How do you personally reconcile your general ledger to the bank balance?

Reconciling your general ledger (GL) to the bank balance involves a systematic process to ensure the accuracy and consistency of your financial records. Here’s a detailed approach to achieve this:
Gather Necessary Documents: First, obtain the bank statement for the relevant period and your general ledger, along with any sub-ledgers that relate to cash accounts.
Match Transactions: Start by comparing each transaction recorded in your GL with the corresponding entry in the bank statement. Pay attention to dates, amounts, and descriptions to ensure they match.
Identify Discrepancies: Note any differences between the GL and bank statement. Common discrepancies involve outstanding checks, deposits in transit, bank errors, or recording errors within the GL.
Adjust for Timing Differences: Account for timing differences, such as checks that haven’t been cashed or deposits that haven’t yet been processed by the bank.
Correct Errors: Rectify any errors found in the GL. This might involve reversing incorrect entries and creating new entries that accurately reflect the transactions.
Update Bank Reconciliation Statement: Prepare a bank reconciliation statement that lists all adjusted and unadjusted differences. This statement should clearly display how you arrived at the reconciled amount from the original GL and bank statement figures.
Review and Finalize: Have the reconciliation reviewed by a manager or an independent party to ensure accuracy. Make any necessary adjusting entries in your Accounting Software to update the GL.
Documentation and Filing: Once reconciled, document all pertinent details of the reconciliation process and file them systematically. This documentation is crucial for audits and future reference.
Regular Monitoring: Implement this reconciliation process regularly—preferably monthly—to catch discrepancies early and maintain accurate financial records continuously.

Following these steps not only ensures the integrity of your financial records but also improves your overall financial controls and reporting.