Performing Bank Reconciliation

One way you can maintain internal control over the company cash is by performing regular account reconciliations. Generally, the goal of reconciliation is to find discrepancies between account balances tracked by different means (in your company and by a third party), locate any errors, and make needed corrections or adjustments.

Reconciliation is performed primarily for cash accounts that represent bank accounts. Also, the balances of petty cash accounts can be reconciled with available documents, cash register receipts, or point-of-sale reports. Sometimes an accounts receivable balance can be reconciled with the records kept in a particular customer's system.

Reconciliation is usually done at the end of each period or more frequently. Regular reconciliations can reduce the number of errors on accounts and make it easier to find overlooked transactions, such as missing sales invoices or payments that have been lost in transit.

In this chapter, you will find general information on how to reconcile cash accounts, a checklist for system implementation, an activity that describes how to manually reconcile a cash account, an activity that describes how to process a bank statement in OFX format, and reports that can be useful to find and view created transactions.