Bank Reconciliation Manual

A user guide for the bank reconciliation program A teaching & learning resource for how to prepare a bank reconciliation

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How to use this manual

If you are already familiar with bank reconciliations: You just need to read the short chapter 'Bank Reconciliation Page'. If you are using this resource to learn or teach how to prepare a bank reconciliation: The key chapter is 'Bank Reconciliation: Step by Step' Note to teachers / finance trainers: to demonstrate the concepts detailed in the chapter Bank Reconciliation: Step by Step you can use the bank reconciliation program with a worked example. You could then give the students a reconciliation to complete using the program.

Where to download the 'Bank Reconciliation Program'

The program is available free of charge to download on the following websites: Scribd (www.scribd.com) Sourceforge (www.sourceforge.net) (Google Scribd Rupert Parsons or Sourceforge Rupert Parsons User Profile)

Copyright
Bank Reconciliation Manual Copyright 2013 Rupert Parsons This document is licensed under the Creative Commons Attribution Share Alike License version 3. You may copy, distribute and/or modify it under the conditions stipulated in the copyright licence. Click the link below to view the details of the copyright licence which applies to this publication: http://creativecommons.org/licenses/by-sa/3.0/deed.en

Author y Feedback
Author: Rupert Parsons If you would like to make any comments or suggestions about this guide please write to me at: rupertparsons@users.sourceforge.net (or leave a comment on Scribd / Sourceforge).

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Table of Contents
Introduction .................................................................................................................................................... 1 What is a bank reconciliation?.......................................................................................................................... 2 Benefits of a bank reconciliation....................................................................................................................... 2 Example of a bank reconciliation...................................................................................................................... 3 Bank Reconciliation Page.............................................................................................................................. 4 Overview........................................................................................................................................................... 5 Configuration.................................................................................................................................................... 6 Cut & Paste / Cell Drag & Drop (disabled)........................................................................................................ 8 Bank Reconciliation: Step by Step................................................................................................................ 9 Step 1: Preparation......................................................................................................................................... 10 Step 2: Receipts in the accounts (cash book).................................................................................................11 Step 3: Bank receipts...................................................................................................................................... 14 Step 4: Payments in the accounts (cash book)............................................................................................... 17 Step 5: Bank payments................................................................................................................................... 20 Step 6: Corrected bank errors......................................................................................................................... 23 Step 7: Review the bank reconciliation........................................................................................................... 24 Step 8: Print bank reconciliation..................................................................................................................... 27 Step 9: Corrections......................................................................................................................................... 30

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Introduction

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What is a bank reconciliation?

The bank reconciliation compares the bank balance according to the accounts (general ledger bank account or cash book) with the bank statement balance at a particular date. Normally there is a difference between the balance per the accounts and the bank statement. This is due to timing differences and errors such as: Money banked by an organisation but which has not cleared the bank (timing differences). Payments issued which has not yet been presented by the supplier to the bank (timing differences). Bank charges & interest applied but which has not yet been recorded in the accounts. Accounting errors. Bank errors. There is almost always a difference between the balance per the accounts and the bank statement and so the bank reconciliation involves comparing the entries in the accounts with the bank statement to identify what gave rise to the difference. Entries which are responsible for the difference are known as reconciling items. The bank reconciliation should be performed at least once a month to ensure errors and problems are identified on a timely basis. It is also easier to complete a bank reconciliation when it is done regularly.

Benefits of a bank reconciliation

Doing a bank reconciliation may appear to be tedious & time consuming particularly for a small business or charity. However, the exercise has a number of very important benefits: Provides an early indicator of fraud (particularly if money banked does not appear on the bank statement in the current or following months). Helps to identify accounting errors. Identifies bank errors. Ensures that the accounts reflect the true cash position of the organisation. Identifies payments that have been lost in transit The bank reconciliation is one of the most important internal controls in any organisation.

