A local law office recently reported that they lost well over $600,000 to embezzlement by their bookkeeper over a 5 year period. The perpetrator was caught, convicted and sentenced to jail for up to 4 years and to pay restitution of $400 per month for 16 years ($76,800).
There are two primary reasons for reconciling your bank accounts every time a statement comes out.
- The reconciliation allows you to maintain the accuracy of your accounting records and those of the bank. The sooner an error is caught, the easier it is to correct.
- A bank reconciliation is an opportunity to detect fraud and theft.
Either of these reasons should be adequate so don’t let reconciliations fall through the cracks. Small businesses with small accounting departments are especially vulnerable to fraud and theft so it is wise to use this powerful and inexpensive tool. Oh yes, it is absolutely necessary that someone you trust do the reconciliations.
If your business has been subject to loss by theft at some level from office supplies to money, you are probably the only one in the world. Think about it. The theft of time happens every single day.