Bank Reconciliation can be defined as that process which reconciles the independently prepared accounting records of an entity with the bank statements and other bank generated documentation for the corresponding period. In normal circumstances, this procedure involves a series of individual calculations whereby consistency is ensured between two different sets of records, each prepared in isolation from the other. In the case of Government of Bangladesh transactions, this ideal situation does not exist, largely because of the Government of Bangladesh’s over-reliance on the Banking network which actually operates as an agent of the Government in terms of cash collection and disbursement.
The process of bank reconciliation is essentially a procedure for substantiating the value and timing of cash movements for an entity, a procedure which in itself adds and a strong level of assurance about the accuracy and completeness of the accounting records and which consequently adds credibility to the whole accounting system itself. Differences between an entity’s records for a particular period and the bank’s records for the corresponding period can arise for a variety of reasons, which fall into the following main categories :-
1. Timing differences
- different period close off dates
- time taken for payments issued to reach banking system
- receipts in bank not notified to accounting office in same period
- cut off differences at separate stages in the bank reporting chain
2. Errors in the accounts of Government of Bangladesh offices
- individual numerical mis-postings or transcription errors
- errors of addition of totals
- errors of omission i.e. some transactions not recorded
- errors of commission i.e. some transactions recorded which should not be included
3. Errors in accounting statements from the banks
- individual numerical mis-postings or transcription errors
- errors of addition of totals
- errors of omission i.e. some transactions not recorded
- errors of commission i.e. some transactions recorded which should not be included
4. Deliberate misstatement
- postings have been altered or adjusted for no accounting purpose
- entries have been falsified to conceal fraud
- collusion to misrepresent transactions
The whole issue of Bank Reconciliation, in the context of the Government of Bangladesh accounting system, is a complex one involving various interfaces between the banks and their branch networks, the local accounting offices, the numerous departmental offices operating under the CHIEF ACCOUNTS Officers, the CHIEF ACCOUNTS Officers themselves and the CGA. In addition, there are a range of commercial bank accounts which also exchange funds with the mainstream Government bank account held at the Bangladesh Bank. Most of these interfaces involve data flows if not the actual movement of funds, flows in both directions as well as with members of the public and other third parties.