In addition to the petty cash account, the bank account is the only source where money can physically flow into and out of the business. The bank account should be strictly monitored to ensure that all the monies that are received are deposited, and that all the payments and / or cheques have been honoured.

TurboCASH allows you to match, or reconcile, your Cashbook with the bank statement you receive from the bank. The bank reconciliation is a process of checking and comparing the transactions in your cashbook with the transactions on the bank statement.

All the transactions on the bank statement should be reflected in the cashbook and those transactions appearing in the cashbook, but not on the bank statement, should be reflected on the bank reconciliation statement. This process can be illustrated as follows:

When the bank statement is received, you will find that any bank costs (and interest if you have an overdrawn cheque account) is debited, and any interest that you have received on a positive bank balance is credited to your bank account. These transactions will appear on your bank statement, but will not appear in your cashbook. The same applies for debit orders and electronic payments as well as monies paid directly into your bank account by your customers or other parties.

The bank reconciliation helps you to identify these transactions and enter them into your cashbook. Another reason is the time factor. If you send a cheque to another supplier by post, this can take some time and the other party (beneficiary) to whom the cheque is issued, may bank the cheque too late for the bank to clear the cheque and reflect it on your bank statement. You may also have made a deposit up, after banking hours, and the deposit will only be reflected on the bank statement on the next day.

The bank reconciliation is carried out for a number of reasons. These are:

1. Determining of outstanding cheques and deposits and reporting it in the Cashbook Reconciliation Report:
   1. Outstanding deposits – Monies may have been received after banking hours and deposited into your bank account on the next day of the month or the day after the bank statement was printed.
   2. Outstanding cheques – All cheques that were issued may not yet have been presented to the bank by the recipient or beneficiary of the cheque. The cheque may have been presented at a different bank or may not yet have reached the beneficiary of the cheque.
      - These outstanding deposits and cheques will be reported in the Bank Reconciliation Statement or Cashbook Reconciliation Report and should be reflected in the bank statement for the next reconciliation period. Should a cheque be outstanding for a second consecutive period, you need to follow it up with the supplier or beneficiary, since the cheque may be lost in the post, etc.
2. Recording of transactions on the bank statement which do not appear in the cashbook:
   1. Electronic payments – Some electronic payments by debit orders may not reflect in the cashbook, but do appear on the bank statement.
   2. Bank charges and interest – The amount of these bank charges will only be known when the bank statement is received. Interest may also be received on a favourable bank balance and can only be recorded when the amount is known.
   3. Dishonoured cheques – Sometimes cheques deposited may have been returned to the drawer as there are no funds in the drawers account, or the cheque has not been signed, or many other reasons.
3. Tracing and correction of errors:
   1. Errors of entered transactions – This may occur when receipts were recorded in the receipts journal and/or when payments were recorded in the payments journals. Amounts may have been entered incorrectly (e.g. 45 instead of 54).
   2. Errors of omission – Transactions have not been entered in the receipts or payments batches.
   3. Errors that may occur at the bank – This is usually when the teller at the bank has recorded the amount of a cheque or a deposit incorrectly. This is very rare and is sometimes rectified automatically by the bank. (This is also referred to as “error in cast” on bank statements).
      - In the case where banks use the Automated Clearing Bureau (ACB) to read and record the cashed cheques electronically on your bank statement, you should take care that the cheques are written out clearly and correctly.
      - Deposit slips should also be filled in correctly and the entries (cash and cheques, etc.) should add up correctly.
      - There are various reasons which may cause differences between the bank balance, as per bank statement, and the reconciled balance according to TurboCASH.
4. Fraudulent cheques - The amounts on the bank statement should match the amount in the cashbook. If it does not, the cashed cheque should be scrutinised to determine that there was no tampering with the cheque.

• Printed Bank Statements - You may receive a bank statement by fetching it from the bank or by post.
• Online Banking - The BankOnline Plug-in allows you to view bank statements in an electronic format which you may obtain as follows:
  • Download a bank statement from your bank, provided that your system is configured and set up for the Internet and you are registered for online banking at your bank or financial institution. It is important to select the correct dates to include transactions (the dates must correspond with those dates for which you need to do the bank reconciliation) when you save the bank statement transactions as a file.
  • You need to import a bank statement from a valid existing file format on your system.
    - The TurboCASH BankOnline Plug-in can be accessed in the Tools→Plug-ins→BankOnline menu option, if you have installed the Plug-ins from the TurboCASH Plug-ins CD, or if you have purchased the Plug-in from the Online Shop.

- Recording of Transactions on Bank Statement in the Cash Book
The transactions on the deposits (credit) side of the bank statement which are not yet recorded in the cashbook, should be entered in the Receipts Journal.
The transactions on the payments (debit) side of the bank statement which are not yet recorded in the cashbook, should be entered in the Payments Journal.

- TurboCASH allows you to reconcile your Bank Accounts before you update or post your Payments and Receipts Journals to the ledger.

This will allow you to easily correct any errors found (edit transactions, insert transactions which are omitted, delete transactions which are entered twice, reverse all the transactions if entered on the incorrect side, etc.), when doing the bank reconciliation.

You may also enter any transactions (such as bank charges and interest), which are listed in your bank statement, but do not appear in your cashbook.

You may post or update your batches after your reconciliation is completed, unless you are working on a “Client Machine” in a network environment.
— digidan 2006/11/02 17:02