Reconciling the trust to the bank account By-Law 9 SS 18(8) requires that you reconcile the two records by the 25th of each month relating to all trust.

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Presentation transcript:

Reconciling the trust to the bank account By-Law 9 SS 18(8) requires that you reconcile the two records by the 25th of each month relating to all trust funds held at the previous months end. You should correct any errors by month end. Trust receipts & disbursement journalsBank statement

Reconciling the trust to the banks records In a perfect world, the clients trust ledger will match the balance in the trusts bank account Notice that there is a check mark matching each entry

The timing between the dates when a transaction was recorded on the trust records versus when they appear on the banks records There could be a mistake in either one of these records This process of finding the differences is called a bank reconciliation We will work through an exercise one step at a time Reconciling the trust to the banks records There are usually differences between these documents for various reasons including:

Total receipts less total disbursements should be the same as the bank statement Compare the totals of the two documents on page 2

Use this chart to enter the totals of each account. add all the deposits deduct the disbursements calculate the balance as per the trust records

Cash balance as per the trust records

Calculating the differences Compare all the transactions in the receipts and disbursements journals and the bank statement by checking them off as they are matched. Example

If a cheque has been recorded in the trust records but does not appear in the bank statement, it means that the cheque has not been presented to the bank. These amounts need to be deducted from the bank statement. Calculating the differences

If a cheque has been recorded in the trust records as paid but does not appear on the bank statement, it means that the cheque has not been presented to the bank. These amounts need to be deducted from the bank statement. Calculating the differences

If a cheque appears on the bank statement but not in the disbursements journal, it means that it was not recorded in the disbursements journal. This amount must be deducted from disbursements journal because it should have reflected a lesser amount. Calculating the differences

Recording the differences This amount must be deducted from disbursements journal because it should have reflected a lesser amount.

Recording the interest earned If the bank deposited interest into the bank account, it needs to be deducted from the bank balance because it should not have been deposited in the first place. The bank needs to be notified that the amount should be reversed and given to the Law Foundation.

Recording the interest earned If the bank deposited interest into the bank account, it needs to be deducted from the bank balance because it should not have been deposited in the first place. The bank needs to be notified that the amount should be reversed and given to the Law Foundation.

Recording the interest earned If bank charges appear on the bank statement, the amount needs to be added back to the total because it should not have been deducted to start with.

Recording the interest earned If bank charges appear on the bank statement, the amount needs to be added back to the total because it should not have been deducted to start with. The bank needs to be notified that the amount should be reversed and billed to the general account.

Adding it all up