Bank Reconciliation Process

Purpose

A Bank Reconciliation is a process performed by a company to periodically ensure that the company’s bank account balances per the General Ledger agree to the bank’s balance. An organization's general ledger cash account contains a record of the transactions such as checks written and receipts from customers that affect its checking account. Banks generally send a monthly bank statement to the company listing the account activity and beginning (since the previous statement) and ending balances.

Differences may occur for several reasons, such as fees charged by the bank, utilization of ACH, or other charges made by the bank that are not reflected in the company’s General Ledger accounts. Differences can also be due to timing of checks and deposits. Consider checks that have been issued by the organization prior to the bank statement balance date but not yet presented to the bank for payment, or deposits recorded in the General Ledger that have not yet been recorded by the bank.

Bank reconciliations should be performed at frequent intervals in order to identify and resolve differences in a timely manner. This process should occur at minimum on a monthly basis., but can be performed more frequently, such as weekly or even daily. Bank reconciliations also provide additional benefits such as helping to correct accounting, and keeping track of checks that are outstanding or in transit. Bank Reconciliations are a key part of the month end close process.

Security and Configuration

Security/Permissions

To complete a bank reconciliation, the user will need security access to "Accounting menu" and "Accounting -- bank reconciliation". Note: Additional security may be required. See your system administrator for security access.

Configuration

There is no specific configuration in connection with Bank Reconciliation.

Related Processes

Procedure

Reconciling the Bank statement

  1. Navigate to Accounting > Bank Reconciliation.
  2. Complete the pre-filter as needed, being sure to select a Cash Account, then click "View".
  3. On the Bank Reconciliation form, select the "Clear date", which is typically the date on the statement from the bank.
  4. Make a selection in the "View" pick list.
  5. Enter the "Statement Balance". This is the ending balance that is indicated on the bank statement.
  6. "Adjusted Balance" is display only. When initially calculated, this balance will be the difference between the bank statement and what entries are still in DEACOM. After clearing checks, this is what the bank balance should be. Any difference between the Statement Balance and Adjusted Balance are referred to as reconciling items (wire transfer fees, bank fees, etc.) and, except for outstanding checks and deposits, may be fixed by booking a Journal Entry to the Cash Account being reconciled.
  7. Clear lines as needed. For more information, reference the "Clearing checks and deposits" section below.
  8. Once everything balances; click "Save".

Clearing checks and deposits

The clearing process involves a comparison of the organization's bank statement to the checks and deposits amounts displayed on screen. Checks and deposited amounts can be marked as cleared by either double clicking on the appropriate line in the list or by using the "Clear All" and "Clear Range" buttons on the form. Clear Range provides for you to enter a beginning and ending check number for the range to be cleared. Once all the appropriate lines have been marked as Cleared, enter the ending bank statement amount in the "Statement balance" field. The adjusted balance will automatically be calculated. Click the "Save" button to complete the process.

Reporting on Bank Reconciliations

The Bank Reconciliation report, available via Accounting > Accounting Reporting, can be used to verify the reconciliation process. It contains the GL balance adjusted for any un- cleared items, and the statement balance as of the cut- off date (End Date) chosen in the pre- filter.

Automating the Bank Reconciliation process

It is possible to automate this process by using a flat file (CSV or Excel) from the bank that lists all cleared checks in conjunction with an External. The flat file must include the check number, amount, and date cleared. When run, the External will pull in all pertinent information from the file then find and clear the matching transactions in DEACOM.

Additional Information