SOP Finance and Accounting – Bank Reconciliations

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SOP For Bank Reconciliations

Purpose of Bank Reconciliations:

Bank reconciliations are an important part of any financial accounting process. They help to ensure that the company’s records match the bank’s records and that there are no discrepancies or errors.

To perform a bank reconciliation, the company first needs to obtain bank statements for the period being reconciled. These statements should then be compared to the company’s records, with any differences noted and investigated.

Common reasons for discrepancies include timing differences, such as checks that have not yet cleared the bank, or errors made in recording transactions. Once any discrepancies have been resolved, the company can update its records to reflect the correct balance.

Performing regular bank reconciliations is crucial for maintaining accurate financial records and identifying any potential issues early on. It is recommended that companies perform bank reconciliations on a monthly basis, or more frequently for larger or more complex operations.

The purpose of this policy is to verify all banking transactions from the bank statement to the General Ledger on a current basis and ensure adjustments are made on a timely basis.

It is the responsibility of the Financial Controller to ensure that all bank accounts are reconciled and approved before the close of the following month.

Bank Reconciliations SOP Procedures:

  1. Bank statement cut-off dates should coincide with the Hotel’s respective accounting cycle.
  2.  Checks should be listed in numerical sequence on the bank statement and actual checks should be in numerical order.
  3.  All bank-generated items (returned checks, wire transfers, and chargebacks) shown as debit or credit items on the bank statement should be returned to the Controller immediately.
  4.  The check reconciliation process should be followed at all times.

Bank Reconciliation Procedure:

The following format should be used to reconcile the bank statement to the General Ledger.
General Ledger Balance Calculation
Balance per Bank Statement$$1000.00
Deposit In Transit+$200.00
Outstanding Checks$250.00
True Cash Balance=$950.00
Reconciling Items+/--$50.00
 General Ledger Balance$900.00

Note: Reconciling items should be listed separately and cleared individually through General Ledger in the following month. Stale-dated checks should be investigated and cleared within six (6) months of the date of issue.

Training Summary Questions:

Q1. What is the purpose of the Bank Reconciliations SOP?

Q2. How to list and check the bank cheques?

Q3. Who is responsible for ensuring that the Bank reconciliation is happening as per the policy?

Q4. Write down the format for reconciling the bank statements.
SOP Number: Finance and Accounting  SOP – 10
Department: Cash Control
Date Issued: 29-Jun-2021
Time to Train: 25 Minutes
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Since 2011 Setupmyhotel has been helping hundreds of hoteliers around the world. Support Setupmyhotel by becoming our Patron!

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