Reconciling Departmental and Sponsored Fund Accounting Records

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University Policy Number 2114

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I. Scope

This policy applies to all George Mason University employees with oversight or administrative responsibility for monitoring budget, revenue and/or expenditures through a fund or organization in the university’s financial accounting system.

II. Policy Statement

Reconciliations of all university funds and organizations to departmental records are required elements of a control structure designed to manage financial risk and maintain accountability.  Reconciliations are essential for an effective internal control environment so that:

A. The information transmitted to, contained in, and reported from the university’s financial system is accurate, complete, and recorded in a timely manner;

B. The information can be relied upon for making financial and administrative decisions;

C. Irregularities are detected and reported to the appropriate authorities in a timely manner; and

D. Corrections are documented, monitored and resolved within an acceptable time frame.

III. Definitions

A. Fund or organization: A business unit such as a department, project or activity that has a unique code in Banner, which is the university’s financial accounting system. Typically, an organization code is used for activities that are supported by Education & General (E&G), Auxiliary Enterprise, and F&A Recovery (Indirect) funds; and a fund code is used for an externally funded activity, such as a grant or construction project.

B. Charges and Credits: Financial transactions posted to account codes within a fund or organization that represent revenue, revenue refund, expenditure or expenditure refund.  Examples include library fines, faculty salaries, and office supplies.

C. Reconciliation: A systematic review of Banner financial activity to verify that all charges and credits are accurate and appropriate, usually comparing to source documentation to confirm accuracy of postings and identify expected transactions that have not yet occurred.  In certain situations it may be appropriate to rely on other compensating controls; advance approval from the Controller or designee is required.

D. Reconciler: The individual who performs the reconciliation and prepares documentation for approval.

E. Approver: The individual who has the knowledge to approve that the work performed by the reconciler is adequate and the charges and credits to the fund or organization are reasonable.  This approver is usually the employee who is responsible for expenditures or credits on the fund or organization.

IV. Responsibilities

A. Deans and Heads of Administrative Units

Deans and heads of administrative units are required to oversee the reconciliation process for all Banner funds and/or organizations.

B. Heads of Departments, Projects, and Activities

Heads of departments, projects, and activities are required to ensure that their Banner funds and/or organizations are reconciled and approved in a timely manner and in accordance with the timeline in Section V below.  They may perform or approve the reconciliation or assign such responsibilities to others. The same individual should not perform both the reconciler and the approver functions on the same fund or organization so the heads of departments, projects and activities should ensure that staffing is adequate for separation of duties between the reconciler and approver or PI.

C. Reconcilers

Reconcilers are required to reconcile all assigned Banner funds and/or organizations in a timely manner and in accordance with the timeline in Section V below. Reconcilers must certify that all charges and credits on the fund or organization have been reviewed and are supported by appropriate documentation. Any discrepancies/reconciling items must be documented, including charges or credits posted incorrectly or pending transactions that did not post as expected.

D. Approvers

Approvers are required to review the reconciliation(s) and must certify that the work performed by the reconciler is adequate and that the charges and credits to the fund or organization are reasonable. The approvers’ review should include analysis of reconciling items and the appropriateness of the follow-up.  The approver must complete and certify his/her review in a timely manner and in accordance with Section V below.

E. Principal Investigators (PIs)

All PIs are required to ensure that their Banner funds are reconciled.  PIs are required to review the reconciliation(s) and must certify that the work performed by the reconciler is adequate and that the charges and credits to the fund or organization are reasonable.   PIs are required to review the reconciliation(s) and must certify that reconciliation is accurate and timely. The PIs’ review should include analysis of reconciling items and the appropriateness of the follow-up.  The PI is further required to ensure that expenditures are made for the intended purpose of the grant or contract in accordance with sponsor requirements as well as university policies and procedures and to subsequently certify the financial reports on his/her sponsored funds. The PI must complete and certify his/her review in a timely manner and in accordance with Section V below.

F. Controller

The Controller is responsible for monitoring and ensuring that the provisions of this policy are observed and in conjunction with the Office of Sponsored Programs and Internal Audit and Management Services as they relate to research funds.  Results of reviews will be incorporated into the annual certification of internal controls signed by the University President.

V. Timeline

 All Banner funds and organizations must be reconciled in a timely manner on a monthly or bi-monthly basis (period).  Reconciliations must be prepared, approved and certified not later than two months after the last day of the reconciled month/period. For example, financial transactions for the month/period ended July 31 must be reconciled, approved and certified by September 30.  Except in extenuating circumstances, reconciling items should generally be resolved not later than three months from the last day of the reconciled month/period.  For example, the reconciler has identified an error related to a July 25 transaction on the report for the month/period ended July 31. He/she should generally process the correction by October 31.  The reconciler must document efforts to escalate open issues to comply with the three month time frame.

 VI. Certification

The fact that the reconciliation was performed must be documented by certifications that are signed and dated by the individual who performed the initial reconciliation as well as by the approver or PI responsible for review of the reconciliation. Electronic certification, including email certification, is preferred.

 VII. Compliance

Office of Management and Budget’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (OMB Uniform Guidance) requires that recipients’ financial management systems shall provide for the following: accurate, current and complete disclosure of the financial results of each federally-sponsored project or program; effective control over and accountability for all funds, property and other assets; records that adequately identify the source and application of funds for federally-sponsored activities; comparison of outlays with budget amounts for each award; written procedures for determining the reasonableness, allowability and allocability of costs, and accounting records that are supported by source documentation.

Failure to comply with federal regulations may result in repayment of disallowed costs and assessment of fines, penalties, and interest by the federal government.

 VIII. Dates:

A. Effective Date:

This policy will become effective upon the date of approval by the Senior Vice President for Administration and Finance and the Provost and Executive Vice President.

B. Date of Most Recent Review:

1/17/2017

IX. Timetable for Review

 This policy, and any related procedures, shall be reviewed and revised, if necessary, annually to become effective at the beginning of the university’s fiscal year, unless otherwise noted.

X. Signatures

Approved:

__/S_____________________
Maurice W. Scherrens
Senior Vice President

__/S______________________
Peter N. Stearns
Provost

Date approved: November 12, 2010

Revised: June 11, 2012

Revised: March 17, 2016

Revision Approved: February 22, 2017*

 

*Revision effective upon date of approval.