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Whether you have mastered the basics of reconciliation at your school, are an experienced professional who knows how to streamline the process, or are just getting started, it never hurts to brush up on your best practices. The following school reconciliation best practices will help you better understand faulty points, common terminology, and a few improvement tips.
The reconciliation process should be completed by someone independent of your cash receipts and disbursements. Having a fresh set of eyes on your finances also helps prevent any erroneous reporting.
Some accounts, such as those associated with online giving, have a greater potential for error or fraud. Other accounts, such as those associated with a pre-approved purchase card program, will be less likely to see errors or fraud due to their secure nature. For schools, you may not have as great a need to reconcile an account as a publicly traded company; however, regularly updating your balances will save you a few headaches during audit season.
Banks often have a cutoff time and do not process payments after a certain period such as weekends. Unless noted, this could potentially throw off your reconciliation process. There are two areas to note here: uncleared payments that are still being processed from the bank, and outstanding checks that your school has written, but not cleared or cashed.
There are some instances where your bank may have additional items listed that do not match your general ledger. Reconciliation can help your school become aware of situations such as:
To ensure both your bank statement and general ledger are balance, some additions and subtractions need to take place. If both your bank statement and general ledger balances are equal, your account has been properly reconciled.
Start with your ending balance per your bank statement. On your balance sheet, add any deposits that have not yet been cleared or processed, and other items that have not yet been reported by the bank statement. You need to deduct any outstanding checks that have not yet been cashed. This will provide you a bank statement balance.
Start with your ending balance per your general ledger. On your general ledger, you should add credit card interest that shows on your bank statement. You should deduct any returned checks due to insufficient funds (NSF checks). This will provide you a general ledger balance.
Do you have questions about the reconciliation process at your independent school? Our subject matter experts work with all types of schools, small and large, on all of their financial and payment processing needs. Feel free to reach out by clicking the button below.
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