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What is a Reconciliation Statement?

A reconciliation statement is a document that begins with a company's own record of an account balance, adds and subtracts reconciling items in a set of additional columns, and then uses these adjustments to arrive at the record of the same account held by a third party. The intent of the reconciliation statement is to provide an independent verification of the veracity of the balance in the company account, as well as to clarify the differences between the two versions of the account.

The differences between the two accounts are detailed in the reconciliation statement, which makes it easier to determine which of the reconciling items may be invalid and in need of adjustment. Reconciliation statements are a useful tool for both internal auditors and external auditors. External auditors will likely want to use internally-prepared reconciliation statements as part of their auditing procedures, since the statements allow them to focus on reconciling items, especially in large-balance accounts that are materially significant components of the financial statements.

When to Use a Reconciliation Statement

Reconciliation statements are commonly constructed in the following situations:

Bank accounts . The bank reconciliation compares the balances between a company's version of its cash balance and the bank's version, typically with many reconciling items for such items as deposits in transit and uncashed checks. This reconciliation is typically provided as a module within a company's accounting software.

Debt accounts . The debt reconciliation compares the debt amounts outstanding according to the company and its lender. There can be differences requiring reconciliation when the company pays the lender, and the lender has not yet recorded the payment in its books.

Accounts receivable . The receivables reconciliation is usually constructed on an informal basis for individual customers, and compares their version of outstanding receivable balances to the company's version.

Accounts payable . The payables reconciliation is also usually constructed on an informal basis by individual supplier, and compares their version of outstanding payable balances to the company's version.

At a minimum, reconciliation statements are useful for noting timing differences in when the same transaction is recorded by both parties to it. The statements are even more useful for clarifying substantial differences between the amounts recorded for a transaction, which may require adjustments by either party to modify their recorded balances.

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Bank Reconciliation Statement

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Why is bank reconciliation important?

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What Is a Bank Reconciliation Statement, and How Is It Done?

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

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What Is a Bank Reconciliation Statement?

A bank reconciliation statement is a summary of banking and business activity that reconciles an entity’s bank account with its financial records. The statement outlines the deposits, withdrawals, and other activities affecting a bank account for a specific period. A bank reconciliation statement is a useful financial internal control tool used to thwart fraud .

Key Takeaways

Understanding the Bank Reconciliation Statement

Bank reconciliation statements ensure that payments have been processed and cash collections have been deposited into the bank. The reconciliation statement helps identify differences between the bank balance and the book balance to process necessary adjustments or corrections. An accountant typically processes reconciliation statements once per month.

For example, a business has an operating account with a balance of $15,000 on July 1. During the course of the month, they write three checks for $1,000, $397, and $1,900. They also make a deposit of $7,000. According to their reconciliation statement, they have a balance of $18,703, but the book balance shows a balance of $18,648. Upon looking at the bank reconciliation statement, they found that they didn’t record the account’s $25 monthly service fee. They also find that the check for $397 was mistakenly cashed for $367 instead. They can now take steps to rectify the errors and balance their statements.


Software that automates bank reconciliation can help reduce errors associated with manual processing.

How to Do a Bank Reconciliation

To successfully complete your bank reconciliation, you’ll need your bank statements for the current and previous months as well as your company ledger . Many templates available online can help guide you, but a simple spreadsheet is just as effective.

All deposits and withdrawals posted to an account must be used to prepare a reconciliation statement.

The balance of the cash account in an entity’s financial records may require adjusting as well. For instance, a bank may charge a fee for having the account open. The bank typically withdraws and processes the fees automatically from the bank account. Therefore, when preparing a bank reconciliation statement, any fees taken from the account must be accounted for by preparing a journal entry.

Another item that requires an adjustment is interest earned. Interest is automatically deposited into a bank account after a certain period of time. Thus, the accountant may need to prepare an entry that increases the cash currently shown in the financial records. After all adjustments are made to the books, the balance should equal the ending balance of the bank account. If the figures are equal, then a successful bank reconciliation statement has been prepared.

Benefits of a Bank Reconciliation Statement

Bank reconciliation statements are effective tools for detecting fraud. For example, if a check is altered, resulting in a payment larger than anticipated, measures can be taken to interrupt the unscrupulous activity.

Bank reconciliation statements also help identify errors that could adversely affect financial reporting. Financial statements show the health of a company for a specific period or point in time and are often used to calculate profitability. Accurate financial statements allow investors to make informed decisions and give companies clear pictures of their cash flows .

