6 Bank Reconciliation
Table of
Contents
6.1 Introduction
6.2 Overview
6.3 General Policies
6.3.1 Relationship with bank
6.3.2 Daily returns by Main Designated Branch
6.3.3 Cash balance and cash reporting
6.3.4 Monthly reconciliation
6.3.5 Monthly reconciliation statement
6.4 Daily Procedures
6.4.1 Daily procedures flowchart
6.4.2 Daily procedures by bank
6.4.3 Daily procedures by DAO/AG/AGPR
6.5 Monthly Procedures
6.5.1 Monthly procedures flowchart
6.5.2 Monthly procedures by bank
6.5.3 Monthly procedures by DAO/AG/AGPR
6.5.4 Summary of bank reconciliation by Accountant General
6.1 Introduction
6.1.1.1 This chapter covers the accounting policies and procedures applicable to the bank reconciliation.
6.1.1.2 This chapter lays down processes to be followed by both the Bank and the Accountant General in order to perform daily and monthly reconciliation functions.
6.1.1.3 The State Bank of Pakistan and the National Bank of Pakistan, acting as an agent for the State Bank of Pakistan, shall be the Government’s banker, unless otherwise authorised by the Government.
6.1.1.4 This chapter does not address the procedures and internal controls operative within the State or National Bank.
6.1.1.5 For the purpose of this chapter branches of the National Bank are describe as follow:
·
Category
A branch - these are main branches of the NBP and are normally situated in
urban areas
·
Category
B & C branch - these branches are normally situated in rural and remote
areas.
6.1.1.6 The following key internal controls must be observed in the bank reconciliation processes:
·
there shall be a one-to-one relationship between
the DAO/AG/AGPR and a designated branch of either SBP or NBP referred to as the
Main Designated Branch
·
all receipt vouchers shall be sequentially
numbered by the bank
·
the DAO/AG/AGPR shall check the bank scroll with
the payment advice note on a daily basis
·
the DAO shall prepare a monthly reconciliation
statement for receipts and expenditures
·
the Accountant General shall prepare a
consolidated monthly reconciliation statement for each government bank account.
6.2 Overview
The following is a summary of
the relationship between the DAO/AG/AGPR, the bank and the payee/payer.
6.3 General Policies
6.3.1 Relationship with bank
6.3.1.1 For payment purposes, the DAO (and AG/AGPR making payments) shall only deal with one designated branch of either SBP or NBP in their jurisdiction and this shall be deemed as the Main Designated Branch.
6.3.1.2 Where a SBP branch exists, the DAO/AG/AGPR shall deal with that SBP branch. Where a SBP branch is not in the jurisdiction, the DAO/AG/AGPR shall deal with the designated category A branch of the NBP. Where neither an SBP branch nor a category A branch of the NBP exists, the DAO/AG/AGPR shall deal with the designated category B branch of the NBP.
6.3.1.3 Cheques issued by the DAO/AG/AGPR can be presented at any bank branch by payee and shall only be cleared at the Main Designated Branch through the bank clearing system.
6.3.1.4 The Main Designated Branch shall only clear cheques which are listed on an advice note sent by the concerned DAO/AG/AGPR.
6.3.1.5 For receipt purposes, government revenue can be deposited at any branch of SBP or NBP authorised to collect government revenue.
6.3.1.6 The adjustments to government bank accounts shall be performed by the SBP as authorised by the AG/AGPR.
6.3.2 Daily returns by Main Designated Branch
6.3.2.1 The Main Designated Branch shall submit a daily return to the concerned DAO/AG/AGPR in the form prescribed by the Auditor-General. The daily return shall include the following:
·
bank scroll (form 6A)
·
paid cheques
·
receipt vouchers
·
transfer advices.
6.3.2.2 When a receipt voucher is deposited at a bank branch, that branch shall allocate a sequential number to it. Where the bank branch receiving the receipt voucher is not the Main Designated Branch reporting to the DAO/AG/AGPR, that branch shall forward all receipt vouchers to the designated main branch at the end of the day. The Main Designated Branch shall then allocate its own unique sequential number when reporting, along with the bank scroll, to the DAO/AG/AGPR.
6.3.2.3 The Main Designated Branch shall submit a separate daily return for each government bank account and for:
·
expenditure - federal government
·
expenditure - provincial government
·
receipts - federal government
·
receipts - provincial government
·
adjustments between government departments
·
adjustments between different governments.
6.3.2.4 The two main government bank accounts (separate for each government) are:
·
Non-food Account (I) relating to other than food
transactions
·
Food Account (II) relating to food transactions.
6.3.2.5 The Main Designated Branch shall report on a monthly basis to the relevant DAO/AG/AGPR through the Monthly Main Designated Branch Statement (MMDBS).
6.3.3 Cash balance and cash reporting
6.3.3.1 The head office of SBP shall report cash balances of each government bank account on a daily basis and in the form prescribed by the Auditor-General to the following, as applicable to each government:
·
Ministry of Finance, Islamabad
·
Department of Finance, Punjab
·
Department of Finance, Sindh
·
Department of Finance, N.W.F.P.
