Reconciling school payments by account code: a guide for business offices

When families pay online, a single bank deposit can hold hundreds of payments for different schools and activities. Reconciling by account code means proving three records agree:

1. The payment system's report of what was collected, by school and account code.
2. The bank's record of what was deposited, and when.
3. The revenue and expenditures posted to the general ledger.

NCES notes that most activity fund reports use the same function, program, object, source and account codes as other district funds (NCES). Coding payments at the source makes that possible without rekeying.

Start from your state's chart of accounts. Many state charts build on the NCES handbook, which puts revenue from district-controlled cocurricular and extracurricular activities in the 1700 series (NCES):

Habits that save time at month end

• Give every collection (a dance, a fee, a fundraiser) a school and an account code before it goes live.
• Use the same names for activities in the payment system and the ledger.
• Keep a short list of who can create collections and who can change account codes.
• Review new collections weekly so nothing runs uncoded for a month.

A month of sales almost never equals a month of deposits. The usual reasons:

• Timing. A payment made on the last day of the month can be deposited in the next month. Card and ACH payments take time to settle, and payouts can group several days together.
• Fees. If processing fees are taken out before payout, the deposit is net of fees.
• Refunds. A refund issued this month can reduce this month's payout even though the original sale was earlier.
• Disputes and returns. Card chargebacks and returned ACH payments come back out, sometimes weeks later.
• Cash and checks. In-person cash and checks go to the bank on their own deposit slips, separate from online payouts.

The fix is line detail. Reconcile each payout to the payments, refunds and fees inside it, not monthly totals to monthly totals.

Decide with your auditor whether you record revenue at the full amount families paid (gross) with fees as an expense, or at the amount deposited (net). NCES describes enterprise revenue in account 1750 as gross (NCES). Whatever you choose, apply it the same way every month and across schools.

If families pay the card fees, the deposit is closer to the ticket price and there's less to record. With Omella, districts choose whether to pass card fees to payers or absorb them, and families always have a free ACH bank option.

1. Export the month's payout report, with every payment, refund and fee listed by school and account code.
2. Match each payout to a bank deposit by date and amount.
3. Add the in-person cash and check deposits from count sheets and deposit slips.
4. Total collections by account code and compare them with revenue posted in the general ledger.
5. Record fees, refunds and disputes using the method you agreed with your auditor.
6. List anything still unmatched, such as payments in transit, and clear it next month.
7. Have someone who didn't collect or record the money review and sign off.
8. Send each school or group its monthly report.

NCES recommends reconciling activity fund bank statements as soon as they arrive, and keeping the reconciliation separate from check signing and recordkeeping (NCES). GFOA recommends integrated receipt and accounting systems where practical so collected revenue is deposited, reconciled and recognized on time (GFOA). In Illinois, the activity fund treasurer must reconcile bank and investment balances with the fund's liabilities monthly (23 Ill. Adm. Code 100.80).

NCES recommends a monthly activity fund report with a beginning cash balance that agrees with last month's ending balance, cash receipts, cash disbursements, ending cash balance, unpaid purchase orders and unencumbered cash. The bookkeeper also prepares a report for each student organization, which the sponsor compares with their own records (NCES).

Sponsors catch errors the business office can't see, like a payment coded to the wrong club. Make it easy for them to review, and give them a deadline to report differences.

• All payments land in one report by account code, including card reader and online payments.
• Payouts can go out automatically every day, week or month, or whenever you request one. Each payout is net of fees.
• The payout report is broken out by school, space code and GL account code.
• Account codes can be added after money has been collected, and past transactions and reports update.
• Every payment and response can stream into a Google spreadsheet in real time.
• For Skyward® districts, fees and food services payments sync back, so Skyward® is always up to date.
• The business office sees collections, payouts and account codes across schools, while staff get the access their role needs.

Omella is free for schools and makes money from optional tips. Read more about reconciliation in Omella, what it does for the business office, or see pricing.