Automated Check Reconciliation

Helpful Resources

Learn how to reconcile outstanding corporate drafts and complete other tasks related to account adjustments/reversals.

Overview

“Auto Check Recon” is an optional service that will eliminate the need to manually reconcile checks on your CU*BASE check register against your bank statement.

In a nutshell, your credit union's corporate checks are printed with your credit union's routing & transit code in the MICR line, as opposed to a local bank or corporate credit union. In other words, the credit union cuts checks on itself.

Contact Client Services if you are interested in taking advantage of this service. Special programming and configuration is required, and depending on your situation and your check processor, there may be a setup fee. A client service representative will assist you in ordering new check stock and getting started.

The Accounting Process

The accounting process uses a separate reconciliation liability G/L account, called “Authorized Corporate Checks Payable.” This account is used when configuring bank IDs on CU*BASE. When a corporate check is cleared, this G/L is credited. Then when the corporate check clears (through normal member share draft processing), this reconciliation account is debited and your bank (or draft settlement) asset G/L is credited automatically.

With Auto Check Recon, your accounting team can work more efficiently and avoid the time-consuming task of manually reconciling checks from a bank statement each month. More importantly, since drafts clear on a daily basis, your credit union will have a much clearer and more up-to-date picture of your liquidity on a daily basis.

Working the Corporate Draft Reconciliation Report

Each day as drafts are presented, the Corporate Draft Reconciliation Report will be produced (see the sample below). Any checks that could not be reconciled will be marked with an error message and the amount included in the “Not reconciled” totals at the bottom. The report will be sorted by MICR line/account number and then by check number.

SEE ALSO: Returning Corporate Checks

Errors you might encounter on this report:

BANK ACCOUNT# IS INVALID	If no valid bank ID is found, you will need to determine the correct check number for the item, and use the CU Bank/Check Reconciliation feature on to manually mark the check as cleared. Next, use the Create/Post Journal Entries feature on to post a journal entry that moves the funds from the corporate check reconciliation account to the bank G/L.
AMT DOES NOT = CHECK FILE	The amount on the check being presented does not match the amount for that same check number in your check register. This could be either because the check is being cleared for the wrong amount, or the item actually represents a different check number. First contact your check processor to obtain a copy of the check so that you can determine why the error occurred. If the check number is wrong and the amount actually matches a different check, simply use the CU Bank/Check Reconciliation feature to manually mark the correct check as cleared. As long as there is a valid Bank ID shown on the item, the money has already been moved from the reconciliation account to the bank asset G/L, so there is no need for a manual journal entry. If the amount is wrong (such as due to a keying error on the part of the check processor), your check processor will advise you as to whether or not an adjustment will be made with the Fed to correct the amount. If an adjustment will be made, manually mark the check as cleared, then post a journal entry to move the amount from the corporate reconciliation account to the bank. The check processor will take care of making the adjustment between the Fed and the bank. If no adjustment will be made (such as for a error of only a few pennies), post a journal entry to expense the amount. If you wish, you may also manually update the detail entry in your check register (using Update CU Check History to make it match the actual amount that cleared. For an accounts payable check, you may or may not want to also update vendor history (generally not, since you did actually issue a check to the vendor for the amount owed).
CHECK# NOT FOUND	The check number being presented was not found in your check register. This might simply be because of a missing digit on a torn or damaged check, a keying error, etc. In this case, locate the correct check number and manually mark the check as cleared using the CU Bank/Check Reconciliation feature. As long as there is a valid Bank ID shown on the item, the money has already been moved from the reconciliation account to the bank G/L, so there is no need for a manual journal entry.
STOP PAYMENT REQUESTED	The check was marked as “stop pay” in your check register. In this case, the check must be manually returned according to your normal procedures. SEE ALSO: Returning a Corporate Check Assuming a reversing entry was posted when the check was originally marked as stop pay, no additional entry should be needed.
ALREADY RECONCILED	The check was already marked as Cleared in your check register. In order to determine the correct steps to take, you will need to obtain a copy of the check from your check processor.
VOIDED - NO REVERSAL	The check was already marked as Spoiled in your check register. Some research may be required to determine the reason for the error and the appropriate action to take.
VOIDED - REVERSAL	The check was already marked as Void in your check register. In many cases, this happens because the void was accidentally placed on a different check of the same amount, and you will simply need to use CU Bank/Check Reconciliation to manually mark both checks correctly.

Report Sample

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Returning a Corporate Check

Contact Item Processing to return a corporate draft.

“Behind the Scenes” Workflow

Following is a more technical explanation of the workflow that occurs once a credit union is set up for auto check reconciliation. (This explanation was designed primarily to assist CU*BASE Client Service and Programming representatives).

Checks are presented to the credit union via the draft transmission. At the time of the receive, the transmission file is translated into posting files. Member checks are placed into the file DFTTMP and corporate checks are placed into the file CUCTMP. This is done via a custom program RNDTnxx (where n is the processor ID and xx is the credit union ID). If the transmission is in balance, the temporary files, DFTTMP and CUCTMP, are copied to the posting files DFTTRN and CUCTRN, respectively. The RNDTnxx report should show the breakdown of member checks and corporate checks.
The next step in corporate draft recon. is to “post” the CUCTRN file (Tool #606: CHECKS 5: Post Corp Draft Recon (Opt.)). Instead of the checks clearing on a member account, the presented checks are marked as cleared (C status) in the CHKMS (check master) file, and debit and credit entries are made to the General Ledger. The debit G/L is configured in the Bank ID and the credit G/L is configured in the Share Draft Processor configuration. The report PCKRXX lists the detail of each check and summarizes the amounts by Bank ID. Reconciled and not reconciled amounts are also separated. Both, however, create the G/L entries.

NOTE: Before the process can occur, these configuration steps must be done:

The bank ID must be configured. This includes using the credit union's R&T number, configuring an account number that may or may not include a check digit (obtained from the Check Digit Calculator, configuring a valid G/L account #, and making sure the current draft transmission format can accept the new MICR line (account #) and check # series.

These configurations must be clearly conveyed to the CU*BASE Programming team so they can add logic to the custom RNDTnxx program and create the “posting“ programs.