·
Department of Finance, Balochistan
·
AGPR, Islamabad
·
AG, Punjab
·
AG, Sindh
·
AG, N.W.F.P.
·
AG, Balochistan.
6.3.4 Monthly reconciliation
6.3.4.1 A monthly reconciliation of bank accounts is a necessary part of financial management and is also an effective measure for detecting and deterring fraud and irregularities.
6.3.4.2 Every DAO shall prepare a monthly reconciliation statement for expenditures and receipts, as set out in direction 6.3.5.1.
6.3.4.3 The respective Accountant General shall prepare a consolidated monthly reconciliation statement for each government bank account, as set out in direction 6.3.5.2.
6.3.5 Monthly reconciliation statement
6.3.5.1 Each DAO will prepare and provide the following monthly reconciliation statement to the Accountant General.
Outline of DAO Monthly Reconciliation
Statement
Expenditure
Total expenditure as per DAO’s
General Ledger X
Less: Unpresented (uncleared) cheques/payments:
Item
1
Item
2
Sub-total X
Add: Payments or transfers in bank statement/
schedule but
not in DAO’s General Ledger:
Item
1
Item
2
Sub-total X
Adjusted total expenditure of
DAO’s General Ledger X
Total expenditure as per MMDBS X
Receipt
Total receipts as per DAO’s
General Ledger Y
Add: Receipts or transfers in bank statement/
schedule but
not in DAO’s General Ledger:
Item
1
Item
2
Sub-total Y
Adjusted total receipts of DAO’s
General Ledger Y
Total receipts as per MMDBS Y
6.3.5.2 The Accountant General (AG and AGPR) will prepare a consolidated monthly reconciliation in the following format for each of the government’s bank account with the SBP under their jurisdiction.
Outline of AG Monthly
Reconciliation Statement
for account ----------
Cash balance as per Accountant
General X
Add: Unpresented (uncleared) cheque/payments:
Item
1
Item
2
Sub-total X
Receipts
in bank statement but
not in AG
record:
Item
1
Item
2
Sub-total X
Less: Payments in bank statement but
not in AG record:
Item
1
Item
2
Sub-total X
Adjusted cash balance as per
Accountant General X
Cash balance as per bank
statement X
6.4 Daily Procedures
6.4.1 Daily procedures flowchart
6.4.2 Daily procedures by bank
6.4.2.1 The Main Designated Branch (SBP branch or NBP category A branch or NBP category B branch) shall submit a daily bank return to the concerned DAO/AG/AGPR as set out in section 6.3.2.
6.4.2.2 The daily bank return shall include all transactions for the day and shall reach the concerned DAO/AG/AGPR by 10 a.m. next working day.
6.4.2.3 The Main Designated Branch shall obtain proof of delivery of the daily bank return. Where the daily bank return is personally delivered to the office of the DAO/AG/AGPR, the signature and official stamp of the officer shall be obtained. If the Main Designated Branch uses a courier service, proof of postage as per courier service voucher shall be kept.
6.4.2.4 Each category B and C branch of the NBP shall report (internally) the daily balances to the NBP - HQ (Head Quarter).
6.4.2.5 The NBP - HQ shall consolidate the daily balances received from category B and C branches and submit a consolidated report, in the prescribed form, of daily balances to the SBP - HQ.
6.4.2.6 The NBP - HQ shall place such internal checks and controls as necessary to ensure that all category B and C branches have submitted the daily report and shall keep a record of those branches which have not reported. The NBP - HQ shall take follow-up actions to receive daily report from such branches.
6.4.2.7 Each category A branch of the NBP shall report (internally) the daily balances to the designated SBP branch.
6.4.2.8 Each SBP branch shall submit a daily report in the prescribed form, of daily balances (including the daily balances of category A branch) to the SBP - HQ.
6.4.2.9 The SBP - HQ shall consolidate the information received from the NBP - HQ and SBP branches and report the daily cash balances to Accountant General and Finance Department as set out in section 6.3.3.
6.4.2.10 The SBP - HQ shall place such internal checks and controls as necessary to ensure that all SBP branches and the NBP - HQ have submitted the daily report on time and shall keep a record of those SBP branches which have not reported. The SBP - HQ shall take follow-up actions to receive daily report from such branches.
6.4.3 Daily procedures by DAO/AG/AGPR
6.4.3.1 At the end of each day the DAO/AG/AGPR office shall send payment advice notes (as laid down in Chapter 4) to the Main Designated Branch of the bank it deals with.
6.4.3.2 On receiving the daily bank returns from the Main Designated Branch, the delegated officer in the Account Section of the DAO/AG/AGPR shall carry out the following checks:
·
supporting documents detail (i.e. paid cheques,
receipt vouchers, transfer advice) agrees with the bank scroll
·
bank scroll entry agrees with a payment advice
note entry previously sent to the Main Designated Branch of the bank.
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