What a reconciliation proves
A bank reconciliation is not the same as downloading bank transactions into accounting software. It demonstrates that the ending cash balance in the books can be reconciled to the ending balance on the bank statement after legitimate timing differences are identified.
Start with a fixed statement period
Use the bank's official monthly statement, not a live online balance that changes during the day. Confirm the opening balance agrees to the prior reconciliation, match cleared deposits and withdrawals, identify outstanding items, and investigate transactions that exist on one side but not the other.
Common exceptions
- Duplicate imported transactions.
- Processor deposits recorded at gross revenue instead of net settlement with fees separated.
- Checks or ACH payments still outstanding at month-end.
- Bank fees or interest not yet recorded in the ledger.
- Transfers recorded on only one side.
- Personal or owner transactions posted to operating expense.
Do not force the difference to zero
A suspense or reconciliation adjustment can hide the very problem the process is meant to identify. If the bank and ledger differ, find the cause, document the treatment, and leave unresolved items on an exception list with an owner.
Retain the evidence
Keep the bank statement, reconciliation report, and support for material reconciling items with the monthly close. That turns the cash number from 'what the software currently says' into a balance another reviewer can independently verify.