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JOHN PARIS's headshot
JOHN PARIS MANAGER OF TREASURY OPERATIONS

Bank Accounting : Reporting Responsibilities

Asked on Nov. 11, 2014

bank accounting reporting responsibilitiesI have a general question/interest in understanding the Bank Accounting functions within institutions as they relate to Treasury Departments (specifically Retail).  From my understanding, most companies seperate the responsibilities of bank activity reconciliation and bank account management between Finance and Treasury.  (The business unit which utilizes the account would be the third party ie. HR)

I am curious to find out how many or what type of institutions join the statement activity and account management tasks?  Also, are their any GAAP requirements which would dictate a seperation of duties? 

Thank you for your responses.

Answers

Ernie Humphrey CTP's headshot
Ernie Humphrey CTP VP, Thought Leadership • June 6, 2011

Great question, and from my experience in many cases this is dictated through SOX compliance in terms of segregation of duties.

My background (although not as a retail treasury person) was that we had general accounting do all bank recs and they received their own copies of the statements. As far as booking journal entries related to bank accounts that also fell into general accounting, but that was a different person that the one who did bank recs.

In my mind, best practices is to segregate, bank recs, from journal entries related to bank accounts, from treasury who often times is the "risk management" player in terms of signatory authority and services related to mitigating payment risks.

My experience as practitioner is consisitent with my experience at AFP which involved interacting with several retail treasury professionals.Segreagtion of duties rules and this more SOX driven and I am not aware of any GAAP related requirements regarding who makes journal entries and does bank recs (not sure that type of issue falls under GAAP).

comment-icon 1
Greg Heinlein's headshot
Greg Heinlein Principal • June 6, 2011

I agree with Ernie. As a former Treasurer, an accounting person should be performing bank reconciliations and receiving statements if required to reconcile manually or review automatic reconciliations when the system performs it. Sox is just the latest reason for doing this, but those responsible for creating transactions (in this case Treasury personnel) should not be performing reconciliation, unless an accountant is assigned to work within treasury, as long as that person is not creating the same transactions. For the record, just a terminology nit of mine, but Treasury is FINANCE. Too often I've seen corporate finance, accounting or control personnel suggest as you did in your original question that treasury is something else. Hopefully they are all on the same finance team in your company. Good luck!

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