1. Bank Reconciliation Statement

2. The Bank Reconciliation Statement is a statement prepared periodically to reconcile the difference, if any, between balance shown in bank column of the cash book and bank passbook/ statement on a particular date.

3. Bank Reconciliation Statement (BRS)
Is a statement
When Prepared?
Periodically, (preferably once at month end)
Purpose?
To reconcile
What?
The difference
Between what?
The balance of the bank column of the cash book with passbook balanced on a particular date

4. The purpose of the bank reconciliation statement
Due to the timing difference, omissions and errors made by the bank or the firm itself, the balances of the bank statement and the bank account in the cash book rarely agree.
Bank reconciliation statements can be used to explain the reasons for the differences and to identify errors and omissions in both documents, so that corrections can be made as soon as possible.

5. Purpose of BRS
Drawn to reconcile the bank balance as per cash book with bank pass book on a particular date
Helps in detecting any errors in recording a transaction and ascertaining the correct bank balance
Prepared on a monthly basis
Separate BRS for each bank account
BRS should be reviewed and signed by the CDPO/ DPO
Outstanding entries should be followed up

6. Reasons for differences between the cash book balance and the bank statement balance
Uncredited items
They are deposits paid into the bank. These items occurred too close to the cut-off date of the bank statement and so do not appear on the statement. They will appear on the next statement.
These transactions are shown in the cash book but do not appear in the bank statement

7. Unpresented cheques Standing orders Direct debits Bank charges
They are cheques issued by the office that have not yet been presented to its bank for payment.
Standing orders
They are standing instructions from the office to the bank to make regular payments.
Direct debits
They are payments made directly through the bank.
Bank charges
They are charges made by the bank to the company for banking services used.

8. Credit transfers / direct credits
Dishonoured cheques
They are cheques deposited but subsequently returned by the bank due to the failure of the drawer to pay.
Credit transfers / direct credits
They are money received from customers directly through the banking system.
Interest allowed by the bank
They are interest received for deposits or fixed deposits.

9. Drawing up a Bank Reconciliation Statement
Three steps:
1. Check the bank statement and the cash book
to identify the items which have been omitted.
2. Update the cash book with any omissions and errors made by the firm itself.
e.g. Credit transfers (debit cash book)
Bank interest (debit cash book)
Standing orders / direct debits (credit cash book)
Bank charges (credit cash book)
Dishonored cheques (credit cash book)
3. Prepare the bank reconciliation statement

10. Drawing up a Bank Reconciliation Statement
Steps to reconcile the bank statement
Check the bank statement and the cash book to see the items which have been omitted.
Prepare the bank reconciliation statement.
Update the cash book with any omissions and errors made by the office.
1st step
2nd step
final step

11. Drawing up BRS Commences with bank balance as per cash book Add:
Cheques issued by us but not presented to bank
Interest allowed by bank
Amount directly deposited in our account by party
Any amount collected by bank on our behalf
Cheque deposited but omitted in cashbook (mistake)
Wrong credit given by bank

12. Drawing up BRS Less: Cheques deposited in bank but dishonored
Amount paid by bank on standing instructions (loan repayment, insurance premium)
Bank Charges
Cheque issued but omitted in cashbook (mistake)
Wrong debit given by bank

13. Bank Reconciliation Statement as on …………
Details
Amount
Debit Balance as per Cash Book
ADD:
Cheque issued but not presented in bank for payment
Interest allowed by bank but not entered in Cash Book
Amount directly deposited in our bank a/c by anyone
Interest or dividends collected by bank
Cheque deposited in bank but not entered in Cash Book due to error
Any wrong credit given by the bank
LESS:
Cheque deposited in bank but dishonored
Direct payment made by bank on our instructions, EMI
Bank Charges
Cheque issued but not entered in Cash Book due to error
Any wrong debit given by the bank
Credit Balance as per Bank Statement/ Pass book

14. THANK YOU