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ReconcilingAssetandLiabilityObjectCodes|CornellUniversityDivisionofFinancialAffairs

ReconcilingAssetandLiabilityObjectCodes
Assets,objectcodesbeginningwith1xxx,
aredefinedaseconomicresourcesownedby
theuniversity,(e.g.cash,investments,
accountsreceivablesponsored/travel,
inventory,buildingandequipment).
Liabilities,objectcodesbeginningwith2xxx,
aredefinedasdebtsorobligationsofthe
university(e.g.accountspayable,deferred
revenue,bond/debtobligations).

Contents
Whatisareconciliation?
Whatshouldbeincludedona
reconciliation?
Whatarethegeneralguidelines
forreconciliations?
What'sthebestwaytoreview
accountswithasset/liability
objectcodebalances?

Reconciliationsshouldbecompletedforallassetandliabilityobjectcodes,basedon
theunit'slevelofactivityorbusinesscycle.Generalguidelinesdictatethatifactivity
ispostedmonthly,thereconciliationistobecompletedmonthly.Pleasereferto
thelistofobjectcodes(XLSX,16KB)thatrecommendsthefrequencyof
reconciliationforassetandliabilityobjectcodes.Itisuptoeachunittocreate
guidelinesforfrequencyofreconciliationperunitifmorestringentthanDFA
guidelines.
Itisimportanttorealizethattheasset/liabilityreconciliationneedstobecompleted
foreachobjectcodepostedtoanaccount,nottheaccountbalanceidentifiedasthe
cashoffsetobjectcodebalance.Also,ifareconciliationiscompletedatthe
consolidatedlevel,thesubaccountsorsubobjectsmaybeincorrectifnotincluded
aspartofthereconciliationprocess.
Adjustmentsorerrorsshouldbecorrectedassoonasdiscovered,usuallytheperiod
aftertheoriginalentrywasposted.Thenaturalclassificationforassetsisadebit
balance(withtheexceptionofacontraasset,e.g.,allowancefordoubtfulaccounts
oraccumulateddepreciation)andforliabilitiesitisacreditbalance.Therefore,the
wrongnaturalbalanceforassets(withtheexceptionofacontraasset)isacredit
balance,andforliabilitiesitisadebitbalance.Itisimportanttopayparticular
attentiontobalancesthatdonothavethecorrectnaturalclassification.