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Example of a bank reconciliation

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Bank Reconciliation Page

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Overview
The bank reconciliation page is divided into 6 sections. Each reconciling item must be registered, using the yellow spreadsheet cells, in the appropriate section: 1. Receipts in the accounts, not on the bank statement 2. Payments in the accounts, not on the bank statement 3. Receipts on the bank statement, not in the accounts 4. Payments on the bank statement, not in the accounts 5. Receipts both in the accounts and on the bank statement but registering different amounts 6. Payments both in the accounts and on the bank statement but registering different amounts

The reconciliation is complete when there is no unexplained difference i.e. the total of the reconciling items matches the difference between the bank balance according to the accounts and the bank statement:

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Configuration
To erase reconciling items Go to the observation spreadsheet cell and select 'Erase reconciling item':

A message appears to confirm that you want to erase the data. Click Yes to confirm:

Alternatively, you can manually erase the reconciling item from the yellow spreadsheet cells. To remove blank rows above and between completed rows After erasing reconciling items, blank rows may appear above and between completed rows:

To remove these blank rows click 'Sort by date':

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The blank rows will be moved to the end of the section and you can then delete these rows (see following section).

Adding & deleting rows Under each section there are buttons for adding & deleting rows. The 'Insert Row' button adds a row under the last row of the section. The 'Delete Last Row' button deletes the last row of the section.

Sort by date The 'Sort by date' button not only removes blank rows but also ensures reconciling items are shown in date order (from earliest to latest). This makes it easier to identify receipts and payments that need to be investigated because they have not appeared in the bank statement after a certain period of time. Cut & paste / cell drag & drop On the bank reconciliation page you will not be able to cut & paste. Also cell drag & drop is disabled. Go to the following page for further details.

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Cut & Paste / Cell Drag & Drop (disabled)

On the bank reconciliation page, cut & paste and cell drag and drop are disabled by the program. This is to protect the formulas and cell formats which can be seriously corrupted by these functions. However, you are still able to copy & paste. When you close the bank reconciliation program, cut & paste / cell drag & drop functionality are completely restored. If you open another spreadsheet while the program is still running and you are using the same instance of Excel, cell drag & drop is disabled in the other spreadsheet. However, you will still be able to cut & paste. To enable cell drag & drop in other spreadsheets: Close the bank reconciliation program. or Open the other spreadsheet(s) in a separate instance of Excel. To open a spreadsheet in a separate instance of Excel, click the excel icon and then open the spreadsheet.

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Bank Reconciliation: Step by Step

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Step 1: Preparation
Review the bank statement On receipt of the bank statement you should make sure the accounts (cash book) are updated for: Bank interest & charges Direct debits Standing Orders Bank transfers

Unlike cheques, it is possible not to be aware of these items until the bank statement is received. The more up to date are the accounts, the less work is involved in preparing the bank reconciliation. Bank Reconciliation Program (if you are using the program for the first time click 'Setup' on the home page and enter the name of your organisation, bank account name & currency symbol. You must also enter the bank reconciliation of the previous month). Open the bank reconciliation program for the previous month. Click the button 'Bank Rec.' Create a copy of the spreadsheet using Save As.. Click the 'Enter month & year' button. Enter the month of the bank reconciliation and change the year if necessary. Click the 'Enter bank balance' button. Enter the bank balance according to the accounts (cash book) and the bank statement. If there is a difference between the bank balance according to the accounts and the statement: Click the 'Bank Reconciliation Page' button. Go to Step 2 on the following page.

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Step 2: Receipts in the accounts (cash book)

For each receipt registered in the accounts (cash book) during the month of the bank reconciliation, you need to determine whether or not there is a corresponding receipt on the bank statement. As a result of this comparison one of the following scenarios will apply to each receipt: The corresponding receipt is found on the bank statement and the amounts agree. The corresponding receipt is found on the bank statement but the amounts do not agree. No corresponding receipt is found on the bank statement. To illustrate, take the following simple example: Cash Book May 2012 (Receipts)
Date 04/05/2012 14/05/2012 30/05/2012 Details Government grant Donations Course Fees Deposit Ref. TFR D566903 D566904 Amount 1,500.00 Receipt on bank statement and amounts agree 480.00 Receipt on bk statement but amounts do not agree 600.50 Receipt is not on the bank statement

