Account reconciliation is a bookkeeping process by which you compare the transactions in your ledger to an external source of truth to catch clerical errors and check for incorrect transactions. Regular reconciliation can help decrease your tax liability, ensure your reports and data are accurate, and minimize the time your accountant needs to spend correcting errors.
A bank reconciliation is the most common type of reconciliation, where you compare a statement provided by your bank to the same account in Ambrook over the same time period. Many bookkeepers and producers use reconciliation to ensure their books are accurate and that neither the bank, the connecting software, the accounting software or the users have made any errors.
Our built-in reconciliation feature makes the process quick and easy.
1. Set Up for Success
Before you initiate a reconciliation session, make sure you have your bank or credit card statement in front of you, either online or printed.
Next, go to the Balances page and click on the account you're going to reconcile. Scroll down to the Opening Balance and Starting Date. Make sure that the Opening Balance matches the balance on your bank account or credit card statement as of the Starting Date.
If the opening balance is incorrect, the starting balance of all your reconciliation sessions will likely be incorrect as well.
2. Initiate a Reconciliation Session
Once you have your statement and confirm your starting balance, initiate a reconciliation session.
From the Ledger, click “Reconcile” in the top right corner, or go to Accounting and choose the "Reconciliation" sub-tab.
You will be brought to a list of all of your connected accounts and their current balances. Select the account you wish to reconcile from the list.
Enter the date range and ending balance from the bank statement (or other external source of truth) that you want to reconcile against in the screen that pops up.
It is important that these values are entered correctly, as your statements may not reconcile if they span different dates or calculate from a different ending balance.
3. Reconcile your Account
Next, you will be brought to the Reconciliation screen where you will see all of the transactions from the Ledger during the statement time period you specified for your selected account.
We recommend starting by clicking the Select All button on the right above the transaction list. This will select all the transactions. If the transactions you have in your Ledger exactly match the transactions from your bank or credit card statement, the Difference amount at the top right should equal $0. If this is the case, you are done and can click Finish to save the session.
4. What if there is a Discrepancy?
If you still have a difference after selecting all and confirming your account opening balance, there are several steps you can take to identify and correct any discrepancies between the transactions you have in Ambrook and your external source of truth.
1. Check off transactions one-by-one against your statement: Deselect all the transactions, then click the circle to the right of the transactions to check off each transaction as you go through your statement. As you do so, the equation above the transaction list will show your progress towards the Statement Ending Balance.
If you are missing transactions, you can add them directly from the session using the +New button.
2. Compare your debit and credit totals to your statement: At the top of your reconciliation page are the debit and credit totals - compare them to your statement to identify whether you're off on debits, credits or both and see if there are easily identifiable transactions causing the discrepancy.
3. Check the transactions on the edge dates: Sometimes transactions from the first or last date of your statement may not be included on your statement (and instead be part of the previous or next statement). You can address this by changing the reconciliation session start or end date in Ambrook.
4. Remove any duplicates or accidental transactions: If you have duplicate transactions or transactions that need to be removed from your Ledger for some other reason, you can leave them deselected in the reconciliation session, and then go to your Ledger, search for those transactions and click the three dots next to the transaction -> Exclude.
Important: The starting balance for your next reconciliation session is the original starting balance on your account plus the sum of ALL transactions from that account on your Ledger before the starting date of the reconciliation session. As a result, it is important to add or exclude transactions as appropriate in previous months to ensure your starting balance isn't off for future sessions.
5. Saving and Deleting Reconciliation Sessions
If you don’t finish reconciling in a single sitting, just click the Save button to return to the ledger. Any transactions that you reconcile will remain checked so you can pick the work back up when you return. The next time you go to reconcile an account, we’ll tell you the last date it was reconciled up to.
If you realize you made a mistake in a reconciliation session and need to undo/delete it, you can click on Reconcile, then the clock icon next to the account you want to reverse to show the session history. You will then be able to click the three dots next to the session you want to Delete.
6. Why is my Statement Beginning Balance Different Than My Ambrook Beginning Balance?
Ambrook calculates the account’s starting balance based on previous transactions in the account on the Ledger. This should match the starting balance on your bank statement, especially if you reconcile your accounts regularly.
If it does not match, it could be for two reasons:
Incorrect opening balance. From Settings > Balances, find the account you're reconciling and click it to see the account details. Confirm that the opening date and opening balance are accurate.
A reconciliation error in the past. We suggest going backwards month-by-month until you find a month where the Beginning Balance does match and then reconciling each month going forward until you find the error.