Reserves are funds set aside or earmarked for a specific purpose.  These funds are usually kept  in the same bank account as operating funds, but are tracked separately for reporting to the  board/council.  These steps will help you keep all of the funds in one GL cash account so you can  reconcile your bank statements while still earmarking the funds for tracking and reporting to the  board/council.   

1. To start, you must understand your reserve accounts; do this by answering the following  questions.   

      a. What accounts (revenue, expenditures, transfer) will impact the reserve account  balance?  Transfer accounts are used to track the transfer of money between one  department/fund and another that             are not true revenues and expenses; they are only  used to move money between departments/funds. 

      b. When will the transaction occur in the revenue, expenditure and transfer accounts? (IE.  once a year, sporadically) 

      c. Are the only transactions in these accounts related to the reserved amount or are they  comingled?   

      d. When do you want to see the changes in the reserve account transpire? (IE. at year end  or each period)   

2. Create appropriate GL account numbers.  A reserve account is necessary.  A transfer account may  need to be created.  Specific account numbers should be discussed with your auditor. 

      a. Wisconsin reserve accounts range in the 30000 Balance Sheet accounts (Fund Equity).   Transfer accounts use the 900 range for object codes (cost reallocations). 

      b. Minnesota reserve accounts range in the 25310 Balance Sheet accounts (Unreserved  Fund Balance Designated for ___ Purpose).  Transfer accounts use the 39200 or 49360720 segments for             interfund transfers in and out.

      c. Illinois reserve accounts range in the 136 Balance Sheet accounts (Fund balance –  reserved).  Transfer accounts use the 302 or 303 segments for operating transfers‐in or  out. 

      d. Iowa reserve accounts range in the 3800 Balance Sheet accounts (Fund balance –  reserved).  Transfer accounts use the 9100 and 6910 segments for transfers in or out.  

3. Determine how to record activity. 

      a. (Classic, Clarity, Connect) If the accounts used to record the activity for the reserve  account are comingled you will have two parts to each entry.  The first entry will be to  record the activity and the       second will be to adjust the reserve balance. 

            i. Example 1 – interest revenue allocated to the reserve.  Credit interest revenue  and debit general checking.  But you must also credit the reserve account and  debit the unreserved‐undesignated                   fund balance account. 

            ii. Example 2 – transfers between departments/programs where no cash is moved  at the bank.  Two transfer accounts will be used; a credit to a transfer in will be  used in the department receiving                   the funds and a debit to a transfer out will be  used in the department “spending” the funds.  The reserve account will be  credited (if it received the funds) or debited (if it spent the funds) and the                      unreserved‐undesignated fund balance account will be the offset. 

      b. (Clarity, Connect) If the accounts are not comingled and will only have transactions that  will impact the reserve account, you will need to determine when you want to see the  change in the reserve             account.   

            i. If you are willing to wait until your year‐end closing to see the change in the  reserve accounts, you can have the system close revenue and expenditure  accounts to the specific reserve account at                   the end of each year.  This option is  available in Clarity and Connect but not in Classic.       

                  1. Set up of the revenue and expenditure accounts.

                  2. On the account 2 tab you will check the box to close to account   

                  3. Enter the reserve account number. 

            ii. If you want to see the reserve balance updated each month you will need to  follow the steps listed under 3a (the same steps for comingled accounts). 

      c. For either of these options, you can consider using the recurring entries journal entry  feature in Caselle.

4. Add the reserve account(s) to the board/council reports as needed.  Please feel free to contact  Civic support for assistance adjusting these reports.  

5. If you are currently set up with your reserve accounts as cash reserve accounts instead of equity  reserve accounts you will need to make the following adjustments. 

      a. Verify amounts are current. 

      b. Create reserve equity accounts (see notes in step 2). 

      c. Record the JE journal entry to credit the reserve cash account and debit the general  checking cash account.  With that same entry, credit the reserve equity account and  debit the unreserved‐            undesignated fund balance account. 

      d. Adjust the bank reconciliation book balance to include these funds (this step may not be  necessary depending on how/whether you were using the Caselle bank reconciliation program.)