Need for Bank Reconciliation - The Book-keepers Forum

Lilac Bookkeeping · Veteran Member

Need for Bank Reconciliation

Susie Sue · Senior Member

Wouldn't have thought it's a legal requirement but IMO is good to do a bank rec. It picks up many errors and omissions - which includes errors by the banks! Must admit my mind is at rest when I've reconciled the bank!

MarkS · Senior Member

Not necessary to do the bank reconciliation.

But what if you come to the year and and you try to agree the bank statement to the accounting software bank balance and the two balances dont agree? What do you do next?

Doing a regular bank reconciliation (say monthly or 3 monthly) is a good discipline in order that any errors are easily idenified and sorted at the time they occur. If you have to take on the full year in one go that is a lot more onerous task.

If there are no error made by the client and they can give you a list of the outstanding lodgements and cheques at the year end then there will be no problem reconciling your bank once a year. In 15 years practice experience i dont think have ever come across the situation where the bank has squared without any errors when no reconciliation is done on a regular basis.

Regards

MarkS

Lilac Bookkeeping · Veteran Member

Thanks Sue

I agree but I dont want to do something that they say they cant afford to pay me for so I wanted to check out the legal side of things first and if they dont want me to do it - then thats their problem!!

Lilac Bookkeeping · Veteran Member

Thanks Mark

I will not be doing year end-the accountant will and most of the business is cash based so I will let them decide!

kjmcculloch83 · Guru

I disagree to an extent. If they don't want you to do it, it could end up being your problem. Personally I wouldn't take on a client who wanted me to cut corners. It's your reputation on the line. You can bet when things don't add up at the end of the year it's you they'll be moaning about to anyone who will listen, and contrary to popular opinion all publicity is not good publicity.

From the clients point of view they need to understand how foolish it is to blindly trust their bank, and all the people they deal with and pay by direct debits. If anyone makes a mistake it can prove costly. This client sounds like the perfect example of the type to be avoided.

Kris

Lilac Bookkeeping · Veteran Member

Thanks Kris - point taken and yes I agree, for the sake of an hour or so per mth it would be foolish not to ensure it's all reconciled.

Thanks very much

alfie · Veteran Member

Lilac
Not a legal requirement but a necessary one.
If they are paying you to to do the books what you do and how you do it should be up to you.
Surely they don't ask you to itemise what you are doing !

Everyone reconciles there bank some way or another, may be even without realises they are.

Hope that helps

ADAS · Guru

I would argue it's now fundamental to do a bank rec,especially for a limited company, given that bookkeepers now have to comply with MLR.

I don't see how you can really comply if you don't regularly review all the bank statements. It's perfectly possible that the client was moving cash through the account and the bookkeeper would never know e.g. the client could use a different paying in book that you never see or make electronic payments in and out?

-- Edited by ADAS on Tuesday 8th of November 2011 06:21:30 PM

Shamus · Forum Moderator & Expert

I agree with Alfie but would go further into saying that how you do your work is really non of the clients business. They pay for the results not the means of producing them. You have done a lot of study to provide a service and it's not for a client who to tell you how to do it.

If they used a bus they would pay to go from A to B. They would not tell the bus driver not to go via C as it add's to the journey time.

If someone pays for your services then they are paying for the finished result not the means of achieving it.

This sort of thing really annoys me. Last time anyone told me how I should do my job it was met by a very swift "Pick a window" (with an embedded expletive in there).

semsley · Guru

The bank rec is fundamental to good book-keeping practice and ensures that things balance. I've just taken over a client and they haven't been able to balance their bank since August because it's an on line account and the bank in question has had a "computer problem" which has resulted in only half month's records being available. It's now resolved but the person I'm taking over from went on maternity leave on Friday and had not finished entering all the income and expenditure up to date, the director asked me for a cash flow projection and budget v actual report for a staff meeting today, together with debtor and creditor balances. As their book-keeping was being done on a budget and forecast spreadsheet and an income and expenditure spreadsheet, with some of the income and expenditure still not accounted for I had to say I could not do anything reasonably accurate. Hopefully, by next month the situation will have been resolved.

Lilac Bookkeeping · Veteran Member

Dear All

Thanks so much for your responses. I do feel like I am being bullied into doing a cut price service that could backfire at year end if nothing agrees! So I will insist, for my benefit that I carry out a monthly bank rec to Sage just to cover my own back!!!

Thanks again.

MarkS · Senior Member

As others have said above you are providing a bookkeeping service.

What you actually do to provide this service is entirely up to you and the client shouldnt be dictating what you should and shouldnt do.

What they should be interested in is getting up to date accounts, on a regular basis which shows the correct position. How you get to that position is your choice.

Regards

Mark

Lilac Bookkeeping · Veteran Member

Thanks Mark

As you say, I am goverened by AAT, and if I am not carrying out my duties correctly I might aswell give up!

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