Downloaded Statements Once your statement has been downloaded, you import it into your ACCPAC Advantage Series database. Imported transactions are matched with transactions in your ACCPAC bank records, using the following fields: Check Number; Account Number; Bank Reference; and Amount. Click the Import Bank Statements icon in the Bank Reconciliation folder (or, in the Reconcile Statements form, click File, Import, then select Downloaded Bank Statements and click OK). In the Import Downloaded Bank Statements form, select the range of banks in the From and To Banks fields. Using the calendar icon, select a date for the Reconciliation field. Using the drop-down arrow, select a Year and Period. Note that it is very important to select the correct year/period, as you cannot post back to a previous year/period that had already been posted. You cannot choose a locked fiscal period. Filename: rec-bank.pdf Page 7 of 9

8 Click the Browse button to select the file you downloaded from your bank's Web site. (The filename and path will appear in the Downloaded Bank Statement File field.) Click the Import button. Read the messages you receive. They will inform you of the following: The number of transactions reconciled. The number of statement transactions processed and matched to posted entries. (The Import process changes the status of matched transactions to Cleared in the Reconcile Statements window.) Unmatched OFX Entries User-entered Unmatched OFX Unmatched OFX Error Unmatched OFX Correction To distinguish manually-inserted entries from unmatched OFX entries, and to correct unmatched OFX entries, you use the Entry Type column in the Entries tab of Reconcile Statements and in the Post Entries form. The entries displayed in this column denote items that were unmatched in an import of a bank statement. The entries are correctable or are read-only, depending on their values. Denotes that you manually entered this item. The entry type cannot be changed (no toggle available). When an entry has this type, all other columns (except for G/L Account Description) are editable. This is an unmatched OFX transaction from an OFX statement import. An Unmatched OFX entry cannot be changed (no toggle function). When an entry has this type, all other columns (except for G/L Account Description) are editable. The following scenarios will result in an entry with this description: The OFX transaction or statement currency was successfully converted to one of the source currencies accepted by this BK bank. (Note: A BK bank is a bank listed in ACCPAC Bank Services.) There's a conversion available from OFX transaction/statement currency to the BK bank's statement currency, on the transaction date and with the company's default rate type. This is an unmatched OFX transaction from an OFX import. When an entry has this type, only the Reference and Description columns are editable. The following scenarios could account for this description: The OFX transaction currency and statement currency are not one of the BK bank's source currencies. Neither the OFX transaction nor statement currencies could be converted to the BK Bank's statement currency using the transaction date and the company's default rate type. The source dedit/crebit amount will be entered without conversion, with the BK bank's statement currency used as the source currency. The Description cell will show the actual currency associated with that amount (in either the OFX transaction currency or the statement currency), and will note that this currency couldn't be converted to the bank's statement currency. When you are ready to correct an unmatched OFX entry (by changing the source debit/credit amount to the correct source currency amount), toggle the Unmatched OFX Correction field to this type. When an entry has this type, all other columns (except G/L Account Description) are editable. In Post Entries, if you had decided to keep the entry as an error and to finish dealing with it later, the "Post Immediately" column changes to "No" if it was previously "Yes" when you toggle the entry type from "Unmatched OFX Correction" to "Unmatched OFX Error". Filename: rec-bank.pdf Page 8 of 9