Before you begin, collect everything you will need for the reconciliation period. Having all documents ready makes the process faster and reduces the chance of missing something.

• Your bank statement for the period you are reconciling
• Your internal transaction records (accounting software, ledger, or register)
• Supporting documents such as receipts, invoices, deposit slips, and cancelled cheques
• Prior reconciliation reports, if available

Start by reading your bank statement from beginning to end. Look at the opening balance, closing balance, and every transaction in between. Pay attention to deposits, withdrawals, transfers, fees, interest, and any items you do not recognize.

Make a note of unusual transactions, such as unexpected fees, duplicate charges, or payments you cannot immediately identify. These will need further investigation.

Go through your internal records and mark each transaction that appears on the bank statement. This includes deposits, cheques, electronic transfers, debit-card purchases, automatic payments, and any other items that have cleared the bank during the statement period.

Most accounting software includes a reconciliation module that lets you tick off transactions as you match them. If you use spreadsheets or manual ledgers, create a simple “cleared” column to track which items have been matched.

After marking off cleared transactions, you will have two lists of items to investigate: transactions in your records that do not appear on the bank statement, and transactions on the bank statement that do not appear in your records.

These differences are called reconciling items. Common examples include outstanding cheques, deposits in transit, bank fees, interest income, automatic payments you forgot to record, or data-entry errors.

For every reconciling item, review your supporting documentation and try to determine the cause. Ask yourself whether the difference is due to timing, an omission, a duplicate entry, or an error in amount or account classification.

Common causes of discrepancies include timing differences between when you record a transaction and when the bank processes it, bank fees or interest you did not expect, missed or duplicate entries, and transposed numbers or other data-entry mistakes.

Once you understand the cause of each discrepancy, update your internal records accordingly. This may involve recording missing transactions, correcting amounts, removing duplicates, or adding bank fees and interest that were not previously captured.

Be careful to distinguish between items that require an adjustment in your books and items that are simply timing differences, such as outstanding cheques or deposits in transit, which do not need to be re-recorded.

After making all necessary adjustments, compare your adjusted book balance to the bank statement’s closing balance. If your reconciliation is complete and accurate, the two balances should agree once you account for outstanding items.

If the balances still do not match, re-check your work. Look for transposed numbers, missed transactions, double-counted items, or incorrect opening balances. Sometimes a small error in one transaction can throw off the entire reconciliation.

Once the reconciliation is complete and the balances agree, save your reconciliation report and all supporting documents. This includes the bank statement, your internal reports, your discrepancy list, and notes about any adjustments made.

Good documentation helps you identify patterns or recurring issues, supports your records during reviews or audits, and makes future reconciliations faster and more reliable.