Do you take your bank reconciliation responsibility seriously? When you fail to give your cash balances proper attention, you run the risk of overlooking (or completely missing) errors and irregularities that could cripple your existing financial strategy. As a bank reconciliation warrior, you are responsible for managing one of the most important aspects of your organization. Don’t be tempted to put it off. Because when crisis strikes your finances, people will be looking to you for answers.
Balanced books are the cornerstone of your entity’s financial wellness. When you take a proactive and assertive stance with regard to your bank reconciliations, you empower yourself and your organization to uncover and resolve errors and irregularities while deterring and preventing fraud. Read on to find out what mistakes you should be on the lookout for and what you can do now to reclaim control over your financial stability.
Mistakes Happen
Timing variances stemming from outstanding checks, deposits in transit, bank fees and interest earnings are traditionally the culprits when your bank balance and book balance are out of whack. But unless you are regularly managing your financial reports, you won’t know if there are other erroneous forces at work until it’s too late. That’s not to say that all errors stem from malicious intent. Mistakes happen and no person, or company, is immune (including your bank).
Be on the lookout for the following errors:
- Discrepancies in deposit and check amounts
- Overcharging of bank fees
- Transactions posted to the wrong accounts
- Fraudulent charges
- Transposed deposit amounts
- Deposits that were not posted or posted more than once
Take Action
Oftentimes, when mistakes happen, you will have a limited amount of time to dispute the fraudulent charges; and if you allow yourself to fall behind on monthly bank reconciliations you ultimately forfeit your opportunity to recover your losses.
Whatever your excuses were in the past, today is the day to reclaim control of your financial domain and proper management of your bank reconciliations is key. Make sure your bank reconciliations are being performed by someone other than the person responsible for your organization’s general accounting responsibilities or for authorizing bank transactions. In addition, be sure to put a management-level employee in charge of reviewing and approving your bank reconciliation each month. The review process should consist of verifying for accuracy and insuring that supporting documentation has been included, reconciling items that are carried over every month, reviewing outstanding checks and investigating “stale” checks.
Master Your Financial Domain
When you actively manage your entity’s financials you are more likely to catch mistakes quickly, which could save you (and your team) from having to dig into several months’ worth of data. Having to backtrack only serves as a monumental waste of time and takes your focus away from other pressing responsibilities. Furthermore (and perhaps most troubling), when errors go undetected your organization is using inaccurate data to make really important decisions regarding its purchasing and budgeting initiatives, which can result in disaster.
Become a bank reconciliation warrior. Not exactly sure where to start? Email Rea & Associates to learn more.
By Chad Welty, CPA (Medina office)