Preparing for Bank Reconciliations

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1 Contents About Preparing for Bank Reconciliations What is Reconciled Preparing for the Reconciliation Selecting the Bank Account and Period About Preparing for Bank Reconciliations Bank Reconciliation is the method used to reconcile your bank statement within PCLaw TM. Bank Reconciliation aids in reconciling your bank statements to your PCLaw TM bank journals. This is the first in a series of documents for Bank Reconciliation. See the Practice Management Document Library in the Support Center for additional documentation. What Is Reconciled PCLaw TM s Bank Reconciliation reconciles two items: the bank account to the statement received from the banking institution the general or trust bank journal in PCLaw TM. Although a relationship exists between the bank journal and its associated general ledger account and bank account summary, it is possible for a discrepancy to exist between these items without it affecting the bank reconciliation. Bank Statement reconcile to statement reconcile to bank journal Bank Journal (general or trust) Gen Bank Acct # (10##) or Trust Bank Acct # (11##) Bank Account Summary (Bank Balance icon) If a discrepancy exists between the Bank Account Summary and the Bank journal, run a verify data integrity on General or Trust Bank Account and Entries. Verify Data Integrity is located on the Tools pull-down menu. If a discrepancy exists between the general ledger bank account and the Bank journal, return to the date when the two reports last balanced and then isolate the day the reports no longer reconciled. Run both reports for a period, compare the totals, and then rerun the reports for half of the period. Repeat this process for the period half that the totals do not match until you are down to a single day. An adjustment must be made on that date.

2 Preparing for the Reconciliation A bank reconciliation involves three stages of preparation. Organizing Prior Documentation Preparing the Current Bank Statement Updating the Bank Journal. If this is the first reconciliation for an account in PCLaw TM, ensure the opening balance is correctly entered. Add general bank opening balances through Tools > General Bank Opening Balances. Add trust bank opening balances through Tools > Matter Opening Balances. Organizing Prior Documentation The preparation materials may differ depending on whether this is the first reconciliation for this account or one in an ongoing chain of reconciliations. If this is the first reconciliation for this account or the reconciliation has been reset, you will require the following: the period bank statement from your banking institute cancelled checks, debit memos, credit memos that came with the bank statement the bank reconciliation for the month prior to the current bank reconciliation. The bank reconciliation for the prior month should include an Outstanding Items list, containing all outstanding checks, receipts, and bank errors. If a bank reconciliation is not available for the prior period, then compile a list of checks, receipts, and bank errors outstanding from prior to the current period. The items may or may not have been cleared in the current reconciliation period. copies of all deposit slips made during the statement period. If this is not your first bank reconciliation for this account in PCLaw TM, and the account has not been reset, then all outstanding items are brought forward from the prior reconciliation period. Warning: If you have reset your bank reconciliation, you will require the same preparation as you would for a first bank reconciliation. Preparing the Current Bank Statement To simplify the procedure when performing the actual bank reconciliation, review the bank statement prior to performing the reconciliation. 1. Highlight service charges, interest payments, and any other debit or credit memos that have not yet been entered into PCLaw TM. 2. Verify the bank statement against the enclosed checks. Ensure that: all returned checks appear on the bank statement checks do not appear on the bank statement that have not been returned no discrepancy exists between the check and statement amounts. 3. Sort the returned checks in numerical order. 4. Verify the bank statement against all deposit slips. Ensure that: all deposit slips appear on the bank statement no discrepancy exists between the deposit slip and statement amounts. By reviewing the bank statement ahead of time, you are checking for possible errors and determining the tasks to performed in PCLaw TM before starting the reconciliation. Page 2

