Reconciliation and Balancing Tips

Balancing is definitely something that gets easier the more times you do it. However, no two balancing issues are the same, so here are some simple Tips to follow to help you identify the problem.

Two Aspects to Balancing

  • Check that the data entry is correct.
  • Check that the data is being correctly displayed in the reconciliation wizard

The Documents You Will Need

  • The last set of ‘in balance’ reconciliation reports including the Reconciliation Summary, the Unpresented Cheque List, the Unpresented Deposit List and the Adjustments List – even if they were blank.
  • The Trust account Bank Statement or Printout, from when the Reconciliation was last in balance up to the present.
  • The Cashbook from when the Reconciliation was last in balance up to the present.
    NOTE: Keep the trust account cheque book, duplicate copies of receipts and bank deposit summaries for the period handy in case you need to clarify details.

Where to Start

Eliminate the simple mistakes first:

  • Ensure you have typed in the final, cleared, balance from the bank statement in the Reconciliation screen and it has printed on your current Bank Reconciliation Report.
  • Ensure that the closing balance of one bank statement is the same as the opening balance of the next bank statement. If not, either the bank has made an error or you are missing a page.

Some banks will show details of transactions that have not yet cleared and so are not included in the ‘Balance’, or will include transactions dated yesterday that did not appear on yesterday’s printout and so you haven’t processed them in Gateway because you thought everything from yesterday had already been entered!

Check that the Closing or Cleared Balance on the Bank Statement/Printout you are reconciling to is correct by starting from the Opening Balance, adding the deposits and taking away the payments.

No joy? Move on to the next step

  • Look at the balanced Reconciliation reports and establish what the Bank Statement balance was at that time.
  • Find the place on the Bank Statement/Printout that matches this value.
  • Find the place on your Cashbook that matches the balanced Bank Statement/Printout and the Reconciliation. We are going to work forward from this point.
  • Before moving forward in the Cashbook, cross out or exclude any entries that have been reversed. You can identify these items by going to the Reversal page of your Cashbook

The Method

Now that we have a starting point we can work forward through the Bank Statement and the Cashbook, cross-checking the transactions. Every transaction should appear in both places for the same value. Identifying the differences will identify why you do not balance.

You may prefer to ‘tick back’ the reports using a pencil and literally ticking off each item, or Gateway 2007 users may prefer to export the Cashbook to MS Excel and ‘tick off’ the transactions by colour coding. Most internet banking provides an option to export your transaction list to MS Excel too.

 

Once every transaction on your Cashbook and Bank Statement/Printout has been compared, and the ones that appear on both have been ‘ticked off’ you should be left with a transaction or transactions that require investigation.

What to do Next

  1. If a deposited receipt appears on your Bank Statement/Printout but is not in your Cashbook you have not processed the receipt in Gateway.
  2. If a receipt appears on your Cashbook but cannot be accounted for on the Bank Statement/Printout either as a deposited amount or included in a Banking, investigate the following:
    a. The receipt has been entered twice, one will need to be reversed.
    b. The Cash/Cheque has gone missing
  3. If a cheque appears on your Bank Statement/Printout but is not in your Cashbook, check the cheque book and the relevant ledger.
    a. If the cheque has been written but is not in Gateway it will need to be entered in Gateway.
    b. If the cheque has not been written contact the Bank as the cheque on your Bank Statement/Printout is not a cheque from your Trust Account cheque book.
  4. If a Cash/Cheque transaction was included in a Banking, then reversed, incorrectly entered again as Cash/Cheque, included in a second Banking and the Banking Wizard updated without editing the ‘Confirm your Bank Deposit amount’, you must edit the value of the second Banking through Advanced Reconciliation to show the amount that was actually taken to the bank.
    Image 3 111

If EVERY Transaction can be accounted for on both the Cashbook and the Bank Statement, check the Reconciliation Wizard itself to make sure that everything has been presented correctly.

  1. Has a cheque been accidentally presented off when it has not yet cleared through the bank? Or has a cheque on the Bank Statement been missed and needs to be presented?
  2. Has a Banking been accidentally presented off when it has not yet cleared through the bank? Or has a Banking on the Bank Statement been missed and needs to be presented?
  3. If you have Unpresent Deposited Receipts selected in Tools, Options your deposited receipts will appear on the Reconciliation.
    Image 4 1111111

There should be NO Unpresented Deposited receipts appearing in the Deposits tab once your Reconciliation is complete. The only exception would be if you are using Banklink to create a daily Direct Debit file and only reconciling to yesterday’s statement. Note: Gateway 2007 provides the option to create the value of this file as an adjustment instead.

Balancing really is a process of elimination. Sometimes we are lucky and the first thing we try is the right one and sometimes we have to work our way through all of the above scenarios until we find the right one this time.

Was this article helpful?

Related Articles