What Is Bank Reconciliation Statement and Who Prepares It?

bank reconciliation statements example

In the business world, possessing correct and reliable information about the company’s financial transactions provides an extra edge to the business. In this scenario, a bank reconciliation statement is a significant financial document that compares the company’s bank balance recorded in its accounting books with the balance shown on the bank statements. 

The main goal of a bank reconciliation statement is to identify inconsistencies between the company’s accounting records and the bank’s records. Professional accountants can prepare reconciliation statements on a monthly or weekly basis, depending on the volume and significance of bank transactions.

Now Consultant provides expert account reconciliation services in Dubai, UAE for all types of businesses to contribute a significant role in the growth of the businesses. 

Who Prepares Reconciliation Statements:

Accountants and financial experts prepare the reconciliation statements as the responsibility rests with the accounting or finance department of a company.

Skilled accountants or financial specialists with a comprehensive understanding of financial complexities diligently prepare the reconciliation statement. Their expertise lies in analyzing financial information, identifying discrepancies, and ensuring accurate record alignment.

Purpose of  Bank Reconciliation Statement

Generating bank reconciliation statements has several purposes for your company. It holds significance for the following reasons:

  1. It helps in identifying the discrepancies between the passbook (provided by banks to its customers) and the cash book entries, facilitating the check of the correct bank balance.
  2. It can detect any fraud and theft, which acts as a deterrent. In this way, it discourages staff from engaging in embezzlement of corporate assets or participating in fraudulent behaviors.
  3. It assists in pinpointing the causes behind the variances observed between the cash book and the passbook.
  4. It helps recognize any delays in check clearance. If significant delays are detected, the root cause can be identified, allowing for remedial action to be promptly taken.
  5. It enables you to monitor interest payments, fees, or penalties, facilitating their periodic recording in your financial records.
  6. It assists in tracking receivables, enabling the identification of receipt entries that still need to be deposited.

Example Of Bank Reconciliation Statement:

ParticularsAmount ($)Amount ($)
Balance as per Passbook4,000
Add:
Insurance premium paid by bank250
Cheque recorded twice in the passbook400
The cheque deposited but not collected700
Bank charges debited only in the passbook150
Less:
A cheque issued but not collected for payment ($500 + $1,000)1,500
The cheque recorded twice in the Cash Book2,000
Received dividends recorded only in the Bank statement500
Balance as per Cash Book1,300

If there are discrepancies, resolving them can be time-consuming. You’ll need to review invoices, emails, receipts, and diary entries to identify and correct the differences.

However, by performing bank reconciliations frequently, such as weekly or daily, you can more easily detect and resolve discrepancies.

Process of Preparing Bank Reconciliation Statement In UAE:

Here are the six easy steps to follow when preparing a bank reconciliation statement in the UAE:

  1. Obtain your bank records, which can be acquired through a bank statement, online banking platform, or by requesting the bank to send data directly to your accounting software. Additionally, gather statements for your current account and credit card account.
  2. Access your book of income containing records of income and expenses to retrieve your business transactions. This data may be stored in your logbook, spreadsheet, or accounting software package.
  3. Locate your starting point, the most recent instance when your business books and bank account showed the same balance.
  4. Review your bank deposits thoroughly. Ensure that each deposit is recorded as income in your account. If any deposits still need to be included, input them, determining whether they are interest, sales, refunds, etc.
  5. Verify your bank withdrawals. Ensure that all withdrawals are accurately recorded in your books.
  6. Review the expenses in your records. Confirm that each entry corresponds to a withdrawal reflected on your bank statement.
  7. Once all verifications are completed, your bank balance should align with the totals in your business account. This balance will serve as the starting point for your following reconciliation.

How Can We Help You?

Are you in need of professional assistance in reconciling your accounts? Now Consultant offers expert bank reconciliation services in the UAE for businesses of all sizes. Our services ensure that your account balances match the bank statements, helping to prevent fraud and legal issues and allowing you to focus on your business goals. 

By outsourcing to Now Consultant, you ensure the accuracy of your financial statements and compliance with regulatory requirements. Our team of experts conducts thorough analyses of your financial transactions and records to identify and resolve discrepancies, promoting a healthier financial future for your company.

FAQs: 

How Often Should Bank Reconciliations Be Performed In The UAE?

 It is recommended that at the end of every month or week, you should analyze bank reconciliation statements to smoothly manage the finances of your company.

Can Bank Reconciliation Help In Detecting Fraud?

Bank reconciliation statements help businesses prevent and detect fraud. It is because of the fact that bank reconciliation statements can easily detect and highlight financial errors, and frauds by comparing both the cash book and bank statement.

What Are The Consequences Of Not Performing Bank Reconciliations?

There is a possibility of fraud and financial theft if you ignore performing bank reconciliation statements. Sometimes a small error from the bank or your accounting staff can make a huge loss to the businesses if it is not detected in the bank reconciliation statements.

You May Also Like:

Request a Call Back!

Claim 20% Offer Now

Get a Call Back from Our Expert

Thank You!

We have received your message and appreciate your trust in our services, Our dedicated team will be in touch with you shortly.

mail icon

Attention UAE Businesses!

Last Chance to Register for Corporate Tax!

If you don’t submit your corporate tax on time, you could face a hefty penalty of 10,000 dirhams.

Call Now Button