Checks from years past

[loish]

I am embarrassed to say that we have several checks from past years that remain unreconciled and never cashed. I am closing out the fiscal year and would like to address this. What do I need to do to get these off the books without disrupting the integrity of the current year's results? Do I click to reconcile them and then add back the amount to our cash? If I void them, which seems cleaner, would that not affect the current year's results by adding line item detail that is not current? I have read through other posts and am not clear on what would be the best solution.

[NeilZ]

I am embarrassed to say that we have several checks from past years that remain unreconciled and never cashed. I am closing out the fiscal year and would like to address this. What do I need to do to get these off the books without disrupting the integrity of the current year's results? Do I click to reconcile them and then add back the amount to our cash? If I void them, which seems cleaner, would that not affect the current year's results by adding line item detail that is not current? I have read through other posts and am not clear on what would be the best solution.

You didn't say what version you're using. If you're using version 12, the system will allow you to 'reopen' any closed months so you can void these checks and not affect this year's numbers.

That said even if you have an earlier version, you void the checks, period. You do not want to 'add back the cash' as that would raise a lot of questions during any audit. In the void transaction, I would add a note explaining why the void was made. If you still have the last month of your previous fiscal year open (usually December in many churches) post the void to that month so it won't affect this year's expenses.

Then when you reconcile, you will clear both the original checks under the CHECKS area, and the VOIDS under the DEPOSITS and other additions area.

[loish]

Thanks Neil. If I were to try and post these voids in prior closed months, wouldn't the changes effect every month following as the cash balance would change, which would result in amended statements?

To further understand, if I void the checks in March, which is the last month in my fiscal year, it will increase my cash balance, but will also affect the line items the void credits, correct? For instance, if it was a mission check I voided from two years ago, because I void it in my current fiscal year it would look like they spent less this year then they actually did. Do you think it reasonable to void all the checks in March so it hits my year-end, and in the financial statements note the total amount of the checks and that this was due to previous year's voided checks?

So sorry I am really trying to wrap my head around the best solution as well as reporting solution!!! Your advice and expertise is GREATLY appreciated!

[NeilZ]

Thanks Neil. If I were to try and post these voids in prior closed months, wouldn't the changes effect every month following as the cash balance would change, which would result in amended statements?

To further understand, if I void the checks in March, which is the last month in my fiscal year, it will increase my cash balance, but will also affect the line items the void credits, correct? For instance, if it was a mission check I voided from two years ago, because I void it in my current fiscal year it would look like they spent less this year then they actually did. Do you think it reasonable to void all the checks in March so it hits my year-end, and in the financial statements note the total amount of the checks and that this was due to previous year's voided checks?

Which is why I, myself will never carry over uncashed checks for more than 6 to 12 months. I leave 18 months open for this very reason.

So sorry I am really trying to wrap my head around the best solution as well as reporting solution!!! Your advice and expertise is GREATLY appreciated!

As far as how you want to handle it, I would check with an accountant who understands Fund Accounting (Cash Basis), they may have a different take on the matter. I always make sure that anything that is done, has an audit trail of somekind, usually entered in the NOTE area of any transaction or VOID so that people can see what is happening.

[loish]

I agree, an audit trail is of the utmost importance. I think my solution will work, again, as long as I void the checks and make a note in the financial statements. But my understanding of how the voids will affect my records is correct?

[NeilZ]

I agree, an audit trail is of the utmost importance. I think my solution will work, again, as long as I void the checks and make a note in the financial statements. But my understanding of how the voids will affect my records is correct?

Unless you post them in the months they were cut, they will affect any expense accounts in this year. Its a given that your checking account will reflect the unspent amounts.

[loish]

Thanks for your help!!

[loish]

Neil,

I did get advice from an accountant and she was able to help! As you know, I was concerned with the integrity of the expense report if I voided the checks and by doing so changed the year-to-date amounts of line items! She suggested I post all of the voided checks to the last month of the year (to avoid amending financial statements) and set up an expense "stale check" line item. So once I posted the voided checks I went in and entered a new transaction to debit the voided line item and credit the new stale check line item. This took the amount out of the various line items and moved it to one account, which is easier to identify as well as leaves a great audit trail. I had several checks (I know, I know!!), and entered each one individually with the description of "void-check#) so it is easy to tie everything together. I ran reports before and after and all is well! My cash balance increased as needed, all of my line items remained with the same balances, and I have a "stale check" expense line item with the total amount of the checks, and I reconciled!!

Again, thanks so much for your thoughtfulness in walking through this with me! Lesson well learned!!!