![Departmental accounting is not a norm as far as I know.It is so because each department does not need to calculate its profits or losses.In case where the company needs any department or a set of departments to work in such manner where their profit/loss contribution in company's totals would make a difference the company form Strategic Business Unit.The idea of departmental accounting is that each department is getting an input from some other department and they process the input to provide an output and that output will be input for the other some process.Example: In a car factory- the department which collects all steel and moulds the same into car bodies has its own accounts books. And the department that does the wiring part also has its own accounts books. So on and so forth.<br />Contents:<br />Why a Departmental Account? <br />What is a Departmental Account? <br />Why a Departmental Account?<br />With the growing popularity of the World-Wide Web has come a growth in requests for departmental accounts. Employees are increasingly seeking to move departmental services, such as web pages and e-mail addresses, off of their personal accounts. <br />Rutgers Computing Services has received requests for departmental accounts almost as long as there have been computer accounts. In the past, these accounts proved to cause security and administrative problems, as people routinely shared passwords for the accounts, making it difficult to tell who was using the account at a given time. <br />On RCI, we've come up with a solution that gives departments the flexibility they want and gives us the accountability we need: the departmental account. <br />What is a Departmental Account?<br />A departmental account on RCI is in most respects just like a personal account on RCI, with one important difference: it has no password of its own but instead uses the passwords of specific authorized users to access it. Consequently, anyone who is going to have access to the departmental account must have a personal RCI account. This means that students or non-Rutgers employees who do not have a faculty/staff status in the Rutgers Online Directory will not be able to work on this account, unless you obtain a guest account for them on RCI. <br />See the section Submit a Request for a Departmental Account for instructions on how to request a departmental account. <br />Objective<br />The objective of these guidelines is to instruct department personnel how to reconcile their departmental accounts. A departmental account is any account that falls under a department’s purview – General Fund accounts, State Fund accounts, Service Department accounts, Designated Fund accounts, Auxiliary Enterprises accounts, Federal Contracts/Grants accounts, State Agency Contracts/Grants accounts, other Governmental Agencies or Local Governmental Contracts & Grants accounts, Private Gifts/Contracts & Grants accounts, etc.<br />How often should departmental accounts be reconciled?<br />Management should determine the frequency. Ideally, all accounts assigned to the department should be reconciled monthly. However, the cost of reconciling every account monthly may exceed the benefit for a department. Management must effectively balance the risks and controls as well as the extent to which revenue and expenditure transactions should be verified for accuracy. The frequency that each account should be reconciled for each department (e.g. monthly, quarterly, semi-annually) should be reassessed annually. <br />What is a departmental account reconciliation?<br />A departmental account reconciliation is simply the matching of two different records, using the same information to identify and investigate differences, and taking corrective action when necessary. Generally the university’s official financial report (e.g., department’s monthly financial reports - TUFIMS ledger sheets) that is produced by the Accounting Department is compared to an alternative report, e.g., departmental internal report and supporting documentation that is retained in the department (e.g. file copies of approved vouchers or departmental accounting reports). This control activity helps ensure the accuracy and completeness of transactions that have been charged to the department’s accounts.<br />Why reconcile departmental accounts?<br />To ensure that the expenditures which have been charged to the department’s accounts were properly approved and charged to the correct account.<br />To ensure that all revenues which have been earned/collected by the department have been credited and charged to the correct account.<br />Who should perform departmental account reconciliations? <br />Each department should ensure proper separation of duties. The person who performs departmental account reconciliations should not approve departmental expenditures or handle cash receipts. At least two sets of eyes should look at a transaction.<br />What are the Minimum Standards?<br />The following Minimum Standards should be used to perform account reconciliations on all departmental accounts. Each department should determine the frequency of the reconciliation (monthly, quarterly, etc) based upon the dollar amount of revenues and/or expenditures, the transaction activity and/or the risk of the account. Each department must determine the risk for their accounts.<br />Step 1 – Listing of Accounts<br />The first step is to obtain the University’s official monthly ledger sheets (either in paper or electronic form (online)) for each of the department’s accounts. The ledger sheets may include the following: <br />Account Summary Report<br />Detail Expense and Encumbrance Payroll Transactions<br />Detail Transaction Report – Monthly<br />Detail Transaction Report – Prior Years<br />Monthly Financial Report<br />For departments with multiple accounts, the person performing departmental account reconciliations should verify at least annually, the completeness of the listing of their department’s accounts. Accounting Department personnel can be contacted for assistance with account listings.<br />The reconciler should maintain a current listing of accounts that have been assigned to the department. The reconciler should note on the listing the date(s) when he / she confirmed the accuracy and completeness of the listing. <br />,[object Object]](https://image.slidesharecdn.com/accountsassignment-100818081952-phpapp02/85/accounts-assignment-1-320.jpg)
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- 2. The second step in the minimum standards for performing departmental account reconciliations is to review ledger sheets for propriety and trends. See page 4 for additional examples of reconciling items.Example Charges to AccountsSupporting DocumentationPayrollApproved Personnel Action Form/Time SheetTravel ReimbursementApproved Travel VoucherEquipmentApproved Purchase Order/InvoiceConsultant ServicesApproved Contract<br />Step 3 – Correcting Entries<br />The third step in the minimum standards for performing departmental account reconciliations is to note whether correcting entries from previous month’s reconciliations have been posted to the current month’s ledger sheets and to propose correcting entries, if necessary, as a result of the current month’s reconciliations.<br />Remember: Reconciling departmental accounts makes good business sense.<br /> <br />EXAMPLES OF RECONCILING ITEMS<br />Category/ItemResponsible PartyGeneral Amount charged to wrong accountR, SA credit or deposit which should have been made to an account R, SData input or keying errorR, SPurchase order which was issued but account was not encumberedR, SPreviously encumbered amount was paid but was not disencumberedR, SDuplicate payment or documentation is not originalR, SPayroll Review salary information R, STerminated employees salaries still on accountR,SEmployees listed are bona fideR, SOvertime pay is unreasonable – overtime increased after supervisor signs off time card.STravel Employee reimbursed twice (duplicate payment)R, STrip cancelled but account still chargedR, STravel vouchers submitted for travel not takenR, STravel expenses inflatedSUTHSC-H Buycard Purchases are not for official business purposesR,SSupporting documentation not on fileR, Cellular phones Employees reviewed charges and reimbursed for personal callsR, SLong Distance Charges Charges are for official business purposes and length of calls are reasonableSPetty Cash Reimbursements Supporting documentation (original) on fileRSupervisor approved the reimbursement SCopy Charges Charges are reasonableR,S<br />