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Shouldn't the General Ledger be a USEFUL tool?

Please clarify for me how the Internal Checking Account Journal in the General Ledger should be used. Background: I'm reviewing General Ledger activities (primarily, incoming revenue) of a school. All revenue receipt amounts entered into the General Ledger by the fiscal manager (as a whole document/ system) were not mirrored in the "Internal Checking Account Journal" portion of the General Ledger. Therefore, the Internal Checking Account Journal did not reflect all of the entries made for incoming revenue and entered in the General Ledger. If amounts received and entered by the fiscal manager into the General Ledger were not traced DIRECTLY to the Bank Deposit -- COMPLETELY skipping the Internal Checking Account portion of the General Ledger -- then the reconciliation was not genuine. The fiscal manager made Bank Deposits (as shown in the Checking Account Journal) in lump sums based on date, but individual transactions were not divided correctly by internal account code in the Internal Checking Account Journal portion of the General Ledger. What's wrong with this picture??? Before you ask.....there was no oversight of the fiscal manager's activities and the situation only gets worse from here. Thanks in advance for your responses.

Answers

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

I am a bit confused by your description, but I hope I can address this in a general way. One should never make a journal entry to a cash account. All activity should be posted through the Accounts Payable (check writing) and Accounts Receivable (cash receipts) 'modules.' Each ERP software sets things up a bit differently, but the concept remains the same. Who posts to each area depends on the size of your company, but should be separate people who only manage one piece of the puzzle. The reconciliation is then done by a manager (who does not process any of the transactions). If managed this way, all transactions will tie back to the original activity and the GL will automatically be updated correctly with an audit trail.

I hope this helps.

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