3 Updating the Bank Journal Add items appearing on the bank statement that are not correctable errors into PCLaw TM. 1. Use a check to enter debit memos and service charges. For the general bank, use Data Entry > General Bank > Check. For the trust bank, use Data Entry > Trust Bank > Check. 2. Use a receipt to enter credit memos and interest payments. For the general bank, use Data Entry > General Bank > Firm Receipt. For the trust bank, use Data Entry > Trust Bank > Receipt. 3. Since bank memos are not actual checks or receipts, use abbreviations for the check or receipt number. For example, for service charges use SC, for Interest use INT etc. Warning: A check or receipt cannot be posted to a trust account without a matter number. Many bar associations and law societies do not allow a miscellaneous matter to be set up to accommodate adjusting entries as described above. You may wish to advise your banking institute to post any trust debit or credit memos that are not associated with a matter to your general operating account. Consult your local bar association or law society for the proper rules and procedures in your area. 4. Enter new bank errors on the Mark Items window of the bank reconciliation. Do not enter new bank errors as a check or receipt. 5. Enter outstanding bank errors from a prior period as prior items if this is the first reconciliation for this account or the account has been reset. If this is not the first reconciliation for this account, outstanding bank errors are carried forward automatically. No pre-reconciliation preparation is required for existing bank errors from a prior period. 6. Reverse NSF checks received from clients by using the Void/NSF button on the General or Trust bank tab of the Register. Use the date the check is returned from the banking institute in the reverse receipt window. NSF checks can also be reversed by entering a negative Firm Receipt, Receive Payment, General Retainer or Trust Receipt. The invoice number of the original payment must be included when reversing the payment. Note: Add all bank statement adjusting entries within the date range of the reconciliation period. Page 3

4 Selecting the Bank Account and Period Pull-down Menu: Tools > Bank Reconciliation Quick Step: End of Month/Year > Bank Reconciliation Once preparation for the bank reconciliation is complete, you are ready to start the reconciliation. The Bank Reconciliation - Select Account window General Select to reconcile a general bank account. Trust Select to reconcile a trust bank account. Acct Select the account number of the bank to be reconciled This number is linked to whether the General or Trust account is selected in the preceding box. Start Date Select the period start date from the bank statement This parameter is only available if this is the first reconciliation for the account or if the account has been reset. End Date Type the period end date from the bank statement The bank reconciliation period should always equate that of the bank statement Opening Balance Type the opening balance from the bank statement This box is only available if this is the first reconciliation for the account or if the account has been reset. Closing Balance Type the period ending balance from the bank statement. Skip Zero Balance Receipts Check to prevent receipts with values of zero from appearing on the Mark Items window. Skip Zero Balance Checks Check to prevent checks with values of zero from appearing on the Mark Items window. Page 4

5 Read Bank Statement from Disk Check to display the Bank Statement Transaction window to load an electronic version of your bank statement: The Bank Statement Transaction File Select the format from the Select the format of the transaction file drop down list PCLaw TM reads electronic statement files from Citibank, Money, and Quicken Browse to the file location in the Specify the location of the file box Click Continue to read the statement Click Skip to proceed to the Mark Items window without reading the electronic statement file. Auto Save Every ## Minutes Check to have PCLaw TM automatically save your reconciliation work at selected intervals Type or select a time interval in the adjacent box. Use Deposit Slips Check to group receipts into their deposit slips on the Mark Items window Use Deposit Slips must be selected on the Banking tab of System Settings. Verify Bank Journal Entries Check for PCLaw TM to reindex the general or trust bank before starting the bank reconciliation. Reprint Click to Print the Bank Reconciliation report for previously saved bank reconciliations The Select Bank Reconciliations window opens Select the bank reconciliation to reprint Select the Output for producing the Bank Reconciliation report. Prev Rec Click to reopen to the previously saved bank reconciliation. PCLaw TM prompts you for confirmation prior to reopening the bank reconciliation: This button is available only after at least one reconciliation has been saved for the selected account. Only one reconciliation may be reopened at a time. Page 5

6 Reset Click to reset the bank reconciliation for the selected account Warning: Once a bank reconciliation is reset, it cannot be undone PCLaw TM prompts you for confirmation and then issues a second confirmation prompt. Once a reconciliation for a bank account is reset, it is essentially a new reconciliation All outstanding checks, receipts and bank errors must be re-entered in the bank reconciliation as Prior Items. OK Click proceed to the Mark Items window. PCLaw TM will prompt you if an amount was not entered in the Ending Balance box: Click Yes to display the Mark Items window. Click No to return to the Select Account window to modify the ending balance. Page 6