Bank reconciliation

A reconciliation starts with the bank's ending balance, adds deposits in transit, subtracts outstanding checks, and compares the result to the book balance. Any remaining difference points to a missing, duplicated or incorrect entry.

Monthly reconciliation catches errors and fraud early. For trust accounts, many state regulators require a three-way reconciliation: the bank balance, the book balance and the total of every owner's and resident's ledger balance must all agree.