What is reconciliation
Reconciliation—commonly referred to as bank reconciliation—involves a detailed comparison of your bank statements with records in your accounts, usually conducted on a monthly basis. This process verifies that all financial transactions occurring within the bank account are accurately reflected in your accounting system.
During reconciliation, discrepancies can often come to light. It is critical to rectify such inconsistencies to ensure both your bank statements and accounting records are in harmony.
Common Reconciliation Pitfalls
A typical oversight in reconciliation is the omission of entries. It’s essential to verify that all vouchers within the period in question have been logged. The bank statement serves as a reference point; therefore, scrutinise each entry to ensure its counterpart exists within your accounting records.
Should you encounter a precise yet erroneous amount detailed in your accounts that matches an entry on the bank statement, you’ve likely pinpointed the error. If not, further investigation will be necessary.
Detecting Common Errors
Firstly, scrutinise bank and card charges. These types of fees are often overlooked and not recorded, so embed the practice of addressing them prior to commencing the reconciliation. Despite their typically nominal amounts, their inclusion is mandatory. In some accounting systems like Conta, you have the feature to account for these bank and card fees directly during the reconciliation.
Next, confirm whether transactions align to the penny. If an exact match is found, the error may simply be a voucher that wasn’t recorded.
Another area to examine is for vouchers that do not correspond with any bank statement entry. Such anomalies could stem from double-posting errors or incorrect dating of the transaction.