Monthly Reporting Requirement

Pursuant to §107 of the State Finance Law, the Commissioner of Taxation and Finance is required to publish in the State Register, on or before the last day of each month, a detailed statement of all balance(s) on deposit in any bank account under the administrative control of any state officer or board. This includes, but is not limited to agency revenue collection accounts, cash advance accounts, custodial accounts (e.g. inmate funds, patient accounts, etc.), agency funds, etc.

All agencies are required to periodically review the Financial Report section of the New York State Register to ensure that all bank account and financial institution names are correctly shown. Updates to bank account information should be immediately reported to the Department of Tax and Finance – Division of the Treasury (DTF – Treasury). To review these financial reports of depositories for funds of the State of New York, please visit the Department of State, Division of Administrative Rules’ website at https://dos.ny.gov/division-administrative-rules.

In order to ensure compliance with this STATUTORY requirement, agencies must obtain and reconcile bank statement balances and provide the following information to the Commissioner of Taxation and Finance:

• Department Name;
• Department Value;
• Department Contact Name and Phone Number;
• Bank Name;
• Account Name; and
• Reconciled Balance - If reconciled balances are not available, then report the most reliable date either from agency book balance records or unreconciled bank statement balances.

The preferred method of reporting data and balances is by e-mail to (case sensitive): [email protected].

Monthly Reports of Balances in state bank accounts should be addressed to:

Monthly Bank Reconciliations

State agencies must perform monthly bank reconciliations. The difference between the cash book and bank statement balances of an account may be due to:

• Checks issued but not yet cleared by the bank (outstanding checks);
• Deposits recorded but not yet sent to the bank (deposits in transit);
• Unrecorded bank charges and credits; or
• Recording errors.

Agencies must reconcile the bank and book balances of all accounts to determine the reasons for any differences and to correct any errors in the accounts. An employee not involved in recording receipts and disbursements must perform the reconciliation within 5-7 days of each month-end to safeguard assets, check the accuracy and reliability of agency-maintained accounting data, and permit the timely reporting of account balances to the Commissioner of Taxation and Finance for publication in the New York State Register (discussed above). Documentation of the reconciliation must be retained for audit purposes. Any format which clearly shows the balances being reconciled and the details of all reconciling items is acceptable. Bank statements often contain an outline for performing the reconciliation.

Reconciliation Procedures

Broadly defined, reconciliation is a comparison of different sets of data to one another, identifying and investigating differences, and taking corrective action, when necessary, to resolve differences. Reconciling monthly bank account statements to agency accounting records is an example of reconciling one set of data to another. This control activity helps to ensure the accuracy and completeness of transactions that have been posted to an agency's accounts.

To ensure proper segregation of duties, the person who approves transactions or handles cash receipts should not be the person who performs the reconciliation.

A critical element of the reconciliation process is the resolution of differences. Differences should be identified, investigated, and explained - corrective action must be taken.

If an unidentified withdrawal (e.g. bank debit) is posted to an agency's account, then the reconciler should immediately contact the bank to ascertain the reason for the unidentified charge. Where appropriate, bank personnel should reverse the bank charge or an adjusting entry should be made to the agency's accounting records. Reversals by bank personnel must be confirmed to the following month’s bank statement. Similarly, agency deposits not shown on the monthly bank statement must be investigated and a determination made that the deposit was posted to the account in the month immediately following the reconciliation period. All bank account reconciliations should be documented and approved by management.

Reconciliation steps:

1. Reconciler should access bank statement from banks’ websites to begin reconciliation.
2. Compare the total of the returned checks to total charges on the statements and examine check signatures and endorsements on a test basis.
3. Compare deposits listed on the bank statements to deposits in transit on the prior reconciliation and to records of deposits made since the last reconciliation. Deposits not recorded by the bank should be listed as deposits in transit. Compare, on a test basis, the date the deposit was recorded in the cash book to the date shown on the bank statement.
4. Arrange returned checks in numerical order and compare to outstanding checks from the prior reconciliation and to the record of disbursements made since the last reconciliation. Checks not returned by the bank should be listed as outstanding checks.
5. List any charges or credits shown on the bank statements that have not been recorded in the cash book.
6. Subtract total deposits in transit, add total outstanding checks, and add or subtract bank credits and charges to the cash book balances. The result should equal the balance shown on the bank statement.

