9706 · 1.4.1
Reconciliation and verification
**Reconciliation and verification** (1.4.1) — know **errors NOT revealed by trial balance** (omission, commission, compensating, complete reversal) and how to perform key reconciliations like the bank reconciliation and control account reconciliations.
Need to know
What you need to know
- Reconciles the business's cash book balance with the bank statement balance.
- Primary causes of differences are timing (unpresented cheques, outstanding lodgements) and items not yet recorded in the cash book (bank charges, direct debits).
- Acts as a key internal control to detect errors and prevent fraud.
- Ensures the cash balance in the statement of financial position is correct.
Explanation
Reconciliation and verification
- Reconciles the business's cash book balance with the bank statement balance.
- Primary causes of differences are timing (unpresented cheques, outstanding lodgements) and items not yet recorded in the cash book (bank charges, direct debits).
- Acts as a key internal control to detect errors and prevent fraud.
- Ensures the cash balance in the statement of financial position is correct.