The Process of Reconciliation

The purpose of reconciliation, whether you are reconciling the bank account, credit card account, or other account balance, is simple. You have two numbers and you are explaining why they are not the same. If they are the same, they are automatically reconciled. When there are differences, you have to figure out why. Let's look at an example:

The total of List A is 9,560, and the total for List B is 15,847. The balances are not the same, so you need to reconcile them.

You know that you care only about the differences. Numbers that are the same on both lists are not part of the difference. Take a highlighter and highlight the numbers that appear on both lists. You can ignore these numbers. All the unhighlighted numbers are part of the difference.

There are two pieces to the difference; the numbers that appear in List A that aren't on List B, and the numbers that appear on List B that aren't on List A.

You need to reconcile the List A balance to the List B balance. The general process you'll follow involves taking the List A balance, subtracting the numbers that are not on the List B balance, and adding in the numbers that are on the List B balance that aren't on the List A balance. This will give you your List B balance.

The second part of any reconciliation is, of course, to find out why the numbers do not match. However, in this section, you need only be concerned with identifying the numbers themselves.

Now, the above example looks easy and clear. But what if each list had dozens or hundreds of numbers? It would be a much more difficult process. If you follow the above procedure for your reconciliations and you still have an unidentified difference, there are a few bookkeepers' tricks to track down the source of the problem.