Bank Statement May 2012 (Receipts)

Date 02/05/2012 10/05/2012 17/05/2012 Details Deposit 566902 UK Grants Authority Deposit 566903 Amount 250.00 1500.00 Receipt in cash book and amounts agree 380.00 Receipt in cash book but amounts do not agree

Note that the first entry on the bank statement (250) does not appear in the accounts. These receipts are dealt with in Step 3 Bank Receipts. The purpose of this exercise is solely concerned with looking at the receipts in the accounts and searching for the corresponding receipts on the bank statement. The following pages explain how each receipt (recorded in the accounts) needs to be dealt with in the bank reconciliation according to the scenarios detailed above.

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If the corresponding receipt is found on the bank statement and the amounts agree In this case the receipt is not responsible for the difference between the balance according to the accounts and the bank statement. Therefore, do not register the receipt in the bank reconciliation. If the corresponding receipt is found on the bank statement but the amounts do not agree Register the receipt in section 5 of the bank reconciliation page: 5. Receipts both in the accounts and on the bank statement but registering different amounts Receipts that show different amounts will be caused by an accounting error or more rarely by a bank error. For each of such receipts you will need to find out whether an accounting or bank error was responsible for the different amounts and then record which type of error it is in the observation column:

If no corresponding receipt is found on the bank statement Register the receipt in section 1 of the bank reconciliation page: 1. Receipts in the accounts, not on the bank statement Each receipt in this section will be due to one of the following reasons: Deposit not cleared the bank If the receipt represents cheques and / or cash deposited, the most likely explanation is that they have been banked but have not yet been processed & recorded (cleared) by the bank. In the observation column, the receipt should be recorded as a 'Deposit not cleared the bank'. Bounced cheque A 'bounced cheque' is a cheque which has been banked but the cheque amount has not been passed on. This can be due to insufficient funds in the account of the person or organisation issuing the cheque. A cheque can also bounce if it has been incorrectly prepared (e.g. signatures, date). In the observation column, the receipt should be recorded as a 'Bounced cheque'.

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Accounting error Possible accounting errors: A payment has been entered on the wrong side of the general ledger bank account (as a debit) or on the receipts side of the cash book. The receipt has been entered twice. In the observation column, the receipt should be recorded as an 'Accounting error'. Bank error More rarely the receipt is not on the bank statement due to a bank error. In the observation column, the receipt should be recorded as a 'Bank error'.

Note that in section 1 (receipts in the accounts, not on the bank statement) the amounts are positive in the 'reconciling item' column. This is because these reconciling items cause the bank balance registered in the accounts to be greater than the actual bank statement balance.

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Step 3: Bank receipts

If step 2 has been completed correctly, the remaining receipts on the bank statement will be those that do not appear in the accounts (cash book) in the month of the reconciliation. This is the case with the deposit of 250 from the example used to illustrate step 2: Bank Statement May 2012 (Receipts)
Date 02/05/2012 10/05/2012 17/05/2012 Details Deposit 566902 UK Grants Authority Deposit 566903 Amount 250.00 1,500.00 Receipt in cash book and amounts agree 380.00 Receipt in cash book but amounts do not agree

The reason why receipts appear on the bank statement but not in the accounts depends on whether cheques and / or cash are deposited: If cheques and / or cash are deposited The most common explanation for such receipts are timing differences i.e. the receipt has cleared the bank statement this month but was deposited in the bank and recorded in the accounts in a previous month. Remember from step 2 that receipts which have not appeared on the bank statement due to timing differences (deposits not cleared the bank') are recorded in section 1 of the bank reconciliation. Therefore, for each of these receipts, you first of all need to determine if the receipt has been registered in section 1 of the bank reconciliation page: 1. Receipts in the accounts, not on the bank statement As a result of this exercise one of the following scenarios will apply to each receipt: The corresponding receipt is found in section 1 and the amounts agree. The corresponding receipt is found in section 1 but the amounts do not agree. The corresponding receipt is not found in section 1 of the bank reconciliation. The following pages explain how each of these receipts need to be dealt with in the bank reconciliation according to the scenarios detailed above. If all receipts are received directly into the bank account (no cheques or cash banked) Go directly to the scenario on the following page: The corresponding receipt is not found in section 1 of the bank reconciliation.