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Itisgoodinternalcontrolpracticetohaveevidencethatthereconciliationshave
beenreviewed.Itisuptoeachunittocreateguidelinesfortheapproverand
evidenceofreview.
Whatisareconciliation?
Thetermreconciliationfrequentlyreferstoaprocessofcomparingtwosystems.
Forexample,comparingthegeneralledgerwithanothersource,typicallya
subsidiaryledger,statement,orothersourcedocument(e.g.,BursarSystemor
UVISfortheVetSchool).
Wewillbeusingthetermreconciliationloosely,becausenotallassetandliability
objectcodeswilltietoasecondsystem.Itcanalsorefertoanyofthefollowing:
Provingordocumentingthatanassetorliabilityobjectcodebalanceiscorrect.
Ajustificationoftheendingbalance,itisnotalistingofthetransactions
posted.
Forexample,anaccountsreceivabletravelobjectcodereconciliationshould
containalistoftravelerswhohavebeenissuedatraveladvanceandthe
amountduethattiestotheobjectcodeendingbalance.
Anobjectcodeshouldbeconsideredreconciledwhendifferenceshavebeen
investigated,propertreatmentdetermined,andcorrectingedocshavebeenposted
tothegeneralledgerorcorrectionsmadetothesubledger.
Top
Whatshouldbeincludedonareconciliation?
Theaccount,accountname,objectcode,date,andthenameofperson
completingthereconciliation.Notethatthesubaccountandsubobjectcodes
mayalsobeincludedinthereconciliation.
Theapprover'ssignatureanddate.
Thegeneralledger(GL)balanceand,ifreconcilingtoasubsidiaryledgeror
anothersource,theendingbalanceofthesourcedocument.
Thereconciliationshouldbeginbycomparingtheendingbalanceinthegeneral
ledgerwiththeendingbalanceinthesubledgerorsupportingdetailsanditshould
finishwithmatchingadjustedbalanceforeach.
Refertosamplereconciliationtemplateandaccountsreceivabletravelreconciliation
example(XLSX,33KB).
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Top
Generalguidelines
Thefollowingareguidelinesforcompletingareconciliation.Ifyouneedatemplate
forcompletingyourreconciliation,seeourreconciliationtemplate(XLSX,33KB).
Assetobjectcodesshouldhaveadebitbalanceunlesstheyarefor
acontraasset.
Liabilityobjectcodesshouldhaveacreditbalance.
DFAwillmaintainalistofassetandliabilityobjectcodes(XLSX,16KB)that
referencestheresponsibleparties,frequencyandtypeofreconciliation.
Unitsareresponsibleforreconcilingthefollowing:
Assets:pettycash,cashdrawers,accountsreceivable(withthe
exceptionofsponsoredandstudentaccountsreceivable),inventories,
prepaidexpenses,allowancesfordoubtfulaccounts,andaccruals.
Liabilities:accountspayable,accruedexpenses,deferred
revenues/expenses,andsalestax.
Unitsdonotneedtoreconcilethegeneratedoffsetobjectcodes1000
and2900.
Centralofficesareresponsibleforreconcilingthefollowing:
Assets:cashoffset(1000),cashinbank,investments,sponsored&
studentaccounts,andcontribution(pledge)receivable,capitalassets,
fundsheldintrust,andinternalloanassets.
Liabilities:accountspayableoffset(2900),obligationsundersplit
agreements,deferredbenefits,fundsheldintrustforothers,bondsand
notespayable,governmentadvances,andinternalloanliabilities.
Objectcodeswithayeartodatebalanceofzerodonotrequirea
reconciliation.
Ifexternalauditors(PricewaterhouseCoopers),theUniversityAuditOffice,or
DFArequestsacopyofareconciliation,theexpectationisthatthe
reconciliation:
Willbeavailablewithintwobusinessdays.
Shouldalreadyhavebeencompleted,notdonesolelybecauseofthe
request.
Evidenceofreviewbywhomandwhen.
Top
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Whatisthebestwaytoreviewaccountswithasset/liabilityobjectcode
balances?
KFSDashboardUniversityFiscalYearEndAssetandLiability
Activity
Thisviewprovideshighlevelreviewofaccountswithassetandliability
balance.ThereportcontainsBeginningBalanceActuals,YTDActualsandTo
DateActuals.TIP:SelectOrgTypethenParentOrg.YoucanalsolinktoYTD
transactions.
KFSDashboardFinancialActivity
BalancebyOrgAccountsTrialBalance(5threport)includesalistof
objectcodesandreports:BeginningBalance,YTDActivity,andYTDBalance.
ObjectcontainsYTDActualsbyobjectcodes.Youcanselectobjectcodes
1xxxthrough2xxx.
Transactionusetoresearchdetailedtransactions
KFSApplication:AccesstheGeneralLedgerBalancescreenontheKFS
MainMenutab,underBalanceInquiries.
Youareonlyabletoreviewoneaccountatatime.However,youcanusethis
verypowerfultooltodrilldowntoreviewactivity.
HelpfulreconciliationTIPS:
Clickonanamountinanygivenperiod.Theapplicationwillreturnalist
ofedocsthatmakeupthemonthlytotal.Clickonthedocument
numbertoreviewtheedoc.
Fortheamountviewoption,selectaccumulate.Thisfeatureaddsthe
beginningofperiodbalance(BB)andthecurrentyearactivitytoprovide
thetodatebalance.Ifmonthlyischecked,remembertoaddthe
BeginningBalanceLineAmountandtheAccountLineAnnualBalance
Amounttogetthetodatebalance.
Negativeamountsreducethebalance,positiveamountsincreasethe
balance.
Anegativetodatebalanceisthewrongnaturalbalance.Generally,
assets,liability,andrevenueandexpensesshouldhavepositivetodate
balances.
Whencorrectinganobjectcodeerror,savetheedocbeforesubmittingitto
makesuretheedocishavingthedesiredeffectonthebalance.Thereare
twooptionsavailable:
Showgeneralledgerpendingentriestoreviewdebit/creditentries.
ClickonthesearchicontodownloadresultstoExceliftheedocis
large.
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GototheGeneralLedgerBalanceinquiryonthemainmenu.Enter
thechart,account,andobjectcode.SelectIncludePendingLedger
EntryAll.Reviewthetodatebalance,inthemonthlybuckets.

Clickimagetoenlarge

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