How to Investigate Discrepancies in the Accounting and Listing reports

Introduction

The SACCO may identify a discrepancy in their accounting reports and the Listing reports. For example, the loan balance in the listing report differs from the gross loss portfolio balance in the Trial balance. This should not be the case as both reports should be in sync. This can also be the case for the deposit balances.

This is not a bug in the system. Rather, it requires the SACCO administrator to investigate the source of the discrepancy and reconcile the correct accounts.

The possible reasons for discrepancies are as follows (in order of occurrence):

• Journal entries. Journal entries passed on Loan/savings GL that are not attached to member accounts can lead to an inflated trial balance compared to the relevant listing report.
  
  
• Wrong opening balance. When the opening balance of the value of deposits/loans uploaded and the Journal entry passed in the Trial balance is different, this will result in a discrepancy between the trial balance and the listing report.
  
  
• (Mambu only) Rescheduled loans. When rescheduling loans on Mambu, the interest is not capitalized(i.e., it is not added to the principal amount) this leads to a discrepancy where the Trial balance will be inflated compared to the listing report.
  
  
• Accounting rules are not set up. This is where the required GLs have not been mapped on the product and therefore entries done in the loan/deposit accounts do not affect the required GLs and in turn the Trial balance. A common indicator of this issue is a zero trial balance.

Steps to identify discrepancies:

1) Opening Trial Balance vs Listing report.

• Pull the Trial balance as of the cut-off date during onboarding and compare it with the various listing report as of the same cut-off date. If the values in the trial balance and the listing reports are not in sync, refer to solution A.

If the issue is not a result of a discrepancy in the opening balances, proceed with the steps below:

2) Identify the timeframe where the discrepancy was observed. 

• Narrow it down as much as possible i.e. identify the year the discrepancy was first observed and then narrow it down to the months. This will be done by generating Accounting and listing reports for various periods. For example, for a discrepancy in the 2023 books, we will generate the Trial balance and listing reports for 2023, 2022, and 2021. After you identify the year, narrow it down further to the specific month.

3) Identify the product.

• Identify the specific products (Loans/Savings) that had discrepancies, and granulate the analysis of the reports by going through the value of each product on the Trial balance and the listing reports for the periods under investigation.
  
  

4) Go to journal entries. 

• Filter the journal entries for the period that the discrepancy has been observed and by the relevant GL attached to the product in question.
• If the SACCO is using Mambu, include the custom filter where the account holder's name is empty.
• If the SACCO is using Core, click on the transaction dropdown to find entries where the account holder's name is empty.
• Identify journal entries that were not attached to member accounts as these are the cause of the discrepancy and then refer to Solution B
  
  

5) If GL has 0 balance (on Trial Balance) and 0 journal entries for the relevant product, then accounting rules haven't been set up refer to solution C.

6) Discrepancy caused by rescheduled loans(This only occurs when rescheduling of loans is done on Mambu).

•  Go to loans>Rescheduled loans>Identify the loans rescheduled during the period identified and then refer to  Solution D

Go through the steps and the solutions until you have clarified all discrepancies. Note: there might be multiple reasons for discrepancies, so you might need to repeat these steps multiple times.

Solutions to discrepancies:

A) If the issue was a result of wrong opening balances, for example, the value passed in the Trial Balance was Ksh1,000,000 whereas the value of deposits uploaded was Ksh800,000. You will pass a journal entry where you will credit the member deposit with the difference (Ksh 200,000) and debit the relevant asset account as of the opening balance date.

B)If the issue was a result of journal entries that were passed, the solution is to reverse the journal entry and post it the correct way (on the member's account); or leave it as is, but the discrepancy will remain (need to explain during audit).

C) Reach out to customer support via [email protected] ; they will set up the rules, then pull the report on which journals need to be passed by SACCO

D) Pass a journal for the missing interest (or undo reschedule on Mambu, then redo on Core but at today's date to ensure capitalization of interest)