Cancelled Checks
I’ve been receiving copies of cancelled checks lately, but I’m puzzled as to why my manager insists that I trace them back to the bank statement. Since they’re cancelled checks, isn’t it obvious that they’ve been cashed and cleared?
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Cancelled checks
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Your manager’s insistence on tracing cancelled checks to the bank statement is likely a part of ensuring thorough financial controls and accuracy in record-keeping. Here are a few reasons why this step is important:
Verification of Amounts: Even if a check is cancelled, it’s crucial to confirm that the amount and the payee are correctly recorded in both the check and the bank statement. This helps catch any errors or discrepancies.
Reconciliation Process: Tracing checks to the bank statement is an essential part of the reconciliation process. It ensures that all transactions are accounted for and helps identify any missing items.
Fraud Detection: By cross-referencing cancelled checks with the bank statement, you can detect potential fraud or unauthorized transactions more easily.
Audit Trail: Maintaining a complete and accurate Audit trail is important for financial accountability. It helps in case of audits or financial reviews, where you can demonstrate due diligence.
Internal Controls: This process reinforces internal controls over finances, ensuring that all transactions are legitimate and properly documented.
While it may seem redundant, this practice promotes accuracy and accountability in financial management.