Assets, object codes beginning with 1xxx, are defined as economic resources owned by the university, (e.g. cash, investments, accounts receivable sponsored/travel, inventory, building and equipment). Liabilities, object codes beginning with 2xxx, are defined as debts or obligations of the university (e.g. accounts payable, deferred revenue, bond/debt obligations).
Reconciliations should be completed for all asset and liability object codes, based on the unit's level of activity or business cycle. General guidelines dictate that if activity is posted monthly, the reconciliation is to be completed monthly. Please refer to the list of object codes (XLSX, 16 KB) that recommends the frequency of reconciliation for asset and liability object codes. It is up to each unit to create guidelines for frequency of reconciliation per unit if more stringent than DFS guidelines.
It is important to realize that the asset/liability reconciliation needs to be completed for each object code posted to an account, not the account balance identified as the cash offset object code balance. Also, if a reconciliation is completed at the consolidated level, the sub-accounts or sub-objects may be incorrect if not included as part of the reconciliation process.
Adjustments or errors should be corrected as soon as discovered, usually the period after the original entry was posted. The natural classification for assets is a debit balance (with the exception of a contra asset, e.g., allowance for doubtful accounts or accumulated depreciation) and for liabilities it is a credit balance. Therefore, the wrong natural balance for assets (with the exception of a contra asset) is a credit balance, and for liabilities it is a debit balance. It is important to pay particular attention to balances that do not have the correct natural classification.
It is good internal control practice to have evidence that the reconciliations have been reviewed. It is up to each unit to create guidelines for the approver and evidence of review.
The term reconciliation frequently refers to a process of comparing two systems. For example, comparing the general ledger with another source, typically a subsidiary ledger, statement, or other source document (e.g., Bursar System or UVIS for the Vet School).
We will be using the term reconciliation loosely, because not all asset and liability object codes will tie to a second system.It can also refer to any of the following:
An object code should be considered reconciled when differences have been investigated, proper treatment determined, and correcting e-docs have been posted to the general ledger or corrections made to the sub-ledger.
The reconciliation should begin by comparing the ending balance in the general ledger with the ending balance in the sub-ledger or supporting details and it should finish with matching adjusted balance for each.
The following are guidelines for completing a reconciliation. If you need a template for completing your reconciliation, see our reconciliation template (XLSX, 33 KB).
Units do not need to reconcile the generated offset object codes 1000 and 2900.
Click image to enlarge