Finding Text
Reconciliation of Cash
Year ended June 30, 2023
Conditions and criteria: At the commencement of the audit a difference existed between the general fund checking bank statement reconciliation and general ledger cash balance in the amount of approximately $12.3 million, while the tax account and payroll checking account did not reconcile by $8.9 million and $1.4 million, respectively. The majority of the differences were interrelated and consisted of transfers from the general fund checking to the tax and payroll checking accounts that were not reflected in the general ledger. Other differences were related to PSERS payments and accounts payable. Adjustments to correct these differences were made during the audit resulting in an unreconciled difference of approximately $258,000.
Cause and Effect: Although bank reconciliations were being prepared on a monthly basis, such reconciliations of the general fund were not agreed to the District’s general fund cash balances within the general ledger software. The effect of not comparing bank reconciliations against the District’s general ledger balance is that reporting errors in posting cash receipts and cash disbursements can occur and not be detected or resolved in a timely manner.
Auditors’ Recommendation: We recommend that the District prepare general fund bank reconciliations soon after the end of each month. As part of the reconciliation process the District’s general ledger cash balances should be compared against the bank reconciliation, with any differences being immediately investigated. Once complete, the bank reconciliation should be reviewed by someone independent of the preparer.
School District’s response: The Business Manager has established a reconciliation schedule and began changing the process of the reconciliation of cash. This has been a work in progress with staff turnover and limited business office staff. The new timeline requires reconciliations to be completed by the end of the following month, and we have additional staff members reviewing them within the limitations of the Financial Software and its double entry process.