Every organization, regardless of its size, conducts its financial transactions manually and through digital banking. Banking is one of the key elements of any financial transaction. Businesses conduct thousands of transactions every day and keeping track of each of them is quite complex. The accuracy and compliance of bank accounts are the most worrying factor for businesses. Our chartered accountants offer quality bank reconciliation reporting services across the Emirates. Let’s find out more about what we do!
A bank reconciliation statement is a comparative analysis to find out the difference between a bank’s cash book and a company’s balance sheet. It can be used to reconcile financial records to bank accounts and provide an overview of the bank’s activities. A bank statement is a list of deposits, withdrawals, and other activities for a specified period. Regular reconciliation of bank accounts is imperative as we cannot rely on banks alone. It is a great way to detect errors or fraud before it causes damage to your business.
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The main purpose of reconciliation is to prevent omissions in a company’s bank account. Businesses cannot rely blindly on the functionality of banks. Account reconciliation is therefore carried out to detect errors and fraud in cash accounting. In this way, accountants can prevent organizations from facing significant losses in the future.
Bank reconciliation is not compulsory for companies, although it is not unimportant in the UAE. There is no set date or timeframe for the preparation of a Bank Reconciliation Statement (BRS). This analysis of bank accounts in companies is carried out periodically. Any adjustments or corrections can be made during the reconciliation process.
Bank reconciliation process in the Emirates
There are some basic steps for conducting a bank reconciliation in the UAE. Our accountants follow the following procedure to detect and prevent suspicious activity in the accounting records.
The main step is to collect all bank and organization records. The business owner is allowed access to the reconciling accountant to review all transactions made by the person or organization. Banking institutions provide a detailed overview of daily financial transactions. You must then compile the business records that the business maintains on its side. Our chartered accountants in UAE will analyze both the similarities and differences in the accounts to start the reconciliation process.
The next step is to determine the duration of the bank statement reconciliation. It is really important to establish a starting point. If you reconcile the bank and company records by accident, it will do nothing. It is therefore advisable to start the process from where you left off last time.
This is a very critical point at which the accountant needs to review the bank deposits and cash withdrawals from the company account. We will check the amounts added and withdrawn as mentioned in the bank cash book and company documents. Make sure that the amounts shown in the company’s documents match the amounts shown in the bank statement. In addition, if you notice an error in either of the two documents, make sure that the error has been corrected and also raise it with the banking authorities.
Checking the company’s income and expenses is not an ignored part of the bank reconciliation statement. Many companies make payments in cash and do not record them in the cashbook, which creates problems for the future. The accountant should record all expenses in the bank and company accounts.
After recording all expenses and receipts, the next task is to organize the bank statements. In this part of the reconciliation process, the accountant has to deduct outstanding cheques, add transit deposits or delete errors in entries. This will adjust the bank statements and eliminate any errors or discrepancies.
Equally important is the reconciliation of the company’s cash statement and cash balance. The reconciliation accountant needs to identify invoices and payments, insufficient funds, deduct monthly expenses and obtain receivables. All this is essential to adjust the cash balance.
Once the cash balance and the bank statement have been adjusted, the accountant moves on to the next and final stage of the reconciliation process. At this point, the accountant makes sure that the final balance in the bank and in the company’s documents must be the same. The company can then prepare journal entries to ensure proper control within the company. If the account is not managed properly, balance sheet losses may occur. Our chartered accountant will reconcile your final balance and repeat the reconciliation process until the balance is equal.
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The frequency of bank reconciliation statements depends entirely on the business owner. Reconciliations can be done daily, weekly, or monthly. Small businesses generally prefer weekly or monthly bank reconciliations. While large companies reconcile accounts each time they receive a bank statement or at the end of each day.
Advantages of bank statement reconciliation
Bank reconciliation has a number of benefits for every organization, small and large, including:
Bestax chartered accountants and consultants offer bank statement reconciliation services in the UAE. Our team will identify any differences or similarities between your account balance and the corresponding bank statement. Businesses can rely on us to stop fraud and legal problems so they can focus fully on their business goals. With BestaxCA’s bookkeeping and accounting services, you’ll get more than just accurate financial statements. Plus, our reconciliation accountants ensure compliance with regulatory requirements. Let us know how our financial advisors can help you!