Corrections and reversals

Even with the tightest controls, there will be instances where mistakes have been made and require correction or reversal. This article details how to reverse/correct the following types of transactions/postings in Arbor Finance.

• Income/Expenditure transactions
• URCS
• Accruals
• Budget Allocations
• Unreconciling
• Re-issuing a BACS file
• Internal Charge

Income/Expenditure transactions

If you have posted an income or expenditure transaction incorrectly, there is not a function to edit the transaction for audit purposes, therefore any mistakes are corrected by reversing the transaction and reposting it.

For example:

• Income reversal
• Income adjustment
• Expense reversal
• Expense adjustment
• Accrual reversal
• Unreconcile

• Code Correction

If the expenditure transaction you are reversing has an associated cheque/BACS payment you will be asked if you would like to reissue this.

Confirming Yes to this message will automatically repost the transaction exactly as it is and put the cheque/BACS payment back on the payments pending window so a new cheque/BACS payment can be created.

Confirming No to this message reverses the transaction and does not repost it.

Here are some examples to illustrate when you would use either option:

• If a cheque was somehow lost in the post and a new cheque needed to be sent, you would reverse the expenditure voucher and confirm Yes to reissue the cheque. This would automatically repost the transaction again exactly as it was before and put it on the Payment Pending window for a new cheque to be printed and a new cheque number to be assigned.
• If you posted expenditure to the wrong budget code, you would reverse the expenditure and confirm No to reissuing the cheque as you do not want another transaction exactly the same. You would then repost the expenditure manually, this time to the correct budget code.
• If you are trying to correct a transaction that has an associated cheque/BACS payment but you do not wish to reissue the cheque or create a new BACS payment, you should confirm No to reissuing the cheque/BACS payment. Then, when reposting the transaction, you would manually enter the cheque number/BACS reference in the Reference field rather than selecting the Create Cheque or BACS Payment option. This way you will be able to reconcile the corrected transaction using the same reference number as the original posting.

URCs

A URC is a transaction that was posted in last year but had not yet been reconciled prior to running year end. URCs are created during the year end process to allow you to reconcile the transactions in the current year's data, although the transactions were accounted for in last year's budget.

When correcting a URC, there are two scenarios to consider; whether you want to remove the URC completely from the Reconciliation window as it is not going to debit the bank, or if you would like to reissue a cheque/BACS payment related to a URC.

1. If you want to remove the URC from the current year data file as it should not have been posted in the first place or it is not going to debit the bank, you should reverse the transaction in last year. 
   In period 13, go to Transactions > Adjustments and Corrections > Expenditure or Income Reversal, locate the voucher and click Reverse. See Posting in Period 13.
   This method will create another URC in the current year to net against the existing URC you are trying to reverse. You should then be able to reconcile the original URC along with the corrective URC posted so the effect on the current year bank balance is nil.
2. If you would like to reissue a cheque/BACS payment relating to a URC you should reverse the transaction in last year. In period 13, go to Transactions > Adjustments and Corrections >  Expense Reversal and locate the original expense transaction. Change the radio button to 'Yes' to reissue a cheque.
   This method will not have an effect on the current year budgets/analysis codes.
   This will mean that the original cheque, reversal and re-posted expenditure item will be posted in last year, but will appear on the bank reconciliation screen as URC transactions in the current year to be reconciled when the new CHQ appears on the bank statement. CHQ numbers are sequenced across all financial years. Should you wish to view the remittance report of payments posted in P13 you should view the remittance report in last year.

As you have already claimed VAT for this item you do not have to claim for this again.

Accruals

Corrections to accruals are carried out in a similar way to income and expenditure transactions, such as accrual reversals.

Note:

After running year end, you must access period 13 to reverse an accrual posted in period 12. Go to System > Switch the financial year
When in period 13 go to Transactions > Adjustments and Corrections > Accrual reversal, select the transaction and click Reverse.

Budget Allocations

If errors are made when making budget allocations, the only way to correct this is by posting a further income or expenditure allocation of the opposite type. Alternatively, if the allocations have been batched but not yet posted, these can be edited in the batch.

Note:

Always check the information at the bottom of the budget allocation screen before clicking on 'Post'. This allows you to check that the allocation has been posted correctly.

How to unreconcile

In the case of reconciling a transaction which should not have reconciled, this will cause the bank balance on RM Finance to become out of sync with the bank balance as per the bank statements.
To correct such mistakes:

1. Find the reconciliation reference associated with the voucher on the Enquires window.
2. Go to Transactions > Adjustments and Corrections > Unreconcile and select the relevant bank account.
3. In the Reference field, enter the reconciliation reference associated to the transaction.
4. Click Display.
5. Locate the voucher and change the Rec flag from Yes to No
6. Click Update

This will put the voucher back on the Reconciliation window ready to be reconciled again and will update the bank balance accordingly.

Note:

You must enter the reconciliation reference exactly as it appears on the voucher you wish to unreconcile, capitals and spaces included, otherwise you will not be able to display the correct transactions.

Re-issuing a BACS file

When a BACS file is created, RM Finance will prompt you to confirm that the BACS file has been created successfully.

It is advisable that you go to the BACS Export location and check that the BACS export file has been created. You should then upload this file to your bank to ensure that it is uploaded successfully. Once you have confirmation that the upload has been successful, you should confirm Yes to this message.

In instances where you have confirmed Yes to this message and the BACS file is not present/contains an error/has been unsuccessful upon uploading to your bank, you need to produce the BACS export file again. To do this, you have to reverse and reissue all of the BACS transactions on the export file so another export file can be created.

To do this, please follow the instructions above in the Income/Expenditure transactions section ensuring that you confirm Yes to the 'Do you wish to reissue the BACS record' message.

Reversing an Internal Charge

To reverse an internal charge, you make a further internal charge posting for the opposite way round.