GAP 200.012, Reconciliation of Financial Transactions

Contents

1. General
2. Responsibility and Documentation
3. Review Process

I. General

Timely review of financial transactions is a key element of Duke’s internal controls and is fundamental to sound business practices. In addition to controls embedded in the workflow approval process, a review of charges against a reporting unit (i.e. cost object, WBSE, BFR, Org. Unit) accompanied by any necessary corrections ensures the fundamental transactions, which result in financial reports, are correct. 

II. Responsibility and Documentation

The business manager, other person who has financial responsibility, or individual to whom authority has been delegated, must review activity posted to an individual reporting unit on a periodic basis (i.e. monthly, quarterly or semi-annually depending on the nature of the reporting unit). They must perform the review in such a manner that confirms that the charges are reasonable and appropriate. Erroneous transactions noted during the review process should be corrected as soon as possible, ideally before the close of the next accounting period. In all cases, adjustments must be made prior to the end of the fiscal year.

The business manager or owner of the reporting unit is ultimately responsible for ensuring that the reviews have been completed as expected. They must document that the review was performed and that the reviewer documented the review process. The business manager or owner may delegate the review confirmation process; however, they should ensure that the individual confirming the completeness of the review is not the same individual who has performed the review.

Documentation that the review and verification have taken place can take several forms. Some documentation options include but are not limited to:

• Providing email confirmation that the review was performed
• Signing or initialing of a reconciliation check list
• Signing or initialing of the financial report for the reporting unit
• Signing or initialing a monthly log of reconciliations

This signature certifies that the reporting unit was reviewed for the relevant accounting period (i.e. montly, quarterly or semi-annually). Electronic documentation of the review must be maintained in an accessible location for current fiscal year plus 2 years.

If the department has original documentation that supports underlying transactions, that documentation must be kept in an accessible location for the period of time as defined in GAP 200.240 Retention Period of Accounting Documents. If the department only has copies and the originals are maintained centrally (such as vendor invoices, Travel Expense documentation, Miscellaneous Reimbursement Form, phone bills, etc.) then the decision to keep copies is a matter of departmental procedure.

III. Review Process

The review process is performed to ensure that transactions/charges to a reporting unit are appropriate and that the correct G/L account(s) have been used for the transaction.

The following is one example of how a review may be performed. Automated tools may be utilized to facilitate the review and analysis of reporting unit activity.

Sample reconciliation process:

1. Run an actual G/L account or line item report for the reporting unit to be reviewed.
2. Review the report for unusual variances or transactions that are inconsistent with known activity and/or planned expenditures. Note any corrections needed.
3. Payroll charges should be reviewed for reasonableness by comparing them to budgeted payroll or to the prior month's payroll charges. If the amount charged seems too high or low, additional review should be performed either by contacting the departmental payroll representative for further explanation or, if available to the reviewer, through review of the Accounting View of Payroll report in SAP which provides details regarding the payroll charges on an individual employee basis. Payroll accruals are automatically posted for the estimated biweekly payroll earned but not paid through the end of the fiscal month for 1xxxxxx cost centers and can be validated against the previous pay period's payroll expense. Accruals automatically reverse in the following fiscal month.
4. Fringe benefit charges (61xxxx) are a fixed percentage based on the gross payroll charges and are automatically posted based on an employee's classification. Further review of fringe benefits charges is not required.
5. All correcting entries should be processed as soon as possible. Non-payroll corrections should be processed via a journal voucher and should include appropriate documentation (header text, extra text, etc.) as required per GAP 200.020, Journal Vouchers. For payroll related items, corrections should be processed by submitting the appropriate payroll iForm.

For sponsored projects, refer to GAP 200.320 for additional guidance regarding the review of sponsored project activity.