Financial transactions and reports help businesses keep track of funds coming out and in, control debt, comply with tax laws and more. Financial reporting isn’t the most exciting part of running a business, but it’s important to make sure all information is current and accurate.
A financial transaction is an agreement that affects the financial affairs of two persons or entities. There are four kinds of financial transactions: purchases, sales, payments and receipts. These types of transactions are recorded using either the accrual or cash method of accounting and must be documented with supporting documents.
The process of substantiation is vital for the accuracy of an organization’s externally audited financial statements consolidated as and its internal management report. The process of confirming that the transaction has been properly documented, recorded and approved assists Drexel produce accurate and reliable reports, free from material misstatement.
A financial transaction should include the who, what and when information along with the where, why and where. The substantiation procedure ensures that the transaction is in line with federal agency and private sponsor guidelines as well as the guidelines and procedures of the team that provides research accounting services.
The Kuali Financial System has tools to verify the accuracy of a transaction, including a Transaction Detail Report and the Budget Adjustment (BA) report. The BA report lists pending transactions with dollar amounts labeled as D (debits) or C (credits) in the General Ledger. The Budget Adjustment Report is also an excellent way to detect unusual activities and reconcile variances between expenses and revenues that are reported in your department’s expense accounts and on the Budget Verification Report.
