Listen to this articleWe’re here to help you troubleshoot common QuickBooks reconciliation discrepancies. QuickBooks reconciliation discrepancy arises when the transactions in your bank account and QuickBooks don’t match.
For instance, let’s say you carried out a reconciliation for the last month, verified its ending balance, and found a small amount left over. QuickBooks does let you fix it by entering an adjustment amount. This is for when you wish to balance the books and close the reconciliation. However, you must first ensure that the transactions in QuickBooks match the transactions in the bank account. Moreover, you should be confident that everything is correctly entered.
There are different kinds of QuickBooks reconciliation discrepancies, and we will discuss some common ones here. Additionally, we will tell you how to fix reconciliation discrepancies in QuickBooks. Before we dive into that, we will brief you on how to reconcile in QuickBooks Desktop.
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How to Reconcile in QuickBooks Desktop?
In layman’s terms, QuickBooks reconciliation is the process of matching the transactions recorded in QuickBooks and that in your bank or credit card statement. Bookkeeping and accounting need to reconcile to ensure that the books stay accurate and balanced.
It is not difficult to reconcile using intuitive software like QuickBooks. However, it is a comprehensive process and requires you to take a backup of the company file before you do so. For a stepwise tutorial, read this QuickBooks reconciliation guide.
How Do You Know If a QuickBooks Reconciliation Discrepancy is Valid?
Perhaps you checked and found out that the ending balance on the bank statement and QuickBooks are different. However, do you know whether this QuickBooks reconciliation discrepancy is valid, or can you ignore it?
Sometimes, these discrepancies are a sign of a mistake in your transactions or something off in the bookkeeping. However, after thoroughly checking every transaction and ensuring everything is correctly entered, you can know whether this discrepancy is valid.
Reasons for a QuickBooks Reconciliation Discrepancy
By now, we have a clear idea of what a QuickBooks reconciliation discrepancy is. Now, let us explore some common reasons that give way to QB reconciliation discrepancies. When you carry out the reconciliation, you should check for these mistakes.
1. Incorrect or Missing Transactions
Anything incorrectly entered in QuickBooks can lead to a discrepancy between the book and the bank statement. For instance, if you enter the transaction incorrectly, fail to enter the amount, or enter it twice, there will be a difference between the books and bank statements.
If you enter the amount inaccurately, such as entering USD 51 for a bank transaction that is USD50, it will show as an outstanding item in reconciliation.
Moreover, you should ensure that a credit is entered as credit, not debit, and the same goes for debit.
2. Wrong Time-Period
Sometimes, the transaction occurs in a different month and will show up in that month in the bank statement. However, the user may input it incorrectly in another month in QuickBooks.
This mistake in recording transactions often leads to a QuickBooks reconciliation discrepancy. The transaction then shows up as an outstanding item in the QuickBooks reconciliation window.
Moreover, sometimes users might not record the deposit or payment made for long. They may record it in a later month or not record it at all. This amount will add to the difference between the bank statement and QuickBooks.
3. Incorrect Adjustments
Let’s say that when you balanced the books, you or someone else entered an adjustment amount as a journal entry.
However, this transaction might show as an outstanding item in the reconciliation window, now giving way to QuickBooks reconciliation discrepancies.
4. Frauds and Scam
Although it is not common and QuickBooks is pretty safe, no software or business is immune to fraud and similar thefts. Someone might create fake customers, vendors, or clients and write checks to them or deposit money in an account. These extra transactions will throw the book off and appear as an outstanding item in the reconciliation window.
For this reason, you can use reconciliation to find invalid or fraudulent journal entries. For example, if a transaction shows up in the QuickBooks reconciliation window but you cannot find its equivalent in the bank statement, it might be fake or incorrect.
How to Fix a QuickBooks Reconciliation Discrepancy
You might have checked and cross-checked QB transactions with the bank statement, yet you see some items left in the reconciliation window. Do not worry, as QuickBooks offers ways to fix a QuickBooks reconciliation discrepancy.
Carry out these solutions individually and check if the issue is resolved.
1. Check the Beginning Balances
Before you go ahead and carry out the solutions to fix the QuickBooks reconciliation discrepancy, you must check and ensure the cause is not hidden at the root of the issue. Every financial period begins with a beginning balance.
