What is Bank Reconciliation having the same understanding as to the meaning of the word reconciliation itself? It can be said that the presence of this bank can certainly be used as a way to avoid negative risks in the banking world. For example, avoiding misappropriation of funds occur between two parties, namely the bank institution and the customer.
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To prevent unwanted things, Bank Reconciliation can be presented to play an important role in terms of adjusting information about banking transactions. So that it can become appropriate between one party and another party. This will also lead to valid information about accounting activities recorded both by the bank institution and by the customer.
Definition of Bank Reconciliation
The presence of this bank reconciliation is related to the existence of actions or processes of matching balances in the accounting records of the entity. This matched note comes from the bank and customers so that later it can be ascertained the differences that may arise between the two. In the process of matching balances and financial transactions, there will be many types of accounting records that must be matched.
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All records regarding financial transactions that occur can have their impact, especially on the entity’s bank account over the past month. This should be resolved periodically, especially for all bank accounts. So that later it can be ascertained that the company’s cash records are appropriate and correct.
But if it is different than it must also be sought the location of the difference. At least the thing that is done by involving Bank Reconciliation is done at the end of each month. Later it can be known the bank’s initial cash balance and the final balance that have occurred during a certain month.
Bank Reconciliation Flow
In carrying out bank reconciliation, of course, there is a clear flow. This flow itself is an important process for the bank. This flow generally starts with the process of getting and knowing information about the bank’s final cash balance. While in it is usually known that there are several deposits for example on the way from the company to the bank. In addition, it can also be known the process of reducing checks that have not been summarized in the bank and then added or reduced with other checks.
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The Main Process
It will be better if the bank reconciliation process is carried out every day so that the latest information can be obtained. The information obtained is then okay if accessed on the bank’s web so that later anyone with an interest can find and see it more easily. Through bank reconciliation, it can help various parties to find existing problems. Both the bank and the customer can later find errors so that they can make repairs in the future.
There are many more things that must be passed to get clearer information and precise details about finances and transactions that occur. In the final stages of this process, the adjusted bank balance must be equal to the company’s adjusted final cash balance.
If indeed the balance is the same, then it means that financial activities or transactions have been recorded correctly. But if it is not the same, then during recording transactions there has been a difference that needs to be sought until found.
Bank Reconciliation Procedures
At least several procedures must be passed in the bank reconciliation process. Such as tracing bank balances to bank statements. After that, it is also necessary to conduct a review process on the confirmation that has been done by the bank precisely regarding cash recording.
The next procedure is to trace the date of the balance sheet contained in the reconciliation of the bank so that later it can be known whether the information obtained is appropriate or not.
Next is creating a bank reconciliation worksheet. In this case, you can find and then match the differences that may occur. Then the boiling of the difference can be calculated and then matched. The last procedure is to do the recheck process, especially on the company’s cash records.
The Function of Bank Reconciliation
The importance of bank reconciliation makes it necessary to do it in every financial institution. It is to give a smooth running of banking activities carried out by bank customers related to certain bank financial institutions. Thus, it can be said that the reconciliation of this bank has several functions including detecting the possibility of fraud for example in the form of money manipulation.
In addition, bank reconciliation also serves to supervise the cash recording process. Bank reconciliation can also serve to avoid errors in the cash recording process so that later everything that is not suitable immediately can be found and then a solution is sought.
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What is Bank Reconciliation by looking at its role and function and purpose, it can be said that its presence is very important. The existence of Bank Reconciliation seems to be the intermediary between the two parties, namely the bank and customers. Because what is done by Bank Reconciliation is related to the process of matching information between the bank institution and the customer.
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