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QuickBooks Blunders, Part 1: Tales of Reconciliation Nightmares

Apr 15th 2015
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In the first installment of my ongoing series “QuickBooks Blunders,” I’ll share with you a few scary tales of reconciliation nightmares I have come across and how to spot the most common signs of trouble when working with clients or working on your own bank reconciliations in QuickBooks.

The Bank Account Has Never Been Reconciled

Beware of clients who tell you that their books are reconciled – hardly anyone knows what a bank reconciliation is these days.

John has been in business for three years. He is finally ready to hire a bookkeeper. He says he has entered all his transactions in QuickBooks and that they are reconciled. I looked at his QuickBooks and noticed that John’s bank account had never been reconciled. Yikes! We have a lot of work to do…

How to Tell Whether a Bank Account Has Been Reconciled

Figure 1. In QuickBooks desktop versions (Enterprise/Premier/Pro), go to Banking > Reconcile. If the account has been reconciled, you will see the last date that it was reconciled.

Figure 2. In QuickBooks Online, click the Gear Icon on the top right and select Reconcile. There, you will also see when the account was reconciled.

‘Someone’ Has Deleted Reconciled Transactions

Beware of the ghost that deletes or changes previously reconciled transactions. This ghost is so sneaky that as soon as you clean up the books, he makes his appearance and transactions are mysteriously altered. Your client swears that they don’t know how it happened!

How to Tell When a Previously Reconciled Transaction Has Been Deleted or Changed

Figure 3. You will always know when a previously reconciled transaction has been altered because the Beginning Bank Balance in the bank reconciliation will have changed from the last time that the account was reconciled.

Figure 4. In QuickBooks desktop versions, go to Reports > Banking > Reconciliation Discrepancy. The report will list all reconciled transactions that have been deleted, changed, or voided.

Figure 5. In QuickBooks Online, go to the reconciliation window and look for any amounts listed under the Changes column.

Figure 6. To correct these discrepancies, re-enter or correct the transactions that have been deleted or changed. Then, make an “off-cycle reconciliation.” Follow the instructions below obtained from the Intuit support website.

The Bank Reconciliation Has Been Forced

Beware of bank accounts that appear to be reconciled when they really aren’t.

Joe and Cindy noticed an account on their Profit & Loss statement called “Reconciliation Discrepancies.” The account detail listed several transactions recorded to this account throughout the year, including some very big adjustments. They asked me to investigate these discrepancies. I discovered that their previous accountant was unable to reconcile the bank account so he forced the bank reconciliation every month. After many hours of work, we reconciled the bank account correctly. What a nightmare indeed!

Figure 7. Yes, if you didn’t know it, QuickBooks does allow you to force a reconciliation to balance (after warning you). However, it is intended to allow you to write off small differences (like $5) and not large differences (like $50,000).

Figure 8. The easiest way to tell if a reconciliation has been forced is to look for an account called “Reconciliation Discrepancies” in the Profit & Loss report or on the chart of accounts.

Fixing reconciliation discrepancies can be time-consuming and tricky. I have found that the best way to deal with discrepancies is to start over. I recommend that you undo the reconciliations in QuickBooks if there are material reconciliation discrepancies.

This is a small sample of the nightmarish bank reconciliation situations I have come across. I hope that you haven’t had too many reconciliation nightmares. If you have, leave a comment below and let me know what happened.

About the author:
Veronica Wasek is an Advanced Certified QuickBooks ProAdvisor, a CPA, a public speaker, and a member of the national Intuit Trainer/Writer Network. Veronica is the founder of VM Wasek CPA LLC, a QuickBooks-centric firm specializing in customized QuickBooks set up, training, clean up, consulting, and bookkeeping. Veronica’s blog, http://5MinuteBookkeeping.com, provides tips, videos, and tutorials for small businesses to get their bookkeeping done in as little as five minutes a day using QuickBooks Online.

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Replies (6)

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By gj
Jun 26th 2015 01:12

Oh my gosh, I know what you are talking about.
One client had not
entered all the ACH withdrawals AND deposits as well as bank fees that many of her customers
and vendors had processed through her account... for 8 months! Sometimes she wrote checks for the wrong amount or something, but instead of voiding them, just wrote a new check so both checks were in her register.
She called me when they were unable to keep checks from bouncing....
I was unable to get their accounts reconciled before they went bankrupt.

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By Alejandro Vazquez
Jun 26th 2015 01:12

Well, in my case, I started working for a small business a few weeks ago. I just noticed they have never reconciled the bank account. They have the 2009 desktop version. I don't know how to do the first reconciliation myself given the circumstances. The worst part is they just bought the new online version and want to start using it, but all the info on the old QB is wrong! I have no idea of what to do.

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By saghirati
Aug 21st 2016 20:52

I m in the same situation as Alejandro. I just started working as a bookkeeper the last 3 days for the first time after 5 years of getting my degree. I have found out that the company never reconciled any of their accounts, and each one of them has a mass numbers. The good news that I was able to find out all the discrepancy and what it is missing to reconcile it right. The bad news is that I do not know what the journal entries that needs to be done to fix it as the discrepancy is coming from the last 2 years and the books has been closed and taxes have been paid. Any advice please?

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By JadenSamuels
Dec 27th 2016 13:07

Thanks for identifying these blunders and make people aware of it. QuickBooks is among the most demanded accounting software. It discovers the easiest way of maintaining accounts that saves time and efforts, resulting into quick decision making. With QuickBooks checks the proper track to Vendors payment can be made possible within their due dates. But keeping extra stock of such checks can be risky so we can refer to https://www.checkomatic.com/quickbooks-checks/ for its timely printing and delivery without maintaining any excess stock. QuickBooks help in monitoring the track of all the expenses and income on daily basis which helps the departments in reconciliation of accounts at regular intervals. It helps in bringing the most authentic and accurate records of business transactions.

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By wrighthr
Apr 30th 2017 23:51

I reconciled July 2016 and now when I run reports for p&l for August 2016 and on it shows absolutely nothing!

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By Clisa
Jun 25th 2017 16:34

I am using QB Enterprise 15. I am getting ready to wrap up the fiscal year. Double checking entries, and performing my due-diligence, as one should do.

I unreconciled to the beginning of the fy in order to make changes "safely." To my surprise, it unreconciled clear back to Feb. 16...??? This happened last year as well. QB helpdesk installed a Fix. Thank gosh I had it because I had to use it again. But, the other reason I unreconciled one month at a time is because the "beginning balance" was off.

I have 2-weeks to get this wrapped up, and really did not need this again. I also have a check from 2008 that keeps rearing it's ugly head?? It throws off our check numbers. I tried to print it out on plain paper hoping it would end this from popping up...to now avail. I started this position almost exactly one year ago. I have called the helpdesk many times?? I also know that changing & deleting reconciled tranx is part-and-parcel that contributes to this so, going back to make some minor changes is the right way, but wow.....it's the nightmare all over again this year.

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