Cancelled Checks
I receive copies of cancelled checks, but I’m puzzled as to why my manager insists I trace them back to the bank statement. Since they’re cancelled checks, we already know they’ve been cashed and cleared!
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Cancelled checks
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Your manager likely insists on tracing the cancelled checks to the bank statement as an additional step for reconciliation and verification. Here are a few reasons why this might be necessary:
Verification of Amounts: Even though a cancelled check shows it has been cashed, verifying against the bank statement ensures that the amount matches what was recorded in your Accounting system. This helps catch any errors or discrepancies.
Fraud Prevention: Cross-checking helps to prevent potential fraud. It ensures that the check was actually cleared and that there haven’t been any unauthorized changes or alterations.
Ensuring Completeness: By tracing cancelled checks to the bank statement, your manager can confirm that all transactions have been accounted for and that the records align, ensuring your financial statements are accurate.
Audit Trail: This process creates a clear Audit trail. If there are any questions later on, having the checks traced to the bank statement provides a thorough record.
Regular Reconciliation: Regularly reconciling checks with bank statements is good practice and helps maintain the integrity of financial reporting.
So, even though it may seem redundant, it’s a valuable step in maintaining accurate financial records.