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Accounting and bookkeepingRisk and compliance
The reconciliations that keep your books honest
Most errors in a set of accounts are found by four simple checks. What they are, how often to do them, and what each one catches.
A reconciliation compares two records that should agree, and explains any difference. It is the most reliable way to catch missing transactions, duplicates, misposted payments and, occasionally, fraud.
Four checks
- Bank and cardsEvery line in the statement matched to the books; the balances agree.
- Customers and suppliersAged lists agree to the control accounts; old items chased or explained.
- VATThe VAT account agrees to the return, then clears to nil when HMRC is paid.
- PayrollTax, National Insurance and pension accounts clear each month when paid over.
Signs something is wrong
- Unreconciled items that get older each month.
- Suspense accounts with a growing balance.
- Customer balances that do not match their own statements.
- A control account that never quite clears to zero.
Reconciliations take minutes when they are done often, and days when they are left. They are also where most AI tools in bookkeeping now help, by suggesting matches for a person to approve.
This insight is general information, not advice for your circumstances. Talk to us before acting on it.