8.2 Journal, Deal File, Ledger & Monthly Reconciliation

Journal, Deal File, Ledger & Monthly Reconciliation

A special account without a matching set of books is still a 1440.270 problem. After allowing one special account or several, 1440.270(c) requires a licensee who accepts escrow monies to maintain a special account and to maintain a bookkeeping system in the office or place of business, including systems of electronic data processing. Software is allowed. A shoebox of deposit slips is not a system. 1440.270(e) adds that the Division shall make available for distribution, on request, samples of approved bookkeeping systems. Using a Division sample is not mandatory. The four pieces below are.

Those four pieces exist so that, on any given day, the firm can prove every escrow dollar is still where the rule says it should be. 20-15(16) then requires the same records to be produced to Department personnel during normal business hours within 24 hours after a request — a clock Section 8.3 treats as its own disciplinary ground. This section teaches what the books must contain and how a reconciliation either ties or fails.

(1) Journal — chronological sequence and a running balance

For each special account, the licensee shall keep a record book called a journal that shows:

• the chronological sequence in which escrow monies were received and disbursed, and
• a running balance after each entry.

After each entry is the tested phrase. A journal that lists deposits in a column and only computes a balance at month-end does not satisfy 1440.270(c)(1). If the firm maintains three special accounts, it maintains three journals. One combined spreadsheet that does not identify the account is not "a journal for each special account."

Electronic journals count if they still show sequence and a running balance after each receipt or disbursement. Deleting a row to "clean up" a bounced check, instead of entering the reversing entry, destroys the chronological record. Back-dating a deposit so a late 270(g) item looks timely is a false record problem under 20-15(17) as well as a journal problem.

(2) Deal file — clerk sheets and settlement sheets

For each auction, the licensee shall keep a deal file that contains clerk sheets and settlement sheets that correspond to journal entries.

The deal file is the sale-level story:

• Clerk sheets record what sold, to whom, and for how much — the lots and hammer prices that explain the deposits.
• Settlement sheets itemize gross proceeds, commission, authorized advertising and other contract expenses, and the net due the seller — the math that explains the disbursements.
• Correspond to journal entries means a reviewer can pick a $12,400 deposit on Tuesday's journal line and find the clerk and settlement pages that produced it.

A folder of advertising proofs with no clerk sheet is not a deal file. A settlement email that does not tie to the journal is not correspondence. Multiple auctions may share one special account (270(c) allows that), but each auction still needs its own deal file. Section 8.3 uses the settlement sheet again when the seller is paid.

(3) Ledger — deposits in, payee out

The licensee shall keep a record or account ledger (e.g., check ledger) that shows:

• the date and amount of monies deposited into the special account, and
• the date, amount, and payee of any money disbursed from the special account.

The parenthetical "check ledger" is in the rule. A checkbook register that omits electronic transfers, or a deposit log that never names the payee of a disbursement, is incomplete. The ledger is the account-level register. The journal is the chronological running-balance book. They must be reconcilable to each other and to the bank. A ledger that says only "misc." or "seller" without a payee does not meet 1440.270(c)(3).

(4) Monthly three-way reconciliation

Bank statements for each special account shall be reconciled monthly within 10 days after the receipt of the bank statement, except where there has been no transactional activity during the previous month.

Parse the exception. No transactional activity during the previous month is what excuses the worksheet — not "I was on vacation," not "the bookkeeper is part-time," and not "the statement arrived late so I will catch up at tax time." If a statement covering an active month is received on June 4, the reconciliation is due by June 14. The clock runs from receipt of the bank statement, not from the last day of the statement period and not from the date of the last sale.

The reconciliation shall include a written work sheet comparing the balances as shown on the bank statement, the journal and the ledger, respectively, in order to insure agreement between the special account and the journal and the ledger entries. That is a three-way comparison:

Agreement means the three, after documented timing items, match. A worksheet that compares only the bank and the checkbook, and ignores the journal, is not the worksheet 270(c)(4) describes. A worksheet that is mental arithmetic with no writing is not a written work sheet.

Each reconciliation shall be kept for at least three years from the last day of the month covered by the reconciliation. Retention is measured from the last day of the month covered, not from the day the worksheet was signed and not from the auction date. A May 2026 reconciliation completed on June 8, 2026, is kept at least until May 31, 2029. Throwing out the May worksheet in January 2029 because "it is more than three years from the sale" is still early.

Mini reconciliation that ties

Assume the June statement arrives July 3. Reconcile by July 13 (10 days after receipt). June had transactional activity, so the no-activity exception does not apply.

Special-account activity in June:

• Beginning book balance (journal and ledger): $18,000 (a $200 opening/service-charge cushion allowed by 270(f) plus $17,800 remaining seller funds).
• June 2 deposit: buyer funds $40,000. Running balance $58,000.
• June 5 check 1101 to seller A, $17,800. Running balance $40,200.
• June 12 check 1102 to the firm operating account for contract commission and authorized ads, $4,200. Running balance $36,000.
• June 20 deposit: buyer funds $12,000. Running balance $48,000.
• June 28 check 1103 to seller B, $10,800. Running balance $37,200.

Bank statement ending balance: $48,000. Outstanding check 1103 (written June 28, not yet cleared): $10,800. No deposit in transit.

Adjusted bank: $48,000 − $10,800 = $37,200.

Journal running balance: $37,200. Ledger: $37,200. Adjusted bank: $37,200. The written worksheet records those three figures, notes outstanding check 1103, and is filed with the June statement. This reconciliation is kept at least until June 30, 2029 (three years from the last day of the month covered).

Mini reconciliation that does not tie

Same facts, except the bank statement ending balance is $45,000, there is still only outstanding check 1103 of $10,800, and no deposit in transit.

Adjusted bank: $45,000 − $10,800 = $34,200.

Journal and ledger still say $37,200. The worksheet does not agree. A $3,000 shortage is not a rounding error. It is not cured by dropping $3,000 of personal funds into the special account to force a match — that extra personal deposit is still commingling under 270(f) unless it is the narrow opening/service-charge cushion, which $3,000 is not. Until the three-way worksheet agrees, the account is not reconciled, even if the journal happens to match the ledger. Investigate immediately: a missing deposit, an unauthorized debit, a check that cleared without a ledger payee line, or conversion-style use of seller money.

Keep the four pieces together in your head for PSI items:

1. Journal — sequence plus running balance after each entry, per account.
2. Deal file — clerk sheets and settlement sheets per auction, corresponding to the journal.
3. Ledger — deposit date/amount and disbursement date/amount/payee.
4. Reconciliation — written bank/journal/ledger worksheet within 10 days of statement receipt; keep three years from the last day of the month covered.

If an item asks whether software is allowed, say yes — 270(c) expressly includes electronic data processing — but the four contents do not go away because the firm bought a program. If an item asks whether IDFPR will hand you a system, 270(e) says samples of approved systems are available on request; it does not replace the duty to keep the books.