Bank Reconciliation
After review by another local officer, the treasurer should receive a bank statement
every month for each bank account. The balance on the bank statement may not
agree with the balance per the accounting records. The following items usually
account for the differences between the bank statement balance and the “book”
balance: outstanding checks, deposits in transit, bank service charges/credits, and
errors by the bank and/or the treasurer. A bank reconciliation must be prepared
monthly to verify that the two independent sets of records (bank statement and
checkbook) are in agreement. The reconciliation should then be retained along
with the other monthly financial documents.
The sample Bank Reconciliation worksheet may be used as follows:
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Complete the heading with the applicable month and year.
Enter the ending bank statement balance at (1) and the ending (month-end) balance of
your checkbook at (2).
Compare the deposits listed on your bank statement with your record of deposits. Any
deposits that the bank has not yet recorded should be listed as a Deposit in Transit (3).
Any deposits that may not have been recorded in the accounting records, but are
included in the bank statement, should be listed under “Plus: Correction” (4) with a
brief description.
Compare the amounts of the “Paid or Canceled” checks per the bank statement with
entries on the accounting records. Any difference(s) must be recorded as a correction
(5) and/or (6). This does not include outstanding checks. If the bank amount is
incorrect, note this on the bank reconciliation and notify the bank of the error.
Checks that have been written but have not yet cleared the bank by the end of the
month are called “outstanding checks”. Compare your listing of checks written with the
canceled checks from the bank. Any checks written which are not returned are
“outstanding” and should be listed under (7) including check amount and check
number.
Follow-up should be performed when checks remain outstanding for more than two or
three months. You should contact the payee to see if the check was received; if not, a
new check should be issued and a “stop payment” order should be given to the bank
for the original check. Checks outstanding for a long period of time may be subject to
Illinois’ “Abandoned Property” filing requirements. It is best to avoid this, if possible.
Identify the amounts of service charge and/or interest included in the bank statement
that have not been recorded in the accounting records. This should be noted at (4) or
(8) with a description. The transaction(s) should also be recorded in the accounting
records.
Review the bank statement for additional charges/credits not recorded in the
checkbook. List these items at (6). Additional credits should be listed at (5).
Total the two sides of the bank reconciliation. The adjusted bank balance and the
adjusted checkbook balance (9) should agree. The checkbook balance should be
corrected to reflect the adjusted balance. Adjustments would include service charges,
other bank charges and credits, and errors made in the checkbook. Bank errors
should not be included in the checkbook balance.
______________________________ EDUCATION ASSOCIATION
“SAMPLE” BANK RECONCILIATION
_________________, 20 ____
Bank Statement Balance
Plus:
$_
1
_
Checkbook Balance $
Deposits in Transit
Plus:
$
3
_
2
_
Corrections/Interest
Description
Amount
$________
___________
$
Total Deposits in Transit
$________
Subtotal
$________
4
_
___________
5
_
Total Additions
$_______
Subtotal
$_______
Less: Outstanding Checks
Number
Amount
_______
$
_______
Description
Amount
________
__________
$
_______
________
__________
____8__
_______
________
__________
_______
Total Outstanding Checks $ ___________
Total Deductions
$ __________
Adjusted Bank Statement
Adjusted Checkbook
Balance
7
Less: Service Charge/Corrections
_
$ ____________
Balance
9
These Amounts Must Agree
6
_
$ __________