Reconciling bank statements helps to identify errors that affect tax reporting. Without reconciling, companies may pay too much or too little in taxes.

Example of a Bank Reconciliation Statement

Bank reconciliation statements compare transactions from financial records to those on a bank statement. Where there are discrepancies, companies are able to identify the source of errors and correct them.

For example, ABC Holding Co. recorded an ending balance of $480,000 on its records. However, its bank statement shows an ending balance of $520,000. After careful investigation, ABC Holding found that a vendor’s check for $20,000 had not been presented to the bank, and a $20,000 deposit made by a client was inadvertently omitted from the company’s records. Therefore, ABC Holding adjusted its records, noting the check as outstanding and adding the missing deposit.

What are the steps in a bank reconciliation?

The first step in reconciling a bank statement is to compare financial record activities to bank statement activities. For any bank errors, unaccounted-for deposits, and unpresented checks, adjustments to the bank statement balance should be made. Some personal or business accounts do not account for bank-related additions and charges, such as interest and maintenance fees. Adjustments should be made to the cash account records for these differences. Once corrections and adjustments are made, compare the balances to see if they match. If not, repeat the process until the accounts are reconciled.

What are common problems with bank reconciliations?

Infrequent reconciliations make it difficult to address problems when they arise, as the needed information may not be readily available. Also, when transactions are not recorded promptly and when bank fees and charges apply, a mismatch can occur.

Where do non-sufficient funds (NSF) checks go on a bank reconciliation?

Non-sufficient funds (NSF) checks are recorded as an adjusted book balance line item on the bank reconciliation statement, with the NSF amount deducted from its balance.

Bank reconciliation helps to identify errors that can affect tax and financial reporting. It also helps to identify and further prevent fraud.

How often should you do a bank reconciliation?

To quickly identify and address errors, reconciling bank statements should be done monthly or as frequently as statements are generated.

Bank reconciliation statements are useful check-and-balance tools used to detect errors, omissions, and fraud. When done frequently, they help companies thwart fraud before serious damage occurs and prevent errors from compounding. It is also a simple and invaluable process to help manage cash flows.

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A bank reconciliation statement is a document prepared by a company that shows its recorded bank account balance matches the balance the bank lists. This statement includes all transactions, such as deposits and withdrawals, from a given timeframe.

Many companies produce bank reconciliation statements regularly to ensure they’ve recorded all their banking transactions properly and that their ending balance matches the amount the bank says they have.

What is the purpose of a bank reconciliation statement?

Bank reconciliation statements can help identify accounting errors, discrepancies and fraud. For instance, if the company’s records indicate a payment was collected and deposited, yet the bank statement does not show such a deposit, there may have been a mistake or fraud.

Making sure a company’s and its bank’s listed balances align is also a way to ensure the account has sufficient funds to cover company expenditures. The process enables the company to record any interest payments the account has earned or fees the bank has charged.

The reconciliation process allows a business to understand its cash flow and manage its accounts payable and receivable.

How to do a bank reconciliation

Before sitting down to reconcile your business and bank records, gather your company ledger and the current and previous bank statements. You can get a template online to use for your bank reconciliation statement, or you can use a spreadsheet.

Step 1: Find the starting balance

If you’re doing a reconciliation every month, your starting balance will be the final balance from the previous month.

Step 2: Review the deposits and withdrawals

Check your ledger’s recorded deposits, withdrawals and cleared checks against those listed on the bank statement. Ensure all of the amounts match up, and investigate any discrepancies. Everything listed on the bank statement should be included in your records and vice versa.

Step 3: Adjust the cash balance

Starting with your bank statement balance , add any deposits you’ve made that have not yet cleared. Likewise, deduct any checks that have yet to clear. Your result is the adjusted cash balance. Adjusting the cash balance ensures your ledger’s balance and the bank statement balance will match.

Step 4: Account for interest and fees

Search the bank statement for any interest your account earned during the month, then add it to your reconciliation statement. Also, deduct any penalties or fees the bank assessed that your ledger doesn’t list.

Step 5: Compare end balances

After reviewing all deposits and withdrawals, adjusting the cash balance and accounting for interest and fees, your ledger’s ending balance should match the bank statement balance. If the two balances differ, you’ll need to look through everything to find any discrepancies. These could be your errors or the bank’s .

