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Audit of bank reconciliation

Sidharth Shankar (Chartered Accountant) (118 Points)

10 June 2015

Kindly provide me checklist for audit of Bank Reconciliation Statement....Thanks!!

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V P Narasimhan (Accounts Manager) (791 Points)
Replied 15 September 2015

Check list for BRS in Audit:

Account Operation: Name of the person/s & their possession as signing authority. Limit if OD or CC A/c. Insutruments sig _ any limit for individuals or can signed e ior s or both or two signatures requred.

In case if two persons are there and one person can sign the other person who has not signed tghe cheque has to initial the counter foil.

Any amount of w/d in individuals name - reason if other than petty cash w/d.

Is there any exorbitant delay in depositing or presenting a chq. if so reason.

Any cancelled chq not reversed in the books - all cancleed chqs to be kept seperaately.

Has BRS made every month & it should be available in the Bank statement.

Any Hypothicatin/pledge stock statement to be furnished to the Bank - if so has it been compiled.

Copy of Board Resolution on operating/changes in Bank A/cs.

Any Term Deposits (in the name of the Co.,) Any Bank Guarantee furnished if so limit of utilisation.Any Letter of Credit facililty availed or unsed.

If you start automatically it will come one by one for checking.

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Milind M. Kulkarni (Practicing CA) (580 Points)
Replied 21 September 2015

Sidharth, Bank Reconciliation is a statement prepared to reconcile differences between balance as per Bank statement and as per Bank book as per the company's books of account.

1. To start with, you need to have copies of both, Bank statement and bank book as of the given date so that you can verify balances as per both. Ensure that they are correctly stated in the BRS;

2. Cheque that the BRS matches arithmetically. Nowadays mostly it is done through system. Even Tally has a BRS preparation tool, so it will match arithmetically;

3. Check reasons for reconciliation items in BRS. If these include debits/ credits given by bank but entry not passed in books, ask the client to pass entry in books and remove those items from BRS. Check in bank statement, corresponding entries appearing with descripttion;

4. Ask clarification of old cheques deposited but not cleared for a long time and also cheques paid but not cleared for a long time. In case of cheques deposited but not cleared, cheque counterfoils of deposit slips;

5. Both, cheques deposited or paid but not cleared which are mpre than 6 months old (i.e., stale cheques no longer valid), should be reversed and a liability or receivables created in the books. These should be removed from BRS. Report such cases to your Partner for his knowledge without fail, as these are very sensitive cases;

6. In case of all the BRS items, check dates of subsequent clearances from bank statement with those dates marked on the right side column in BRS.

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