Bank reconciliation when the feed looks finished

You open the client's June file. The bank feed has nothing left to match. The preparer's note says “bank reconciled”, and the PDF called June_statement_final_2.pdf is already attached. Then you compare the closing balance with the ledger. Different numbers. You check the date, because that would be a pleasantly boring explanation. Same date.

An empty queue is a useful place to start a bank reconciliation. It is a poor place to finish one.

For a year-end file, I would make the handover rule explicit: the bank's balance must connect to the ledger balance through named, evidenced differences. No unexplained plug, no “probably timing”, and no sign-off based only on how tidy the feed looks. Here is a practical way to get there without starting the bookkeeping again.

Start with the bank's record, at the right date

For each account in scope, put the following together before investigating individual transactions:

• The bank-issued statement covering the reconciliation date, including the page with the closing balance.
• The ledger balance for that same account, date and currency.
• The preceding reconciliation, with its outstanding items, if one exists.
• Any later statement needed to establish when a claimed timing item actually cleared.

Record the account identifier and the statement period in the working paper. Check the account holder against the entity you are preparing. A trading name in the filename is not enough to establish whose account it is.

If the statement ends before 30 June, do not rename its closing balance “30 June” and carry on. Obtain the bank record covering the missing days. Likewise, a screenshot taken today needs a historical balance at the relevant date before it can support the year-end number.

For a newly opened or closed account, document the actual period it existed. Twelve statements are not a sensible requirement for an account opened in April; evidence of its opening is.

Separate feed completeness from transaction matching

Start at the last balance you can support. Work forward through the statement periods and compare them with the data held in the bookkeeping file. Where opening balances and movement totals are available, use them to locate the period in which the difference first appears. Then inspect that period's lines. A closing balance tie is useful, but equal and opposite omissions can still cancel each other out.

Look particularly at the join between a manual import and a live feed, or between two overlapping CSV exports. Check whether a statement page is missing before deciding that the client made no payments that week. If an export uses separate debit and credit columns, establish the sign convention before summing it. Brackets, minus signs and separate columns should not become three different treatments of the same withdrawal.

Keep the source files. If you remove a duplicate import, record which source overlapped and which lines were affected. Do not remove a genuine bank transaction merely because its amount resembles another. Two payments of the same amount are allowed to exist. The bank does not know that your spreadsheet prefers unique values.

Explain the bridge between the two balances

Take this deliberately hypothetical example for a positive bank account. These are illustrative amounts, not a client file or tax calculation:

Item at 30 June	Amount
Closing balance on the bank statement	A$18,420
Add a receipt recorded in the books but not yet credited by the bank	A$600
Less a payment recorded in the books but not yet debited by the bank	A$950
Adjusted bank balance	A$18,070
Ledger balance before correction	A$18,495
Less a receipt duplicated in the ledger	A$425
Corrected ledger balance	A$18,070

The arithmetic is A$18,420 + A$600 − A$950 = A$18,070 on one side, and A$18,495 − A$425 = A$18,070 on the other. That makes the numbers agree. The evidence makes the reconciliation worth keeping.

In this example, retain the records supporting the receipt and payment at year end, and the subsequent bank entries showing when they cleared. Link the duplicated receipt to the two ledger entries and the single bank receipt. Correct the duplicate through the appropriate bookkeeping workflow, then retain the refreshed ledger balance. A deduction typed only into the working paper has not fixed the books.

Do not post the A$600 and A$950 again just to make the unadjusted ledger equal the statement. On the stated facts they are already in the books. First establish that they are valid timing items; then carry them visibly until they clear. If the later statement does not support that explanation, keep the question open.

Use the difference to narrow the search

What you find	What to check next	Evidence to leave in the file
Opening balance already differs	Prior reconciliation, conversion balance and entries posted into the earlier period	The last supported balance and the change that explains the break
A gap begins at an import boundary	Overlapping exports, missing dates and duplicated statement lines	The affected source files and transaction references
The difference equals one transaction	Missing entry, duplicate, wrong account or incorrect amount	Both records and the correction, if required
A payment remains outstanding well after year end	Whether it cleared, failed, was cancelled or was recorded twice	Subsequent bank evidence or a specific unresolved query
A transfer appears on only one side	The other account, posting dates and any separate fee	Both account records and the treatment of the difference
Balances tie but an item looks wrongly coded	Invoice, contract, client explanation and business purpose	A separate coding or tax review point

These are search directions, not diagnoses. An exact amount match is a lead. It is not permission to delete something.

An old outstanding item deserves its own question. “Timing” without a transaction date, reference and follow-up evidence is simply the name the uncertainty has been given.

A bank reconciliation does not settle the tax treatment

The ATO's record-keeping overview says business records need enough information to establish the essential features or purpose of a transaction. It also calls for clear documents showing the business portion where an expense has both business and personal use. A bank narration may tell you whom the client paid while leaving both questions unanswered.

Keep those review points separate from the cash reconciliation. Otherwise a file can be marked “reconciled” and have that word quietly promoted into approval of every deduction underneath it.

When evidence is missing, send a request that names the transaction and what remains unknown:

Please send the invoice for the payment to the equipment supplier on 18 June, and confirm what was purchased and how it is used in the business. We have the bank payment; we still need the detail behind its treatment.

That is a different request from asking for the bank statement again. The same principle applies to the wider document chase: ask for the gap you have found, using words the client can act on.

Leave a handover another person can finish

• Scope: the entity, account, currency and reconciliation date are explicit.
• Bank evidence: the closing balance points to a bank-issued record and a specific page or entry.
• Completeness: the statement coverage and any feed or import gaps have been checked.
• Bridge: every difference has an amount, explanation and supporting reference.
• Corrections: changes have reached the books, and the final ledger agrees with the reconciliation.
• Outstanding work: each unresolved item has an owner and a next action; coding queries remain visible.
• Review: the preparer and reviewer record who checked the reconciliation and when.

Do not mark the cash reconciliation complete while an unexplained difference remains. Equally, do not hide a separate unresolved tax question merely because the cash has been reconciled. Give each its own status so the next person can see precisely what has and has not been established.

This is the practical version of making a working paper readable at review. The reviewer should arrive at the remaining judgement, rather than spend their first ten minutes repeating the preparer's search.

If you are evaluating AI tax working-paper software, use the same file as a test. Ask the tool to show the statement balance, the ledger balance and the evidence behind each difference. A polished schedule with an unexplained balancing entry has failed that test, however quickly it was produced.

Before you close the June file, read the words “bank reconciled” once more. The paper underneath should be able to explain exactly what they mean.