13.4 Reconciliation of Financial Activities

Policy Statement

Units must regularly monitor and reconcile their financial activity within Banner.

Reason for the Policy

To ensure accurate reporting for the University of Illinois System’s audited financial statements and to help safeguard system resources.

Applicability of the Policy

All units that have financial activity within Banner.

Procedure

Any employee who reconciles financial activity within Banner should be properly trained. The system offers a variety of training resources, such as Understanding University Financial Statements & the Reconciliation Process. In addition, employees are encouraged to contact University Accounting and Financial Reporting (UAFR) with any questions.

In addition to being properly trained, see below for several good business practices to follow that will help ensure an effective and timely reconciliation process.

Perform Reconciliations on a Timely Basis

It is important to perform reconciliations on a timely basis to help ensure that any discrepancies are quickly identified and corrected. The system recommends that reconciliations are performed on at least a monthly basis.

Ensure Proper Segregation of Duties

To properly safeguard system resources and to help mitigate the risk of fraudulent activity, it is important to ensure a proper segregation of duties in the reconciliation process. This means that the person who performs the reconciliation should not also have access to processing the transactions which are being reconciled. This ensures an independent review and reconciliation of the transactions which are being processed. In situations where segregation of duties is not possible (such as in a small department), units should implement mitigating controls such as a review of activity by an independent person at a higher level (such as at the college level).

Trace Banner Transactions to Source Documents

In order to ensure the legitimacy of each Banner transaction, it is beneficial to trace each Banner transaction to the related source document (such as a receipt or deposit form). This helps identify situations where a Banner transaction may differ from the source document, such as when a vendor may have charged an incorrect or duplicate amount. This tracing process helps ensure the accuracy of Banner transactions and helps identify any erroneous transactions which may require further attention.

Monitor and Reconcile Balances and Transactions in both the Operating Ledger (OL) and the General Ledger (GL)

When performing reconciliations, the typical process is to reconcile Operating Ledger (OL) transactions (such as expenses, revenues, fund transfers, and encumbrances) to the source documents (such as receipts or deposit forms). However, in addition to reconciling the OL it is also important to monitor and reconcile the activity within the General Ledger (GL). This would include monitoring and reconciling transactions and balances in GL account codes such as cash, accounts receivable, inventory for resale, accounts payable, unearned revenue, etc.

By reconciling both the OL and the GL, you are helping ensure the overall accuracy of the system’s financial statements.

Resolve Discrepancies Identified during the Reconciliation Process

During your reconciliation process, you may identify discrepancies such as duplicate charges from a vendor, misclassified (“rogue”) transactions, revenue deposited to an incorrect C-FOAP, expenses recorded to an incorrect account code, etc. Once these discrepancies are identified, it is important to investigate and correct the discrepancy. For example:

• If a transaction was recorded to an incorrect C-FOAP, then a Journal Voucher should be processed to reclassify the transaction to the proper C-FOAP.
• If a vendor overcharged the system, then you would need to pursue that discrepancy with the vendor to ensure you are refunded from the overpayment.

By resolving all discrepancies identified during the reconciliation process, you are helping to ensure the overall accuracy of the system’s financial statements.

Additional Resources

Understanding University Financial Statements & the Reconciliation Process

Last Updated: October 9, 2020 | Approved: Senior Associate Vice President for Business and Finance | Effective: February 1, 2023