Lessons learned: Schedule 06 and documenting bank reconciliations

Sep 29, 2020

We're jumping into some lessons learned from the 2020 filing season regarding Schedule 06 – Summary of Bank Reconciliations. Even if you don't file a Schedule 06, these tips are useful when preparing any bank reconciliation, or other schedules or reports. These were identified as the most common areas of emphasis when SAO staff helped clients in 2020.

1. Start with what you know

Bank reconciliations are all about starting with what you have evidence of and identifying anything else that isn't supported or recorded. Because of this, make sure to start with what you know: banking transactions from source documents and what is in your general ledger. Make sure to double-check as you progress, because one early mistake can compound into something larger at the end of your work.

2. History often repeats itself – use previous information to predict the future!

Audits are routine, and often begin where they last left off. Use your previous Schedule 06 or bank reconciliation to start the subsequent years, taking into account any comments, corrections, or other notes from the last audit. This will make sure you start the current year off with the most current, corrected data.

3. Think like a doctor when analyzing a variance

Doctors often start with what's easiest to diagnose or rule out. As a preparer, you can do the same by confirming the amounts that are easy to verify first, such as beginning and ending bank balances, bank, investment, and interfund transfers, etc., leaving the more time-consuming investigations for last, such as other miscellaneous adjustments and netted transactions. This way, if you find a simple mistake was made in an area that is easy to double-check, you can fix it right away.

4. Don't assume technology knows what you need

As with any Excel file, make sure that all formulas you are using are kept intact. Sometimes adding or deleting rows or columns can create issues with check figures. Also, be wary of system report names and titles. We noticed that some users were generating reports that detailed a list of interfund transactions in all funds across the government. The problem? The report also listed managerial funds that were eventually rolled up, causing inflated reconciling numbers. A “fund report” by one name may not be the fund report you are looking for.

5. Reconcile all your accounts. Seriously.

Even if the accounts are small, or hold only investments, reconcile them all before preparing any final end-of-year reconciliation. Often, investments or sweeping accounts will have significant reconciling items that must be documented and included with the preparation of your Schedule 06 or bank reconciliation. Don't focus only on your “main” accounts.

If you haven't already, make sure to check out our Best Practices for Bank Reconciliations resource. We're also making some updates to our Schedule 06 instructions, and make sure to stay tuned to BARS updates later this fall and winter. If you have questions about these best practices, reach out to us at center@sao.wa.gov.