One of the most important accounting chores is bank reconciliation, which guarantees QuickBooks'
records match your credit card and bank statements. Correctly done reconciliation helps you find
mistakes, prevent fraud, and maintain accurate financial data. However, occasionally, you may find a
reconciliation discrepancy—that is, a disagreement between your actual bank statement and your
QuickBooks accounts. If you are not sure where to start, this can be time-consuming and
aggravating.
We will discuss what reconciliation discrepancies are, why they arise, and how to step-by-step
correct them in this blog post. We also will discuss recommended methods to avoid such problems
in the future.
In QuickBooks, a reconciliation discrepancy results from transactions in your reconciliation window
not matching your bank statement either in the beginning or ending balance. This indicates that
following a previous reconciliation, anything entered into your QuickBooks file has been altered.
QuickBooks notes changes to previously reconciled transactions; if anything is added, deleted, or
changed—intentionally or unintentionally—it may result in a discrepancy.
Common Causes of Reconciliation Discrepancies
Deleted or Modified Transactions
QuickBooks will not show a transaction that was previously reconciled as matching the bank
statement, whether it is deleted or altered—that is, changes the amount, date, or account.
Unresolved Deals
Once thought to be reconciled, a transaction may have an inadvertent change in status. An "R"
(reconciled), for instance, would be deleted from the register and marked as uncleared.
Multiple Transactions
Two common mistakes include manually importing bank feeds and twice entering the same
transaction. QuickBooks has more balance as a result than the bank.
Errors in Bank Statements
Though rare, banks are prone to errors. Before presuming QuickBooks is at fault, it is always
advisable to carefully review the bank statement and QuickBooks record.
Journal Notes
If not accurately recorded, manually written journal entries impacting reconciled accounts might
skew the balance.
corrupted data file start
Rarely, data corruption can compromise reconciliation balances—especially in older QuickBooks
company files.
How to Identify a Reconciliation Discrepancy
You must narrow down what has changed since your most recent successful reconciliation in order
to troubleshoot a disparity. Here is how to get going:
Step 1: Use the Reconciliation Discrepancy Report
QuickBooks includes a built-in report just for this:
- See Reports > Banking > Reconciliation Discrepancy.
- Select the account exhibiting the problem.
- Look over the transaction list altered following your most recent reconciliation.
If several users exist, this report will list who modified what and when.
Step 2: Review the Audit Trail
The Audit Trail Report can assist should the discrepancy report not provide what you are looking for.
- See Reports > Accountant & Taxes > Audit Trail.
- See any transaction changes by filtering the report by date or account.
- Search for amended or deleted reconciled transactions.
Step 3: Check the Previous Reconciliation Reports
- Access Reports > Banking > Previous Reconciliation.
- Choose the latest month or statement you balanced.
- Check your bank statement and current register to match the reported transactions.
Fixing a Reconciliation Discrepancy in QuickBooks
Once you have found the troublesome transaction or several, you can act:
1. Re-enter Deleted Transactions
Should a reconciled transaction be erased, you must manually recreate it using the same date and
amount. Note it as reconciled in the register after recreating it.
2. Correct Modified Transactions
Change a previously reconciled transaction back to its original form. Look for the original values in
the Audit Trail and correct them if required.
3. Reconcile Again
You might have to undo and redo the reconciliation occasionally, even after the changes have been
corrected.
- Look at the Reconcile screen.
- Available in QuickBooks Desktop and using Accountant tools in QuickBooks Online, Click Undo Last Reconciliation.
- Carefully go over the month to ensure every transaction is accurate.
4. Consult with an Accountant
It could be necessary to see a specialist if you do not find the mistake or the disparity spans several
months. QuickBooks-savvy accountants can usually find difficulties fast and counsel on how to move
forward without aggravating more significant problems in your records.
Best Practices to Prevent Reconciliation Discrepancies
Lock Reconciled Periods
Close the books after reconciliation to avoid inadvertent modifications. In Quickbooks:
- Go to Company Settings > Advanced > Accounting > Close the books.
- Set a closing date and optionally add a password for changes.
Train Your Team
Everyone who uses QuickBooks should be aware of the need not to change reconciled transactions.
Teach employees to use procedures for deleting or modifying entries.
Make Careful Use of Bank Feeds
Double-check before doing transactions to prevent duplicates or misclassifications even if bank
feeds save time.
Typical Backups
Back up your QuickBooks file often. You can restore the last known valid version should a
reconciliation difference result from a corrupted file or user error.
Review the monthly reconciliation reports.
Print a copy of the reconciliation report or save one after every reconciliation. Should things go
wrong thereafter, it is a fantastic reference.
When Should You Consider Undoing a Reconciliation?
Your only final resort should be undoing a reconciliation. When many transactions have been
altered, it is helpful.
Manual identification and correction of disparities are impossible.
Manual identification and correction of disparities are impossible.
Just keep in mind that erasing and repeating several months of reconciliations can be labour-
intensive and may be dangerous if done carelessly.
Final Thoughts
QuickBooks' reconciliation differences are not unusual, particularly if several people engage with the
program or if your accounting methods are not efficient. The secret is to react fast when differences
show up and to use the QuickBooks tools to find and fix problems.
QuickBooks’ reconciliation differences are not unusual, particularly if several people engage with the
program or if your accounting methods are not efficient. The secret is to react fast when differences
show up and to use the QuickBooks tools to find and fix problems.
Do not hesitate to contact a QuickBooks ProAdvisor or accountant to straighten your books should
things ever spin out of hand.
