Tales From Tech 2 - Issue: 11

In today's edition, I want to talk about bank reconciliation. I went back through all of the suggestions I've received and I didn't see any that suggested this subject and so, to keep with tradition, I'll just take another Fabulous, Limited Edition, PowerChurch Plus Mug home with me.

Whoa! Stop the presses! After deciding on the subject and almost finishing this newsletter, I got a suggestion from Karl at Grace Lutheran Church in Elyria, Ohio and he suggested I talk about bank reconciliation. So, I'm very happy to say that we have a new winner in our "Give Tech 2 a Suggestion for an Upcoming Newsletter and if Your Suggestion is Used You'll Win a Fabulous, Limited Edition, PowerChurch Plus Mug" contest. (By the way, if you don't know about the contest, take a look at Tales From Tech 2, Volume 4.5. Instructions on how to access prior issues are at the very end of this newsletter.)

Anyway, thinking about money, bank accounts and other things of value reminded me of that old saying: People in glass houses shouldn't throw stones when they're trying to count their chickens.

BANK RECONCILIATION - IT'S NOT JUST FOR FEUDING BANKS ANYMORE

Before we begin, let me say that bank reconciliation is a function in the Fund Accounting section of the Accounting module. If you aren't using Fund Accounting, you're certainly welcome to continue reading this newsletter for its medicinal value, but these first sections won't really apply to you.

Anyway, let's start with a quick introduction to what bank reconciliation is all about in the first place. In simplest terms, it allows you to verify that the balance of the bank account in PowerChurch Plus matches what the bank says you have.

HOW IS THIS FEAT ACCOMPLISHED?

Bank reconciliation is basically a 2-step process (unlike the waltz). The first step is to mark the items that have cleared the bank as reconciled on the Check Register. The second step would be to bring up the "Reconcile Bank Accounts" screen to find out if what you have in the program matches the bank. These 2 steps are described in detail below. (Please note, these instructions assume that you have already set up all of your Year Start Balances in Fund Accounting and that you have posted your entries in Fund Accounting.)

The first step in reconciling is to actually take the bank statement and use it to mark the items that have cleared. The Check Register lists all of the Checks (Credits) and Deposits (Debits) that have been posted to your bank account. In the Check Register, you have the ability to mark these items as reconciled (meaning that they've cleared the bank) or unreconciled (which means that they haven't). To do this, simply bring up the Check Register by going to the Fund Accounting menu and then choosing "Maintain Check Register." On the screen that comes up, put in the major account number, pick a sort option and choose the items you want to include (I'd try the "Unreconciled" option, myself) and then click on the OK button. Then, just go down the list and change the Y/N flag to Y on any items that have cleared the bank since the last time you ran the Check Register. You can use either the Space Bar or the Enter key to toggle the Y/N column to indicate whether the item has cleared. Just be careful that you don't fall asleep with your finger on the Space Bar or the Enter key because you might end up toggling every record in the Check Register! (Please note that if you bring up only the unreconciled entries, toggling the N to a Y will actually cause the entry to disappear from the list. Don't let this scare you. This is what's supposed to happen.)

The second step in this process is to actually bring up the "Reconcile Bank Accounts" screen. To do this, simply click on the "Reconcile Bank Accounts" option under the Fund Accounting menu. When you choose this option, the program will first ask you for the major account number for the asset you want to reconcile. This is the 4 digit account number that you have defined in the program to be your bank account. The next line asks for the balance that the bank lists on your bank statement. Once you type in that number and click on the OK button, the program will then display a window with more information on it.

WHAT'S IT ALL MEAN?

The first line on the Reconcile Bank Accounts screen is the amount you typed in on the first window that came up. This is the ending balance from your bank statement.

The next 2 lines are for outstanding (and I don't mean "remarkable") checks and deposits. These are entries that have not been marked as reconciled on the Check Register. (In other words, you haven't indicated on the Check Register that these items have cleared the bank and so, these are the amounts that the bank supposedly doesn't know about, yet.)

The fourth line down is the "Adjusted bank balance" line. This number is calculated by subtracting the outstanding checks and adding the outstanding deposits to the amount the bank says you have. (One way that I often think about this line is that it is the amount the bank would have in it if they knew about all the checks and deposits that they don't know about yet. Or, if you prefer, this is the amount the bank would have in it if they knew about everything.)

The next line is the account balance. This amount is calculated by the program. It is the Year Start Balance (or Balances) of the account plus and minus every single Debit and Credit that has posted to that major account within the program.

The last line is the difference between what the bank would have in it if everything had cleared (line 4) and what has actually been posted inside the program (line 5). If all's well, the difference (line 6) will be 0.00.

WHAT'S THAT AGAIN?

