Overview

DiLOG Accounting provides for a Treasury Fund that can serve as the central manager of cash and cash related assets for all of the individual funds. Use of the Treasury Fund provides several advantages for most governments:

• Single Checking Account can be used for all funds.
• Single Payroll Account can be used for all funds.
• Vendor Checks can combine multiple invoices and cross fund lines.
• Cash Management can be done by analyzing the Treasury Fund.
• Inter-fund Transactions don't require checks to be issued by one fund and deposited in another.
• Bank Reconciliation is facilitated since the entire balance of each bank account is shown in the Treasury Fund.
• Automatic Inter-fund Borrowing is permitted since the cash balance of an individual fund can drop below zero.

How the Treasury Fund works

The Treasury Fund is treated as an agency fund and is comprised of a series of self-balancing accounts. Since the Treasury Fund is merely a central depository for all cash, it has no assets of its own and no fund balance - all cash-related assets are fully offset by Due To accounts.

Debits

One account is maintained for each physical segregation of cash. This will normally mean a separate account for each individual bank account and investment account at the level chosen by the user, e.g., either an account entitled Certificates of Deposit, or individual accounts for each certificate. An account may also be established for Cash on Hand or Undeposited Cash.

Credits

A series of Due To accounts are established in the Treasury Fund, one for each fund, such as Due To The General Fund. This account will always be equal to the single Cash account on the books of each fund, which should be entitled Cash in Treasury or Cash & Investments with Treasurer. The system-wide number for this cash account is specified in the SCR (System Control Record) as control account 01.

Design Setup

There are two methods for setting up the Treasury Fund:

• Complete Treasury Fund: Contains all cash accounts and investments.
  
  • Assets: Includes main bank investments, cash in the treasury, and petty cash.
  • Liabilities: Due to the general fund and the enterprise fund.
  • Equity: Retained earnings and fund balance.
    
• Partial Treasury Fund: Contains only the actual cash accounts without investments.
  • Assets: Includes main bank cash in treasury and investments.
  • Liabilities: Due to general and enterprise funds.
  • Equity: Retained earnings and fund balance.
    

Bank Reconciliation

Bank reconciliation involves comparing the bank's records with the government's books to identify and rectify discrepancies. Key transaction codes that can automatically generate entries to the Treasury Fund::

• TC-30 Cash Receipt: For recording cash receipts in the fund that receives the revenue.
  • If the revenue is recognized on a cash basis, the fund receiving the revenue (e.g. general fund) is posted as follows:

    DR Cash in Treasury
    CR Revenue

  • If the revenue had already been recognized on a modified accrual basis, the fund is posted as
    follows:

    DR Cash in Treasury
    CR Accounts Receivable

  • In both cases, DiLOG automatically generates an entry to the Treasury Fund:

    DR Bank Account where cash is deposited
    CR Due to Fund receiving the Revenue

• TC-52 Cash Disbursement: For recording cash disbursements in the fund paying the bill,
  • They are posted as follows:
    

    DR Accounts Payable (or Expenditure Control if Cash Basis)
    CR Cash in Treasury

  • 4gov automatically generates the entry in the Treasury Fund:
    

    DR Due to Fund paying the bill
    CR Bank Account check is written on

• TC-60 Inter-fund Transfer: For transferring funds between different funds.
  • This transaction is the only two-sided entry the user is required to enter in DiLOG. Most TC-60's
    are intra-fund, involving organizations and accounts that are in the same fund. However, TC-60's
    can involve two funds, in which case DiLOG will post a cash transfer (receipt and disbursement as
    illustrated above) for the two funds. The effect of this transfer is to change each fund's equity
    position in the Treasury Fund.
• TC-6T Treasurer's Transfer: For moving cash between accounts within the Treasury Fund.
  • This is a special one to handle movement of cash between accounts within the Treasury fund. Both the debit and credit are to the Treasury Fund. A typical use of the TC-6T is to record wire transfers made from one cash account to another.

Bank Reconciliation Procedures

A bank reconciliation helps locate any errors made by either the bank or the depositor. It discloses any items which have been entered on the Government books but have not come to the bank's attention.  Also, it discloses items that should be recorded on the Government books but are unrecorded on the date of the reconciliation. To perform bank reconciliation:

1. Review balance sheet reports (FNCL101-P) for any out-of-balance funds.
2. Check edit reports for transaction rejections and completeness.
3. Ensure both DiLOG and CAPPS system reconciliations (produced during DiLOG update) are balanced.
4. Reconcile Treasury Fund accounts:
   • Compare Due To accounts with Cash Control accounts
     • The Cash Account for each fund should be equal to that fund's Due To account in the
       Treasury Fund. If they are not equal, review the Trial Balance report for journal vouchers
       (TC-40) that may have been posted incorrectly to the Cash or Due To accounts. Make any
       corrections necessary.
   • Compare actual bank accounts with Cash Control accounts
     • The grand total of Actual Cash should always agree with the Cash control accounts for all
       funds. If they are not equal, review the trial balance report for journal vouchers (TC-40) that
       may have been posted incorrectly to the Cash or Due To accounts. Make any corrections
       necessary.
5. Review and reconcile the payroll cash clearing account (make sure it is 0)
6. Perform bank reconciliation steps and post adjustments as needed.

Accounts Payable Fund

Use of an Accounts Payable Fund is optional. If used, accounts payable balances for all funds are combined in a single agency fund rather than having each fund maintain its own payables balance.

When an accrued expenditure transaction is processed, the expenditure is posted to the subsidiary ledger expense account and Expense Control account in the operating fund and the payable established in the Accounts Payable Fund. Cash is automatically transferred from the operating fund to the Accounts Payable Fund to cover the payable.

The Due To balances in the Treasury Fund are adjusted to reflect this cash transfer. When the check is written, entries are made to the cash and payables accounts in the Accounts Payable Fund and to the bank account and Due To Accounts Payable Fund in the Treasury Fund.

Bank Reconciliation Formats

1. Reconciliation of Bank to Books:

   • Start with the bank balance.
   • Adjust for items that explain the difference between the bank and book balances.

2. Reconciliation of Bank and Book Balances to Corrected Balance:

   • Start with the balance shown on the bank statement and adjust to the correct balance.
   • Start with the balance shown by Government records and adjust to the correct balance.
   • This format groups all reconciling items requiring book adjustments together, making the process more logical.

3. Proof of Cash (Four-Column Bank Reconciliation):

   • This method includes:
     1. Reconciliation of the beginning of the period bank balance to the beginning of the period book balance.
     2. Reconciliation of receipts per the bank statement to receipts per books.
     3. Reconciliation of disbursements per the bank statement to disbursements per books.
     4. Reconciliation of the end of the period bank balance to the end of the period book balance.
   • This format is preferred by auditors for identifying differences between the books and the bank statement during the reconciliation period.