Bank reconciliation example

Regularly creating a bank reconciliation statement allows you to find errors by comparing your company ledger with your bank statement. Then, you can correct your records as needed.

For instance, say your company’s ledger has a recorded ending balance for a given month of $350,000. However, the bank statement lists an amount of $347,000. In comparing your ledger with the bank statement, you find that the record of a company check for $3,000 was inadvertently omitted from your book. You add the check to your records, and now the two balances match up.

Bottom line

A bank reconciliation statement is important in managing your business’ finances . This document can help ensure that your bank account has a sufficient balance to cover company expenses. It’s a tool for understanding your company’s cash flow and managing accounts payable and receivable. If you haven’t been using bank reconciliation statements, now is the best time to start.

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Bank Reconciliation

Connecting bank accounts to financial statements

What is a Bank Reconciliation?

A bank reconciliation statement is a document that compares the cash balance on a company’s balance sheet to the corresponding amount on its bank statement. Reconciling the two accounts helps identify whether accounting changes are needed. Bank reconciliations are completed at regular intervals to ensure that the company’s cash records are correct. They also help detect fraud and any cash manipulations.

Reasons for Difference Between Bank Statement and Company’s Accounting Record

When banks send companies a bank statement that contains the company’s beginning cash balance , transactions during the period, and ending cash balance, the bank’s ending cash balance and the company’s ending cash balance are almost always different. Some reasons for the difference are:

Nowadays, many companies use specialized accounting software in bank reconciliation to reduce the amount of work and adjustments required and to enable real-time updates.

Bank Reconciliation Procedure

XYZ Company is closing its books and must prepare a bank reconciliation for the following items:

Bank Reconciliation Statement

After recording the journal entries for the company’s book adjustments, a bank reconciliation statement should be produced to reflect all the changes to cash balances for each month. This statement is used by auditors to perform the company’s year-end auditing.

Bank Reconciliation Statement

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Video Explanation of Bank Reconciliation

Below is a video explanation of the bank reconciliation concept and procedure, as well as an example to help you have a better grasp of the calculation of cash balance.

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How to do bank reconciliation.

How to Do Bank Reconciliation?

To do a bank reconciliation you would match the cash balances on the balance sheet to the corresponding amount on your bank statement, determining the differences between the two in order to make changes to the accounting records, resolve any discrepancies and identify fraudulent transactions.

What this article covers:

How Often Should You Reconcile Your Bank Account?

What is the purpose of bank reconciliation.

NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area .

H ow Do You Reconcile a Bank Statement?

To reconcile a bank statement, the account balance as reported by the bank is compared to the general ledger of a business.

Businesses maintain a cash book to record both bank transactions as well as cash transactions. The cash column in the cash book shows the available cash while the bank column shows the cash at the bank.

Similarly, the bank too keeps an account for every customer. In the bank books, the deposits are recorded on the credit side while the withdrawals are recorded on the debit side. The bank sends the account statement to its customers every month or at regular intervals.

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Sometimes these balances do not match. The business needs to identify the reasons for the discrepancy and reconcile the differences. This is done to confirm every item is accounted for and the ending balances match.

To do this, a reconciliation statement known as the bank reconciliation statement is prepared.

Bank Reconciliation: A Step-by-Step Guide

You receive a bank statement, typically at the end of each month, from the bank. The statement itemizes the cash and other deposits made into the checking account of the business. The statement also includes bank charges such as for account servicing fees.

Once you’ve received it, follow these steps to reconcile a bank statement:


Match the deposits in the business records with those in the bank statement. Compare the amount of each deposit recorded in the debit side of the bank column of the cashbook with credit side of the bank statement and credit side of the bank column with the debit side of the bank statement. Mark the items appearing in both the records.


Adjust the balance on the bank statements to the corrected balance. For doing this, you must add deposits in transit, deduct outstanding checks and add/deduct bank errors.

Deposits in transit are amounts that are received and recorded by the business but are not yet recorded by the bank. They must be added to the bank statement.

Outstanding checks are those that have been written and recorded in cash account of the business but have not yet cleared the bank account. They need to be deducted from the bank balance. This often happens when the checks are written in the last few days of the month.

Bank errors are mistakes made by the bank while creating the bank statement. Common errors include entering an incorrect amount or omitting an amount from the bank statement. Compare the cash account’s general ledger to the bank statement to spot the errors.


