Bank error of contribution check at month end, best approach for reconciliation

[sgbani]

Dear All,

I am please requesting some guidance on an error I have not really had before, at least not in this direction.

A donor's contribution was done via check in the amount of $100. It was deposited late in the month. The bank, however, credited the check as $400; meaning we were given an extra $300 due to a bank error of not interpreting the check amount properly.
By the time this issue was detected (as it was at the end of the month), the bank statement at month-end already was finalized and statement was produced with month-end balance.
While we are working towards communicating with the donor and bank to rectify the situation, I am not sure how best to approach reconciliation on the fund accounting side.
In a situation where we are shorted, this would be an easy fix, but now it is the opposite way, more money received than expected.
If we process the contribution as intended, the posted contributions for the month do not match the total deposits, but the records are accurate as intended as the bank will have to fix the error. Therefore, the contribution data is correct as the donor intended.
If we alter the contribution entry to match the bank statement's entry, then we have to go back and rectify the contribution later on. While that is doable, it is misleading on all report data as a result of such a posting. I prefer to have the contribution entry match the proper and correct amount, even though it does not match what the bank did.

How should I handle the fund accounting because the bank statement says we have $300 more at the end of the month, and the posted contributions do not account for that?
Do I do a simple error transaction entry, and then an equal / opposite transaction when it is fixed?
It is not really income since it will be resolved, so do I enter the transaction as a bank error credit to a temp liability / pass-thru (aka in/out) account until resolved?
Some other approach I have not though of?

Thank you,
sgbani

[NeilZ]

Dear All,

I am please requesting some guidance on an error I have not really had before, at least not in this direction.

A donor's contribution was done via check in the amount of $100. It was deposited late in the month. The bank, however, credited the check as $400; meaning we were given an extra $300 due to a bank error of not interpreting the check amount properly.
By the time this issue was detected (as it was at the end of the month), the bank statement at month-end already was finalized and statement was produced with month-end balance.
While we are working towards communicating with the donor and bank to rectify the situation, I am not sure how best to approach reconciliation on the fund accounting side.
In a situation where we are shorted, this would be an easy fix, but now it is the opposite way, more money received than expected.
If we process the contribution as intended, the posted contributions for the month do not match the total deposits, but the records are accurate as intended as the bank will have to fix the error. Therefore, the contribution data is correct as the donor intended.
If we alter the contribution entry to match the bank statement's entry, then we have to go back and rectify the contribution later on. While that is doable, it is misleading on all report data as a result of such a posting. I prefer to have the contribution entry match the proper and correct amount, even though it does not match what the bank did.

How should I handle the fund accounting because the bank statement says we have $300 more at the end of the month, and the posted contributions do not account for that?
Do I do a simple error transaction entry, and then an equal / opposite transaction when it is fixed?
It is not really income since it will be resolved, so do I enter the transaction as a bank error credit to a temp liability / pass-thru (aka in/out) account until resolved?
Some other approach I have not though of?

Thank you,
sgbani

As a bank error, I suspect it will be fixed and adjusted on the next reconciliation. What I would do is just go with the intended contribution of $100. Yes on the reconciliation for this month you will be off by $300, but I would just make a note on the report about the issue. The next bank statement will be adjusted, and you just make another note about the bank's error.

IMHO ... I wouldn't mess up the rest of the system, for what will be a minor reconciliation error.

[sgbani]

Thanks for the response and suggestion, appreciated.