Morningstar Office uses a cash accounting method for transactions, and each custodian has its own cash account with a name unique to that custodian. A cash account is a “passthrough” account required by Morningstar Office to track the cash flow of transactions (with the exception of certain accounts from Charles Schwab and DST Vision).
That is, every time a client purchases a security, a corresponding withdrawal from the cash account takes place as well. Likewise, when a client sells a security, a deposit is made into the cash account. These transactions are referred to as cash offset transactions.
Cash accounts typically maintain a zero balance since they represent funds for (or proceeds from) a transaction that are required to move through these accounts before the funds reach their final destination, either as a security a client owns, or in a client’s money market account. It is extremely important to use the proper cash account when entering manual transactions.
When importing data into Morningstar Office, if the Custodian positions do not match the positions in Office, this creates an out of balance situation. This topic covers examples of cash out of balance transactions, and how to research and fix them.
After you have reconciled all of your out of balance (OOB) security positions, focus on your cash OOB. In most cases, once you successfully reconciled your security OOB, the Cash OOB will resolve itself. Cash OOB are often the most challenging OOB to fix because most transactions have an offsetting Cash transaction, which means that the cause of a cash OOB could be linked to almost any transaction in the account. Once you identify a cash OOB, fix it immediately. The longer you wait to fix a Cash OOB, the more challenging it will be to identify, especially when multiple transactions contribute to the OOB.
Click here 
for more information on the cash security type and how it is used with transactions. Click here to view the cash account that is used for a specific Custodian.
Follow the process listed below to research and fix a Cash OOB.
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Step |
Action |
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Determine when the Cash OOB occurred. |
The first step when researching a Cash OOB is to determine when the transaction occurred. Click here |
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Compare Morningstar Transactions against Custodian Transactions |
Compare the Morningstar transactions against the custodian files. Click here |
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Review the Audit Report |
If you cannot find any discrepancies after the Last Successful Reconciled date, then most likely something was changed after this date on an earlier transaction. If there were any changes or deletions made to any transaction in the account, it will be noted in the Audit Report, including the date the change\deletion was made. Click here |
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Review Running Share Balance |
If Cash usually keeps a zero balance at the custodian, you can look at the Running Share Balance in Office to see when the current OOB first occurred. You can tell if the custodian usually keeps a zero balance by looking at the Custodian Position (Shares) column within the Failed blotter. If the line item is blue and it has "0" listed, then most likely, the Cash is a sweep account and should keep a zero balance. Follow these instructions to determine the timeframe that the OOB first occurred:
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Compare Month-end Statements |
If the Cash has been out of balance for a long time and there is uncertainty as to when that occurred, it may be helpful to compare month-end statements in Office against the custodian files. The Portfolio Current Value report can be used to view values as of a date range.
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Researching Custodian Specific Cause |
In some cases the out of balance is specific to the custodian. |
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Forcing the OOB to be in Balance |
As a last resort, you can force the OOB into balance. Click here |
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Fix the Discrepancy |
Once you have found the OOB, you can add, edit, or delete transactions as needed. Click here |
In some cases, custodian specific causes could be the reason for the Cash OOB.
LPL Data
When working with American Depositary Receipt (ADR) transactions, distributions will incur a foreign tax fee. LPL will send additional transactions to account for the tax withheld fee that will cause your Cash to become out of balance. The additional transactions include the following.
LPL will send down two distributions and a Distribution Reinvest:
Distribution before tax is withheld.
Distribution for the withheld amount
Distribution Reinvest for the original distribution amount minus the tax withholding
To resolve this situation, complete the following steps:
Manually change the Distribution Reinvest transaction to a Buy transaction. Click here for information on how to manually change a transaction type.
Delete the Distribution transaction that accounts for the tax withholding (do not delete the tax withheld transaction). Click here for information on how to delete a transaction.
Delete the Cash Balance Deposit for the amount of the distribution before the tax withheld.
Fidelity Advisor Channel Interface
If the account gets dividend checks sent to the client, then Cash in Morningstar Office will always be plus the amount of the dividends since the last dividend check. When the dividend check gets sent, the Cash will go to 0 (zero) and there will be no reconciliation OOB. As soon as there is another dividend, Cash will again be plus the amount of the dividend, whereas the custodian position will be 0 (zero) when reconciling.
This OOB is resolved by switching to our Fidelity Wealth Central/Fidelity Streetscape hybrid interface in Morningstar Office. Please call support at 866 215-2503 and we will assist you with this process.
See Also
Using the Audit Report to find Updated or Deleted Transactions
Comparing Custodian and Morningstar Transactions
Forcing a Reconciliation Out of Balance to be In Balance
Determine When the Holding Reconciliation Out of Balance Occurred
Changing Transactions in the Reconciliation Blotter