Post-Reconciliation:

When the balances have been reconciled and the nature of the reconciling items is known, the following steps must be taken:

1. File returned checks in numerical order with previous checks and sequentially account for all checks. All recorded checks must be examined and any checks, other than outstanding checks, missing from the sequence must be investigated.
2. Review documentation for any check outstanding for more than 90 days. Agency responsibilities and disposition of the proceeds of uncashed checks is explained in greater detail in Section 1 - Outstanding Check Outreach and Escheatment of this Chapter.
3. Have unrecorded bank charges or credits posted to the cash book as of the date of the reconciliation. Bank charges and credits must be treated consistently (e.g. deposited checks returned because of insufficient funds are recorded as reductions to revenue, not as disbursements). Further, a process must be initiated to collect good funds from the maker of the check and cancel the goods or services that the returned check was intended to pay for.
4. All monthly reconciliations should be reviewed and signed by a supervisor that did not participate in the reconciling function.
5. Outstanding checks must be written-off after one year of the date of issuance pursuant to the procedures governing the disposition of uncashed checks as found in Chapter XV, Section 10, Uncashed Checks. New York State checks are negotiable for one (1) year after issuance date year according to Section 102 of the New York State Finance Law. After one year, stop payments are placed on the checks. On March 10th, the checks are written off and turn over to the OSC Bureau of Unclaimed Funds.
   All questions concerning the disposition of uncashed checks should be directed to the Office of Unclaimed Funds. Information and phone numbers concerning stale checks can also be found on the Bureau of Unclaimed Funds link located on the OSC home page at http://www.osc.state.ny.us

Sole Custody Bank Account Annual Reporting

The state's accounting and financial reporting system under the control of OSC provides for the collection, summarization and reporting of unique financial data and information maintained at state agencies. Financial data and related information is required to ensure full and proper disclosure in the financial statements prepared in accordance with generally-accepted accounting principles (GAAP).

In April of each year, a secure website for reporting agency sole custody account information is activated for the purpose of gathering financial data for any bank account under the administrative control of any State officer or board. The website is used by agencies to report reconciled bank account information needed for the State's annual financial statements, using information derived from monthly bank reconciliations. Monthly bank account reconciliations contribute immeasurably to complete, accurate and timely filing of required sole custody bank account information, which typically is due within 30-45 days of fiscal year-end.

The sole custody data that is entered on the website is collected in a database which assists in the generation of the state's required financial statements.

When the electronic reports are received by the OSC Bureau of Financial Reporting and Oil Spill Remediation (BFROSR), they are reviewed to determine that:

• Each report is complete and accurate in all material respects, that transfers to State Treasury funds are properly noted and that no disbursements are made from the sole custody account without proper statutory authorization.
• The composition of the closing balance is reported so that investments, if any, are properly noted, for disclosure in the Cash and Investment footnote of the Annual Comprehensive Annual Financial Report (See Note 2). NOTE - All state deposits are required to be collateralized in accordance with Section 105 and Section 98a of New York State Finance Law. Securities pledged as collateral must be held at the State's Fiscal Agency. The OSC BSAO Cash Management Unit (BSAO CMU) must approve all securities that are pledged and substituted for collateral.
• All agency sole custody accounts are reported in both the Comptroller’s Annual Report to the Legislature on State Funds Cash Basis of Accounting and the Annual Comprehensive Annual Financial Report (ACFR) prepared on a GAAP basis of accounting. A match of the reported accounts (filed through the web based application ) to the inventory of bank accounts maintained by the OSC BSAO CMU is completed each year, to ensure that all Sole Custody reports are accounted for. A reconciliation is also performed to ensure that a report is received for each account that was reported in the prior years, unless the agency reports the account was closed.
• A sample is selected (from all of the reported filed each year) by the OSC BFROSR and a request is made of the account custodian to provide additional information in support of the financial data provided in the sole custody report. For example, OSC may request a copy of the year-end bank statement and account reconciliation; list of outstanding checks (if any); a copy of the check register for the account indicating the check number, payee, date of issuance and amount; date and amount of funds transferred to State Treasury funds; etc.
• The electronic reports are classified by fund type by the BFROSR and summaries of the reports are prepared by fund type and agency. These reports include the:
  • Beginning balance;
  • Total receipts, disbursements, and ending balance for all sole custody accounts within each fund group;
  • Composition of account balance at year-end;
  • Transfers to and from other sole custody accounts;
  • Investment types; and
  • Where appropriate, the State Treasury fund and account into which the sole custody monies are ultimately transferred.

This financial information is necessary to satisfy the requirements outlined in State Finance Law and in accordance with GAAP.

Late filing or failure to report sole custody monthly and annual reports is characteristically the result of poor internal controls and will result in increasing the agency risk assessment used by the State auditors to assess strength of agency internal controls, and a report of material weakness will be sent to the Agency Internal Control Officer.

For further information about annual reports containing sole custody accounts of the state, please visit the Office of the State Comptroller’s website at http://www.osc.state.ny.us/finance/index.htm and select Cash Basis Annual Reports on State Funds.

Guide to Financial Operations

REV. 09/14/2015