If none of the above made sense, think about it in these terms. The bank says I have some amount of money (line 1) and if they knew about all the things that haven't cleared yet (lines 2 and 3), I would actually have this amount of money (line 4). The amount that I've posted in PowerChurch Plus (not taking into account whether the bank knows about it or not) is this amount of money (line 5). The last line (line 6) shows the difference between lines 4 and 5.

WHEREFORE ART THOU, DIFFERENCE?

Now that we have a better feeling of the what and how, let's talk for a bit about what to do when there is a difference between the bank and what you've entered and posted in PowerChurch Plus.

One of the first things that you might ask yourself is if you were able to reconcile last month. If not, the first thing to look at might be the Year Start Balances that you have put into the program. If you did reconcile last month without any problems, then it's probably not an issue with the Year Start Balances unless they have been changed.

After looking at the Year Start Balances, if needed, the next thing might be to look back at the Check Register. What you need to do is verify that there are no items marked as reconciled that haven't cleared the bank and that there are no items marked unreconciled that have cleared the bank. (Remember how the first time you brought up the Check Register, you may have only looked at the unreconciled transactions? This time you'll probably want to look at "All data" since it could be a transaction incorrectly marked as unreconciled or vice versa.)

If the Year Start Balances are correct and all of the items on the Check Register are correctly marked, then finding the problem might take a little more work and, unfortunately, it could be any number of things causing the difference. Some of the things to look for next would be items that haven't been entered into the program or items that have been entered but not posted. There could have been transactions that affected the checking account but should have affected some other account or vice versa. There might be entries with incorrect amounts. Maybe something was accidentally entered twice.

No matter what the cause, finding the problem might take some digging around in the Cash Flow, Check Register or Selected Transactions reports.

When you find the problem, you can take whatever steps are needed to correct the issue and then you simply run the Reconcile Bank Accounts again to see if you've made things better or worse. (Oh, by the way, if you go in and do any kind of correcting entry, don't forget to go back to the Check Register and mark it as reconciled.)

AND NOW FOR SOMETHING NOT ENTIRELY DIFFERENT

I mentioned in a previous newsletter that I was hoping to get a new newsletter out every week or two, but so many people have called about the following issue that I haven't had the time. (I've just been so busy on the phones.) Although it isn't directly related to bank reconciliation, I wanted to briefly touch on it in hopes of preventing some possible future headaches (mine and yours).

The issue involves the Accounting Month. In Version 7, your current month is displayed at the bottom of the Accounting menu (in Version 6.2, the current month is at the bottom of the screen when you are in the Fund Accounting module). Now if the number displayed there means absolutely nothing to you, then maybe you aren't using Fund Accounting and if you aren't, you can just skip on down to the next section. If you are using Fund Accounting and the number still means nothing to you, then maybe you should whip out the manual and take another look at the section on page 137 (it's page 180 in the Version 6.2 Manual, by the way).

Anyway, the current accounting month is a 4-digit number. The first 2 digits represent the accounting year. The last 2 digits represent the accounting month. Here's an example. If the current month is 9909, that would mean that you were in the 9th month of the 1999 accounting year. If the church is on a calendar year, 9909 would mean the September 1999 accounting month. If the church is on a fiscal calendar, month 09 could be any month.

So, what this means to you is that if you are on a calendar year and you're in January of 2001, the accounting month in the program will read as 0101. What this also means is that if you want to send across transactions to February, you'll put in the month as 0102, NOT 0201. (0201 would be for the first month of 2002, not the second month of 2001.)

AND NOW FOR THE GOOD STUFF...

In my last newsletter I told you that I was going to try to sneak back to the Program Development Office to find out more about the upcoming upgrade to PowerChurch Plus. I've discovered a couple of things that I wanted to pass along.

If you tell anyone, I'll get into serious trouble and so you have to keep this between you and me. Also keep in mind that nothing at this point is written in stone (not that we write on stones anymore, management actually bought us some pens and paper just the other day), so things could change. Please also remember that I don't know when the next upgrade will be available and so calling me and begging me to tell you when it's coming out won't do you any good.

Anyway, after I crawled through the ventilation shaft and lowered myself down into the small, dark room where our Program Development Team works, eats and sleeps, I began quietly sifting through all the papers I could find (being very careful not to wake any of them because they're actually kinda scary when they're awake).

On one of the papers I saw the words "removing the 9 line limit for accounting transactions" and on another paper I'm pretty sure that I saw the words "backing up to ZIP disks." Now I'm no expectant mother (nor a rocket scientist), but I think it's fairly clear what Program Development is thinking about here (and it's not the Colonel's recipe for fried chicken).

As I said before, don't tell anyone because if it gets back to management that I've spilled some beans, I might get the ax (and I'm not talking figuratively).