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Trust Bank Reconciliation
Trust accounts must be reconciled to the last day of the calendar month, every month, within 14 business days of the last day of the month.
For larger firms, it may be practical to reconcile more frequently, for example weekly.
To reconcile select the trust icon (the red courthouse) from the top menu bar.
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From the trust register, select the 'Bank Rec' button.
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The 1st trust bank reconciliation screen will appear. From here:
Select the correct account to be reconciled
Verify the opening balance on Wise Owl Legal agrees with the opening balance on the bank statement
Enter the closing date and closing bank balance from the bank statement
Select Begin Reconciliation.
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NOTE: the external reference may be useful for recording the bank statement number |
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The bank reconciliation screen displays:
all cheques and payments that have not previously been reconciled, on the left hand side
all receipts and credits that have not previously been reconciled, on the right hand side
a summary of the cleared transactions
From here the user works from a printed bank statements and reconciles what movements have occurred within the trust bank account and what has been recorded in Wise Owl Legal.
A transaction can be reconciled by clicking the transaction line or by hitting the space bar.
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Transactions can be sorted by date, transaction, ref #, amount and cleared. Using a combination of 'sort by' filters can be most effective in the reconciliation process.
Whilst the default 'sort by' is date, sorting by date alone can be problematic as trust cheques are not usually written on the same day as they are presented to the bank.
To overcome this it may be useful to 'sort by' Ref # or amount.
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A summary screen is displayed at the bottom of the page, and shows all the amounts cleared. This summary highlights the amount of any variance.
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A useful function is the 'mark all' and 'unmark all' buttons. Please note that these buttons only apply to each specific type of transaction (e.g. all payments, receipts or adjustments).
Therefore to mark all items on the bank reconciliation, you will need to select 'Mark All' for all three categories.
Each month there may be adjustments necessary. Select the adjustments button from the top of the bank reconciliation screen.
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If applicable enter the transaction reference number, cheque or receipt number, to not only assist with matching up the adjustment next month, but also for the auditing process.
At any point the bank reconciliation can be closed by selecting the 'Back to Trust Register' button.
All transactions are saved at this point, allowing the bank reconciliation to be later resumed at its current state.
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Be sure to thoroughly check the bank reconciliation report before rolling to the next period. Before finalising the reconciliation check for:
Reversal transactions, ensuring they are checked off against the original entry
Stale cheques, cancel and re-issue if necessary
Outstanding adjustment for the previous month have been cleared
The 'Complete Reconciliation' button is only available when the bank statement balance is in agreement with the calculated closing balance on Wise Owl Legal.
Make sure to run the reports for Trust EOM at this point in time; including the bank reconciliation, the trust trial balance, the cashbook, and the client accounting ledger for trust only.
An interim bank reconciliation report can be printed by opening up the in progress bank reconciliation, through Trust Accounting > Bank Rec > Continue Bank Reconciliation , then > Print button
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Another way is by selecting the browsers print function: either by right clicking and selecting print or selecting print from the top menu bar.
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This report will be displayed with an 'In Progress' watermark.
Trust End of Month Reports
The following reports should be saved and printed each month and filed in your trust account folder in preparation for audit.
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Bank Reconciliation
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To enter a new Bank Adjustment, select the black Enter Adjustment button on the bank reconciliation screen.
Wise Owl Legal software has made adjustments easy, by having a pre-existing list of adjustments to choose from, spelt out in layman’s terms.
When in the adjustment screen and your mouse has selected the 'type of adj' field, this list can be brought up by pressing the down arrow on your keyboard.
The adjustments have also been pre-numbered for your convenience. The list of adjustments, and additional information, is detailed below:
- There is money deposited into my account that I have not yet processed
- This is the most common type of adjustment and usually occurs because of the trust accounting regulation that states that trust receipts cannot be backdated
- There is an error on my bank statement that the BANK will put BACK INTO my account
- There is an error on my bank statement that the BANK will TAKE OUT of my account
- There is money taken out of my account that the FIRM will PUT BACK
- A cheque was presented for LESS than our records
- A cheque was presented for MOER than our records
- Money deposited was MORE than the receipt we wrote – Firm will receipt
- Money deposited was for LESS than the receipt we wrote – Firm will deposit more
- Deposit for General was put into trust – bank will correct
- Deposit for General was put into trust – we will receipt and process correction
1000. None of the above describes my problem
Once you have chosen the appropriate Type of Adjustment, the following details also need to be filled out.
- The date is the date the money was physically received by the firm (in the case of direct deposits, this is the date the funds appear on the bank statement)
- The description is what the funds are for. E.g. professional fees
- The Txn Ref is the receipt number for the transaction, when it has been processed.
- The matter ref is the matter number the funds relate to
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Report
Once the trust bank account is reconciled for the month a Bank Reconciliation Summary will appear on the screen. From here select print report.
Bank reconciliation reports can be printed at any time, not just upon completion of the bank reconciliation, through the reports tab.
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A new tab will open with the Trust Bank Reconciliation.
2. Trust Trial Balance
3. Trust Matter Ledger
4. Trust Cash Receipts by Date
5. Trust Cash Payments by Date
To print reports 2-5 click the reports icon from the top menu bar.
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Go to the Trust Reports tab and click on the necessary report from the list above.
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Enter the date parameters if prompted. Make sure to select the dates of the first day of the month to the last day of the month (EXACTLY the same as the closing date used on the bank reconciliation).
The Reports then need to be checked to ensure that the bank reconciliation was completed correctly.
An easy way to check this is to confirm the following:
The Trust Matter ledger balance equals the Trust Trial Balance.
This amount also equals the Cash book Balance on the Bank Reconciliation.
The cash receipts and payments reports must equal the figures for receipts and payments on the Bank Reconciliation for that same period.
Additional Resources:
How to check your Trust Bank Reconciliation
Trust Accounting - New Adjustment