The next step is to adjust the cash balance in the business account.

Adjust the cash balances in the business account by adding interest or deducting monthly charges and overdraft fees. 

To do this, businesses need to take into account the bank charges, NSF checks and errors in accounting.


After adjusting the balances as per the bank and as per the books, the adjusted amounts should be the same. If they are still not equal, you will have to repeat the process of reconciliation again.

Once the balances are equal, businesses need to prepare journal entries for the adjustments to the balance per books.

Ideally, you should reconcile your bank account each time you receive a statement from your bank. This is often done at the end of every month, weekly and even at the end of each day by businesses that have a large number of transactions.

Before the reconciliation process, business should ensure that they have recorded all transactions up to the end of your bank statement. Businesses that use online banking service can download the bank statements for the regular reconciliation process rather than having to manually enter the information.

Automated Stress Free Accounting

The bank reconciliation process offers several advantages including:

Bank reconciliation done through accounting software is easier and error-free. The bank transactions are imported automatically allowing you to match and categorize a large number of transactions at the click of a button. This makes the bank reconciliation process efficient and controllable.

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How To Solve Real-Life Problems Of Bank Reconciliations (With Examples)

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In the bank reconciliation process, the transactions recorded in the company’s cash book are compared with the bank’s passbook to identify any inconsistencies in the day-to-day transactions. In this simple process of tallying the cash book and bank statement, there could be multiple errors. These errors or bank reconciliation problems might differ based on the size of the organization.

In this blog, we will introduce you to some real-life bank reconciliation examples as well as the major roadblocks faced by organizations while reconciling their bank statements .

4 Common Examples of Bank Reconciliation Statement

Before deep diving into the practical examples of bank reconciliation statements, let us go through a few terminologies which are used in a recurring way while explaining the examples:

Example #1: Cash Book Balance More Than Bank

ABC Corp, has a balance of $2000 as per passbook as on 31st march 2021. However, the balance as per cash book as on 31st march 2021 is  $2210.

Let’s Understand the Transaction Details

Solution #1: Bank Reconciliation Statement(BRS) Format

Bank reconciliation statement for the above transactional details

Example #2: Cash Book Balance More Than Bank

JPN & Co, has a balance of $20,000 as per passbook as on 31st march 2021.

Let’s Understand the  Transaction Details

Solution #2: Bank Reconciliation Statement(BRS) Format

Bank reconciliation statement for the above transactional details

Example #3: Bank Balance More Than Cash Book

Markson’s & co. has a difference in balance as per cash book and bank statement as on 31st march 2021.

Solution #3: Bank Reconciliation Statement(BRS) Format

Bank reconciliation statement for the above transactional details

Example #4: Cash Book Balance More Than Bank

Rutherford Inc. has  a difference in the balance as on 31st March 2021 between the bank statement and cash book.

Let’s Understand the Transaction Details:

Cash Book (March 2021) for Rutherford Inc:

Transactional details

Bank statement (March 2021) for Rutherford  Inc:

Transactional details

Solution #4: Bank Reconciliation Statement(BRS) Format

Bank reconciliation statement for the above transactional details

The balance transactions would appear in the Bank Reconciliation Statement:

Bank reconciliation statement for the above transactional details

Challenges Faced While Preparing Bank Reconciliation Statements

Businesses can gain a variety of advantages from effective reconciliation processes . Without good reconciliation, it is difficult determining which expected payments haven’t been made. In addition to detecting fraud, cash book and bank reconciliation statements allow you to quickly identify any potential disruptions in your cash flow .

However, even today, the bank reconciliation process is highly manual in nature. The accountants are responsible for manually comparing the passbook and the cash book to prepare bank reconciliation statements. Additionally, sometimes due to the delay in cash being processed in the bank, there is a difference between the passbook and the cash book. This might lead to multiple errors or inconsistencies in the bank reconciliation statement. Let us explore the various problems in bank reconciliation process and real-life examples of errors in bank reconciliation:

In case of electronic fund transfers such as ACH , wire transfers, credit card payments , the cash is not immediately reflected in the bank, which leads to a difference in the passbook as compared to the cash book.

This is a predominant issue which leads to multiple errors in bank reconciliation statements. If there is a delay in checks getting deposited or being processed, the balance on the password would not match the cash book balance.

