Previous Bookkeeper Has Never Done a Bank Rec?

Introduction

Hello Everyone,

I recently reviewed the financial records of a business I might be taking over, and I noticed something peculiar. Despite being in operation for 8 years, it seems like no bank reconciliations have ever been performed on their QuickBooks Online (QBO) account.

Investigation

After examining the QBO reconciliations, the evidence pointed to them being untouched. When the current bookkeeper was questioned about it, she couldn’t provide a clear answer, which likely means that these reconciliations were never done.

Seeking Advice

I’m curious if this is an unconventional Bookkeeping method I am unaware of. Are bank and credit card reconciliations unnecessary for some reason?

Possible Solutions

As we are approaching the end of the fiscal year, I am contemplating whether to advise my potential client to let the existing bookkeeper finish until the month’s end. Personally, I’d prefer starting fresh with the new financial year and transitioning back to QuickBooks Desktop. I’m more comfortable with that platform, and I find its layout more intuitive compared to QBO.

Conclusion

Thank you all for your insights! Any advice or thoughts on how to handle this situation would be greatly appreciated.

Understanding Bank Reconciliation

Purpose: Reconciliation ensures that the balances on the books (i.e., the company’s Accounting records) match the balances on the bank statements. This process helps identify any discrepancies due to errors, omissions, or unauthorized transactions.

Standard Practice: Typically, businesses reconcile bank accounts monthly, aligning their records with monthly bank statements.

Steps to Address the Situation

Assess the Current State:

Review the available records in QBO thoroughly. Confirm whether any informal reconciliation has been performed, or if there’s any record of such activities outside of QBO.

Communicate with Your Client:

Discuss the importance of bank reconciliations with your potential client. Explain how regular reconciliations can prevent financial discrepancies and ensure accurate financial reporting.

Decision on Reconciliation:

Historical Reconciliation: If possible, attempt to reconcile past months, starting from the latest month and moving backward. This may help in identifying any red flags or critical issues.

Immediate Action: If time doesn’t permit a complete reconciliation for historical data, at least perform a thorough reconciliation for the past few months. This will provide a starting point moving forward.

Technology Transition:

Consider the pros and cons of switching from QBO to QB Desktop. While familiarity is crucial for efficient Bookkeeping, ensure the client’s business needs and the software features align well.

Finalizing the Current Month:

Before the end of the fiscal year, ensure everything is accurately recorded for the current period.

Decide whether the current bookkeeper should complete the last month or if you should take over immediately to ensure the transition is smooth.

Set Up Future Processes:

Establish a routine for monthly reconciliations moving forward.

Create detailed documentation of procedures to ensure consistency and accuracy.

One response

APAdmin

26 February 2025 at 2:58 PM
It sounds like you’re stepping into a challenging but manageable situation. Performing bank reconciliations is indeed a fundamental aspect of Bookkeeping, and it’s concerning if they’ve never been done. Here’s a structured approach on how to handle this:

Understanding Bank Reconciliation
- Purpose: Reconciliation ensures that the balances on the books (i.e., the company’s Accounting records) match the balances on the bank statements. This process helps identify any discrepancies due to errors, omissions, or unauthorized transactions.
- Standard Practice: Typically, businesses reconcile bank accounts monthly, aligning their records with monthly bank statements.
Steps to Address the Situation
1. Assess the Current State:
2. Review the available records in QBO thoroughly. Confirm whether any informal reconciliation has been performed, or if there’s any record of such activities outside of QBO.
3. Communicate with Your Client:
4. Discuss the importance of bank reconciliations with your potential client. Explain how regular reconciliations can prevent financial discrepancies and ensure accurate financial reporting.
5. Decision on Reconciliation:
6. Historical Reconciliation: If possible, attempt to reconcile past months, starting from the latest month and moving backward. This may help in identifying any red flags or critical issues.
7. Immediate Action: If time doesn’t permit a complete reconciliation for historical data, at least perform a thorough reconciliation for the past few months. This will provide a starting point moving forward.
8. Technology Transition:
9. Consider the pros and cons of switching from QBO to QB Desktop. While familiarity is crucial for efficient Bookkeeping, ensure the client’s business needs and the software features align well.
10. Finalizing the Current Month:
11. Before the end of the fiscal year, ensure everything is accurately recorded for the current period.
12. Decide whether the current bookkeeper should complete the last month or if you should take over immediately to ensure the transition is smooth.
13. Set Up Future Processes:
14. Establish a routine for monthly reconciliations moving forward.
15. Create detailed documentation of procedures to ensure consistency and accuracy.
Your Action Plan
1. Immediate Assessment: Conduct a quick review of the QBO setup and Accounting records. Identify major areas of concern.
2. Client Meeting: Have a transparent discussion with the client about your findings and recommendations. Clarify your approach to transitioning the books back to QB
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Previous Bookkeeper has never done a Bank Rec??

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