Although the frequency of trust account reconciliations is a personal preference, the governing legislation in your state or territory may call for specific requirements and should be followed at all times.
The following suggestions are intended as a guide only and should be considered in addition to legislative requirements.
A computerised trust account should be reconciled with the bank statement on a regular basis to ensure that balancing errors are detected close to the time that they occur. This is imperative to ensure that the monthly disbursement and close proceeds smoothly. We recommend that Reconciliation is carried out on a daily basis using an internet banking printout of transactions.
In addition, a preparatory Reconciliation should also be carried out at least three working days prior to the monthly close. If you are out of balance, three days should allow sufficient time to find and rectify the problem.
Finally, you should always reconcile your trust account before processing a disbursement of any kind, whether a single owner disbursement; change of owner disbursement; bond disbursement; weekly, mid-month or end of month disbursement.
5 Steps Every Day for Best Practice
- Download your internet banking printout.
- Process any Deposited receipts received into the trust account since your last reconciliation.
- Enter any unidentified transactions as an Adjustment (to be identified and processed later).
- Run the Reconciliation Wizard.
- Print the Reconciliation Report (4 pages) to collate with your internet banking printout then file for the auditor.
Daily Reconciliation Checklist
- Log into internet banking and download your Bank Statement.
- Receipt all funds received to the appropriate files in Gateway.
- Add any Adjustments for unallocated funds received in your bank statement, add these in the Adjustment tab of your Advanced Reconciliation, or receipt them as a miscellaneous receipt account and “Unallocated Funds” Creditor as per your Auditors advice.
- Run the Reconciliation Wizard (see below).
- Enter the date on your bank statement as the Reconciliation Date.
- Enter the Closing Balance on your statement, ensure that all funds that are included within this balance are accounted for in Gateway.
- Present any Cheques that have been debited from your Bank Statement.
- Present any Banking that has been credited to your bank statement. If Unpresented Deposits are turned on, present the deposited receipts, ensuring they are correct along the way.
- Present any EFT payments that have been debited from your account or any adjustments that have been resolved.
- If you are in balance, choose Finish and print off all 4 reports and file in your Reconciliations Folder.
- If you are out of balance, move on to the Out of Balance Checklist.
Out of Balance Checklist
- Check that the date you are reconciliation matches the date of the bank statement.
- Check the closing balance you are using is the correct balance.
- Check that all cheques, deposits or adjustments have been presented off correctly, and ensure none have been presented off in error (then unpresent the cheque, deposit or adjustment in the Advanced Reconciliation).
- Check that any new adjustments are entered correctly.
Remember, negative adjustments mean there is more money in your bank than showing in Gateway, positive adjustments mean there is more funds in Gateway than in the bank. For example, unallocated funds that can’t be receipted into Gateway is a negative adjustment. Or a payment that has been debited from your bank account but hasn’t been debited from Gateway is a positive adjustment.
If the above items are correct and you are still out of balance, there may be a transaction that has been entered incorrectly or not entered at all.
- If you are still out of balance, cross-check all of your transactions from your cashbook and bank statement.
A. Print your Cashbook from Gateway. Go to Reports and select Cashbook. Choose to print either daily or monthly depending on how long you have been out of balance
B. Then print your Bank Statement. This can be done through internet banking.
- Lay out both reports, and begin to tick off each transaction from your Cashbook to match your Bank Statement.
Remember, Gateway is a mirror of your Bank Statement. If there is something that doesn’t match (even in the smallest amount) this will cause you to be out of balance.
- Once you find the error, correct this in Gateway then run your Reconciliation Wizard again.
How to Use the Reconciliation Wizard
- Go to the main menu, click Transactions and select Reconciliation Wizard. A welcome screen opens.
- Click Next.
- Enter the date on the bank statement and statement balance then click Next (defaults to today’s date but can be amended).
- Tick every Cheque that appears on the bank statement and click Next.
- Tick every Deposit that appears on the bank statement and click Next.
Note: Deposited receipts will only display if you have Unpresent Deposited Receipts ticked in Tools, Options, General).
- Tick every Adjustment that has been identified and processed as a transaction, and are therefore is no longer required.
- The reconciliation details display for your confirmation – at the bottom of the screen, a message will state if the Ledgers: in balance Bank: in balance.
Note: if not in balance refer to Related links below and click Cancel – do not proceed if not In Balance.
- Click Finish.
- Click Print to print the Reconciliation Report, Unpresented Cheques Report, Unpresented Deposits Report and Adjustments Report.
- Click Close to exit the Reconciliation Wizard.
Reconciliation Wizard Reports
The Reconciliation Report is divided into three parts:
- The Trust Bank Account (the money that is actually in the bank account)
- The Cashbook Balance (the money that Gateway thinks is in the bank)
- The Ledger Balance (the total of monies held in all Gateway ledgers)
The Trust Bank Account is further divided into:
- Bank Statement Balance – the final balance on the last page of the latest bank statement
- Un-presented Deposits – any money receipted into the computer but not year appearing on the bank statement
- Un-presented Cheques – any cheques made from the computer system which have not yet been presented at the bank for payment
- Adjustments – usually involving bank errors
The Cashbook is divided into:
- Opening Balances – that money in the computer which has been carried forward from last month
- Receipts – all monies receipted this month (minus reversed receipts)
- Payments – all money paid out this month (minus reversed payments)
How to Edit Adjustments
- Select Advanced Reconciliation from the Reconciliation Wizard
- Choose the Adjustment tab
- Highlight the Adjustment you wish to correct, then choose File > Open
- Edit the Adjustment as required, then choose OK
How to Unpresented a Presented Adjustment
- Select Advanced Reconciliation from the Reconciliation Wizard
- Choose cheque, deposit or adjustment tab
- Choose the ‘Show Presented Items’ icon
- If you see an entry that has been presented that hasn’t been debited from your bank statement yet or been corrected, you can unpresent this by highlighting the incorrect entry, then selecting the Unpresent Item icon. When prompted, choose Yes to unpresent the item.