Overview
Some banking activity moves cash without affecting revenue or expenses. Common examples include transfers between accounts, treasury sweeps, loan proceeds, and owner distributions.
Companies may also leave certain movements out of the general ledger. For example, a bank may sweep funds out of an account and return them the same day. Both transactions appear on the bank statement, but the company may not record either transaction in its books.
Cash Proof Advanced automatically organizes eligible banking activity into banking-only reconciling items, helping explain these differences and reducing the work your team needs to do manually.
Your team can review the items, correct their treatment, and add any additional items needed.
What Audit Sight Creates Automatically
Audit Sight uses our AI Banking Group categories to create reconciling items when bank transactions are not able to be matched to the general ledger. Such banking only reconciling items include:
| Banking activity | Common examples |
|---|---|
| Transfers and sweeps | Moving funds between bank accounts or daily treasury sweeps |
| Loan proceeds and payments | Receiving borrowed funds or repaying debt |
| Owner contributions and distributions | Owners funding the business or taking distributions |
| Investment proceeds | Cash received from investments |
| Offsetting transactions | A deposit and withdrawal of the same amount, with no corresponding activity in the books |
*See Trial Balance Only Proof of Cash. for additional information.
How Transfers and Sweeps Are Handled
Consider a bank account with a $100,000 sweep out and a $100,000 sweep back in on the same day.
The bank statement shows $100,000 of cash outflows and $100,000 of cash inflows. The company may record neither movement because the funds returned and the ending cash balance did not change.
These movements still need to be considered in the Cash Proof because they increase banking inflows and outflows without increasing revenue or expenses.
Audit Sight compares banking activity with the cash activity recorded in the books to determine how eligible transfers and sweeps should be treated. It creates banking-only reconciling items and assigns a treatment that your team can review.
Review Whether the Activity Was Recorded in the Books
Each transaction has a Recorded in GL or Not Recorded in GL tag. This tells the Cash Proof how to treat the transaction.
- Recorded in GL: Used for activity treated as included in the company’s accounting records.
- Not Recorded in GL: Used for activity treated as appearing in the banking data without corresponding activity in the books, such as certain sweeps or offsetting movements.
For transfers and sweeps, Audit Sight uses the bank-to-book activity comparison to assign the initial treatment. Loan activity, owner contributions and distributions, and investment proceeds are initially treated as recorded. Offsetting transactions with no corresponding activity in the books are treated as not recorded.
Review the treatment against what you know about the company’s accounting. If it needs to change, click the transaction’s tag.
For example, foreign-currency accounting can cause banking and accounting activity to differ even when transactions were recorded. Your team can correct the tag after reviewing the supporting records.
When Only Trial Balances Are Available
Without detailed general ledger activity, Audit Sight cannot determine whether individual banking transactions were recorded.
These transactions default to Recorded in GL. If your review identifies activity that was not recorded, change its tag accordingly.
Where to Review Automatic Items
Open the Banking Recon Items inside your cash proof.
The Source column identifies automatically created items. Expand an item to review its transactions. A sparkle icon marks automatically added transactions; hover over it to see why a transaction was included.
An item containing both automatic and manual transactions may show a source such as 7 of 9 automatic.
You can also review these transactions in the cash proof’s Banking Data tab. Use the Added Automatically filter to focus on automatic transactions.
In the Excel workpaper, these items appear like other banking-only reconciling items. Looking Glass provides the details about which transactions were added automatically.
How to make change.
You remain in control of the reconciling items.
| If you need to… | What to do |
|---|---|
| Correct whether a transaction was recorded in the books | Click its Recorded in GL / Not Recorded in GL tag. Your correction is preserved; other automatic transactions continue to update. |
| Correct a transaction’s category | Update its AI Category. Automatic transactions move to the appropriate category’s item on the next cash proof run. |
| Remove a transaction | Remove it from the item. It will not be added back automatically. |
| Customize an entire item | Rename it or manually add transactions. The item becomes manually managed and stops receiving automatic changes. |
| Remove an entire item | Delete it. Its transactions will not be itemized automatically again for that client. |
| Create your own grouping | Create a reconciling item and add the relevant transactions. Your manually included transactions stay where you put them. |
What Happens When You Run the Cash Proof Again?
Automatic items update each time the cash proof runs, incorporating new data, corrected categories, and updated bank mappings.
Your manual changes are preserved. Items you have taken over by renaming or manually adding transactions remain under your control.
The first run may take a few minutes longer when Audit Sight needs to update transaction matching to reflect activity treated as not recorded in the books.
FAQs
Do I still need to review automatically created items?
Yes. Automation gives your team a prepared starting point. Review the included transactions, categories, and treatment, then investigate any remaining differences.
Can Audit Sight add transactions to an existing item?
Yes. Eligible automatic transactions can be added to an existing item with the same name and are identified by a sparkle icon.
Renaming an item or manually adding transactions makes the entire item manually managed and stops further automatic changes.
Does this work with trial-balance-only entities?
Yes. Audit Sight creates eligible banking-only reconciling items using the banking data and trial balance conditions. Your team reviews whether the transactions were recorded because individual journal entries are unavailable.
