Reconcile cash swept into deposit and investment accounts

Read the agreement for the deposit or investment sweep before creating an import rule. Establish whether the company receives a direct bank statement, a placement-service allocation report or a custodian's investment statement. Record the destination owner, product type, currency and evidence source, together with the balance threshold that triggers each movement.

A sweep into a money market fund involves an investment product. The SEC distinguishes those funds from bank money market deposit accounts and explains that fund investments do not have FDIC deposit insurance. If a service places deposits at several banks instead, review its deposit-placement and ownership records. Use the underlying arrangement to select the accounting treatment.

Build a transfer register from the operating statement and the receiving statement. Preserve the outgoing date, incoming date, amount and references separately. A sweep can appear in one system before the corresponding receipt appears in another. Mark that item in transit and follow it to completion instead of forcing both statements to use the same date.

For an illustrative daily sweep, $42,000 leaves the operating account after the payment run and appears in the destination account the following business day. The reconciliation needs one movement of $42,000, supported on both sides. An import rule that records the withdrawal as an expense and the receipt as revenue overstates both activity measures.

Read the destination statement for interest, distributions, fees, purchases, redemptions and any changes in value. Match the statement's terminology to the applicable accounting policy. A sweep returning $42,060 does not establish that the entire receipt is sales income, nor does it establish that all $60 is interest without supporting detail.

Where distributions are reinvested, the account balance can rise without a matching operating-bank receipt. Keep that activity in the reconciliation. Ask the accountant how to recognize income and measure the asset under the company's reporting framework. Retain trade confirmations or detailed statements when a summary balance cannot explain the movement.

Reconcile each account first, then review the sweep register for unmatched items across the cutoff. Identify pending redemptions, rejected transfers and movements reversed after month-end. Trace exceptions to the next statement and retain evidence of resolution. Review the direction of each transfer so a withdrawal and its reversal do not appear as two additions to cash.

Compare the total with the balance sheet after accounting for investment classification and access restrictions. A zero operating-account balance can be the intended result of the sweep while the business still holds funds elsewhere. Management's cash view should state which destinations are available for payments and how long access normally requires under the actual agreement.

An accounting engagement should specify who obtains the sweep statement and who resolves bank-side exceptions. Access only to the operating feed leaves the reviewer observing one end of every movement. Agree a practical delivery date for the destination records and keep evidence of any manual adjustments.

When changing banks or sweep products, reconcile the final redemption, residual earnings and remaining fees before retiring the old account mapping. Confirm whether automatic transfers have stopped. A forgotten sweep instruction can move funds after the team believes the transition is finished and create a fresh reconciliation difference in an account no one is watching.