How do I Carry out a Bank Reconciliation?

Detailing the Steps to be taken when carrying out an interim or Final Bank Reconciliation for a Period.

Written By Dave Fay (Super Administrator)

Updated at September 5th, 2022

Introduction 

Periodically, you need to reconcile the system’s view of the status of your Bank Accounts with that of your live Bank Accounts. This may result in amendments to the System Bank Accounts or requests for refunds from the real Bank, or re-presentation of Receipt requests.
 

Discrepancies between the two can arise because of:

  • Unforeseen Bank Charges
  • Interest Rate Changes
  • Errors
  • Refused Payments
  • unanticipated Receipts
  • Inbound Transfers

Normally, you will carry out this task from a regularly provided printed Statement of Account from your Bank, or one that you print off yourself through your On-Line Bank facilities. 
 

Supplementing the Reconciliation process

You can also supplement this process by uploading interim (such as daily, bi-weekly, or weekly) electronically produced Bank Import Files. You can also print off interim statements from your online Bank login and use them for matching. However, it is still important to perform a full Bank Reconciliation process, especially regarding, and in advance of, the production of Management Accounts.
 

The reconciliation process matches many of the transactions from the imported electronic statement with the System’s Bank Accounts. This results in a significant reduction in the workload involved with the full Bank Reconciliation. It also facilitates immediate response to any discrepancies (such as refused Receipts, or Shortfalls) much closer to the point in time at which they arise. 

See:

Bank Reconciliation (Manual) (6A.6) - AIQ Academy

Bank Feeds (6B.1) - AIQ Academy

Importing bank statements manually (6B.2) - AIQ Academy

 

How do I Use the Bank Import Facility to assist with my Bank Reconciliation?‍  

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Before you start

If you have been using the Bank Import facility you must clear all remaining transactions before commencing a full Bank Reconciliation. 

  1. Go to Bank > Import bank Statement.
  2. If you receive a warning message, click Clear Imported Transactions to proceed with the Bank Reconciliation.

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Begin the Bank Reconciliation Process

Option 1: Bank List Actions
 

  1. Go to Bank > Bank List and find your account. 
  2. Under Actions, select Create New Reconciliation. 

Option 2: Blue Banner

Alternatively, in the blue banner: 

  • Go to Bank > Bank Reconciliation.
     

 

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If the Bank Account has a current open un-reconciled Bank Reconciliation episode, then you must resolve and close it first. Once you have initiated a Bank Reconciliation episode you can save it at any stage and return to it later. 

 

If the system warns you that an open reconciliation for a particular Bank Account exists, go to it by clicking Reconcile NowCurrent Reconciliation.

 

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Bank Reconciliation using Printed Statements

Have the physical Bank Statement to hand when you begin this process. 


Complete the following fields:

  • Reference: Enter the Bank Statement No. (Page Number), or else a unique Reference No. of your own choosing.

  • To: Enter the Closing Date of the Bank Statement.
  • Opening: This is the amount from the previous fully reconciled episode for this bank. Ensure that it corresponds exactly to the opening amount on your physical Bank Statement. If it does not, resolve it before proceeding. 
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Warning

Failure to rectify previous reconciliation issues compounds subsequent issues. Possible causes include a missing Bank Statement Page or the opening date on your physical Bank Statement not matching the closing date of the previous Bank Statement.

  • Closing: Enter the Closing Amount as stated on your physical Bank Statement.
  • System Details: Balance is the system’s calculated balance as of the date entered. If it doesn’t match the amount of the Closing field as of the same date, then you need a transaction-by-transaction Reconciliation. If these two figures do match, click Match All > Reconcile > Close which will then complete the reconciliation for that Bank Account.

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Transaction by Transaction Matching

In the Bank Reconciliation window, under System Details note the following:

  • Unreconciled Receipts: This is the sum of all the System’s unreconciled receipts
  • Unreconciled Payments: This is up to and including the To date. 

As you tick off various transactions during reconciliation, you will see that these reduce. 

To proceed with the transaction-by-transaction Reconciliation:

  1. Click View Transactions.

  1. If you have been using the Bank Import facility and/or if you have been updating your Bank Account by regularly matching off transactions either daily or weekly, then many of the transactions will display as matched. To view the remaining unmatched transactions, under the Matched column select Un-Matched.

  1. Go through your printed Bank Statement and under the Matched column, tick the transactions that match.

Resolving Imbalances

  1. When you have completed the process, you may have an imbalance for the following reasons:
  • There are transactions on your physical Statement that are not in your System.
  • There are transactions in your System that are not on your physical Statement.
  • Both.

In the example here, there was a Bank Credit for £5.00 on the physical Statement that didn’t appear in the System. 

  1. To enter a Bank Charge Refund from this window, click Create Transactions.

  1. In this case, to adjust for this difference, click Bank Debit Journal and enter the Bank Charge Refund against the relevant Bank Charges GL Code.

