Accounting Case Study · Financial controls
Bank Reconciliation Discrepancy
Fictional portfolio demonstration. All businesses, events and financial figures are invented for educational illustration; this is not a claim of client work.
Business background & problem
A fictional retailer finds a £2,430 difference between its cash book and bank statement at month-end.
Financial evidence
| Measure | Value |
|---|---|
| Balance per bank statement | £25,870 |
| Deposit in transit | £1,800 |
| Unpresented cheques | (£920) |
| Adjusted bank balance | £26,750 |
| Cash book before corrections | £28,300 |
| Unrecorded bank charges | (£150) |
| Duplicate receipt correction | (£1,400) |
| Adjusted cash book | £26,750 |
Analysis and diagnosis
The £2,430 initial difference is explained by £880 of net timing items and £1,550 of cash-book corrections. The adjusted balances agree at £26,750.
Investigation approach
- Obtain the bank statement and cash-book transaction listings for the same cut-off date.
- Match transactions using dates, amounts and references; separately identify deposits in transit and unpresented payments.
- Verify the £150 bank charge and £1,400 duplicate receipt against independent evidence before posting corrections.
- Reperform the reconciliation and retain supporting documentation with reviewer sign-off.
Recommended solutions & controls
- Prepare reconciliations monthly, with independent review and dated approval.
- Investigate old outstanding items and require evidence for all manual journals.
- Use exception reporting to flag duplicate receipts and unmatched transactions.
Expected outcome
A zero reconciling difference after validated adjustments; stronger month-end audit trail.
Key learning
Reliable financial decisions depend on reconciled data, documented assumptions, proportionate controls and clear communication with stakeholders.