BANK RECONCILIATION STATEMENTS

Reconciling Bank Statements Automatically

You can use the Auto Reconciliation program to automatically reconcile any bank statement in Oracle Cash Management. There are three versions of the program:

• Auto Reconciliation: Use this program to reconcile any bank statement that has already been entered in Cash Management. 

• Bank Statement Import: Use this program to import an electronic bank statement after loading the bank statement file into the Bank Statement Open Interface tables.

• Bank Statement Import and Auto Reconciliation: Use this program to import and reconcile a bank statement in the same run.

You can run these programs from the Submit Request window, the Reconcile Bank Statements window, or the Bank Statement Interface window. You can also import and automatically reconcile a bank statement from the Bank Statement Loader program, by using the option of Load, Import and Auto Reconciliation.

After you run the program, you can review the Auto Reconciliation Execution Report to identify any reconciliation errors that need to be corrected. This report is produced automatically, or you can run it whenever needed. You can also review reconciliation errors online. 

After you automatically reconcile a bank statement and correct any reconciliation errors, you can run the Bank Statement Detail Report or use the View Bank Statements window to review reconciled and unreconciled statement lines. If lines remained unreconciled, you can:

• Update the bank statement and rerun the Auto Reconciliation program.

• Reconcile the statement lines manually.

Once you have reviewed your reconciliation results, you can transfer the accounting entries to your general ledger from Oracle Payables and Oracle Receivables. If you use Oracle General Ledger, you can reconcile you General Ledger cash account balance to your bank account balance by running the GL Reconciliation Report.

 

Reconciliation Process:
Bank transactions entered directly into GL or generated from Payables, Receivables or Payroll can be reconciled with CM.

1. Loading the Bank Statement:
The transactions can be reconciled manually or automatically by loading an electronic statement directly into CM. Loading is done using the bank statement open interface where a bank statement in the requisite flat file format is uploaded into CM tables. The automatic reconciliation looks for certain match criteria to determine whether a transaction and a bank statement line are one and the same.

2. Reconciling Journal Entries:
The journal entries entered directly in GL can be reconciled with the bank statement. The Auto reconciliation program matches a journal line description with the bank statement line transaction number.

3. Reconciling Payments:
Supplier payments entered in Payables can be reconciled to the bank statement lines in CM. The payment status against each check is updated as “Reconciled”.

4. Reconciling Receipts:
Receipts created in Receivables can also be reconciled to the bank statement lines in CM. CM updates the status of the receipts to “Reconciled” and creates appropriate accounting entries for transferring to GL. Payables and Receivables can generate reconciliation accounting entries for cash clearing, bank charges and foreign currency gain or loss.

5. Reconciling other Transactions:
Certain transactions like bank charges, interest credits, specific exchange rate applied against foreign currency transactions, customer receipts returned due to bounces etc, are known only when the bank statement is received. These would not have been initiated from Oracle Applications. CM is the primary point of entry for these transactions.

Importing Bank Statements and Validation:
Use CM’s Reconciliation programs to:
•Validate the information in the bank statement open interface tables
•Import the validated bank statement information
•Perform an automatic reconciliation after the import process completes

The Auto Reconciliation program performs the following validations on loading bank statement information into the bank statement open interface tables:
•Bank statement header validation
•Control total validation
•Statement line validation
•Multicurrency validation

Reconciling Bank Statements Automatically:
Use Auto Reconciliation program to automatically reconcile any bank statement in Oracle CM. There are three versions:
1. Auto Reconciliation: Use this program to reconcile any bank statement that has already been entered in CM.
2. Bank Statement Import: Use this program to import an electronic bank statement after loading the bank file with a SQL*Loader script.
3. Bank Statement Import and Auto Reconciliation: Use this program to import and reconcile a bank statement in the same run. After the program has been run, review the Auto Reconciliation Execution Report to identify any reconciliation errors that need to be corrected and re-run the program again if corrections are done.

Introduction

The procedures for performing period-end processing in Oracle Cash Management Release 11i.

Business Requirements

Oracle Cash Management is an enterprise cash management solution that helps you effectively manage and control the cash cycle. It provides comprehensive bank reconciliation and flexible cash forecasting.
The Bank Reconciliation process enables the verification of entries on the Bank Statement by reconciling that information with system transactions in Oracle Payables, Oracle Receivables and Oracle General Ledger.
During the Bank Reconciliation process miscellaneous transactions can be created for bank-originated entries, such as bank charges and interest.
Cash forecasting is a planning tool that helps anticipate the flow of cash in and out of the enterprise, allowing the projection of cash needs and evaluation of the company's liquidity position.

