Hello,
I am reconciling our A/P Bank Clearing account and have come across the following issue in the GL.

On Jan 31/09 (period 10 for us) a cheque was voided through Bank Rec. This created a BR-RC entry in the GL which debited the bank and credited the AP Bank Clearing account. As I understand it, the BR-RC entry should have created an AP-RC entry, which would debit AP Bank Clearing and credit AP Control to re-establish the outstanding payable amount and adjust these two accts in the GL. The credit to AP Bank Clearing from BR and the debit to AP Bank Clearing from AP would offset within the same period thus clearing the AP Bank Clearing account to zero.

In our case, the BR-RC entry was posted as of Jan 31/09, but in both AP and GL (the AP-RC entry)the entry is dated Feb 6/09, period 11. Therefore at the end of Period 10 there is an outstanding amount in AP Bank Clearing, when this account should have cleared to zero in that period.

As the BR-RC Entry should automatically create the AP-RC entry, I don't understand why the dates/periods would have been different. Why did this happen and how can I fix it? Is the process correct that we should be using the Reconcile feature in Bank Rec and then change the status of the cheque to Reversed, which will create a BR-RC entry as above and also an AP reverse cheque entry? In our case we are originating the void cheque entry in Bank REc rather than AP - is this correct or should it originate in AP using the cheque reconciliation function? I don't believe that doing it through AP updates the Bank Rec, but do not know for sure.

On a related note, what is the difference between voiding and reversing a cheque? In which module would each be done and how? I am wondering if part of our problem is that we are changing statuses in Bank Rec to Reversed when we maybe should be doing something different??? We have multiple transactions in our AP Clearing account that have two debits (one is an AP-RC entry, the other is a BR-WD entry) and one offsetting credit which is an AP-CK entry. So as a result our AP Bank Clearing has a large balance when it should be zero. Almost all of these entries are the same (AP-RC, BR-WD and offsetting AP-CK) so it would appear we are doing something wrong, but I'm not sure what.

Appreciate your help,
Thanks,
Tanja

Hi,

When 'reversing' a cheque in BR it sends the entries you indicated to the G/L. However, in order to resetup the invoice to be paid again in AP, the cheque also needs to be reversed in AP. BR cannot do this automatically for you. It must be done by entry staff with the AP Check Reconciliation function. Reversing the cheque in AP sends the entries you indicated to the G/L.

It sounds like there was a 'gap' between when the cheque was reversed in BR and the cheque was reversed in AP.

Voiding a cheque is something that is rarely done, unless a cheque didn't print properly and you responded so to the prompt asking about this after printing. It doesn't create any GL entries, nor does it reset up invoices to be paid again. The check is simply reprinted. This is something that could be done in AP. As it only affects printing, often, a site will enable/turn on the 'Disallow voiding checks in reconcilation' option in the AP Company Profile.

If you are using BR, a cheque should be reversed there so the entries go to the bank and AP/BR Clearing account 'and' in AP so the invoice is reset up for payment and the offsetting entries are made to the AP/BR Clearing account and an entry to the AP Control account.

Another thing I noticed is that BR reverses the cheque back to the original cheque date but GL reverses it as of the date the BR reversal is done. For example, if a cheque was issued in Oct '08 and reversed in May '09, BR removes the item from the outstanding cheque list as of Oct '08 whereas the GL entry is dated May '09. Therefore when trying to reconcile BR back to GL there is a discrepancy in the control account as a result of this timing.

I understand that one way to get around this date issue would be to login to BR with a session date of Oct '08 (as it's the session date that BR sends with GL entry), however that poses issues if the GL for that period has been closed. As the cheque is not technically reversed until May '09 it should still be outstanding up to that point in time and should not reversed through BR back to Oct. The difference in dating of reversal items between BR and GL makes it very difficult to balance between the two ledgers and also makes the outstanding cheque listing inaccurate if BR is reversing a cheque back to a date that is prior to the actual reversal. From an accounting perspective the fact that BR (which is the subledger) is reversing this cheque as of a different date than the GL is a crazy concept - how can these two ledgers possibly ever balance??

I ran into this issue recently.

BR does not give you the option to select the check reversal date. The batch created in the GL comes across with today's date, while the check is reversed in BR as of the original check's issued date. For a check that was issued in one month and reversed in another, the reconciliation for the first month will be off by the amount of that check - unless the user manually corrects the GL batch brought in from BR. The next month, the issue washes itself out.

In AP 8.1B (maybe earlier versions as well) you are able to specify the "As of" date for the reversal. This ability should be included in BR.

We only added the Check Reversal Date in AP81B, in November 2009, and we have not released a new version of BankRec since then. Yes, it would be good to have this feature in BankRec too.

Ok, thanks. Wanted to make sure it made it into next BR release.