Accountants of Metafilter, please help me not go crazy.
February 28, 2015 4:51 AM   Subscribe

No, nothing to do with taxes. I am a night auditor now, and the job is seriously activating my analytical streak. I'm pretty good at figuring out how things interact in our system and why they do what they do, but there is a vale I cannot penetrate, though there be wonders beyond it: what the $#&*# is a System Suspense Account?

It's like magic, you see. It balances the General Ledger when something is wrong. It lurks inexplicably at the bottom of the hotel's G/L report, almost always the same seemingly random dollar amount in both columns. Occasionally it is not even there. And I do not want it to be magic, I want it to be a thing that I understand. And, maddeningly, the internet refuses to help me in my quest.

Where does it come from? What determines how much money is in it on any given day? Is it even money? How does it fix the balance if it's off? Why is it occasionally not on the G/L report? Is it a thing in accounting in general, or just in some specific instances? Is there another name for it which might result in a few more explanatory and less abstruse google hits? Is there a Secret Accounting Cabal which guards this information against outsiders who do not bear the Sacred Mark? The System Suspense Account is like my little friend, faithfully guarding me against unbalanced audits. I like to know something about my friends.

I am not sure why I have fixated so on this, but I have, and it's driving me bats. Does anyone, anyone know anything about this sort of thing?

Pretty sure this is the silliest question I have ever asked.
posted by Because to Work & Money (5 answers total) 7 users marked this as a favorite
I'm not an accountant, but I am an IT guy who has supported accounting systems for a couple of decades or so. I've only rarely seen this terminology in the industries I've worked with. When I have seen it, it has been used in cases where something that would normally be a single general ledger transaction actually has two or more separate processes behind it, at least one of which can theoretically fail.

So instead of debit account A, credit account B, you get something that looks like debit account A, credit System Suspense Account, then later (maybe seconds later when it works), debit System Suspense Account, credit account B. Anything left over in the System Suspense Account is a sign that something is incomplete and should probably be looked into further (though depending on the process, that may be just a matter of waiting for the whole process to complete).

The classic example would be something like withdrawing money from an ATM. Presumably we verify the customer account has enough money first, then dispense money, then update customer account balance. Suppose due to the intricacies of the banking system, customer account balance updates happen on an entirely different system vs. cash being dispenses by ATMs, and both of those systems feed transactions to the GL.

You would then see something like, one transaction for the cash going out, balanced by an entry to system suspense, and then (hopefully) a few seconds later, the transaction for customer balance decrease also balanced by the opposite entry to system suspense. But if the customer balance updating system breaks... then you've got a balance left over in system suspense.

This is how I've seen it used, and only rarely. I have no idea if this is standard use of the terminology or not.
posted by FishBike at 5:22 AM on February 28, 2015

I've never done night auditing, but the suspense account is where you put transactions that you don't have any classification for. So if you received a payment but aren't sure what invoice to apply it to, it goes in the suspense account.

It should be the same amount in both columns, since any credits will be balanced by a debit somewhere else. I suspect it is related to the way your company receives payments, and it's just unprocessed payments left over at the end of each day. Wikipedia says:

"In branchless banking (BB) - banking through mobile for unbanked - these accounts are used for 'money-in-transit'. For example, sender sends payment from US ACH account to a BB mobile number in Japan. The customer receives an alert on their mobile to withdraw this money from any BB agent. Until they withdraw, the remittance stays in the suspense account, earning the financial institute or the BB enabler float/interest on that money. When customer withdrawal completes, the money moves from suspense account to the agent's account who facilitated the cash withdrawal."

If it's not the same amount every night, or god forbid getting bigger every night, it's probably working itself out somewhere.
posted by natteringnabob at 5:31 AM on February 28, 2015

It's the junk drawer of accounting. When you don't know what something is or where it goes, put it in suspense.

When I was an auditor, suspense accounts were always a giant headache because you had to untangle the bowl of spaghetti if it was material. And because it's iffy, you had some heightened fraud risk and had to review it if it wasn't material.

There are certainly legit purposes (I do pro bono accounting, and use it for stuff when I need to do some work still. example: it's where I stick gross proceeds where there's a basis adjustment to make in order to get to gain), but it should be reconciled and zeroed out regularly.
posted by jpe at 5:55 AM on February 28, 2015 [1 favorite]

The stuff I've done is smaller businesses, but in that case, LOTS of stuff goes to live in a similar account at first, but it's temporary. I think "suspense" here is less "mystery" than in the sense of "suspended"--temporarily paused in that location before going elsewhere. Technically speaking, it's not on the GL because it's not a GL account. It's not real. If it was real, it would be something like "miscellaneous expense". It's there because you can't make the journal entry without both sides. It won't necessarily be the same debit as credit, I don't think, because the opposing ends of the transaction are elsewhere. We know this money came out of the bank account, but it's not immediately apparent why; we want the bank account to reflect the change but we don't know where the other side goes.

Ideally, everything gets neatly filed away in its place. In practice, if it's not material, I believe the technical term is "well just stick it wherever"--categorize it somewhere to get the thing to balance. But if it's showing up regularly and this is a larger organization, chances are there's some part of this process where there's a slight delay in how the information about how to account for a transaction gets to the person who inputs that information. In a small business after-the-fact context, I've had clients where "Ask Client" was the so-called account at the bottom of the chart of accounts in QuickBooks, and half their monthly bank statement would wind up there and we'd send them the report and they'd send it back with more information. So, it's not scary unless it sticks around.
posted by Sequence at 6:53 AM on February 28, 2015 [3 favorites]

I've seen it on reports, usually when a step is incomplete or run out of sequence. One example, if you were take a pricing file and the fund is updating at the cusip level. At time x, the close reports can be run, but say the mutual fund is missing a secondary exchange rate file or it would report a wrong figure for securities not priced correctly. On some systems it would clear if you re-applied in the correct sequence. Other times a secondary report can drill down and point out what that amount relates to. It is the replication of the error once corrected that can be harder to do or explain when researching. Do you have a system manual that will spill out the "guts" of the ledger balances or explain the reports basis? That would be the IT world implementing the end users (accountants) of Debits and Credits to the accounting platform to build the different ledger reports.
posted by brent at 8:12 PM on March 1, 2015

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