Bank Reconciliation SOP Template

1.Purpose

To confirm the cash balance in the general ledger agrees with the bank, catch errors or irregular transactions early, and keep a documented, reviewed reconciliation for every bank account.

2.Scope

Applies to reconciling operating, payroll and any other company bank accounts each period. Recording the underlying transactions themselves is covered by other SOPs such as accounts payable and payroll processing.

Definitions

Outstanding check

A check issued and recorded in the general ledger that has not yet cleared the bank.

Deposit in transit

A deposit recorded in the general ledger that has not yet appeared on the bank statement.

Reconciling item

Any difference between the bank statement and the general ledger balance that must be explained to reconcile the two.

3.Responsibilities

Staff Accountant

Performs the reconciliation, matches transactions and investigates discrepancies.

Senior Accountant

Reviews and approves completed reconciliations.

Treasury Analyst

Provides bank statement access and helps resolve bank-side discrepancies.

RACI matrix

R = Responsible, A = Accountable, C = Consulted, I = Informed

4.Materials and PPE

Materials, tools and systems

• →Bank statement or online banking portal
• →General ledger cash account detail
• →Bank reconciliation template
• →Outstanding check and deposit in transit list
• →Prior period reconciliation for reference

5.Procedure

1. 5.1

   Obtain the bank statement

   Staff Accountant

   The staff accountant downloads the bank statement or transaction detail for the period from the bank's portal shortly after the statement cutoff date.

2. 5.2

   Pull the general ledger cash detail

   Staff Accountant

   The staff accountant exports the general ledger cash account activity for the same period, including the beginning balance and every posted transaction.

3. 5.3

   Match cleared transactions

   Staff Accountant

   The staff accountant matches each transaction on the bank statement to its corresponding entry in the general ledger, marking each as cleared once confirmed.

4. 5.4

   List outstanding checks and deposits in transit

   Staff Accountant

   The staff accountant lists any check recorded in the general ledger that has not cleared the bank, and any deposit recorded that has not yet appeared on the statement.

5. 5.5

   Record bank fees and interest

   Staff Accountant

   The staff accountant identifies bank fees, interest earned or other bank-initiated transactions on the statement that are not yet recorded, and prepares journal entries to record them.

6. 5.6

   Investigate unmatched items

   Staff Accountant

   The staff accountant investigates any transaction that appears on only one side, checking for timing differences, data entry errors or an unauthorized or unrecognized transaction.

   Warning: An unrecognized transaction on the bank statement may indicate fraud and should be reported to the senior accountant immediately.

7. 5.7

   Resolve discrepancies with the bank

   Treasury Analyst

   The treasury analyst contacts the bank to research any transaction that cannot be explained internally, such as a bank error or a transaction the company did not initiate.

8. 5.8

   Prepare the reconciliation summary

   Staff Accountant

   The staff accountant completes the reconciliation template showing the adjusted bank balance and adjusted book balance, confirming the two agree after all reconciling items are listed.

   Checkpoint: The adjusted bank balance and adjusted book balance agree exactly before the reconciliation is submitted for review.

9. 5.9

   Review and approve the reconciliation

   Senior Accountant

   The senior accountant reviews the completed reconciliation, checks that every reconciling item is explained, and approves it before it is filed.

   Checkpoint: No reconciliation is filed as complete without senior accountant approval and a documented explanation for every reconciling item.

10. 5.10

    Escalate long-outstanding items

    Senior Accountant

    The senior accountant reviews any check or deposit that has remained outstanding for an extended period and decides whether to void, reissue or otherwise resolve it.

11. 5.11

    File the reconciliation

    Staff Accountant

    The staff accountant files the approved reconciliation, supporting bank statement and outstanding item list in the document management system for the period.

6.Quality checks

• →The adjusted bank balance and adjusted book balance agree exactly on every reconciliation.
• →Every reconciling item has a documented explanation, not just a listed amount.
• →Every reconciliation is reviewed and approved by the senior accountant before filing.
• →Long-outstanding checks and deposits are followed up rather than carried forward indefinitely.

7.Records

• →Bank statement for the period
• →Completed and approved reconciliation
• →Outstanding check and deposit in transit list
• →Notes on resolved and escalated discrepancies

8.KPIs

• →Number of business days to complete the reconciliation after statement cutoff
• →Number of unexplained reconciling items at review
• →Number of long-outstanding checks or deposits carried month to month
• →Number of reconciliation errors caught in review

9.Common mistakes

• →Forcing the reconciliation to balance without explaining every item.
• →Skipping the investigation of a small unmatched transaction because the total still balances.
• →Letting outstanding checks age for months without follow-up.
• →Filing a reconciliation without senior accountant review and approval.

10.Revision history