Why it matters
QuickBooks describes bank reconciliation as matching your internal records to your bank statement to confirm every transaction is accurate and accounted for, and notes that it catches unrecorded bank fees, uncleared cheques and missing payments early (QuickBooks). It is also one of the simplest ways to spot fraud.
The steps
- Get the bank statement for the period, for example one month.
- Tick off each transaction that appears in both your books and the statement.
- List what appears in only one place.
- Record bank charges, profit or tax deducted by the bank that you had not entered.
- Note cheques issued but not yet cleared, and deposits not yet credited.
- Check that the adjusted balances agree.
Differences you will usually find
- Bank charges and SMS alert fees nobody recorded.
- Withholding tax the bank deducted, for example on profit paid into the account.
- JazzCash, Easypaisa or card settlements that arrive days after the sale.
- A cheque written in the books but not yet presented.
Software such as QuickBooks can import a bank feed and suggest matches, which turns a long manual job into a review. Understanding why a difference exists is still the accountant’s job.