Reconciliation

Reconciliations are a means of verifying whether the transactions posted to a particular account (most often a bank account) match the items on an official statement.

In the case of trust bank accounts, Legal Profession Regulations in many jurisdictions require reconciliations to be performed frequently and in a timely manner.

Properties

Reconciliations have the following properties:

• Account (can be any type/purpose, but must be marked "reconcilable")
• Reference (statement number or code)
• Period covered by the statement
• Link to the statement document
• Opening balance (closing balance of the previous reconciliation)
• Target balance, total debits and total credits (according to the statement)
• Actual balance, total debits and total credits (according to the transactions on the account)
• Template for generating the reconciliation report upon finalisation

States

Reconciliations can either be draft or final.

In order to finalise a reconciliation:

• The user must have appropriate permissions
• The target balance, total debits and credits must match the actual figures

Once finalised, the reconciliation (and its included transactions) can no longer be changed or deleted.

Transactions

All transactions whose date falls within the period are listed in the reconciliation. Individual transactions are replaced with groups if present (since these are indicative of a single line on an official statement). Transactions/groups are either included in the reconciliation (i.e. they occur on the official statement and their particulars match) or excluded (i.e. they represent an unpresented payment or other anomaly). Only included transactions contribute towards the actual balance, total debits and total credits. Excluded transactions will continue to appear on subsequent reconciliations until they are included or deleted.

Reconciling accounts often involves correcting transaction particulars (date, amount, reference, etc) so they match the statement. This is not always a trivial process.