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Cost center reconciliation and approval demonstrates good stewardship and accountability of financial resources. It is a comparison of the department’s monthly financial transactions in PeopleSoft to supporting documentation, which is retained by the department. Reconciliation is essential for an effective internal control environment to ensure:
UT Dallas Business Practice
Reconciliation, review and approval of cost center financial records should be performed on a monthly basis by knowledgeable personnel. The reconciliation, review and approval should occur within 30 days of month-end close. Departments are notified by email of each month-end close.
Cost center owners should assign the reconciliation process to someone in their department who is knowledgeable of the financial activity to ensure that an effective reconciliation occurs. In addition, cost center owners should either perform the monthly approval of cost center reconciliations or delegate that process to someone other than the reconciler and to someone who has knowledge of the financial activity. An effective process will ensure inaccuracies or incomplete financial information identified during the reconciliation or verification process are investigated and corrected in a timely manner. Cost center owners should also ensure that a good segregation of duties and other internal controls exist in their departments. The Account Reconciliation Application is available through the Galaxy portal, under Gemini Financials > Main Menu > General Ledger Custom > Account Reconciliation.
Although departments may review their ongoing cost center activity throughout the month, a formal reconciliation of the accounting records is required monthly in the University’s accounting system. A cost center reconciliation consists of:
Review and Approval
The review and approval of cost centers is a broader and less detailed process than the steps involved in the reconciliation. Specifically, the approver should consider the following questions:
When the approver completes the review process and believes all transactions are logged, accurate, appropriate and authorized, then he/she will check the “approved” check box indicating that he or she has reviewed and approved the reconciliation and notes regarding the reconciling items for the cost center’s monthly activity.
Supporting documentation for transactions recorded to the cost center and used for reconciliation purposes should be retained. Supporting documentation should be kept in accordance with record retention guidelines. More information about records retention is available from the Office of Legal Affairs.
Comparison: The process of examining financial information for similarities or differences.
Reconciliation: The process of comparing information that exists in two systems or locations, analyzing differences and making corrections so that the information is accurate, complete and consistent in both systems or locations. For departmental purposes, the process includes comparing the supporting documentation retained by the department to the information recorded in the Account Reconciliation Application.
Review: The process of examining financial information for accuracy and reasonableness. If determined to appear inaccurate or unreasonable, further investigation is warranted.
Verification: The process of examining information contained in an account, report or system to ensure that it is accurate and complete.
Internal controls: The practices performed by departments to provide management with reasonable assurance that assets are safeguarded and transactions are authorized, valid, complete and accurate.
Segregation of duties: The concept of having more than one person required to complete a task. To create a good segregation of duties, the individual steps of a task that should be separated between multiple employees include authorization, custody, record keeping and reconciliation.