Importance Of Bank Reconciliation For Multinational Employees

IMPORTANCE OF BANK RECONCILIATION FOR MULTINATIONAL EMPLOYEES
Name
Accounting instructor:
Accountant and business consultant
Date:
Abstract
This paper reviews the attempts to avoid experiencing differences in bank reconciliation. The difference is likely to occur due to bank charges which are included in the bank statement but the company finds later via a bank statement. Additionally in order to avoid creating difference in the banks records and the company’s it is required of the company to always view the bank statement online in order to be in update with the account balance available in the bank. This paper seeks to explain the best methods of conducting bank reconciliation.
Introduction
Background
Most companies have general ledger account which contains information that is used to prepare financial statements. It holds all the transactions either in written form, checks or receipts that involves its checking account. A company’s checking account is created to be useful in the process of checks and deposits. On a monthly basis, the bank ensures that the company receives a bank statement via an email which entails all the information about any deposits done in the recent month as well as the bank account balance. When the company receives its bank statement, it verifies whether the amount reading on the bank statement is compatible with the company’s cash account record.
Purpose
Bank reconciliation involves matching balance between the balance shown in an organizations bank statement and the amount in the accounting records of the organizations. The differences mainly occur if the organization issues a check, and it’s not presented to the bank or if a bank or the organization made an error itself. The purpose for reconciliation is to ensure that the money leaving an account matches the actual money spent (Wind, Kyle).
Scope
This report shows the problems encountered in bank reconciliation. By being in update with the bank transactions will help avoid any financial differences of the recording account.
The problems experienced in bank reconciliations
The system of accounting mainly holds records of the assets of the company. Hence, most companies prefer doing the reconciliations on time to avoid any kind of fraud. The absence of having timely and proper cash reconciliations increases the risks of error or fraud (Ellery & J.p). According to recent reports, most company’s and financial institutions experience check frauds which cost $20 billion annually. Several financial institutions still follow the traditional approach, whereby the reconciliation is done manually and compared. This process is tiresome since the records are manually entered, then the information is compared, later analyzed and finally the information is stored. The process may lead to several errors due to high increase of data. With more complex calculations and new asset types, major challenge in reconciliation analysis is experienced; hence the need to improve the existing systems in order to comfortably accommodate the reconciliation deals.
Increase in transaction affairs brings the need of essential solutions in data management in order to have a smooth flow in the area of recon...