1	Accounting for the Non-Accountant
2	Introduction This print module was produced by the Michigan Judicial Institute (MJI) specifically for Michigan Court Support Personnel. The intent of this print module is to: Introduce basic accounting principles, practices, and terminology as they apply to the court. Identify the need for and the elements of internal controls. Lay out the steps for daily balancing. Lay out the steps for monthly reconciling. Identify steps to take when you do not balance. This publication is funded by the Michigan Justice Training Commission (MJTC). These materials may not be reproduced without prior written permission from MJI.
3	What Is Accounting?
4	How Does Accounting Relate to the Courts? The receipt and disbursement of all court collections should be properly recorded in an accounting system. The accounting system should provide an audit trail from cash collection to reporting. SOURCE: SCAO Michigan Court Administration Reference Guide Section 6-05
5	The Accounting Equation
6	Accounting Terminology
7	Basic Accounting The receipt and disbursement of all court collections must be properly recorded in an accounting system, either manual or automated, that provides, unlike the cartoon at left, an accurate source documentation and records of original and final entry. This system should be maintained on a current basis and balanced to subsidiary records monthly. The following financial management guidelines are to be used for collection, disbursement, and control of court funds. If your court process varies from the information provided here, contact your supervisor for clarification.
8	Daily Balancing Process STEP 1. (Individual Cashiers) Each cashier should count his or her own drawer and prepare an individual “Daily Reconciliation Form” (see page 10) or at least sign or initial the system’s summary receipt report reflecting the checks, money orders, and cash amounts collected. The checks, money orders, and cash should then be forwarded to the employee who balances the accounting records (hereto referred to as the Court Accountant). This employee should not be involved with opening the mail, receipting payments, or performing the bank reconciliations. continued on next slide
9	Daily Balancing Process STEP 2. (Court Accountant) Checks, money orders, and cash should be counted by the employee who does the balancing and verifies the money to be deposited to the total per the system. This process should include verification of total “cash” receipts per the system to actual “cash” counted. This employee should prepare a “Daily Reconciliation Form” (see page 11) or the system’s summary receipt report as verification that receipts were balanced and any overages/shortages noted. Overages/shortages should be reported to court management with any significant amounts reported to the Chief Judge in writing. Receipt numbers should be accounted for with verification of the first number following the last number from the previous day. Review and account for all voided receipts by verifying the voided receipts per the system to the original voided receipts which then should be attached to daily balancing records. Review and account for all manual receipts issued, ensuring that they have been entered in to the system. Review the back of all checks and money orders to be deposited to ensure that they were properly validated. This review should provide verification that the checks and money orders were receipted in to the system.
10	Daily Balancing Process STEP3. Prepare deposits. STEP 4. Balance open bonds and trust funds (restitution, garnishments, etc.) per the automated system to trust account receipts and deposits. If open bonds do not balance, review for receipting error (bond amount entered incorrectly) or deposit error. Also review voided receipts, looking for those that change the distribution of a receipt. For example: voiding a prior day receipt for court costs and re-entering as restitution OR voiding a bond forfeiture receipt and reinstating the bond. STEP 5. Balance closed bonds and trust funds per the automated system to trust account checks issued. If closed bonds do not balance, compare amounts of checks issued to closed bonds per system. Determine that all bonds were appropriately closed on the system and that all check amounts are accurate.
11	Cashier Daily Reconciliation Form
12	Court Accountant Reconciliation Form
13	When You Don’t Balance Determine if the cash total or check / money order total is out of balance. If the check / money order total is out of balance, someone probably receipted a check for an incorrect amount. Compare the check and money order receipts to the actual checks and money orders being deposited. Review voided receipts to determine if accounted for properly. How do voided receipts for NSF checks affect the balancing? How do voids of prior day receipts affect the balancing? Were voided receipts re-entered properly? Review and account for manual receipts issued to ensure that they have been properly entered in the automated system. If the difference is divisible by 9, then it could be a transposition error. Review the amounts recorded on the reconciliation reports to determine that they were recorded correctly. Search under, behind, and around cash drawers. for misplaced cash, checks, or money orders.
14	Monthly Reconciliation Process (Court Accountant) STEP 1: Run the Monthly Cash Receipt’s Report used by your court and make any adjustments needed to reconcile the book balance to the bank balance. (NSF, voids, and etc.) STEP 2: Run the Cash Adjustments; Case Deletions; and Dispositions and Dismissals Reports. These reports should be reviewed and monitored to ensure that the transactions are proper and justified. These reports should be retained. STEP 3: Run the various Bond/Trust Reports; Open, Closed, Account Activity Report and Check Register. STEP 4: Run Secretary of State Clearance Report and reconcile to the State of Michigan Report, issue check to disburse receipted or reconciled amounts. STEP 5: Prepare the State Transmittal and issue checks for amounts due. STEP 6: Reconcile the Depository Bank Statement to your account detail/ check register, detail ledgers or whatever detail you have in place. This is a zero balance account. (Meaning there should be no accumulating balance.) STEP 7: Reconcile the Bond/ Trust Bank Statement to your Open Bond/Trust Report. STEP 8: Reconcile any other Bank Statements to your account detail records.
15	Depository Account Statement
16	Reconciliation of the Depository Account
17	When Your Monthly Totals Don’t Agree Take a coffee break, go back with a fresh mind, and relax. In most cases it is an NSF check not adjusted, voided transactions, void and re-ring, overage or shortage. Review NSF checks to determine if accounted for properly. Determine how “voided transactions” and “void and re-ring” affect the balance. Were overages or shortages included in the reconciliation? For step by step instructions on how to reconcile the bank statement(s) to the court book balance or monthly cash reports see the Michigan Court Administration Reference Guide, Fiscal Management, Section 6-05.
18	Accounting Word Search
19	Answers to Word Search