Investigating and Resolving Discrepancies in the 'Other Transactions Affecting' Section of the Open Client Deposit Report
The 'Other transactions affecting the client deposit account' number on the Open Client Deposit report often reflects entries that were posted directly to the client deposit asset account outside the standard workflow. This may include non-standard items such as journal entries, manually-posted expenses, or other adjustments that typically indicate incorrect postings. Resolving these discrepancies ensures accurate reporting and accounting integrity.
Understanding 'Other Transactions Affecting'
The 'Other transactions affecting' line item captures non-standard entries that influence the client deposit account outside the intended deposit processing flow. Common causes include:
Journal entries
Expenses mistakenly posted to the deposit account
Manual adjustments or ad-hoc postings
These entries often result in inaccuracies and should not be used in determining the true balance of the client deposit account. The accurate balance comes from the standard client deposit activities displayed in the report.
Steps to Investigate Discrepancies
To pinpoint and address any discrepancies in the 'Other transactions affecting' section:
Run the Open Client Deposit Report: Start the report from an earlier period to identify when the balance first deviated unexpectedly.
Note Unexpected Changes: Identify each fiscal period where the 'Other transactions affecting' or total balance shows unexpected changes.
Use Account Inquiry for Analysis: For each period with anomalies, run an Account Inquiry for the client deposit account to view the detailed entries made during that period.
Identify Non-Standard Transactions: Focus on spotting irregular entries, such as ad-hoc journal entries, expenses booked to the deposit account, or manual invoice adjustments.
Corrective Actions
Once you identify the problematic transactions, take the following steps to correct them:
Reclassify incorrect postings to their appropriate accounts according to your company’s accounting policies.
Reverse any erroneous entries that should not have been made to the client deposit account.
Validate corrections to ensure the account reflects only standard client deposit activity.
Remember, journal entries should usually not be employed to adjust client deposit accounts unless under very specific circumstances.
Best Practices to Avoid Future Discrepancies
To ensure ongoing accuracy in managing client deposit accounts:
Limit direct postings to the client deposit liability account to approved transactions only.
Regularly review and reconcile the client deposit account to catch errors early.
Train staff on proper procedures for handling client deposits and associated accounts.
By following these steps and maintaining disciplined processes, you can ensure the accuracy of your client deposit accounts and prevent future discrepancies.
Related Topics
Reconciliation of Vendor and Client Deposits
Guidelines for Journal Entries in Accounting
Best Practices for Financial Report Reviews