Trust Bank Reconciliation
Trust accounts must be reconciled to the last day of the calendar month, every month, within 14 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.
From the trust register, select the 'Bank Rec' button.
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.
- NOTE: the external reference may be useful for recording the bank statement number
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.
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.
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.
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.
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.
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 selecting the browsers print function: either by right clicking and selecting print or selecting print from the top menu bar.
This report will be displayed with an 'In Progress' watermark.
Bank Reconciliation Adjustments
As we don’t live in a perfect world, the bank reconciliation isn’t going to be perfect every time.
Therefore it is necessary to create adjustments to ensure the bank’s records balance against the records in Wise Owl Legal.
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
Once you have finished, select the save Adjustment button to add it to your Bank Reconciliation.