As discussed earlier, bank reconciliation is a highly manual process. The accountants might enter incorrect transaction details or not add the bank fees or interest details mistakenly. These human errors might lead to problems in the bank reconciliation process and eventually the statement.

Automate 95% of the account reconciliation process reduce workload by 50% with HighRadius Bank Reconciliation

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How To Do A Bank Reconciliation: Step By Step

Mitch Strohm

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Updated: Aug 2, 2021, 7:00am

How To Do A Bank Reconciliation: Step By Step

Keeping accurate records of your bank transactions can help you determine your financial health and avoid costly fees. One way to keep accurate records is through bank reconciliation. Using this simple process each month will help you uncover any differences between your records and what shows up on your bank statement.

Reconciling your bank statement used to involve using a checkbook ledger or a pen and paper, but modern technology—apps and accounting software—has provided easier and faster ways to get the job done. Regardless of how you do it, reconciling your bank account can be a priceless tool in your personal finance arsenal.

Here’s a look at what it means to reconcile your bank account, why it’s important and how to do a bank reconciliation.

What Is a Bank Reconciliation?

Bank reconciliation is the process of comparing accounting records to a bank statement to identify differences and make adjustments or corrections. In the case of personal bank accounts, like checking accounts , this is the process of comparing your monthly bank statement against your personal records to make sure they match. Many banks allow you to opt for fee-free electronic bank statements delivered to your email, but your bank may mail paper bank statements for a fee.

The goal of bank account reconciliation is to ensure your records align with the bank’s records. This is accomplished by scanning the two sets of records and looking for discrepancies. If you find any errors or omissions, determine what happened to cause the differences and work to fix them in your records.

The Benefits of Reconciling Your Bank Account

Reconciling your bank accounts each month has several benefits:

How to Do a Bank Reconciliation

It can be helpful to reconcile your bank accounts every month. Consider performing this monthly task shortly after your bank statement arrives so you can manage any errors or improper transactions as quickly as possible. Follow these steps to reconcile your bank accounts each month.

Step 1. Choose Your Method for Reconciliation

How you choose to perform a bank reconciliation depends on how you track your money. Some people rely on accounting software or mobile apps to track financial transactions and reconcile banking activity. Others use a paper checkbook, and balance it each month , to keep a record of any written checks and other transactions. You can also opt to use a simple notebook or spreadsheet for recording your transactions.

Whatever method you prefer, it’s important to keep solid records of every transaction to reconcile your bank account properly.

Step 2. Compare Deposits

Compare your personal transaction records to your most recent bank statement. First, make sure that all of the deposits listed on your bank statement are recorded in your personal record. If not, add the missing deposits to your records and your total account balance.

Next, check to see if all of the deposits listed in your records are present on your bank statement. If the bank didn’t receive a deposit, investigate why it’s missing.

The deposit could have been received after the cutoff date for the monthly statement release. Depending on how you choose to receive notifications from your bank, you may receive email or text alerts for successful deposits into your account. Look at your history to check for a missed notification. Contact your bank to investigate further and find where the issue lies. Once solved, be sure to adjust your records to reflect deposits as needed.

Step 3. Compare Withdrawals

As with deposits, take time to compare your personal records to the bank statement to ensure that every withdrawal, big or small, is accounted for on both records. If you’re missing transactions in your personal records, add them and deduct the amount from your balance. If you’re finding withdrawals that aren’t listed on the bank statement, do some investigation. If it’s a missing check withdrawal, it’s possible that it hasn’t been cashed yet or wasn’t cashed by the statement deadline.

Step 4. Look for Bank Adjustments

There could be transactions unaccounted for in your personal financial records because of a bank adjustment. This may occur if you were subject to any fees, like a monthly maintenance fee or overdraft fee . For interest-bearing accounts, a bank adjustment could be the amount of interest you earned over the statement period.

If you find any bank adjustments, record them in your personal records and adjust the balance accordingly. If you’ve been charged a fee in error, contact your bank to resolve the issue.

Tips for a Successful Bank Reconciliation

Reconciling your bank accounts is a relatively quick and straightforward process, depending on the number of monthly transactions you make. It’s an important piece of the personal finance puzzle to ensure accuracy and help you achieve your financial goals. Below are some other tips to consider as you plan to reconcile your bank accounts:

Bottom Line

Taking the time to perform a bank reconciliation can help you manage your finances and keep accurate records. This relatively straightforward and quick process provides a clear picture of your financial health. Consider reconciling your bank account monthly, whether you set aside a specific day each month or do it as your statements arrive.

