Cash Management 1.

Objective: The objective of this paper is to describe the bank reconciliation process as per the functionality available in Oracle cash management and to recommend steps, which can be taken to increase the level of automation of the process. 2. Background: AUB records its receipts and payments as follows A. Payments: All payments are recorded in Oracle A!. B. Recei ts: ". $. ). All cash, che#ue receipts and some transfers are recorded in the cashiering system. %ome transfers, primarily relating to AU& are sometimes recorded directly in '( %tudent fees directly recorded deposited in the bank account are recorded in Banner.

C. !nter"bank #rans$ers: All inter*bank transfers are recorded directly in Oracle '(. +o receipts affecting the ,bank- accounting distributions originate from Oracle A.. All transactions recorded in the first instance directly in the cashiering system or transferred to Oracle '( in summary and not in detail. %. Bank &tatements: Bank statements are currently received from &%B/ on a daily basis in an electronic format via the &e0agon system. a. All payments clearing the bank accounts are recorded in the statements in detail with the appropriate che#ue number and value date. b. All transfers are recorded in the statements in detail with a reference number and a value date. c. All che#ue receipts are recorded in the statements in summary, summari1ed by the clearing area 2to which the che#ue belongs3 and the value date. There is no reference number associated with these deposits 2other than the ,/&4- or ,T.5- or ,+O+.65-3 '. Reconci(ing Bank &tatements Automatica((y Oracle cash management provides functionality to automatically reconcile bank statements with receipts and payments recorded in Oracle payables, receivables and general ledger. Automatic reconciliation is carried out on submission of the ,Auto.econciliation- concurrent program in cash management. On completion of the program, a report called ,Auto.econciliation 60ecution .eport- is banners are

automatically generated, listing all reconciliation errors. All reconciled and unreconciled statement lines can be viewed on line in the ,7iew Bank %tatements- window or in the ,Bank %tatement 8etail- report. 9f the statement contains unreconciled lines, they can be dealt with as follows a. Update the bank statement line 2include missing data that is re#uired for automatic reconciliation3 and rerun the auto reconciliation process, or b. :anually reconcile the statement line. 9t is unlikely that AUB will be able to automatically reconcile "; percent of the bank statement. AUB must however aim to reduce manual reconciliation effort as much as possible. The recommendations included in the subse#uent sections will go a long way in the reducing the manual reconciliation effort. ). Reconci(iation Accounting *ntries A. !ayables Transactions ". <hen payments are created in Oracle payables the following journal entry is created. 8r. !ayables control account /r. Bank clearing account $. <hen the payment is reconciled against a bank statement the following journal entry 8r. Bank clearing account /r. Bank ledger account is created

!lease note that both journal entries are transferred to Oracle '( when the payables transfer to general ledger is carried out. B. 'eneral (edger =ournals There are journal entries created when '( journals are reconciled to bank statement lines. +. Marking a bank statement as Com (ete Once a bank statement has been fully reconciled. The bank statement should be fro1en to prevent any changes to the statement. :arking the statement as ,/omplete- free1es the bank statement. a. b. c. d. e. f. +avigate to the find bank statements window 4uery the statement to be fro1en %elect the statement to be fro1en and choose ,.eviewThe bank statement window will now pop*up. /heck the ,/omplete- check bo0. %ave

,. Bank Reconci(iation and C(osing The closing process should ensure that all reconciliation transactions created are properly transferred to Oracle 'eneral (edger. The following steps should be carried out a. .econcile all bank statements for the month. b. .un a payables transfer to '( after all the bank statements for the month have been reconciled. c. !ost the journals in '(.

d. .un the 'eneral (edger .econciliation report for each bank account to compare the statement balance to the 'eneral (edger ending balance. e. .eview and rectify all errors. f. /lose the !ayables period. g. /lose the '( period. -. Prere.uisites $or AutoReconci(iation A. Payab(es #ransactions: The cash management auto reconciliation program automatically matches bank statement lines to payables transactions, only if the following conditions are met ". The transaction currency is the same as the bank statement currency. $. 5or payment batches 26.g. funds transfer batches, especially relevant once AUB has fully rolled the funds transfer process3, where a payment batch contains more than one payment, the payment batch name matches the statement line ,Transaction +umber- and the match amount is within the tolerance levels 21ero in the case of AUB3. ). 5or detail 2or individual3 payment transaction, the che#ue number should match the statement line ,Transaction +umber- and the match amount is within the tolerance levels 21ero in the case of AUB3. >. 5or stopped or cancelled che#ues, the payment must first be stopped or voided in Oracle A!. B. /enera( 0edger 1ourna(s: The cash management Auto.econciliation program automatically matches bank statement lines to general ledger journals, only if the following conditions are met ". The journal line is posted. $. The journal line accounting fle0field matches the bank account?s cash 2 2O# clearing3 accounting fle0field. This cash account is associated with a bank account in the define banks form in Oracle payables. ). The journal line description matches e0actly the statement line transaction number. 3. Recommendations: To increase the percentage of transactions automatically reconciled by Oracle cash management, it is recommended that the following be implemented. 14. 5ata entry at A6B: a. All receipts regardless of whether they are identifiable or not should be recorded and mapped to the unidentified receipts account 2"$"@;3. The balance on the unidentified receipts should be regularly analy1ed. b. All bank transfers received by AUB should be entered in detail in the cashiering system. The transfer reference number should be included on each record.

c. Transfers and che#ues or cash should not be clubbed into a single summary figure for entry into the cashiering application. d. All che#ues received on a daily basis should be grouped and summari1ed by the clearing area they belong to and a borderau0 created for each clearing area. A borderau0 should not include che#ues belonging to multiple clearing areas. e. The cashiering system should transfer all transactions affecting the bank accounts to Oracle '(, in detail and not in summary. f. 6ach journal line interfaced from the cashiering system to Oracle '( should include the e0act bank reference number in the journal line description. g. .eceipts are recorded in detail in banner with the associated student id 2 the student id is included in the bank statements as the statement line transaction number3 h. Banner should transfer all transactions affecting the bank accounts to Oracle '(, in detail and not in summary. i. 6ach journal line interfaced from the banner to Oracle '( should include the student id in the journal line description. 11. Bank: a. 6nsure that separate bank accounts are created for receipts and payments. b. 6nsure that the bank provides the correct reference number against all transactions 2particularly3 receipt transactions on the bank statements.