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If the corresponding receipt is found in section 1 and the amounts agree The receipt needs to be erased from the bank reconciliation as it is now both correctly reflected in the accounts and the bank statement. This can be done manually or the program can do it for you by going to the observation column and from the drop down list selecting 'Erase reconciling item':

If the corresponding receipt is found in section 1 but the amounts do not agree Erase the corresponding receipt from section 1 of the bank reconciliation page. Then register the receipt in section 5 of the bank reconciliation page: 5. Receipts both in the accounts and on the bank statement but registering different amounts Receipts that show different amounts will be caused by an accounting error or more rarely by a bank error. For each of such receipts you will need to find out whether an accounting or bank error was responsible for the different amounts and then record which type of error it is in the observation column:

The corresponding receipt is not found in section 1 of the bank reconciliation If the amount is a correction by the bank for a previous error, this is dealt with in Step 6: Bank Errors Corrected. If the amount is not a correction by the bank, register the receipt in section 3 of the bank reconciliation page: 3. Receipts on the bank statement, not in the accounts

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Each receipt in section 3 will be due to one of the following reasons: Bank interest If the amount is bank interest, then the accounts / cash book has not been updated to reflect this. Some organisations do not update the accounts for bank interest until after the bank reconciliation has been done. In this case such income will always appear on the bank reconciliation as a reconciling item. In the case of bank interest, this should be recorded in the observation column as 'Bank interest ' or as an 'Accounting error'. Accounting error The most likely accounting error is that the receipt has been credited directly to the bank account due to a direct debit received, bank transfer or standing order. It is easy to forget to update the accounts for these types receipts because there may be no notification of such amounts until they appear on the bank statement (unlike cheques & cash received). There are other types of accounting errors which can cause the receipt to appear on the bank statement but which cannot be found in the accounts: The receipt was entered in the accounts, but on the wrong side of the general ledger bank account (as a credit) or on the payments side of the the cash book. The receipt was entered in the accounts, but to the wrong general ledger account. Whatever the reason, the receipt should be recorded in the observation column as an a 'Accounting error'. Bank error More rarely the receipt appears in the bank statement due to a bank error i.e. it is not income belonging to the organisation. In the observation column the receipt should be recorded as an a 'Bank error'.

Note that in section 3 (receipts on the bank statement, not in the accounts) the amounts are negative in the 'reconciling item' column. This is because these reconciling items cause the bank balance in the accounts to be less than the actual bank statement balance.

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Step 4: Payments in the accounts (cash book)

For each payment registered in the accounts (cash book) during the month of the bank reconciliation, you need to determine whether or not there is a corresponding payment on the bank statement. As a result of this comparison one of the following scenarios will apply to each payment: The corresponding payment is found on the bank statement and the amounts agree. The corresponding payment is found on the bank statement but the amounts do not agree. No corresponding payment is found on the bank statement. To illustrate, take the following simple example: Cash Book May 2012 (Payments)
Date 02/05/2012 10/05/2012 28/05/2012 Payee / Details S.Knowles (Rent) Car Repairs Ltd IT Solutions Ltd Payment Ref. S0 Visa C754718 Amount 800.00 Payment on bank statement and amounts agree 112.34 Payment on bk statement but amounts do not agree 1400.84 Payment is not on the bank statement

Bank Statement May 2012 (Payments)

Date 02/05/2012 08/05/2012 18/05/2012 Details Standing Order Cheque 754714 Visa Debit Amount 800.00 Payment in cash book and amounts agree 430.00 102.34 Payment in cash book but amounts do not agree

Note that the entry of 430 on the bank statement does not appear in the accounts. These payments are dealt with in Step 5 Bank Payments. The purpose of this exercise is solely concerned with looking at the payments in the accounts and searching for the corresponding payments on the bank statement. The following pages explain how each payment (recorded in the accounts) needs to be dealt with in the bank reconciliation according to the scenarios detailed above.

