the municipal secretary desktop reference manual - Southwestern ...

NOTES
BANK ACCOUNT RECONCILIATION
The checking accounts are the principal resources used in daily municipal operations. They
also are the most active accounts, recording both receipts and disbursements, in many cases on a
daily basis. Because of this volume of activity, errors frequently occur, some of which are due to
mistakes in preparing or recording documents that are sent to the bank. Other mistakes are made by
the bank.
A prompt reconciliation of the bank statement with the cash accounts maintained by the local
government is necessary at the end of each month to assure that errors, if any, are found and
corrected without delay and before monthly reports are prepared.
Sound internal controls require that reconciling the bank statement be assigned to someone
who is not responsible for writing, recording, or signing checks.
Procedure:
1. Assure that all checks prepared through the end of the month have been posted to the cash
disbursements book.
2. Assure that all deposits made through the end of the month have been posted to the cash
receipts book.
3. Receive bank statements from bank.
4. Differences between the bank statement and municipal fiscal records must be resolved by
comparing deposit slips and cancelled checks with the statement to determine the nature of the
error or errors.
5. Compare each canceled check on the central depository bank accounts to the cash
disbursements book, and to check copies. Compare each canceled check on the payroll
account to the payroll journal.
6. Indicate by checking off on the cash disbursements book or the payroll journal and the previous
month's listing of outstanding checks all checks that have cleared the bank.
7. On a separate sheet, list all outstanding checks and check numbers, including checks
outstanding from previous months. Total the outstanding checks.
8. Compare deposits on the central depository and payroll accounts to the cash receipts book.
Reconcile any differences.
9. On a separate sheet, list all checks received in payment by the governmental unit, but returned
by the bank (payer, check number, account number). Total the returned checks.
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