Common Discrepancies in Reconciliation

During the reconciliation process, several common discrepancies can arise. Here is a list of these discrepancies along with examples of how to correct each one:

Missing Transactions

A missing transaction occurs when a financial transaction is recorded in one set of records, such as a bank statement, but is not reflected in another, like your accounting books.

Example: A payment made to a vendor is not recorded in the accounting system.
Correction: Review bank statements and receipts to identify the missing transaction. Once identified, record the transaction in the accounting system with the correct date and amount.

Duplicate Entries

A duplicate entry refers to any individual financial transaction being recorded more than once.

Example: A sales invoice is entered twice in the accounting records.
Correction: Identify the duplicate entry by comparing the accounting records with the original invoices. Remove the duplicate entry to ensure the records reflect the correct amount.

Incorrect Amounts

Transactions that were recorded with mistake in the dollar amounts.

 Example: A deposit of $500 is recorded as $50 in the accounting system.
 Correction: Verify the amount on the bank statement and update the accounting records to reflect the correct amount of $500.

Unrecorded Bank Fees

Bank account fees, credit card charges and interest generally aren't available until statements are released.

Example: Monthly bank service fees are not recorded in the accounting system.
Correction: Check the bank statement for any service fees and record them in the accounting system under the appropriate expense account.

Timing Differences

Timing differences occur when part of a transaction occurs outside the specified reporting period.

Example: A check issued in one month is not cleared until the following month.
Correction: Note the timing difference and ensure that the check is recorded in the correct period. Adjust the reconciliation to account for the outstanding check.

Errors in Data Entry

A transposition error occurs when two digits are reversed or swapped in a number.
Example: A payment of $1,200 is mistakenly entered as $2,100.
Correction: Cross-check the payment details with the original documentation and correct the entry in the accounting system to reflect the accurate amount of $1,200.

There will almost always be some kind of discrepancy during reconciliation, so it's important to be able to identify and correct errors.