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If the corresponding payment is found on the bank statement and the amounts agree In this case the payment is not responsible for the difference between the balance according to the accounts and the bank statement. Therefore, do not register the payment in the bank reconciliation. If the corresponding payment is found on the bank statement but the amounts do not agree Register the payment in section 6 of the bank reconciliation page: 6. Payments both in the accounts and on the bank statement but registering different amounts Payments that show different amounts will be caused by an accounting error or more rarely by a bank error. For each of such payments you will need to find out whether an accounting or bank error was responsible for the different amounts and then record which type of error it is in the observation column:

If no corresponding payment is found on the bank statement Register the payment in section 2 of the bank reconciliation page: 2. Payments in the accounts, not on the bank statement Each payment in this section will be due to one of the following reasons: Unpresented cheque If a cheque has been issued for the payment, the most likely explanation is that it has not yet been deposited (presented) by the supplier and / or processed (cleared) by the bank. In the observation column, the payment should be recorded as an 'Unpresented cheque'. Accounting error Possible accounting errors: A receipt has been entered on the wrong side of the general ledger bank account (as a credit) or on the payments side of the cash book. The payment has been entered twice. In the observation column, the payment should be recorded as an 'Accounting error'.
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Bank error More rarely the payment is not on the bank statement due to a bank error. In the observation column, the payment should be recorded as a 'Bank error'.

Note that in section 2 (payments in the accounts, not on the bank statement) the amounts are negative in the 'reconciling item' column. This is because these reconciling items cause the bank balance registered in the accounts to be less than the actual bank statement balance.

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Step 5: Bank payments

If step 4 has been completed correctly, the remaining payments on the bank statement will be those that do not appear in the accounts (cash book) in the month of the reconciliation. This is the case with the payment of 430 from the example used to illustrate step 4: Bank Statement May 2012 (Payments)
Date 02/05/2012 08/05/2012 18/05/2012 Details Standing Order Cheque 754714 Visa Debit Amount 800.00 Payment in cash book and amounts agree. 430.00 102.34 Payment in cash book but amounts do not agree.

The reason why payments appear on the bank statement but not in the accounts depends on whether cheques are issued for some or all payments: If cheques are issued for some or all payments The most common explanation for such payments are timing differences i.e. the payment has cleared the bank statement this month but was issued and recorded in the accounts in a previous month. Remember from step 4 that payments which have not appeared on the bank statement due to timing differences (unpresented cheques') are recorded in section 2 of the bank reconciliation. Therefore, for each of these payments, you first of all need to determine if the payment has been registered in section 2 of the bank reconciliation page: 2. Payments in the accounts, not on the bank statement As a result of this exercise one of the following scenarios will apply to each payment: The corresponding payment is found in section 2 and the amounts agree. The corresponding payment is found in section 2 but the amounts do not agree. The corresponding payment is not found in section 2 of the bank reconciliation. The following pages explain how each of these payments need to be dealt with in the bank reconciliation according to the scenarios detailed above. If cheques are not issued for any payment Go directly to the scenario on the following page: The corresponding payment is not found in section 2 of the bank reconciliation.

