Bank Account Reconciliation is the process by which you compare the information in the company's records with the statements provided each month by the bank for the bank account and balance the difference so that the bank's records and the company's records balance.
The Integral Accounting Enterprise system makes bank reconciliation an easy process. To access the bank reconciliation screen, from the main menu click General Ledger then click Banking then click Reconcile Bank Accounts. A screen will be displayed that contains the company's bank accounts ready to be reconciled. If no bank accounts have been reconciled yet, then the default record will be displayed until the first bank reconciliation is entered.
Creating the Bank Reconciliation for the First Time
If a bank account to be reconciled does not appear on the Bank Reconciliation screen, then that account will need to be added to the screen. To do this, from the main Bank Reconciliation screen, click the New button. This will bring up a screen where you can select the bank account for the new bank reconciliation.
From the drop down list in the field Bank ID, select the name of the bank account that you are setting up the bank reconciliation for. The information will be automatically populated in the fields but you will not be able to edit it. This is only to confirm that the information is correct for the bank account selected and to add the information to the table in the system. Click CLOSE to save the newly created reconciliation and return to the Bank Reconciliation list and proceed to the next step, reconciling the bank account.
Reconciling Bank Accounts
Select the bank account from the Bank Reconciliation List to begin the reconciliation process.
After clicking the bank account to be reconciled, the Bank Account Reconciliation Detail screen is displayed. From this screen there are two separate screens displaying the debit and credit transactions for that bank account, fields on the main screen to enter service charges and adjustments to balance the account, and a display on the right showing the current balance in the company's "books".
The data displaying the company balances cannot be edited, it retrieves the information based on the balances in the system automatically.
There are four steps to reconciling a bank account. They should be completed in order to ensure accuracy of the bank reconciliation.
1. Review the previous bank reconciliation and retrieve the current bank statement
The first step is to ensure that the actual bank statement to be reconciled from the bank is available. Also, you may want to review the previous bank reconciliation before beginning a new bank reconciliation.
To review the previous bank reconciliation on an account, select General Ledger from the main menu, then View Bank Reconciliations. From that screen, all the bank reconciliations previously entered into the Integral Accounting Enterprise system can be reviewed. Further information about the Bank Reconciliation Summary Screen can be found in the corresponding documentation section.
2. Enter initial information from the bank statement
Next, enter the Reconciliation Start Date, Reconciliation End Date and the Ending Balance as shown on the Bank Statement. Detailed information about these fields and the remaining fields are listed below. Do not enter information into the other fields yet. They will be reviewed later in the reconciliation process. When you enter the amount in the Ending Balance field, you will notice that the box on the right side of the screen that says "Stmt Balance" is updated with the amount you just entered. This reflects the balance shown on the bank statement.
3. Compare and Clear Transactions with the Bank Statement
The third step in reconciling the bank account is to compare and clear all the debit and credit transactions on the company's books with those that were processed by the bank and displayed on the bank statement. First, click the Credit button to display the screen listing the Credit Transactions. Review each transaction individually to ensure what is displayed on the screen and entered in the system corresponds with the bank statement. If the data corresponds, check off the box next to that transaction. This indicates that the transaction is accurate and has "cleared" the bank.
If the transaction is different then what is shown on the bank statement, then research needs to be done to find the difference and enter an adjustment to correct the error. If the transaction displayed in the system does not accurately match what is on the bank statement, then the transaction should not be checked off.
Note: If a transaction is not marked as "cleared" it will reappear on the next bank reconciliation.
As the transactions are checked off, the Company's book balances displayed on the screen are automatically updated to reflect the current balance.
Once all the Credit transactions have been reviewed and cleared, click the Debit button to display the screen listing the Debit Transactions. As with the Credit transactions, review the list and check off each box if the transaction has cleared the bank. As the transactions are checked off, the Company's book balances displayed on the screen are automatically updated to reflect the current balance.
When you are finished selecting the Debit transactions, click the Main button to return to the main bank reconciliation screen.
4. Enter additional transactions if needed
The last step in the Bank Reconciliation process is to enter any transactions that appear on the bank statement but have not been recorded in the system on the company's records. These transactions may include service charges, interest, or other charges and adjustments. Enter each amount in the field on the main screen, and select the GL Account where the transaction should be posted. Further information on each field is listed in detail below.
As with clearing the debit and credit transactions, when entering additional transactions in the respective fields, the book balance display is automatically updated.
5. Posting the Bank Reconciliation to the GL
When you are finished working with the bank reconciliation and ready to post the transactions to the General Ledger, click the Post button to post the bank reconciliation to the GL. Posting the bank reconciliation to the GL record the service charge transactions, adjusting entries (if any) and additional transactions entered during the bank reconciliation process. You can print the bank reconciliation at any time by clicking the Print button.
Note: You must click the post button to post the bank reconciliation to the General Ledger and record the adjusting transactions entered for the bank account.
Main Section Fields
Bank ID: This field is automatically completed based on the Bank Account selected.
Reconciliation Start Date: This field is automatically completed by default to be 30 days prior to the date you are entering the bank reconciliation. This date should be changed to correspond with the statement start date shown on the bank statement.
Reconciliation End Date: This field is automatically completed with the present date that the bank reconciliation is being entered. This date should be changed to correspond with the statement end date shown on the bank statement.
Currency ID: This field displays currency that the bank account is in. This field is automatically selected based on the Currency ID selected in the Bank Account screen for the account being reconciled.
Currency Exchange Rate: This field displays the current currency exchange rate between the currency the bank account is in and the company's default currency. This field is automatically completed based on the information entered in the currency exchange table.
GL Bank Account: This field is automatically selected based on the GL Bank Account selected in the Bank Accounts screen. It cannot be edited in this screen. If it needs to be changed, it has to be changed in the Bank Accounts screen.
Ending Balance: Enter the ending balance from the Bank Statement. The ending balance according to the company's books is displayed in a separate column on the right side of the screen in the field called End Book Balance.
Service Charge: If there is a service charge charged by the bank that has not been entered on the company's books, enter that amount in this field.
GL Service Charge Account: From the drop down list, select the GL Service Charge Account to record the bank service charge.
Interest: If there was interest earned that appears on the bank statement but has not been entered on the company's books, enter that amount in this field.
GL Interest Account: If interest has been charged by the bank, select the GL Interest Account to record the interest charged.
Other Charges: Enter any other charges appearing on the bank statement that are not entered on the company's books in this field.
GL Other Charges Account: From the drop down list, select the GL Other Charges Account to record the Other Charges.
Adjustments: If an adjustment needs to be entered, enter that amount in this field.
GL Adjustment Account: Enter the GL Adjustment Account to record the adjustment entered in the previous field.
Notes: Enter any notes about this bank reconciliation in this field.