Cash, DIT, and tips review
Reviewing bank reconciliations, change funds, the investment account, cash over/short and deposits-in-transit, and the tips variance.
The cash and cash-adjacent accounts, plus the tips reconciliation that sits alongside them.
Source: Rackson_RRS_RCY_Review_Process.docx sections 7, 8, 28, and 40.2.
Bank reconciliations
- Review the bank reconciliation for aged, unresolved items each period.
- RRS bank reconciliations are typically clean; the most aged items tend to be outstanding checks rather than deposit timing issues.
- Aged payroll checks are common and are generally left to the client's own process (Mike) to resolve up to a point, rather than PBI writing them off unilaterally.
Change funds and petty cash
- Store-level change fund balances are confirmed with the client at year-end rather than reconciled in detail every period.
- Change Fund (GL 10800) and Office Petty Cash (GL 11000) are two separate, simple schedules. Both rarely have activity period to period — most periods both are confirmed as "no activity" and moved on from quickly. These are the fastest items in the entire review.
Investment account
An annual investment account that is not touched or adjusted until the account statement arrives, typically in November. No monthly activity is expected.
Cash over/short and cash-in-transit (DIT)
- A store-by-store schedule tracks expected POS cash deposits against what actually posts to the bank.
- Before treating a variance as a true cash over/short, confirm it isn't a timing item — a deposit posted just after period end.
- Watch for patterns rather than one-off variances. Recently acquired stores have historically shown more recurring cash-handling issues and warrant closer attention than the portfolio average.
- POS cash figures also feed a secondary check on backup/processing fees. These are effectively hard-coded month to month and reviewed for reasonableness rather than rebuilt from scratch.
Step-by-step checklist — cash and DIT
Look for any item older than one clearing cycle; note it on the checklist if unresolved.
Confirm the period-end date on the inputs matches the close date.
For any store above the normal range, check whether the deposit posted after period end before treating it as a real variance.
Flag any store showing the same pattern for a second consecutive period. Recurring cash-handling issues, especially at recently acquired stores, should be escalated rather than re-noted silently each month.
Neither should show unexpected current-period activity — change funds are only confirmed at year-end, and the investment account only moves in November.
Once all store-level variances are explained or documented for follow-up.
Tips
- Compare tips collected per the sales entry (POS) to tips paid out per payroll — the difference is the net tips variance for the period.
- This net amount is reviewed each period rather than written off automatically. Betsy does not clear it without review.
- Some of the variance nets out at the store level — tips over at one register offsetting tips short at another within the same store. For the most part this still needs to be looked at store-by-store rather than only at the consolidated total.
A recurring, stable variance should be raised with the client (Mike) directly rather than cleared as routine. A repeatable variance usually points to a POS or payroll setup issue rather than noise. Illustrative: a recurring variance of roughly $300 for the month was flagged for exactly this reason.
Historically, monthly tip write-off amounts in the $900–$1,000 range have been seen and approved by the client. Amounts of that scale are still reviewed line by line before posting, not rubber-stamped.
Step-by-step checklist — tips
Tips-collected from the sales entry (POS) and tips-paid from payroll, for the same period.
Against the prior period's variance.
Investigate at the store level before writing anything off.
Raise it with Mike rather than clearing it as routine.
Write off, hold, or escalate — record it on the schedule before closing the item.
Weekly and interim support files
Performed weekly, mid-week (currently Wednesday), by the client's bookkeeper Karen, tying POS deposits to the bank and to the GL.
This is a shared workbook with the client — the file must have macro content enabled on open, or the formulas driving the reconciliation will not calculate correctly.
PBI's involvement is deliberately light: spot-check rather than fully re-perform, and assist with filtering or investigating by store if the client identifies a variance needing a second set of eyes.
The client saves reconciliation detail by week, sometimes across several files. PBI posts the related journal entries from that detail as part of ongoing work through the month, rather than waiting until period end to catch up on the whole month at once.
The client's bookkeeper has become efficient enough at the manual process that moving it into an AI-assisted tool did not clearly add value and, if anything, risked losing customization built into the current shared worksheet. May be revisited if workload changes.
Getting the weekly deposit verification done before period-end close begins is what allows the close timeline to be accelerated — the DIT summary is already substantially resolved by the time the balance sheet review starts.
Related
- RRS cash and bank workpapers — the preparer's steps
- RCY inventory and cash workpapers — the RCY deposit verification and store 1418 safe count
- Delivery service reconciliation — the other major source of DIT