08-17-2017, 12:02 AM
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Project title: Reconciliation Engine (RECONGINE)
Background/Introduction
The aim of the project is to develop a Reconciliation Engine (RECONGINE) product that will be used for managing and handling reconciliation between a company s Ledger accounts and Statements received from Banks. The Engine will take care of reconciliation for disbursal as well as collection accounts. This engine can be used by any organization that has multiple external Banks/Institutions to deal with. The engine will be rules driven and provide for automatic matching as well as manual matching through suggestions from the engine.
Functionality of proposed product
The main functionality of the system will be:
Accounts details capture
Rules capture and maintenance
Reconciliation entity capture
Internal Ledger, External Bank statement entries/upload
Automatic Reconciliation process
Manual Reconciliation process
Authorisation process
Reports/Queries
Details of Functionality
Accounts details capture
This module will capture details of the accounts (Both Internal and External) that will participate in the reconciliation process for an organisation.
External accounts could be Bank accounts maintained with external banks (like SBI, UTI). The accounts could be savings, current, disbursal, collection accounts.
Internal accounts are usually the ledger accounts maintained in the organisation accounts department. There could be single or multiple ledger accounts corresponding to accounting transactions (receipts, payments, cash, bank etc.)
The following fields will be maintained for each account Name of account, Description, Swift code, Telephone number, Fax number, e-mail address, Address, City, State, Zip code.
Rules capture and maintenance
The Rules feature will let you define and customise the various rules applicable for matching transactions. The five parameters involved in setting rules are, Amount, Grouping Criteria, Reference Number and Booking Date.
Once a rule is defined then it can be associated with one or more reconciliation entities. These will be used to determine how the reconciliation will be performed for the entity. One or more rules can be associated with a reconciliation entity. A rule can be either used for auto matching or for suggested matching
For each of the above parameters, the condition could be Exact Matching or Matching with Tolerance, where the tolerance factor can be positive as well as negative.
The fields to be maintained against Rules are Rule code, Rule Description, Grouping criteria (1:1, 1:N, N:1), Fields against which matching is to be done - Transaction amount to be matched(exactly, with tolerance), Reference number to be matched(full match, first few characters, last few characters) and Booking date match.
Provision to modify the Rules should exist.
Reconciliation entity capture
The entity creation module will define the reconciliation entity and capture the accounts that participate in the reconciliation and the rules that are applicable for the reconciliation. In addition, transaction codes that need to be excluded in the reconciliation process can also be defined.
The following fields need to be defined/captured Entity code, Recon type (eg: ledger vs. statement, ledger vs. ledger), Description, Frequency of reconciliation, Manual match permissible difference, Auto match permissible difference, Accounts involved (Ledger Internal and Statements-External with facility to select the accounts from a list box), Option to select auto match rules from available list of rules(list box), Option to select Suggested match rules from available list of rules(list box), Exclusion of transaction codes
Internal Ledger / External Statement entries/upload
This module will allow manual entry of Account statements. The user can manually input Account Balances (opening and closing) with corresponding transactions. The fields to be captured for Account balances are Account number, Account description, Statement number, Currency, Opening balance amount and date, Closing balance amount and date,
The detailed transactions will have Booking date, Amount, Transaction type (Debit, Credit, Debit reversal, Credit reversal, Transaction code, Transaction reference, Narration
Automatic Reconciliation process
The Automatic Reconciliation engine will perform the core activity of reconciling transactions uploaded/created in the application, taking into account all the parameters defined in the Maintenance section.
The recon engine will scan all the Reconciliation accounts participating in the reconciliation of an entity and finds the unmatched transactions of the accounts, and matches these transactions in accordance with the rules defined for that Reconciliation entity.
In case there are multiple rules defined for a Reconciliation entity, the application will apply the rules according to the order of priority assigned to each. By assigning appropriate priority level for the rules within a Reconciliation entity, best reconciliation results can be achieved.
The Reconciliation engine can be initiated on-line through user intervention or can be scheduled at periodic intervals.
Manual Reconciliation process
Based on automatic match rules and auto match permissible difference defined at account level (if any) transactions will be matched by the system. Transactions failing auto match may match as per suggested match rule set up by the user. "Suggested match" as the name indicates are suggestion generated by the system to facilitate reconciliation process, accepting/rejecting a suggested match is based on user's discretion.
All unmatched transactions and suggested match transactions will be listed in the 'Unmatched Items' of Manual Reconciliation screen. These items require manual intervention for matching. If any Manual Match Permissible Difference is defined at the reconciliation account level - it will be considered at this stage.
A suggested match can be proposed for a match if accepted. Otherwise, it is proposed for de-match. Authoriser in turn can accept or reject this.
Unmatched items can be proposed for a match which authoriser may accept or may reject.
Specific user group will also have rights to propose de-match of auto matched transactions. Authoriser can either accept or reject that.
Authorisation process
This module will carry out authorisation for the entities, rules, statement entries and manual reconciliation.
Unless a particular transaction is authorised, it cannot participate in any reconciliation processing.
Reports/Queries
This module will facilitate generation of the following typical reports/Queries:
Automatic Match Report
Unmatched Transaction report
Manual Match Report
Aging Report