Moreover, when you first connect QuickBooks with a bank or credit card account and start recording journal entries, it notes the bank balance at the moment as the opening balance. QuickBooks also allows you to edit that opening balance.
Therefore, first, ensure that the original opening balance at the very beginning is entered correctly. Now check the beginning balance of the financial period or month you want to reconcile for and match it with the ending balance of the last reconciliation. Once you verify the opening and beginning balances, you can move ahead.
If you find out that the opening balance or beginning balance was wrong, you might have to undo some reconciliations and do it again.
2. Utilize the Reconciliation Discrepancy Report
The reconciliation discrepancy report allows you to check for the changes in transactions after the last reconciliation. Here’s how to run the reconciliation discrepancy report
- Navigate to Reports and move your cursor over banking
- Choose reconciliation discrepancy.
- Now, choose the account you wish to reconcile.
- Tap on OK when prompted.
- You will see the report and the changes that have been made.
- Evaluate the discrepancies in the report and verify these changes.
- If you come to know that a transaction was incorrectly made, edit it accordingly.
However, if you find that the change was in a transaction you already reconciled, you might need to redo the reconciliation. Therefore, consult your accountant before undoing these changes.
Now check for the reconciliation discrepancies in QuickBooks and if everything has been fixed. If the discrepancy persists, continue to the next step.
3. Utilize the Missing Checks Report
The missing checks report, as the name might suggest, shows any checks that might be missing and are not part of your ending balance. These missing checks can be the reason for the QuickBooks bank reconciliation discrepancy.
Here’s how you can run the missing checks report.
- Navigate to Reports and move your cursor over Missing.
- Choose missing checks from the list.
- Now, pick the account you wish to reconcile for.
- See the report and find out the transactions that are different in banks and QuickBooks.
Edit these transactions to resolve QuickBooks reconciliation discrepancies.
4. Utilize Transaction Detail Report
If the above few methods didn’t resolve the issue, a transaction detail report might be your best bet. This report elaborates on any transaction that was changed.
- Navigate to Reports and move your cursor over Custom Reports.
- Choose Transaction Detail from the list.
- Click on Display.
- Choose the Date From as the earliest available or leave it blank.
- Choose the Date as the date of your last reconciliation.
- Now open the Filters.
- Choose the account you wish to reconcile in the accounts field.
- There will be an Entered/Last Modified field. Here, choose the date of your last reconciliation.
- The Date To should be today’s date.
- Once done, click on OK and run the report.
- Now, study the transaction changes that show up on your screen.
- If these don’t match your bank statements, try to find the reason why they were changed or ask the person who changed them.
- If required, edit the transactions as required.
5. Verify Reconciliation Adjustments
We saw in the reasons section that the reconciliation adjustments can lead to a QuickBooks reconciliation discrepancy. Therefore, if you still face discrepancies in QuickBooks and bank statements, you must check the adjustments.
Users often make reconciliation adjustments to force-balance the books. However, when they do so, the adjustment is recorded separately in a Reconciliation Discrepancies account. That’s what we are investigating now.
So, let’s review the adjustments.
- Navigate to Lists.
- Click on Charts of Accounts.
- Now, you might see an option to choose the date.
- Choose the date as the date for your reconciliation.
- You will be able to see all the adjustments.
- Evaluate these adjustments, and if you find an incorrect one, edit it as required.
- Ensure that your correction doesn’t conflict with other transactions and doesn’t imbalance the book.
Check if the discrepancies in QuickBooks reconciliation are resolved.
6. Undo the Last Reconciliation and Do it Again
If you haven’t been able to find the culprit for the QuickBooks reconciliation discrepancy and fix it, the problem might stem from the last reconciliation.
Therefore, you might need to undo the last reconciliation and do it again. However, we advise you to consult your accountant once before that.
Conclusion
So this was all on what causes QuickBooks reconciliation discrepancy and how to fix it. However, if you find the troubleshooting methods difficult to follow or feel stuck anywhere, call us anytime. We provide 24/7 QuickBooks support for accountants, bookkeepers, self-employed individuals, and business professionals.
Also, get a QB ProAdvisor to fix your QB issues and ensure it runs like water. Take a free trial of our services at 800-580-5375 today!