Our training manual “The Adventures of Mr Claw in the World of Charity Accounting” – which is being used at professional training courses in Book Keeping – explains Bank Reconciliation and Statement production, and how to implement these procedures in to your organisation’s accounting procedures. Get your copy here
The bank reconciliation is the means by which you can give yourself some self-assurance that you have recorded every item of income and expenditure, and that what you have recorded is correct.
When a group has a bank account, a record of the bank transactions is kept in the organisation’s cash book. In addition, the bank also keeps a record of these same transactions and this record is shown on the statement produced by the bank.
There are then two quite separate records of the same transactions.
It is therefore necessary to compare these records regularly to ensure that no errors have arisen, and to explain any differences that there are between the balances, i.e. those shown in the Cash Book and on the bank statement.
This comparison is known as a Bank Reconciliation Statement which is simply a method of explaining any difference that there may be between the two balances.