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Kevin Payne is a personal finance and travel writer who covers credit cards, banking, and other personal finance topics. In addition to Forbes, his work has been featured by Bankrate, Fox Business, Slick Deals, and more. He is the budgeting and family travel enthusiast behind Family Money Adventure. Kevin lives in Cleveland, Ohio with his wife and four kids.

Managing Editor, Global Data and Automation for Forbes Advisor. Mitch has more than a decade of experience as personal finance editor, writer and content strategist. Before joining Forbes Advisor, Mitch worked for several sites, including Bankrate, Investopedia, Interest, PrimeRates and FlexJobs.

How to Check a Bank Reconciliation Statement – Top Tips

This Top Tip gives advice on how to check a bank reconciliation statement.

A bank reconciliation is a very powerful control tool that enables the organisation to identify omissions and errors in its own records, as well as being the only way to spot cheque fraud, bank errors and even bank fraud.

It is therefore very important for managers to carefully check bank reconciliation statements every month.

What is a Bank Reconciliation?

The bank reconciliation process involves checking the entries and the closing balance in the Cashbook (also called the Bank Book) with the entries and closing balance on the bank statement for the same period, to make sure the closing balances agree and to explain any differences.

This helps to pick up any missing items and incorrect entries in the records and to ensure that our accounts are accurate and complete.

For most NGOs, bank reconciliation is a monthly routine. For bank accounts that have a high volume of transactions, weekly or even daily reconciliation is advised. Even for bank accounts that are not very active, a monthly bank reconciliation is recommended due to the risk of bank fraud.

A bank reconciliation statement should be prepared every month end for every bank account held and then reviewed and signed by another responsible person such as the manager or Treasurer. The signed statements should then be carefully filed in date order for each account.

To complete the review of a bank reconciliation statement, you will need access to:

What should you look for on the Bank Reconciliation Statement?

1. check the dates.

Is the date of the closing balance on the bank statement the same as the closing balance date in the cashbook? For example, if the bank statement is dated 29 January and the cashbook date is 31 January, the bank reconciliation will not be comparing like with like.

2. Check the cashbook balance

Does the stated cashbook closing balance actually agree to the cashbook?

3. Check the bank statement balance

Does the stated bank statement closing balance actually agree to the bank statement?

4. Check the structure of the reconciliation statement

Does the reconciliation statement provide details of the differences between the bank statement and cashbook balances at the month end? Do the figures add up correctly?

5. Check the outstanding items listed on the reconciliation statement

Does each of the outstanding items seem to be reasonable? These will include un-cleared cheques or cash deposits, bank interest or charges, and direct debits or bank transfers. Anything very old, very large or peculiar should be checked out. For example, a cheque that keeps appearing as un-cleared month after month could mean it is lost. Cheques do eventually become “stale” (usually after 6 months) so these must be followed up.

Check to see if missing items such as bank charges and deposits (ie appearing on the bank statement) have now been entered in the cashbook.

6. Check some cashbook entries

From time to time, it is a good idea to do a ‘spot check’ on some cashbook entries (eg for unusual or large purchases and cash receipts) to ensure the entries are valid.

For example, check the cash paying-in book to see how long it took between the cash being received and the actual banking date. It is reasonable to expect that cash is paid into the bank within 3 to 5 days for cashflow and security reasons (but check your NGO’s own policy on this). If it regularly takes 3 to 4 weeks, the money could be being ‘borrowed’ or put at risk of theft.

7. Check for ‘transposed’ numbers with the ‘magic number 9’

Sometimes the reconciliation statement will show an unexplained difference. In such cases, divide the difference figure by 9 (or add up the digits and see if it comes to 9). If it divides out evenly, then there’s a good chance that the difference is caused by a transposed number (ie where two numbers are reversed when entered).

For example, if $2,196 is entered incorrectly as $2,916 this would result in an unexplained difference of $720. We can see that 720 is divisible by 9 because 7 + 2 + 0 = 9. Magic! [If the difference figures add up to more than 9, eg 18, add together those digits too, so 1 + 8 = 9].

8. Show you’ve been here!

It can be helpful to put ticks against what you have checked, and then sign and date the reconciliation statement as evidence for the auditors that the reconciliation has been reviewed by a manager. The person preparing the reconciliation statement should also sign the form, of course.

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