Bank Reconciliation Statement: Process, Examples & Tips

Intercompany reconciliation is used in businesses with multiple entities. Balances are reviewed and matched across entities to eliminate mismatches and ensure accurate group-level reporting. Companies often buy or sell assets such as property, machinery, or inventory. From cash and receivables to intercompany Debt to Asset Ratio and investments, each type of reconciliation ensures your books reflect economic reality and stand up to audit scrutiny. A bank reconciliation statement is a summary of recent banking activity that is used to reconcile personal or business records against the bank’s record of transactions.

Check the bank statement balance

Whether you’re just starting out or need a quick reminder, feel free to bookmark, save, or print this post – it’s your checklist for what you’ll need to be prepared and tips to save. Related benefits include remote backups, disaster recovery features, and easy integration with payment processors or other business tools. For example, if a business notices an unexpected electronic transfer on its statement, reconciliation highlights the issue for prompt investigation and correction.

Bank Errors

A regularly scheduled bank reconciliation statement helps detect suspicious or unauthorized transactions early. If your organization is going through records on a daily basis, it gets easier to spot suspicious transactions or missing records. This ultimately helps in early fraud detection and avoiding penalties because of audit non-compliance. Further, spotting errors like double payments or unauthorized withdrawals can be critical to preventing them from cascading, and further damaging your financial status.

Step 4: Track Outstanding Checks and Deposits

However, this does not rule out the need to consider both, uncredited deposits and unpresented checks. There are certain cases where bank charges are doubled, or some entries have been incorrectly recorded because of a technical issue at the bank’s end. In this regard, it is highly important to establish proper communication channels, so that companies can communicate with the bank, and settle any differences. Examples include deposits in transit and amounts not duly received by the company. Additionally, there is a video available that demonstrates how to reconcile the statements using DocuClipper.

• If everything seems more or less in order the accountant proceeds to the next step.
• Fixing individual issues is one thing—but building a smoother, more reliable reconciliation process requires proactive steps.
• However, high-volume or high-risk accounts may require weekly or daily reconciliation.
• Even individuals managing large payments, loans, or multiple accounts can benefit from preparing one.
• Modern accounting software, such as QuickBooks or Xero, automates much of the reconciliation by importing bank transactions, highlighting unmatched entries, and even suggesting categories or corrections.
• A closer review confirmed the payment was processed in two parts—$200,000 cleared immediately, while $50,000 was held due to a bank processing delay.
• Automates certification, standardizes account formats, and ensures real-time visibility across entities.

You tick items that contra asset account match, adjust the bank side for timing, record bank‑only items to the books, and keep going until both adjusted balances match. Managing accurate financial records is a challenge—one that audit reconciliation can solve. As a cornerstone of financial accuracy, audit reconciliation provides a systematic process to verify and validate financial records by comparing two or more sets of data to ensure agreement. From a compliance standpoint, accurate bank reconciliation ensures businesses meet tax obligations and regulatory requirements. Inconsistent financial records can raise red flags during audits and lead to penalties or legal complications.

• This technology is especially valuable when auditing multiple months or accounts simultaneously.
• A bank statement is a document that is issued by a bank once a month to its customers, listing the transactions impacting a bank account.
• Always verify that the opening balance in your cash book matches the closing balance from your previous reconciliation.
• It’s better to catch and report any errors to the bank as soon as possible.
• These may include deposits in transit, outstanding checks, bank fees, or miscalculations by the bank or the internal accounting team.

By linking your company’s bank statements to its internal records, reconciliation builds financial transparency and trust—both crucial for small business owners, managers, and accountants. With your reconciliation successfully completed, it’s time to create a clear paper trail that will serve you in the future. This final organizational step, often overlooked but critically important, transforms your reconciliation from a one-time task into a valuable financial resource. If you encounter any issues during the reconciliation process, document not just the problems but also your solutions — these notes often become helpful bank reconciliation references when similar situations arise in the future.