PRO­TECT­ING YOUR COM­PANY: BANK RECONCILIATIONS

Asian Journal - - WORLD -

Tax Ques­tion:

How does pre­par­ing bank reconciliations help to de­tect and pre­vent pos­si­ble fraud?

Facts:

A bank rec­on­cil­i­a­tion ex­plains the dif­fer­ence be­tween the bal­ance in the bank ac­count per the ac­count­ing records and the bal­ance ac­tu­ally in the bank at any given time. The bank rec­on­cil­i­a­tion should be pre­pared and re­viewed monthly to an­a­lyze the dif­fer­ences and help de­tect er­rors or fraud. This in­ter­nal con­trol will also help de­ter fraud.

Dis­cus­sion:

The bank rec­on­cil­i­a­tion should be pre­pared monthly by some­one in­volved in the record keep­ing for the com­pany and re­viewed monthly by an owner or the Chief Fi­nan­cial Of­fi­cer (CFO).

The bank rec­on­cil­i­a­tion re­port pro­vides a list of the cheques and pay­ments that have cleared the bank that month. These lists should be re­viewed by the owner to en­sure that there are no du­pli­cates (no pay­ment has been is­sued twice) and that all ven­dors ap­pear le­git­i­mate and amounts ap­pear rea­son­able. If an amount or ven­dor ap­pears ques­tion­able, the can­celled cheque should be viewed and the pay­ment in­ves­ti­gated. The bank rec­on­cil­i­a­tion re­port also pro­vides a list of de­posits and funds re­ceived that month. This amount can be com­pared to other in­ter­nal re­ports such as cus­tomer re­ceipts and cash and credit card sales to en­sure it is cor­rect. Fur­ther­more, the bank rec­on­cil­i­a­tion re­port lists out­stand­ing de­posits and cheques. These items should be re­viewed for rea­son­able­ness.

Is it rea­son­able that those de­posits had not yet been de­posited as at the re­port date or should this be in­ves­ti­gated as po­ten­tial fraud? Are there any du­pli­cate pay­ments that need to be in­ves­ti­gated? Dawn Lo­ef­fler, (Hons), CPA, CA Man­ager, Gil­mour Group CPA’S

Email: [email protected]­mour.ca Dis­claimer: The in­for­ma­tion con­tained in this ar­ti­cle is in­tended solely to pro­vide gen­eral guid­ance on mat­ters of in­ter­est for the per­sonal BA use of the reader, who ac­cepts full re­spon­si­bil­ity for its use. While we have made ev­ery at­tempt to en­sure the in­for­ma­tion con­tained in this ar­ti­cle has been ob­tained from re­li­able sources and ac­cu­rately de­scribed herein. SW Me­dia Group and Gil­mour Group In­cor­po­rated is not re­spon­si­ble for any er­rors or omis­sions, or for the re­sults ob­tained from the use of this in­for­ma­tion. Be­fore tak­ing any ac­tion that might af­fect your per­sonal and busi­ness fi­nances, you should con­sult a qual­i­fied pro­fes­sional ad­vi­sor.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.