Bank Reconciliation-A Complete Guide

Author: Alex Pardin

Bank reconciliation is a process of matching the balances in an entity’s accounting records for a cash account to the corresponding information on a bank statement. A BRS (bank reconciliation statement) ensures the differences between the passbook and the cash book of the entity.

A bank reconciliation statement is helpful in finding out the exact value of the amount of bank balance held on a particular date.

Why bank reconciliation statement is importance?

A bank reconciliation statement is needed for the following reasons:

  • Bank reconciliation statement ensures the accuracy of the balances shown by the pass book and cash book.
  • Bank reconciliation statement provides a check on the accuracy of entries made in both the books
  • A bank reconciliation statement helps in detecting and rectifying any errors committed in both the books.
  • Bank reconciliation statement helps in updating the cash book by discovering some entries that are not yet recorded.
  • Bank reconciliation statement indicates any undue delay in the collection and the clearance of some cheques.

    • How to efficiently prepare a bank reconciliation statement?

    If are you are going to prepare a bank reconciliation statement, then it is necessary to make it in an effective manner. For this purpose, there are some steps mentioned below:

  • Examining the bank statement balance by checking if each transaction appears both in records and on bank statement.
  • Increase the bank balance for any deposits that have not posted because sometimes when you deposit funds at an ATM or the bank brand, then you may face some delay. At that time, it is very important that you update your bank balance too.
  • Decreasing the bank balance for all outstanding cheques. Any cleared cheque is called an outstanding cheque. If you have any outstanding cheque, then it must be deducted from the bank balance.
  • Checking if any errors made by the bank’s processing department by comparing the cash account’s general ledger to the bank statement.

    • Online banking in Malaysia

    Due to changes in technology and an advance in globalization, financial services industry has been subjected to many changes. These changes have led to online banking or E-banking.

    All the licensed banking institutions in Malaysia, under the Bank Negara Malaysia guidelines, are permitted to establish informational Websites. This has been done for advanced and efficient internet banking services. At present, there are 12 banks that are offering internet banking facilities and five banks have even introduced mobile banking. Banks who have introduced chip technology offer new forms of payment options along with higher security.

    Online banking services in Malaysia include:

  • Checking and managing bank accounts.
  • Transferring money through Interbank GIRO (IBG) OR Instant Transfer (IBFT)
  • Online application forms for prepaid MasterCard, ASB loan, Business Premises
  • Financing, and property financing.
  • Bills payment
  • Top up mobile prepaid
  • Payment alert and reminders
  • Remittance
  • eStatements for bank accounts
  • eIPO and share trading
  • eFixed deposit
  • ASNB

    • Private banking services

    Private banking services are personalized financial and banking services to high net worth individuals (HNWIs). In this, the bank appoints particular staff members in the private banking division to manage client accounts.

    Some of the private banking services are:

  • Transaction Banking
  • Credit and debit cards
  • Foreign exchange
  • Margin trading facilities
  • Online banking and reporting

    • Axios Credit Bank

    Axios credit bank is an international financial institution providing offshore banking services. Axios credit bank provides best and user friendly online banking services such as fund transfer services, account information, high level security, Electronic bill etc.