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If the corresponding payment is found in section 2 and the amounts agree The payment needs to be erased from the bank reconciliation as it is now both correctly reflected in the accounts and the bank statement. This can be done manually or the program can do it for you by going to the observation column and from the drop down list selecting 'Erase reconciling item':

If the corresponding payment is found in section 2 but the amounts do not agree First of all erase the corresponding payment from section 2 of the bank reconciliation page. Then register the payment in section 6 of the bank reconciliation page: 6. Payments both in the accounts and on the bank statement but registering different amounts Payments that show different amounts will be caused by an accounting error or more rarely by a bank error. For each of such payments you will need to find out whether an accounting or bank error was responsible for the different amounts and then record which type of error it is in the observation column:

The corresponding payment is not found in section 2 of the bank reconciliation If the amount is a correction by the bank for a previous error, this is dealt with in Step 6: Bank Errors Corrected. If the amount is not a correction by the bank, register the payment in section 4 of the bank reconciliation page: 4. Payments on the bank statement, not in the accounts

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Each payment in section 4 will be due to one of the following reasons: Bank charges & interest If the amount is bank charges or interest, then the accounts / cash book has not been updated to reflect this. Some organisations do not update the accounts for bank charges and interest until after the bank reconciliation has been done. In this case these costs will always appear on the bank reconciliation as a reconciling item. In the case of bank interest and charges, this should be recorded in the observation column as 'Bank charges & interest' or as an 'Accounting error'. Accounting error The most likely accounting error is that the payment has been charged directly to the bank account due to a direct debit, bank transfer or standing order. It is easy to forget to update the accounts for these types payments because there may be no notification of such amounts until they appear on the bank statement (unlike cheques). There are other types of accounting errors which can cause the payment to appear on the bank statement but which cannot be found in the accounts: The payment was entered in the accounts, but on the wrong side of the general ledger bank account (as a debit) or on receipts side of the cash book. The payment was entered in the accounts, but to the wrong general ledger account. Whatever the reason, the payment should be recorded in the observation column as an a 'Accounting error'. Bank error More rarely a payment appears in the bank statement due to a bank error i.e. it is not a payment issued by the organisation. Such payments should be recorded in the observation column as an a 'Bank error'.

Note that in section 4 (payments on the bank statement, not in the accounts) the amounts are positive in the 'reconciling item' column. This is because these reconciling items cause the bank balance in the accounts to be greater than the actual bank statement balance.

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Step 6: Corrected bank errors

Bank errors are fairly rare and therefore if the bank statement does not contain any corrections by the bank for previous errors you can skip this step. If the bank statement does contain one or more corrections for previous bank errors: First of all you need to find the bank error(s) in the reconciliation that correspond to the correction(s). As a result of this exercise one of the following scenarios will apply to each error: The bank error is found in the bank reconciliation and the correction cancels the error. The bank error is found in the reconciliation but the correction does not cancel the error. The bank error cannot be found in the bank reconciliation. The following sections deal with each scenario in terms of how to register these corrections in the bank reconciliation: The bank error is found in the bank reconciliation and the correction cancels the error Erase the reconciling item which registers the original error. This can be done manually or go to the observation column and select Erase reconciling item. The bank error is found in the reconciliation but the correction does not cancel the error Adjust the reconciling item that registers the bank error by the amount of the correction. For example, if there was a reconciling item for a payment of 100 because it was not issued by the organisation and the bank correction was 90, you will need to reduce the reconciling item to 10. Note that if the bank error is registered in section 5 or 6 (different amounts), it is the bank amount that needs to be adjusted. Inform the bank that their correction did not cancel the error. The bank error cannot be found in the bank reconciliation Check all reconciling items. It could be that the bank error is registered in the bank reconciliation but was not recorded in the observation column as a bank error. If, after checking all reconciling items, the bank error still cannot be found: Register the amount in section 3 'Receipts on the bank statement, not in the accounts' or in section 4 'Payments on the bank statement, not in the accounts'. Then contact the bank.

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Step 7: Review the bank reconciliation

The review of the bank reconciliation should involve the following: Confirm that that there is no unexplained difference. Sort reconciling items by date. Review receipts and payments in the bank reconciliation due to timing differences. Each of above will be considered in detail: Confirm that there is no unexplained difference If the bank reconciliation has been completed correctly there will be no unexplained difference i.e. the total of the reconciling items matches the difference between the bank balance according to the accounts and the bank statement:

If there is an unexplained difference you should first of all: Check that the bank balance according to the accounts & statement has been entered correctly. Investigate whether the unexplained difference matches an entry in the accounts, bank statement or bank reconciliation. It is possible that it is this entry which has been incorrectly registered in the bank reconciliation. If the above does not correctly identify the unexplained difference then you will need to repeat the bank reconciliation (steps 1 6) until the error in the reconciliation is found. Sort reconciling items by date Click the Sort by date button to ensure that the oldest receipts and payments appear first in each section of the bank reconciliation. This will assist in the review of the receipts and payments due to timing differences.