Steps

Procedures

The following steps are taken in performing period-end processing for Oracle Cash Management:

Load Bank Statements

Detailed information from each bank statement, including bank account information, deposits received by the bank, and checks cleared needs to be entered to Cash Management. Bank statements can be either manual entered or loaded electronicly from information received directly from your bank.
For organizations with high transaction volumes Bank Statements should be loaded and reconciled on a daily basis.
Refer to: Entering Bank Statements Manually and Loading Bank Statement Open Interface

Reconcile Bank Statements

Once detailed bank statement information has been entered into Cash Management, the information must be reconciled with the accounting transactions.
Cash Management provides two methods to undertake reconciliations:

• Automatic - Bank statement details are automatically matched and reconciled with accounting transactions. This method is ideally suited for bank accounts which have high volumes of transactions.
• Refer to: Reconciling Bank Statements Automatically
• Manual - This method requires a manual match of bank statement details with accounting transactions. The method is ideally suited to reconciling bank accounts which have a small volume of monthly transactions. The manual reconciliation method can also be used to reconcile any bank statement details which couldn't be reconciled automatically.
• Refer to: Reconciling Bank Statements Manually

Create Miscellaneous Transactions

During the reconciliation process miscellaneous transactions for bank originated entries, such as bank charges and errors can be created. Oracle Payables payments or Oracle Receivables receipts can also be manually created.
Note: The automatic reconciliation process can be set up to create miscellaneous transactions automatically.
Attention: If you create transactions during the reconciliation process you will need to re-run your GL posting routine from Oracle Receivables to ensure all information is transferred to the General Ledger

Review Auto Reconciliation Execution Report

Once the reconciliation process has been completed, reviewing the reconciliation results is recommended.
This report shows import and reconciliation errors that occurred when running the Auto Reconciliation program. Cash Management automatically produces this report during the automatic reconciliation process. You may also request it as needed from the Submit Request window.
This report includes either statement import errors, which prevented the automatic loading of your bank statement, or your reconciliation exceptions found during the automatic reconciliation process.

Resolve Exceptions on the Auto Reconciliation Execution Report

Resolve the exceptions on the Auto Reconciliation Execution report by either re-running the import process or by manually reconciling the exceptions.

Run Bank Statement Detail Report

This report shows statement and transaction information for a specific bank account statement, including bank statement header information, statement line detail, and reconciled transaction detail. This report lists any un-reconciled transactions separately with their current status, and the statement totals for each type of transaction, including the amount entered, reconciled, un-reconciled, over-reconciled and under-reconciled, and gives you the option to only select un-reconciled statement lines.

Run Transactions Available for Reconciliation Report

This report shows all transactions available for reconciliation for a specific bank account. It lists detailed transaction information for your Available Receipts, Available Payment, and Available Journal Entries for reconciliation. Detailed information includes the Customer, Supplier or Batch Name, Transaction Date, Payment Method, Transaction Number, Currency, and Amount.
This report only lists void payments if the Show Void Payments option on the Systems Parameters window is checked. It does not list reversed receipts due to user error nor does it list the associated original receipts that were not reconciled. This report groups transactions by status so that void or reversed transactions are separate from regular transactions.

Resolve Un-reconciled Statement Lines

Resolve the un-reconciled statement lines by manually reconciling the Statement lines to the available transactions.

Run the GL Reconciliation Report

Use this report to reconcile the General Ledger cash account to a bank statement balance.
This report lists a balance and an adjusted balance for the bank statement. It also lists a separate adjustment amount for un-reconciled receipts, payments, and journal entries, as well as bank errors.
Warning: To ensure that this report is accurate, you must first perform these tasks:

• Reconcile all statements in Cash Management.
• Transfer journal entry transactions from Oracle Payables and Oracle Receivables to your General Ledger.
• Post journals in General Ledger.

Run the Account Analysis Report for the General Ledger Cash Account

Run the Account Analysis Report from General Ledger for the General Ledger Cash Account Flex field and sort by Source.
Ensure that only bank account related transactions have been posted to this account by checking the Source of the transactions. Valid sources will include Payables and Receivables. Transactions entered directly via General Ledger will have a Source of Manual or possibly Spreadsheet if ADI is used.

Review the Account Analysis Report

Review the Account Analysis Report to ensure that only bank account related transactions have been posted to the General Ledger Cash Account by checking the Source of the transactions. Valid sources will include Payables and Receivables. Transactions entered directly via General Ledger will have a Source of Manual or possibly Spreadsheet if ADI is used.

Correct any Invalid Entries to the General Ledger Cash Account (Optional)

Reverse or amend any journals incorrectly posted to the General Ledger Cash Account, which were highlighted during the review of the Account Analysis Report.
To prevent invalid journal entries to the General Ledger Cash Account it should be protected by enabling security rules in Oracle Financials.

Perform the Bank Reconciliation

Use these reports to reconcile the General Ledger cash account period-end balance to the Bank Statement period-end balance.