5 Steps to Find Outstanding Checks on a Bank Reconciliation

Written by Jason Wethe in Outstanding checks

Want to learn how to find outstanding checks on a bank reconciliation? Read on.

To find outstanding checks on bank reconciliation, follow the simple five steps below. The steps can help you look for outstanding checks faster than before.

It could take more time to look for outstanding checks in a bank reconciliation without a good plan. For instance, the starting point has not yet been determined. The process can start in step three below. It can also begin with step five, which is messy.

In this post, the five steps are chronologically organized to assist the reconciler for efficiency in preparing a bank reconciliation statement. For instance, it starts with the obvious gathering of data. Next, the collected information is set up in a certain manner, which makes them understandable. Finally, the search for outstanding checks is explained deeply.

However, it is believed that by using the steps below; Reconciliation becomes easier and faster.

1. Get all the required information

In this step, the correct subsidiary ledger is extracted from the accounting record. For instance, it should match the account number of the bank statement. This is obvious, but most reconciliation officers often make these mistakes by reconciling another bank account instead of the correct one. In fact, some of them only become aware after reconciliation. So, by ensuring the use of the correct account number, the reconciler can save time.

Next, be sure to get an electronic copy of the bank statement. A bank statement can be pulled online from a bank’s website. It is usually available to their clients. Nobody wants to encode each transaction from a long bank statement with too many figures.

However, the reconciler should be a person who can be trusted. A person who does not distort records for his own benefit. Trust is required because anyone can twist the information in the reconciliation since it is electronic. If one is not trustworthy, somebody has to review and compare everything with the original bank statement from the bank.

2. Extract all disbursements from the subsidiary ledger of a bank account and identify check numbers that have duplicates, triplicates, and so on.

Duplicate check numbers in the accounting record should be reviewed, corrected, or adjusted for easy reconciliation. Indeed, duplicate check numbers could confuse the reconciler during the reconciliation. For instance, when you want to automate with Excel, you need to remove all duplicate data in order not to be confused with them. They must be identified before proceeding to the next step.

Some examples can be an erroneous recording of check numbers and multiple posting of check numbers. For instance, a bookkeeper recorded a different transaction but inadvertently entered the check number of the previous transaction. It usually creates more complexity in the report’s preparation.

3. Get all bank debits from the bank statements and eliminate multiple postings of check numbers

Sometimes banks’ employees also commit errors when recording check encashments. Indeed, they could encode other check numbers in their bank’s system instead of the correct numbers. So, the reconciler must search again for double posting or multiple postings of check numbers to prevent errors in the report’s preparation.

Well, using the COUNTIF function of Excel can find multiple occurrences of a check number. For instance, the formula can count the number of times the number occurs. Multiple postings of check numbers are identified, usually with over the value of one. The excess over one appears to be part of the reconciling items worth reviewing. They can be the bank employees’ clerical errors.

=COUNTIF (range, criteria)

The range is the column of check numbers and the criteria are often the check number.

Most bank reconciliation becomes unreconciled because of the non-identification of multiple postings of check numbers. To explain, with thousands of transactions being reconciled, it could be difficult to pinpoint multiple postings of check numbers. So, we recommend beginning with identifying the above errors first to ensure the discovery of reconciling items in step number four (4) below.

4. Use the VLOOKUP function of excel to pair cleared checks

After removing all multiple posting of check numbers, the VLOOKUP function can then help match check disbursements with bank statements. The function looks for a value in one column and returns the value from the same row of the lookup value from the selected column in the formula. This helps the reconciler find the differences between both records by comparing.

Both records mean the accounting record and the bank statement.

When the function cannot find the lookup value, it returns an error in Excel. Indeed, the errors are usually the outstanding checks.

5. Find the differences in amounts and list the outstanding checks

The last step is to find all the differences in amounts and list all the outstanding checks for the period. Be sure to include the issue dates to determine all stale checks in the future. The list should not include over six months of uncleared checks.

Read also:

Recent