ATM Reconciliation Manual

ATM Reconciliation Manual

Outline1. General Description of ATM

2. Parties involved in ATM3. CLASSIFICATION OF ATM TRANSACTIONS4. Accounting Entries 5. Operation of the ATM6. Basic message type in an ATM transactions 7. Associated Risks in the Operations of The ATM8. Overview of the ATM9. ATM RECONCILIATION10. ATM CONTROL PROCEDURES

General Description of ATM

The Automated Teller Machine (ATM) is a machine that enables customers carry out basic financial and non-financial transactions without necessarily coming into the banking hall. Such transactions include cash withdrawals, account balance enquiry, mini statements, bill payments e.t.c.

ATM can be installed through the wall or placed in the lobby. Characterized by stout and decent, safe and reliable, easy to maintain. It is very suitable for banks, postal savings to provide self-service to the public, and will offer a general solution for your automatization desire.

General Description of ATM

ATM can offer the following services

1. Withdrawal

2. Enquiry

3. Pin Change

4. Transfer

5. Voice Prompt

6. Payment (optional)

7. Multimedia Ads (optional)

8. Invoice Print (optional)

9. IC Card Services (optional)

10. Privacy Filter (optional

Parties involved in ATM

When a card is used in an ATM, several parties are involved. 1. Cardholder

A cardholder is the person to whom a plastic card has been issued by a card issuer. Typically, the cardholder is responsible for all charges on and debit transactions against that card.2. Card issuer

A card issuer is an institution (typically a bank or card scheme) that issues cards to its account holders. The issuer is ultimately responsible for authorizing transactions against the cardholder’s account. Once a transaction has been authorized, the issuer deducts the transaction amount from the cardholder’s account and is then responsible for settlement; that is, insuring that payment is made to the acquirer either directly or via the card scheme (e.g. MasterCard or Visa).3. Acquirer

An acquirer is a bank or institution that provide /own the ATM 4. Processor

Processors acquire transactions that originate at ATMs owned by third parties (usually independent sales organizations - ISOs). They then process these transactions, routing them via regional and national networks to issuers. They also receive settlement from the issuing banks and distribute this to the various participants who facilitated the transaction (e.g. ISOs). 

CLASSIFICATION OF ATM TRANSACTIONS

There are basically three types of transactions, which can exist under the ATM network of any bank. They are the following1. On-us transaction: 2. Remote-On-us Transaction: 3. Not-On-us-transactions:

In modern terms this three basic terminology have change to:1. On-us transaction OCOM (Our Card Our Machine)2. Remote-On-us Transaction OCTM (Our Card There Machine)3. Not-On-us-transactions: TCOM (There Card Our Machine) 

Accounting Entries

ON US (OCOM)

Any time there is OCOM transactions, the Customer’s account is debited for both the actual amount and charges. While ATM Cash GL account is credited with the actual amount,

The system automatically: Debits the customer’s account with the transaction amount Credits the ATM CASH GL with the transaction amount

Accounting Entries

REMOTE ON US (OCTM):

Any time there is OCTM transactions, the Customer’s account is debited for both the actual amount and charges where applicable. While payable account is credited with the actual amount, the ATM fee payable account is credited with the charges.The system automatically: Debits the customer’s account with the transaction amount Credits the payable account with the transaction amount Debits customer’s account with charges where applicable Credits fee payable with the charges.

Accounting Entries

NOT-ON US (TCOM)

The system automatically:

• Debits Receivable account

• Credits ATM Cash GL

Operation of the ATM

The following are the nuggets concerning the operation of the ATMS• ATM terminal is installed and attached to a General Ledger on CBA.• ATM cash is operated like an impress system i.e cash remaining in the ATM is retired into the branch (cash unload) and fresh amount loaded into it (Cash Load)

The following are the accounting entries passed during the operation of the ATMS• It is expected that the ATM cash GL reflects the real position of cash available in the ATMs at any point in time.• The ATM cash GL is expected to be nilled off at the point of cash unloads.

Basic message type in an ATM transactions

Code Message type Category Use0100 Authorization Request Real time Requests authorization for a tnx .Used for an

approval for reservation of funds. does not result in funds transfers. fund transfer occurs later. Often encountered in car rentals and hospitals industries

0110 Authorization Request Response

Real time Response to an authorization request indicating full approval ,partial approval or a decline

0120 Authorization Advice Store and forward Advises to an authorization entity of an authorization txns (eg stand-in authorization ) that as been perform

0130 Authorization Advice Response Store and forward Response to an authorization advice indicating whether the authorization entity accepts or rejects the authorization

0200 Transaction Request Real time Request an authorization and capture. On approval funds are transferred immediately. Used in ATM and many debit card txns

0210 Transaction Request Response Real time Response to txns request, indicating full approval, partial approval or declined.

