Bank Reconciliation SOP

{{company_name}}

{{company_address}}

Phone: {{phone}} | Email: {{email}}

{{company_name}}

{{company_address}}

Phone: {{phone}}

Email: {{email}}

1. Purpose

The purpose of this Standard Operating Procedure (SOP) is to establish a clear and consistent process for performing bank reconciliations. This ensures that the cash balance in the company's accounting records matches the corresponding bank statement balance, thereby identifying discrepancies, preventing fraud, and maintaining accurate financial reporting.

2. Scope

This SOP applies to all bank accounts held by {{company_name}} and covers the reconciliation process for all financial transactions that flow through these accounts. It should be performed on a {{frequency_of_reconciliation}} basis.

3. Responsibilities

**{{job_title_preparer}}**: Responsible for preparing the bank reconciliation statement.

**{{job_title_reviewer}}**: Responsible for reviewing and approving the bank reconciliation statement.

4. Definitions

**Bank Statement**: A summary of all financial transactions occurring over a given period, issued by the bank.

**Cash Book/General Ledger**: The company's internal record of all cash receipts and payments.

**Outstanding Deposits**: Cash or checks recorded in the company's books but not yet credited by the bank.

**Outstanding Checks**: Checks issued by the company but not yet presented to or cleared by the bank.

**Bank Errors**: Mistakes made by the bank in recording transactions.

**Company Errors**: Mistakes made by the company in recording transactions.

5. Procedure

**5.1 Obtain Necessary Documents:**

a. Obtain the bank statement for the period ending {{reconciliation_period_end_date}}.

b. Obtain the cash book/general ledger for the same period.

**5.2 Compare Bank Statement to Cash Book:**

a. Go through each transaction on the bank statement and match it against the corresponding entry in the cash book. Tick off matched items in both records.

b. For items appearing in the bank statement but not in the cash book (e.g., bank charges, interest earned, direct debits), add these to the cash book.

c. For items appearing in the cash book but not in the bank statement (e.g., unpresented checks, deposits in transit), identify these as reconciling items.

**5.3 Identify and Document Discrepancies:**

a. List all outstanding deposits not yet credited by the bank.

b. List all outstanding checks not yet presented to the bank.

c. Identify any bank errors and note them down.

d. Identify any company errors and note them down, making sure to correct them in the cash book.

**5.4 Prepare the Bank Reconciliation Statement:**

a. Start with the balance as per the bank statement.

b. Add outstanding deposits.

c. Subtract outstanding checks.

d. Add/subtract bank errors (if applicable).

e. The adjusted bank balance should now equal the balance as per the cash book/general ledger.

f. Start with the balance as per the cash book/general ledger.

g. Add interest earned/direct deposits not yet recorded.

h. Subtract bank charges/direct debits not yet recorded.

i. Add/subtract company errors (if applicable).

j. The adjusted cash book balance should now equal the adjusted bank balance.

6. Review and Approval

The completed bank reconciliation statement, along with all supporting documents, must be reviewed and approved by {{job_title_reviewer}}. Any unresolved discrepancies must be investigated immediately.

7. Document Retention

All bank reconciliation statements and supporting documents must be filed electronically and/or physically and retained for a period of {{retention_period}} in accordance with company policy and regulatory requirements.

Signature Block

Prepared By: __________________________ Date: ______________

Name: {{preparer_name}}

Title: {{job_title_preparer}}

Reviewed By: __________________________ Date: ______________

Name: {{reviewer_name}}

Title: {{job_title_reviewer}}