What Is the Purpose of a Bank Reconciliation Statement?

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Bank account reconciliations are both practical and critical cash control procedures. Completing one for each of your checking and saving accounts is one way to find errors or discrepancies and verify how much you have to spend or how much you’ve saved. Reconciliation statements are tools to achieve these goals.

A Practical Perspective

From a practical viewpoint, a reconciliation statement helps you avoid overdrafts and associated fees. It’s unlikely the balance shown in a checkbook or savings register will agree with the one on a reconciliation statement. Unrecorded fees or credits, data entry errors, and transactions that occur after the statement date contribute to differences. Just as using the statement to resolve these differences squares your accounts, ignoring these differences can lead to substantial variances between the book and bank balances.

Internal Cash Control

The statement can also serve to monitor and control the cash in the account. It can reveal internal or bank errors and expose theft and fraud, such as unauthorized withdrawals and stolen checks cashed without your knowledge.



About the Author

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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