0202 Transaction Completion Store and forward Indicate the final disposition of a txns in a dual message pair system. Follows a txns request response

0212 Transaction Completion Response

Store and forward Response to a txns completions in a dual message pair system

0220 Transaction Advice Store and forward Advises an authorization entity of a txns that has been performed

0230 Transaction Advice Response

Store and forward Responds to a txns advise

Basic message type in an ATM transactions

Code Message type Category Use0400 Acquirer Reversal Request Real time Used to fully or partially reverse a

previous authorization or funds transfers

0410 Acquirer Reversal Request Response

Real time Used to response to a prior 0400 or 0401.

0420 Reversal Advice Store and forward Fully or partially reverses a previous authorization or txns, including a refund. Must be matched to a previous txns to have any effect. A time limit usually applies to reversals.

0430 Reversal Response Store and forward Responds to a reversal advice0520 Acquirer Reconciliation

AdviceReal time Used to indicate batch cutover. Can be

received from a downstream entity or sent to an an upstream entity. The totals contained in the message are those of the acquirer

0530 Acquirer Reconciliation Advice Response

Real time Used to response to a prior 0520 or 0521. indicate whether reconciled totals matched

       

Associated Risks in the Operations of The ATM

  Activity Risk Implication Mitigant

1 ATM set up Mapping wrong GL to the ATMs *Distortion banks books i.e GL carrying unusual balances.*spurious postings into such GLs are not easily detected

*reconciliation of ATM cash with balances on GLs

2 Cash Load *loading lower amount on ATMs than amount posted into the ATM GLs.

*Cash pilferage.*GL carrying unusual debit balances*

*Daily reconciliation of ATM cash related transactions*Periodic ATM cash investigations*Loading in the presence of control officer 

3 Cash Unload *posting lower amount than actual cash unloaded from ATM into the GL

*Cash Pilferage*ATM GL carrying unusual balance

*Reconciliation*unloading in the presence of control officer

4 Unusual activities

*Direct pilferage of cash from the ATM i.e reduction of cash balances from ATM without the use of customer’s card.

*Loss of fund to the bank. *Dual Control of ATM keys and combinations*Cash Investigation*cash count

         

Overview of the ATM

1. Lighting 2. Invoice Slot 3. Card Entry Slot 4. Receipt Issue Slot 5. Cash Slot 6. Numeric Keypad 7. User Monitor 8. Function Keypad 9. Through-the-wall Frame

Overview of the ATM

1. Diagnostic Unit Display Window 2. Cabinet Door

Overview of the ATM

1. Lamp Control Module 2. Power Supply 3. Journal Printer 4. Safe Door 5. Dispenser 6. Main Switch 7. Industrial PC 8. RS232 Hub 9. Receipt Printer 10. Diagnostic Unit 11. Card Reader 12. User Monito

ATM RECONCILIATION

The need for the reconciliation of ATM cannot be over-emphasised. Just like human tellers balancing their Teller tills, ATM tills need to be balanced on a daily basis. If this is done the risks associated above would be mitigated and deviations from standard easily and quickly identified for necessary action.ATM reconciliation involve the monitoring of the total life cycle of an ATM transaction. It start from the point of cash load into the ATM to the point of cash dispense. It try to provide the answers to questions such as :How Why When What Of a transactions failure. With reconciliation you can determine at what point a transactions failed. E.g. is it at the point of request, or at the point of authorization or at the point of dispense.ATM reconciliation is best done by an automation process. We have a lot of Application that automat the reconciliation process of ATME.G Corona, Clirec

ATM RECONCILIATION

ATM Reconciliation Process

ATM Reconciliation should be done daily by designated staff. Just like a human teller balance his till daily the ATM is expected to do the same. ATM Reconciliation has two aspects. Cash reconciliation and ATM Transactions Reconciliation. The following are the Reports need for the Reconciliation

ATM Electronic Journal …………………… ATM MachineATM cash GL Transaction…………………. Banking Application

ATM RECONCILIATION

ATM Reconciliation Process

RECONCILIATION RESPONSIBILITY

FREQ Process

Cash Reconciliation:-

Review of ATM Journal Balances to physical cash counts in ATM Machine canisters and Reject Bins

BRANCH Daily or At each Cash loading

(The Cash activity is a process to determine the expected physical cash remaining in the ATM machine. Get the cash loaded posted on your CBA and deduct all cash withdrawals on the ATM from the point of the cash load using either Postilion or the E-journal).

