Why Do Bank Reconciliations?

Bank reconciliation is an essential tool for every account system for two primary reasons. First, bank reconciliation helps ensure that your bank balance matches your book balance and helps you identify why there are differences. This helps you catch potential errors and improve the accuracy of your books. Secondly, it improves your internal controls by locking down cleared transactions so they cannot be edited without reopening a past period. This process should be done regularly. For most organizations, it is a monthly process, but that may vary depending on your needs.

How to Do a Bank Reconciliation

Bank Reconciliation is specifically designed for the purpose of reconciling your bank statement with the information in Aplos. Here is how you would go about completing a Bank Reconciliation. See the step-by-step instructions below.

Start a New Bank Reconciliation

1. Access your Bank Reconciliation screen: Fund Accounting > Transactions > Bank Reconciliation.
   
2. Pick which Cash account you’ll be reconciling, and select “Reconcile” to begin. The opening balance will remain 0.00 for your first Bank Reconciliation. The opening balance will be automatically calculated for all following reconciliations.
3. Select the statement ending date. For instance, if you’re looking at a bank statement that ends on December 31, 2024, select that as the statement ending date.
4. Enter the statement ending balance. This is the balance of the account at the ending date of the statement. Click “Start Reconciliation.​​”

Select Cleared Transactions

The transactions shown on the next screen are the entries you’ve entered in Aplos. On the bottom row of the screen, you will see your Opening Balance, Payments, Deposits and Other Credits, your Cleared Balance, and your Statement Ending Balance.

As you click through the transactions, you will be marking the payments and deposits as cleared, with the goal of arriving at your Statement Ending Balance.

Here are the steps for how to proceed once you’ve set your ending date and balance. The best way to go about this is to print a bank statement for the period you’re reconciling and follow the steps below.

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1. Select Cleared Transactions: Check the transactions on your bank’s statement by going down the list. If something appears on both your bank statement and in Aplos, check the box next to the transaction and cross it off your paper bank statement. If this is your first reconciliation, you’ll also need to check off your starting balances. As you check things off, you’ll notice the difference either increases or decreases. Note: If you have not set up starting balances, refer to our resource on How to Set Your Starting Balances to learn about this process.
2. Research Missing Transactions: If you find a transaction that does not appear on the statement or in the software, highlight it and do some further research. It’s possible something cleared your bank that was never entered in Aplos or something was entered in Aplos that never cleared your bank. Click the ^ button in the bottom row next to the “Reconcile” button and select “Save & Close” if you need to come back at another time or “Edit Statement Info” in the top right corner if you need to change the statement ending date or balance.
   
3. Finish Your Bank Reconciliation: To finish and complete a bank reconciliation, the difference must be 0.00. Once you’re finished, click “Reconcile” to complete your first bank reconciliation.
   
4. When you click “Reconcile,” you will get a Congratulations modal that will allow you to easily click to view the report or start a new reconciliation.

Attach Your Bank Statement

To improve your internal controls and record-keeping, attach your bank statement for the closed period to your bank reconciliation. Under the “Reconciled” tab, you can see in-progress and closed reconciliations. If you click the Actions button, you will be able to Add Attachment.

Bank Reconciliation Reports

You can access your current Bank Reconciliation Report from the Report screen under Other Reports. Your bank reconciliation history is available from the Bank Reconciliation screen. You can select the end date of the period you wish to see to open or print the bank reconciliation report for that period.

Book Balance vs. Bank Balance

You may notice that you have a list of uncleared transactions on your Bank Reconciliation Report. They’ll most likely be included in your reconciliation the following month. They also help you identify potential differences between your Bank Balance and Book Balance.

Bank Balance is the ending balance appearing on a bank statement. For example, when an organization receives its June checking account statement from the bank, the June 30 balance will be the bank balance. 

Book Balance refers to the amount shown in the organization’s records. For example, the book balance listed in your current accounting solution as of June 30 refers to the balance in the general ledger account Cash or Checking Account.

It is typical for a bank balance to not agree with the amount in the organization’s records since some checks written will not have cleared yet or some money received may not have appeared yet on the bank statement. When you perform a bank reconciliation, you identify these uncleared transactions and ensure all cleared transactions were entered correctly.

Changing Completed Bank Reconciliation

Closing a Period

Performing a bank reconciliation will close the period for the cleared transactions tied to that bank account. This prevents the transactions in that period from being edited. Another way to close a period for transactions without performing a bank reconciliation is to use Period Close. 

Reopen a Prior Period

Sometimes you may find it necessary to revisit or edit a bank reconciliation that has been previously closed. If you are an administrator, you will be able to reopen a bank reconciliation.

If you need to make changes to your reconciliation, you can go to the “Reconciled” tab under the Bank Reconciliation screen, click the “Actions” button and select “Reopen Reconciliation.”

Note: Re-opening a bank reconciliation will delete any bank reconciliations that are currently in progress for this account, since the change may impact the balances for these periods.

Selecting “Reopen Reconciliation” will reopen that period so you can make changes. If you need to go further back, repeat this process until all reconciliations are open back to the period you need.

Deleting a Bank Reconciliation

If you need to reopen a bank reconciliation that is not the most recent period, you will need to delete all of the bank reconciliations that were completed since that date because changing an earlier period may impact the overall account balance so these periods may no longer be accurate. It may be helpful to print out a bank reconciliation report for these periods before opening up multiple bank reconciliations so you have a hard copy of the Checks/Payments and Deposits/Other Credits for your reference.