BANK ACCOUNT RECONCILEMENTS Page 1
BANK ACCOUNT RECONCILEMENTS
A system of internal control may be implemented in many different ways. Because political subdivisions vary in purpose, size and complexity,
no single method of internal control is universally applicable. However, the five internal control components should be present and functioning in all political
subdivisions.
Questions have been accumulated for all five internal control components. This document includes questions pertaining to various
noncompliance issues regarding bank account reconcilements. These questions can be used to aid in designing a proper system of internal control over
bank reconcilements that will allow incorrect bank reconcilements to be prevented or detected and corrected. It is not necessary to address all questions
in this document. These are only suggestions and ultimately it is up to the unit on how they implement it. The internal control system as a whole has to
be designed and implemented appropriately in order to allow errors made on the bank reconcilement to be prevented or detected and corrected in a timely
manner.
Control Environment
The questions in this section are divided by questions that pertain to the governing board and management.
Risk Assessment
Control Activities
YES NO
1) Does management identify, analyze and respond to risks regarding the preparation and review of the bank reconcilement?
a. What areas have been identified regarding the preparation and review of the bank reconcilement that may be exposed to risk?
b. How has management analyzed and responded to identified risks? For example, management may accept the risk and take no
action, choose to eliminate certain processes to avoid the risk and/or institute proper internal controls.
2) How does management prevent fraud and errors in the accounting records, which are used to compute cash and investment
balances. For example, are important internal control procedures in place such as approvals, regular preparation or review of
reconciliations, review of supporting schedules or reports, etc.?
3) What procedures are in place to ensure that the information reported on the bank reconcilement is correct and reflective of the
accounting records and the bank reconcilement is performed monthly?
YES NO
1) Is there a system of checks and balances (segregation of duties) to ensure a correct bank reconcilement?
a. Are responsibilities for reviewing the bank reconcilement segregated from those preparing the bank reconcilement?
b. Are responsibilities for preparing the bank reconcilement segregated from those involved in receipting and disbursing activities?
c. Are responsibilities for preparing a reconcilement between the receipts ledger and the credits to the bank account segregated
from those involved in the receipting process?
d. Are responsibilities for preparing a reconcilement between the disbursements ledger and the debits to the bank account
segregated from those involved in the disbursing process?
2) Does management present the bank reconcilement to the governing board for review and approval?
3) Are bank statements received directly by the appropriate level of management or another appropriate person and reviewed prior to
routing to the individual who performs the bank reconcilement?
Governing Board: YES NO
1)
Does the governing board oversee the unit’s internal control system over the preparation and review of the bank reconcilement?
2)
Are there written policies documenting internal control procedures over the preparation and review of the bank reconcilement? If
yes, do these written policies outline the authority and responsibility for the preparation and review of the bank reconcilement within
the unit and require bank reconcilements to be performed monthly?
3)
Does the governing board have a complete listing of all bank accounts?
Management:
1)
What procedures did management put in place for the preparation and review of the bank reconcilement and review of cash and
investment balances?
a.
Does management assign responsibility, and delegate authority to achieve a correct bank reconcilement and ensure it is
prepared monthly?
2) Have all bank accounts been reported to management?
3) Is management willing to adjust the financial statements for misstatements that approach a material amount?
