GL & Budget Reconciliation

This information is intended to provide guidelines for a regular budget reconciliation process. Please review all of the content provided in the sections below.

What is budget reconciliation, and why do we need to do it?

  • Definition: Budget reconciliation is the process of reviewing transactions and supporting documentation, and resolving any discrepancies that are discovered.
  • The process encompasses two different activities or roles:
    • Detailed review of transactions and supporting documentation (department staff)
    • High level budget review and analysis by a person accountable for the budget (budget reviewer).
  • Budget Reconciliation is not the same as ProCard reconciliation or any other transaction verification process required by a specific system or overseeing authority (e.g. a granting agency). Your departmental reconciliation process should cover these requirements as well as the general budget reconciliation guidelines outlined here.
  • Purpose: Regular reconciliation should be done in your department to provide reasonable assurance that transactions are authorized, reasonable, allowable, and correct.

Who should reconcile?

  • All colleges, schools, departments and units should perform regular budget reconciliation for all budget types.
  • (Note: For the purposes of these guidelines, we will use “department” as the standard word for any university organization, whether college, school, department, or unit)
  • Department staff knowledgeable of University and departmental policies, budget restrictions, and reconciliation guidelines should be involved in regular reconciliation of department budgets. This often includes department Administrators and Fiscal Specialists.
  • Ideally, the reconciliation process involves someone who did not initiate, record, or authorize the transactions. Your department process should have separation of duties. This means that no one person has sole control over the lifespan of a transaction.
  • A budget reviewer reviews budget activity for reasonableness and appropriateness. A reviewer is someone:
    • Accountable for the budget
    • Conversant with all rules and regulations applicable to the budget
    • Who does not pose any separation of duties conflicts
  • Special Notes on Sponsored Budgets: The Principal Investigator (PI) is responsible for their grant budgets, unless the PI has delegated authority to another person who has direct knowledge of the needs of the project. See Reconciliation Best Practices for additional guidance.

How often should we reconcile?

When possible reconciliation should be completed monthly, within 45 days of month-end close, but no less frequently than quarterly. For sponsored agreements a final reconciliation should be completed within 45 days of the budget end date. Keep in mind that special situations such as biennium close may take longer to finish than “regular” months.

What does Budget Reconciliation Cover?

1) Review transactions

  • Review all departmental transactions. The following examples of reports are useful for reviewing posted transactions:
  • When reviewing transaction amounts, keep in mind that sales tax may not have been charged by the vendor. The transaction amount posted to UW systems will typically include sales or use tax, and may therefore differ from the vendor charge amount.
  • Look for any suspicious transactions or abrupt changes from an established pattern or trend.

2) Match transactions with supporting documentation

  • Validate that supporting documentation (electronic or paper), including source documents, matches expense or revenue transactions on the official university record (e.g. MyFD Transaction Summary or Reconciliation Report, Enterprise Data Warehouse (EDW) Reports, BAR).
  • A transaction may be reconciled without physically matching supporting documentation if:
    • The person accountable for the budget has knowledge of the nature of the transaction, is able to explain what it is for, and the transaction originated from a UW source. The source document needs to be reproducible and available according to the record retention schedule. Examples may include: regular salary charges originating in UW payroll system, and internal recharges (e.g ISDs, CTIs).
    • It is less than $75 and your department has other compensating controls in place regarding expenditures. The strength of your department’s documented internal controls over purchasing and receiving may affect the depth of your reconciling activity, and departments may choose to be more restrictive with their threshold of review. For receipt waiver and reconciliation guidelines, see the ProCard Website.
    • Special Note on Federally-Sponsored Budgets: Federal auditors may ask you to provide supporting documentation for these transactions. If sufficient documentation is not available, your department may be responsible for reimbursing for these charges.

3) Manage supporting documentation as specified by Records Management:

4) Investigate and resolve any discrepancies or concerns

5) High level review and analysis of budget activity by someone accountable for the budget

When Is Budget Reconciliation Considered Complete?

  • Transactions have been reviewed and matched as described above,
  • Errors have been detected and resolved, and
  • Any corrections initiated have been verified as complete.

 

Final Words and Recommendations

Remember that department records should provide evidence that the budget reconciliation has been completed and reviewed.

  • We recommend that departments document their reconciliation policies and procedures, addressing any areas that are not in accordance with the reconciliation guidelines provided here. Documented departmental reconciliation policies and procedures should be kept current.
  • If your department does not maintain its own budget reconciliation policy, auditors may use these Reconciliation Guidelines and/or department internal controls to assess your reconciliation practices as part of an audit.
  • Examples: Follow this link to see examples of documented departmental reconciliation procedures.

 

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