Who is bank reconciliation statement prepared by?

Bank Reconciliation Statement or BRS is a statement prepared to reconcile the bank account balance as per the cashbook with the bank balance as per the passbook. This is done so because often the bank balance as per the cashbook does not match with the bank balance as per the passbook.

BRS is usually prepared by the accountant of an entity to find out the causes of the difference between the bank balance as per cashbook and the bank balance as reported in the passbook. The frequency of preparation of BRS is usually monthly. Nowadays, many enterprises have computerised accounting systems which help in automatic bank reconciliation.

Sometimes, BRS is also prepared by auditors during the audit of financial statements.

The balance of the bank account column of the cashbook does not match the bank balance as per the passbook. This is due to many transactions like the following that go unnoticed by the accountant:

• The credit of bank interest,
• Auto-debit of bank charges,
• Delay in the clearing of cheques deposited, for which debit is already given by the accountant.
• Late presentment of cheque issued by enterprise, for credit is already given by the account.

Differences also occur due to accounting errors like posting wrong amounts in the cashbook.

To prepare the BRS, we have to start either with the bank balance as per cashbook, then add or subtract amounts to arrive at the bank balance as per passbook. Or we can do the vice verse. Here, the amounts we add or subtract are the amounts of items that are causes for the difference between the two balances.