The Importance of ATM Reconcilition

1. ATM Reconciliation Manual

2. ATM Reconciliation Manual
Outline
1. General Description of ATM
2. Parties involved in ATM
3. CLASSIFICATION OF ATM TRANSACTIONS
4. Accounting Entries
5. Operation of the ATM
6. Basic message type in an ATM transactions
7. Associated Risks in the Operations of The ATM
8. Overview of the ATM
9. ATM RECONCILIATION
10. ATM CONTROL PROCEDURES

3. 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.

4. 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

5. 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).

6. CLASSIFICATION OF ATM TRANSACTIONS
There are basically three types of transactions, which can exist under the ATM network of any bank.
They are the following
1. 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)

7. 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

8. 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.

9. Accounting Entries
NOT-ON US (TCOM)
The system automatically:
• Debits Receivable account
• Credits ATM Cash GL

10. 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.

11. Basic message type in an ATM transactions
Code Message type Category Use
0100 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

12. Basic message type in an ATM transactions
Code Message type Category Use
0400 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 advice
0520 Acquirer Reconciliation
Advice
Real 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

13. 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

14. 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

15. Overview of the ATM
1. Diagnostic Unit Display Window 2. Cabinet Door

16. 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

17. 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 ATM
E.G Corona, Clirec

18. 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 Machine
ATM cash GL Transaction…………………. Banking Application

19. 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

20. 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 cash
To determine if there is an overage/ Shortage in the ATM.
To determine if there is cash theft in the ATM machine

21. 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 GL
Cr:- Customer Account
With full amount (N20,000)
Dr:- Fee Payable
Cr Customer Account with Fee. Where applicable.
For Non customer.
Dr:-ATM cash GL
Cr :-Relevant Account in Flexcube
With full amount (N20,000)
Dr:- Fee Payable
Cr:-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 Payable
Cr 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 Payable
Cr:-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 Flexcube
Cr :-ATM cash GL
4 Transactions did not impact Flexcube Flexcube Challenges Dr:- relevant GL in Flexcube/Customer Account
Cr :-ATM cash GL
5 Expected Physical Cash greater than what was posted by Branch as cash
offloaded
1. Retractions
1. Cash theft
1. Dispute Team will investigate further before crediting the customer Account.
1. 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
1. Wrong mapping
1. Cash load may not have been posted same day cash was
loaded
1. Reversal should be made into the correct ATM cash GL
Dr ATM cash GL
Cr relevant GL
1. Correct wrong mapping (control to investigate)
1. Control to investigate and ensure cash is posted.

22. 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 officers
A 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.