Bank Reconciliation Procedures

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Controller, Accounting Staff

Purpose

Establish procedures for reconciling bank accounts to ensure accurate cash reporting, detect errors and fraud, and maintain internal controls.

Why Bank Reconciliation Matters

Benefits:

Accurate cash position
Error detection
Fraud prevention
Internal control verification
Audit trail

What It Catches:

Bank errors
Recording errors
Unauthorized transactions
Timing differences
Missing transactions

Reconciliation Schedule

Frequency:

Account Type	Frequency	Due Date
Operating account	Monthly	10th of following month
Payroll account	Per payroll	Within 3 days
Money market/savings	Monthly	15th of following month
Credit card accounts	Monthly	15th of following month

Bank Reconciliation Process

Step 1: Gather Documents

Required:

Bank statement
General ledger cash account
Outstanding check list (prior month)
Deposit records

Step 2: Compare Deposits

================================================================
         DEPOSIT RECONCILIATION
================================================================

Account: _______________________  Period: ___________________

| Date | Per Books | Per Bank | Difference | Status |
|------|-----------|----------|------------|--------|
|      |           |          |            |        |
|      |           |          |            |        |

Deposits in transit (per books, not on statement):
| Date | Amount | Description |
|------|--------|-------------|
|      |        |             |

Total deposits in transit: $_________________

Deposits on statement not in books:
| Date | Amount | Description | Action |
|------|--------|-------------|--------|
|      |        |             |        |

================================================================

Step 3: Compare Disbursements

================================================================
         DISBURSEMENT RECONCILIATION
================================================================

Account: _______________________  Period: ___________________

Outstanding checks (issued, not cleared):
| Check # | Date | Payee | Amount | Days Outstanding |
|---------|------|-------|--------|------------------|
|         |      |       |        |                  |

Total outstanding checks: $_________________

Prior month outstanding checks now cleared:
| Check # | Amount | Cleared Date |
|---------|--------|--------------|
|         |        |              |

Checks on statement not in books:
| Check # | Amount | Description | Action |
|---------|--------|-------------|--------|
|         |        |             |        |

================================================================

Step 4: Other Reconciling Items

================================================================
         OTHER RECONCILING ITEMS
================================================================

Bank charges not recorded:
| Date | Description | Amount |
|------|-------------|--------|
|      | Service charge | |
|      | Wire fee | |
|      | Other | |
Total: $_________________

Interest earned not recorded:
| Date | Amount |
|------|--------|
|      |        |
Total: $_________________

NSF checks returned:
| Date | Customer | Amount |
|------|----------|--------|
|      |          |        |

ACH transactions not recorded:
| Date | Description | Amount |
|------|-------------|--------|
|      |             |        |

Errors found:
| Type | Description | Amount | Correction |
|------|-------------|--------|------------|
|      |             |        |            |

================================================================

Step 5: Complete Reconciliation

================================================================
         BANK RECONCILIATION
================================================================

Account: _______________________  Account #: ________________
Period Ending: ________________  Statement Date: _____________

================================================================

BALANCE PER BANK STATEMENT: $_________________

Add: Deposits in transit
     Date: _______ Amount: $_________________
     Date: _______ Amount: $_________________
     Total deposits in transit: $_________________

Less: Outstanding checks
     Check #_____ Amount: $_________________
     Check #_____ Amount: $_________________
     Check #_____ Amount: $_________________
     Total outstanding checks: $_________________

Add/(Less): Other adjustments
     Description: _____________ Amount: $_________________

ADJUSTED BANK BALANCE: $_________________

================================================================

BALANCE PER BOOKS: $_________________

Add: Interest earned: $_________________
     Other credits: $_________________

Less: Bank service charges: $_________________
      NSF checks: $_________________
      Other debits: $_________________

Add/(Less): Error corrections
     Description: _____________ Amount: $_________________

ADJUSTED BOOK BALANCE: $_________________

================================================================

DIFFERENCE: $_________________ (should be $0)

================================================================

Prepared by: _______________________  Date: __________________
Reviewed by: _______________________  Date: __________________

================================================================

Journal Entries

Standard Adjusting Entries:

Bank Service Charges:

Debit:  Bank Charges Expense     $XX.XX
Credit: Cash - Checking                   $XX.XX

Interest Earned:

Debit:  Cash - Checking          $XX.XX
Credit: Interest Income                   $XX.XX

NSF Check:

Debit:  Accounts Receivable      $XX.XX
Credit: Cash - Checking                   $XX.XX

Outstanding Check Management

Stale Check Procedures:

Days Outstanding	Action
30-60	Normal, monitor
61-90	Contact payee
91-180	Send replacement if needed
180+	Consider void and re-issue or escheat

Stale Check Review:

================================================================
         STALE CHECK REVIEW
================================================================

As of: _______________

Checks outstanding over 90 days:

| Check # | Date | Payee | Amount | Action |
|---------|------|-------|--------|--------|
|         |      |       |        | ☐ Contact ☐ Void ☐ Escheat |
|         |      |       |        | ☐ Contact ☐ Void ☐ Escheat |

Total stale checks: $_________________

State escheatment requirements:
  State: _________ Holding period: _____ years
  
Checks to escheat this period: $_________________

================================================================

Controls and Segregation

Reconciliation Controls:

================================================================
         BANK RECONCILIATION CONTROLS CHECKLIST
================================================================