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The Sort by date button also removes blank rows above and between completed rows. These blank rows can be created when receipts & payments that appear in the bank statement cancel corresponding amounts in the reconciliation due to timing differences:

The Sort by date button moves these blank rows to the end of the section. This will improve the presentation of the reconciliation report:

The presentation of the reconciliation report can be further improved by using the Delete Last Row button to remove these blank rows at the end of the section:

Review receipts and payments in the bank reconciliation due to timing differences Go to section 1 of the bank reconciliation (if cash and/or cheques are deposited) Remember that section 1 includes receipts that appear in the accounts, not on the bank statement due to timing differences (i.e. have not cleared the bank). If any receipt in section 1 is more than a month old* and is due to timing differences, it should be investigated. After a month, the amount should have turned up on the bank statement and therefore may not be due to a timing difference. It could be the result of an accounting error or the money may have been stolen! Go to section 2 of the bank reconciliation (if cheques are issued for some or all payments) Remember that section 2 includes payments that appear in the accounts, not on the bank statement due to timing differences (i.e. unpresented cheques). If any payment in section 2 is more than 3 months old* and is due to timing differences, it should be investigated. After three months, the amount should have turned up on the bank
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statement and therefore may not be due to a timing difference. It could be the result of an accounting error or possibly the payment could have been lost in transit or by the supplier. If the investigated receipts & payments in the bank reconciliation are not due to timing differences, then the comment recorded in the observation column will need to be changed (e.g. from an unpresented cheque to an accounting error):

* the age of the receipt & payment is determined with reference to the date of the bank balance in the reconciliation. For example, in a bank reconciliation for May 2012, the bank balance would normally be recorded & reconciled at 31/05/2012. Therefore, receipts recorded in the accounts on or prior to 30/04/2012 and which are still in the May reconciliation would be more than one month old. Payments recorded in the accounts on or prior to 29/02/2012 and which are still in the May reconciliation would be more than three months old.

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Step 8: Print bank reconciliation

On the home page click the button 'Bank Rec.' Then click the button for 'Print Bank Reconciliation (format 1)' or 'Print Bank Reconciliation (format 2)' to print the bank reconciliation report. Bank Reconciliation (format 1) emphasises how the reconciling items have resulted in the difference between the bank balance according to the bank statement and the accounts. An example of bank reconciliation report format 1 is shown on page 28. Bank Reconciliation (format 2) starts with the bank statement balance and then shows how the reconciling items result in a different bank balance according to the accounts. An example of bank reconciliation report format 2 is shown on page 29. Both reports are configured to print on A4 paper.

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Bank Reconciliation Report (format 1)

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Bank Reconciliation Report (format 2)

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Step 9: Corrections
The final step is to correct the accounting errors identified in the bank reconciliation. The following may also need to be cancelled: Bounced cheques Payments lost in transit If bank errors have been identified in the reconciliation, the bank should be contacted. After the accounts have been corrected, go to the bank reconciliation and carry out the following: Enter the revised bank balance according to the accounts. Erase reconciling items which have now been corrected / cancelled. Make sure there is no unexplained difference.* Click the Sort by date button to remove blank rows above and / or between completed rows caused by erasing reconciling items. Print the bank reconciliation again and sign it (prepared by) The bank reconciliation should then be approved and signed (approved by). Normally the preparation and approval of the bank reconciliation is not carried out by the same person as the reconciliation can highlight fraud. * If there is an unexplained difference, check the following: The corrections to the accounts. The revised bank balance according to the accounts has been correctly registered. The correct reconciling items have been erased.

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