Monthly Bank Reconcilation

A Bank reconciliation is a process that explains the difference between the bank balance shown in an organizations bank statement, as supplied by the bank, and the corresponding amount shown in the organizations own accounting records at a particular point in time.

It may be easy to reconcile the difference by looking at very recent transactions in either the bank statement or the organizations own accounting records (cash book) and seeing if some combination of them tallies with the difference to be explained.

If not, it may be necessary to go through and match every single transaction in both sets of records since the last reconciliation, and see what transactions remain unmatched. The necessary adjustments should then be made in the cash book, or any timing differences recorded to assist with future reconciliations.

For this reason, and to minimize the amount of work involved, it is good practice to carry out such reconciliations at reasonably frequent intervals.