Bank reconciliation checklist for CAs and accountants

A bank reconciliation statement (BRS) explains the difference between the balance in your books and the balance on the bank statement on the same date. Done monthly, it’s a short routine. Done once a year before audit, it’s an archaeology project.

This checklist is the routine we’d follow for a typical Indian business client using Tally or a similar package. Adapt it to your firm’s working papers.

Why monthly

• Errors are cheaper to find early. A wrong amount from this month is a five-minute fix; from eleven months ago it’s a search through every voucher.
• Unrecorded bank entries hide in the statement. Bank charges, interest, NACH debits and customer NEFTs often reach the bank before they reach the books.
• Stale cheques have a deadline. Cheques are valid for three months from their date. An issued cheque that hasn’t been presented by then needs attention.
• It keeps GST input credit on track. Bank charges carry GST, and you can only claim credit for what you’ve recorded.

Before you start: collect

• The bank statement for the full month, as a digital PDF or download, for every account, including OD/CC, loan and FD sweep accounts
• The bank ledger (bank book) from the books for the same period
• Last month’s BRS and its list of outstanding items
• The cheque issue register or cheque book stubs, and deposit/pay-in slips
• Loan and EMI schedules, and the list of standing instructions and NACH mandates (insurance, SIPs, rent, utilities)
• Card and POS settlement reports, if the business takes card or UPI payments through an acquirer

Step 1: Check the statement itself

Before matching anything, make sure the statement is complete and internally consistent:

• The period covers the whole month, with no missing pages (check page numbers, and that the running balance carries over between pages)
• Opening balance + total credits − total debits = closing balance
• Each row’s running balance equals the previous balance plus that row’s credit, minus its debit
• The opening balance equals last month’s closing balance on the previous statement

A converted statement that fails these checks will send you hunting for differences that don’t exist. KhataSheet runs all of them when it converts a PDF and flags the exact row that breaks.

Step 2: Agree the starting point

• Book opening balance = last month’s closing balance per books (no back-dated entries since the last BRS)
• Last month’s outstanding items are listed, and you’ve marked which ones cleared this month
• Anything still outstanding from last month is carried forward, with its original date

Step 3: Match the entries

Work through the statement and the bank ledger together:

• Match on amount, then confirm with the cheque number, UTR or UPI RRN and a reasonable date window (cheques can clear days after issue)
• Record the bank date for each matched entry. In TallyPrime, open Bank Reconciliation for the bank ledger and enter the bank date against each cleared voucher.
• Watch for one-to-many matches: one deposit slip with several cheques, or one NEFT batch covering several invoices
• Decode cryptic UPI and NEFT narrations to identify the counterparty. The UPI narration decoder helps.

What’s left unmatched on either side is your list of reconciling items.

Step 4: Sort the reconciling items

Most unmatched entries fall into a small number of familiar groups:

Step 5: Record what belongs in the books

Items that are on the statement but not in the books are usually your entries to make, not reconciling items to carry forward:

• Bank charges, with GST. Bank fees attract GST at 18%. Claim input credit only where eligible and where the bank’s charges appear in GSTR-2B against the client’s GSTIN.
• Interest credited and interest or EMIs debited
• Direct receipts from customers and direct debits (NACH, standing instructions)
• Returned cheques and their charges

Then re-run the match. What remains should be only timing differences: cheques issued but not presented, and deposits not yet credited.

Step 6: Prepare the statement

A BRS in its common form:

• The computed figure equals the statement’s closing balance exactly. A difference of even ₹1 means an item is missing or wrong.
• Each outstanding item is listed with its date, cheque/UTR number, party and amount
• For OD/CC accounts, signs are handled consistently (an overdraft is a credit balance in the books)

Step 7: Clean up old items

• Stale cheques: issued cheques older than three months won’t be honoured. Confirm with the payee, then reverse the entry or reissue.
• Long-outstanding deposits: a deposit in the books that never reached the bank needs explaining now, not at audit.
• Suspense ledger: its balance should be zero, or each entry explained, at month-end.

Red flags worth a second look

Reconciliation is also where unusual patterns surface. None of these is proof of anything, but each deserves a question:

• Round-sum transfers to or from directors, relatives or related concerns without supporting documents
• Repeated cash deposits just under reporting thresholds, or large cash receipts from a single person (cash receipts of ₹2 lakh or more are restricted under section 269ST of the Income-tax Act)
• Large cash withdrawals. TDS under section 194N can appear as a bank debit once withdrawals cross the threshold
• Entries dated on bank holidays, gaps or reuse in the cheque number series, or the same UTR appearing twice
• Payees on the statement who don’t appear anywhere in the books

Sign-off

• BRS prepared for every bank account, including OD/CC, loan and FD sweep accounts
• Book balance and statement balance reconciled to the rupee and paisa
• Unrecorded entries posted, with GST input where eligible
• Outstanding items listed with dates and references, and stale items actioned
• Suspense ledger cleared or explained
• BRS saved with the statement and dated, and the preparer and reviewer noted

Kept up monthly, the year-end reconciliation becomes the twelfth repeat of a routine you already trust.

This guide is general information, not professional advice. Menus can change between software versions; check your version's help if a screen looks different. Tally, Tally.ERP 9 and TallyPrime are trademarks of Tally Solutions Pvt. Ltd. KhataSheet is not affiliated with Tally Solutions or any bank.