ATM Transactions Reconciliation :-

ATM CASH GL VS ATM ELECTRONIC JOURNAL

BRANCH ……. Daily Spool ATM transactions from your CBA Spool ATM cash withdrawal transactions

from Postilion or E-Journal Match the two set of data using agreed

matching criteria e.g. RRN or Stan depending on the data set

 

ATM RECONCILIATION

ATM Reconciliation Process

Cash Reconciliation is done to determine

The expected Physical Cash in the Machine at any point in time.To compare the cash offloaded in the ATM Machine with the Expected Physical cashTo determine if there is an overage/ Shortage in the ATM.To determine if there is cash theft in the ATM machine

ATM RECONCILIATION

ATM Reconciliation Process

Exceptions types from ATM Transactions Reconciliation are listed below.S/N Exception type Courses Corrective Actions

1 Un-dispensed cash transactions Customer request for an amount (N20, 000) on the ATM. The customer was debited for the Amount but cash was not dispense.

Dr:- ATM cash GLCr:- Customer Account With full amount (N20,000) Dr:- Fee PayableCr Customer Account with Fee. Where applicable. For Non customer.Dr:-ATM cash GLCr :-Relevant Account in Flexcube With full amount (N20,000) Dr:- Fee PayableCr:-Relevant Gl in Flexcube with Fee.    

2 Partial Dispense Customer requested for an amount (N20, 000) on the ATM .customer was debited for the Amount but ATM dispensed an amount less than what was requested (N15, 000.00).

Dr:- Customer Account with Amount that was dispensed (N15,000.00)Cr:- ATM cash GL with Amount that was dispense (N15,000.00) Dr:- ATM Cash GL with Amount that was requested (N20,000.00)Cr:- Customer Account with Amount that was requested (N20,000.00)Dr Fee PayableCr Customer Account with Fee. Where applicable. For Non customer.Dr:- relevant GL with Amount that was dispense (N15,000.00)Cr:- ATM cash GL with Amount that was dispense (N15,000.00) Dr:- ATM Cash GL with Amount that was requested (N20,000.00)Cr:- relevant Gl with Amount that was requested (N20,000.00)Dr Fee PayableCr:-Relevant GL in Flexcube with Fee. .  

3 Transactions that did not impact on ATM cash GL 1. Wrong mapping 2. Transactions defaulted to ATM suspense Account

Dr:- relevant GL in FlexcubeCr :-ATM cash GL 

4 Transactions did not impact Flexcube Flexcube Challenges Dr:- relevant GL in Flexcube/Customer AccountCr :-ATM cash GL 

5 Expected Physical Cash greater than what was posted by Branch as cash offloaded

1. Retractions     2. Cash theft

1. Dispute Team will investigate further before crediting the customer Account.   2. Control and investigation unit to investigate branch  

6 Cash Load outstanding on ledger side (Flexcube) 1. Cash load may have been posted in to wrong ATM cash GL

 2. Wrong mapping

  

3. Cash load may not have been posted same day cash was loaded

1. Reversal should be made into the correct ATM cash GLDr ATM cash GLCr relevant GL

2. Correct wrong mapping (control to investigate) 

3. Control to investigate and ensure cash is posted.

       

ATM CONTROL PROCEDURES

Ensure cash load and unload are done in the presence of at least 2 staff with the control officer present.Available cash on the ATM at the time of load must be evacuated and properly documented, posted into flexcube and fresh cash loaded into the ATM.Ensure that cash load certificates are properly signed and reviewed by control officersA copy of the cash load certificate must be properly referenced and filed.ATM cash print out must be attached to the cash load certificate and where the print out is not available the cash position be manually copied out and signed off by a senior officer. Ensure dual control/custody of ATM keys/combinations.Ensure daily reconciliation of the ATM cash GLs and cash available on the ATMs.Proper review and investigation of open items before approved corrective entries are passed.Compulsory unload and loading of ATMs on Fridays every week to ascertain the actual cash positions for investigative and other purposes.

Thank you Pastor Charles. Itsuokor