☐ Bank statements received directly (not through AP)
☐ Reconciliation prepared by someone other than:
    - Check signers
    - Cash receipts handler
    - AP processor
☐ Reconciliation reviewed by supervisor/manager
☐ Reconciling items investigated promptly
☐ Large/unusual items reviewed by management
☐ Reconciliation completed within deadline
☐ Prior month items cleared appropriately
☐ Supporting documentation retained

================================================================

Red Flags to Investigate:

Red Flag	Possible Issue
Checks clearing out of sequence	Altered check
Unfamiliar payees	Fraud
Round-dollar amounts	Fictitious vendor
Checks to employees (not payroll)	Unauthorized
Duplicate check numbers	Error or fraud
Missing check numbers	Stolen checks
Unexpected ACH debits	Unauthorized
Large deposits followed by withdrawals	Check kiting

Positive Pay Reconciliation

If Using Positive Pay:

================================================================
         POSITIVE PAY EXCEPTION REPORT
================================================================

Date: _______________

Exceptions presented by bank:

| Check # | Amount Issued | Amount Presented | Action |
|---------|---------------|------------------|--------|
|         |               |                  | ☐ Pay ☐ Return |
|         |               |                  | ☐ Pay ☐ Return |

Checks issued but not in positive pay file:
| Check # | Date | Amount | Resolution |
|---------|------|--------|------------|
|         |      |        |            |

================================================================

Daily positive pay file transmitted: ☐ Yes  ☐ No
Exceptions reviewed by: _______________

Multi-Account Reconciliation

For Multiple Bank Accounts:

================================================================
         CASH RECONCILIATION SUMMARY
================================================================

As of: _______________

| Account | Per Books | Adjusted | Per Bank | Status |
|---------|-----------|----------|----------|--------|
| Operating |         |          |          | ☐ ✓    |
| Payroll |          |          |          | ☐ ✓    |
| Money Market |     |          |          | ☐ ✓    |
| Savings |          |          |          | ☐ ✓    |
| TOTAL |            |          |          |        |

Total cash per GL: $_________________
Total cash per banks (adjusted): $_________________
Difference: $_________________

================================================================

Payroll Account Reconciliation

Special Considerations:

================================================================
         PAYROLL ACCOUNT RECONCILIATION
================================================================

Pay Period Ending: _______________
Pay Date: _______________

Payroll funded: $_________________
Net payroll per register: $_________________
Difference: $_________________

Direct deposits:
  Per payroll system: $_________________
  Per bank: $_________________
  Difference: $_________________

Checks issued:
  Count: _____
  Amount: $_________________

Checks cleared this period:
  Count: _____
  Amount: $_________________

Outstanding payroll checks:
| Check # | Employee | Amount | Pay Date |
|---------|----------|--------|----------|
|         |          |        |          |

Total outstanding: $_________________

Ending payroll account balance: $_________________

================================================================

Credit Card Reconciliation

Monthly Credit Card Review:

================================================================
         CREDIT CARD RECONCILIATION
================================================================

Card: _______________________  Period: _______________

Statement balance: $_________________
Per books (liability account): $_________________
Difference: $_________________

Transactions on statement not recorded:
| Date | Vendor | Amount | Account Code |
|------|--------|--------|--------------|
|      |        |        |              |

Disputed charges:
| Date | Vendor | Amount | Status |
|------|--------|--------|--------|
|      |        |        |        |

Authorized cardholders confirmed: ☐ Yes
All transactions have receipts: ☐ Yes  ☐ Missing: _____
Personal charges identified: ☐ None  ☐ Yes (list for reimbursement)

Payment scheduled: $_________________  Date: _______________

================================================================

Documentation and Retention

Required Documentation:

Bank statement
Completed reconciliation form
Outstanding item lists
Journal entry support
Supervisor approval

Retention:

Document	Retention Period
Bank statements	7 years
Reconciliations	7 years
Canceled checks (images)	7 years
Supporting schedules	7 years

Troubleshooting

Common Issues:

Issue	Likely Cause	Resolution
Doesn't balance by small amount	Transposition error	Check digit-by-digit
Consistent difference	Repeated error	Review prior reconciliations
Large unexplained difference	Missing transaction	Review bank activity detail
Outstanding check never clears	Lost/stolen check	Void and reissue
Deposit difference	Timing or amount error	Trace to deposit slip

Cash Management Procedures
Accounts Payable Procedures
Internal Audit Procedures
Fraud Prevention

Template provided by support.construction. Reconcile every account, every month—no exceptions.

Purpose​

Why Bank Reconciliation Matters​

Benefits:​

What It Catches:​

Reconciliation Schedule​

Frequency:​

Bank Reconciliation Process​

Step 1: Gather Documents​

Step 2: Compare Deposits​

Step 3: Compare Disbursements​

Step 4: Other Reconciling Items​

Step 5: Complete Reconciliation​

Journal Entries​

Standard Adjusting Entries:​

Outstanding Check Management​

Stale Check Procedures:​

Stale Check Review:​

Controls and Segregation​

Reconciliation Controls:​

Red Flags to Investigate:​

Positive Pay Reconciliation​

If Using Positive Pay:​

Multi-Account Reconciliation​

For Multiple Bank Accounts:​

Payroll Account Reconciliation​

Special Considerations:​

Credit Card Reconciliation​

Monthly Credit Card Review:​

Documentation and Retention​

Required Documentation:​

Retention:​

Troubleshooting​

Common Issues:​

Related Documents​