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How to Prepare a Company Bank Reconciliation

Before learning the steps of preparing company's bank reconciliation, you should learn what is the difference of bank reconciliation of normal individual business and reconciliation of company. Both bank reconciliations are done for finding the reasons of difference between cash book and bank statement but after week or after closing of every month, to prepare the bank reconciliation statement of company is must because there are large number of bank transactions and there is big risk of fraud or mistake in it.
There are many big MNC which check the difference between cash book and online bank statement on daily basis. Moreover company makes cash budget and it has to control cash at any cost. With help of BRS, it can easily achieve its target.

Steps of Preparing a Company Bank Reconciliation

1st Step : Collect the Cash Book, Bank Statement and Other Records 

When you start the process of bank reconciliation, you have to collect all the cash book, bank statement, ATM cards vouchers and bill of online transactions through credit card. Photostat of deposited cheques for collection. All these information will be helpful to find differences between cash book and bank statement.

2nd Step : Make the List of Reasons for Not Matching the Closing Balance of Cash Book and Bank Statement

If you are seeing that the closing balance of cash book and bank statement are different, you have to start to make the list of reasons behind this. Following may be its list

a) Cheques  Deposited but not Collected By Bank

b) Cheques Issued but not paid by Bank

C) Bank Charges which was not recorded.

D) Accounting Mistakes in Cash Book

E) Accounting Mistakes in Bank Statement

F) Interest Allowed by Bank

G) Auto- Payments and Auto-Receipts by Banks

H) Direct Deposit into Bank by Customer of Company

I) Cheque Dishonored

J) Errors in Cash Book

F) Other Reasons

3rd Step : Compare the Recorded Transaction in Cash Book and Bank Statement 

If there is same record of any transaction on the cash book and bank statement. It is ok. Any transaction which is in cash book but not in bank statement and any transaction which is in bank statement but not in cash book, will be the base of reconciling both. So, circle all these transaction with pencil. Sometime, we do not record in cash book but make the list of written and issued cheques. So, compare whether issued cheques are paid and properly recorded bank statement and cash book.

4th Step : Verify the Record of Circled Transactions

In third step, we have to verify circled the transactions which are recorded  either in cash book or bank statement. It is very necessary because suppose in cash book, there is showing Rs. 50,000 as receipt and deposited in bank but there is not any such record in bank statement but when we have verified that our account assistant returned the cheque to the party due to returning of goods by party. But due to mistake, he recorded same cheque as the receipt in cash book. Like this, there is very necessary for checking the validity of all circled transactions

5th Step : Adjustments through Bank Reconciliation Statement 

Take any Excel Template and make the BRS in it. We can take either closing balance of cash book or closing balance of bank statement.

If we have taken the closing balance of cash book, we have to add all the items which
increase the balance of bank statement. We have to deduct all the items which decrease the
bank statement balance.

Or

If we have taken the closing balance of bank statement, we have to deduct all the items which
decrease the cash book balance. We have to add all the items which increase the balance of
cash book

Format of BRS of Company


Related : Learn Accounting Step by Step 

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Accounting Education: How to Prepare a Company Bank Reconciliation
How to Prepare a Company Bank Reconciliation
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Accounting Education
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