Chapter 6- Lesson 3 Identifying and Correcting Errors

During reconciliation, you may come across different types of mistakes that cause discrepancies between your books and your bank statement. Data entry errors are common and can include simple typos, such as recording $85 instead of $58. Double entries happen when the same transaction is accidentally recorded twice. Sometimes, there are missing transactions, like forgetting to include a bank fee or interest earned. You might also encounter unrecorded deposits or payments, where cash received or payments made were never entered into your records. And yes, even banks can make errors, such as applying a wrong charge or duplicating a fee. Identifying these issues is an important part of keeping your financial records accurate.

When your bank balance and book balance don’t match, it’s a clear red flag that something’s off. To find the issue, go through your records line by line and look for amounts that don’t match, transactions that appear in one place but not the other, dates that seem too far apart, or descriptions that look unusual. Also, keep an eye out for strange or unexpected charges. Anything that seems out of place should be highlighted and set aside for closer review. This careful checking is key to identifying errors before they cause bigger problems.

Once you've identified an error, the next step is to fix it. If the mistake is in your bookkeeping records, simply correct the original entry or add the missing transaction to ensure your books are accurate. If the error is on the bank’s side, contact your bank with proper documentation and request a correction. It’s also important to add a note or brief explanation for each correction you make—this creates a clear audit trail in case you or someone else needs to review the changes later. Keeping detailed records of these adjustments helps maintain transparency and accuracy in your financial reporting.