Practicing CA
584 Points
Joined April 2011
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 Both, cheques deposited or paid but not cleared which are mpre than 6 months old (i.e., stale cheques no longer valid), should be reversed and a liability or receivables created in the books.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.