Bank Statement

Because a business's own record of its money is an assertion, and the bank's record is the independent check that makes it evidence.

Reconciliation is the only routine control that tests the accounts against something outside them. Everything else in finance checks the books against the books. That independence is why the exceptions matter more than the completion: the unmatched list is the finding, and a reconciliation reported as done with nothing learned usually means the list was cleared rather than worked.

• The statement is the external record. Where it and the ledger disagree, the ledger is the one to investigate first.
• Every statement line is either matched to a book entry, or it is an exception requiring explanation. There is no third category.
• Reconciliation is periodic and complete. A partial reconciliation that leaves unmatched lines is a deferred problem, not a finished task.

It becomes a monthly ritual measured by completion rather than by findings. Unmatched lines get forced or written to a suspense account that nobody empties, and the one control capable of catching an error the books cannot see stops being capable of it.

• Timing differences at period end — issued but uncleared, which are legitimate and must not be forced.
• Bank charges and interest appearing only on the statement, needing a book entry rather than a match.
• Bounced payments, which appear twice on the statement and must reopen the invoice rather than net to zero.
• Multi-currency accounts, where the statement is in one currency and the books in another.