 

  1. Click Process. The system will return you to the Bank Reconciliation function.
  2. In this example, there is also a Deposit in the System transactions which is not on the Bank Statement. The actual Deposit in the Bank was made to a different Bank Account in the Bank Branch which now needs to be rectified.

  1. In this case, the actual physical Bank Deposit was made to the correct Bank Account, and it is the System that is in error. To correct this issue, click Create Transactions > Bank Transfer to make a System Bank Transfer.

 

  1. When you have accounted for all discrepancies, click Reconcile, then Close

 

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Un-cleared Checks and Miss-Matched Deposits

Uncleared Checks

You will occasionally have to deal with uncleared checks. This happens when you make Check Payments to your Vendors, and you include them in a Vendor Batch (Volume) Payment run despite not being completely processed by your real Bank Account.
 


In the Bank Reconciliation window, Reconcile will remain greyed-out until the Closing Bank Balance from your Bank Statement is equal to the System Details: Balance inclusive of any Unreconciled Receipts and Unreconciled Payments. When the balance matches, you can click Reconcile and then Close
 

Any unmatched Transactions at this stage will then be carried forward and included in the next Bank Reconciliation. If any of these unmatched transactions never enter the real Bank Account, such as a lost Check, then you must deal with it in both the Bank System and the Payables or Receivables Ledger as appropriate.

Mismatched deposits

There will be occasions where your bank will reject Checks that you receive for various reasons, such as being undated, unsigned, or with a date that is outside the To date. 
 

Where these are in a System Lodgment, in the Bank Reconciliation window, you can click the + plus symbol next to it. This will expand the Deposit to show the individual Checks it includes. Click Remove needed, then Save.
 


When you remove the Check from the Lodgment it remains as a Transaction in the Bank Account. You can deal with it by carrying it forward to a further Reconciliation or by reversing it out of the system.
 

 

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Amending and Deleting Transactions

If a System Transaction differs from the Bank Statement and you believe the Bank Statement is more correct, then you can amend the system transaction in several ways. All will correct the transaction, not only in the Bank Account but also in the associated Customer or Vendor Receivables or Payables Account. 
 

You cannot delete Transactions in your system’s Bank Account, but you can Reverse them:

  1. In the blue banner, go to Bank > Bank Reconciliation. Alternatively, go to Bank > Bank List > View Transactions against the appropriate Bank Account.

  1. Find the transaction and click Int. No. to open the Transaction Details window.

  1. Click the eraser icon to make certain edits.
  2. Click Reverse to reverse the transaction in the Bank account and the originating Customer or Supplier's (Vendor’s) Account. 

See:

How Do I Amend, Cancel or Delete Transactions? 

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Banked and In-Progress Deposits

You can have several Lodgments in preparation prior to a Bank Reconciliation. Some of these will be Banked and some will be In-Progress
 

The system assumes that all Lodgments have been banked and therefore includes them in the system’s view of the Bank Balance and Transaction list. 

As with un-cleared Checks, if you leave any In-Progress Lodgments un-ticked during the Reconciliation process, they will be carried forward to the next Reconciliation. To ease the Bank Reconciliation process, keep the number of In-Progress Lodgments to a minimum.

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Un-Reconciling a Bank Reconciliation

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You must have Administration privileges to access this feature.

 

If you decide to Un-Reconcile a much earlier Reconciliation, such as several previous generations, then you should Un-Reconcile all subsequent Reconciliations. Amendments you make to the first one may cause transactions to flow into subsequent reconciliations. 


To view past reconciliations:

  1. Go to Bank > Bank List and find the account. 
  2. Under Reconcile Now, select All Reconciliations.

  1. This will bring up a list of previous reconciliations. Untick Reconc. You will be asked to confirm that you will proceed with the un-reconciliation.

  1. You should then, as soon as possible, Re-Reconcile all the Reconciliations that you have re-opened in their correct sequence.
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Other features & Facilities in the Bank Reconciliation screen

  • Match All: This allows you to selectively match or un-match transactions without having to Tick them off one by one.

  • Sort: You can also use the Grid to sort or locate transactions. Click Tran. Type to sort the transaction list by ascending sequence of Transaction Type. Click it again to sort in descending sequence. 
  • Filter: Enter a Value (or a partial Value) in the filter fields to filter the transaction list. 

  • Record Notes: Use to record and retain notes against a Reconciliation.

  • Docs: You can also add Documents (one or more) to a Bank Reconciliation.

  • Print Reconciliation Report: If you have been using the Bank Import facility, a copy of the imported file is automatically added to the Document Manager for each import. You can subsequently view or print it by clicking Print Bank Reconciliation Report.

See:

How do I Add Notes and Images to Documents?‍ 

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Bank Reconciliation Total Overview Schematic

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