A monthly bank reconciliation checks whether the transactions in your nonprofit’s accounting records match the activity reported by the bank. It can reveal duplicate entries, missed transactions, bank fees, timing differences, or signs of unauthorized activity before small discrepancies become harder to trace. Set a regular date, gather the same documents each month, and record how you resolved differences. A repeatable process gives your team a clearer view of cash and creates a useful record for review.
Gather the right records
Start with the bank statement for the account and the corresponding cash account in your accounting system. Include the statement’s opening and closing balances, transaction dates, deposits, withdrawals, fees, and interest. If your nonprofit uses more than one bank account, reconcile each one separately rather than combining activity.
Collect deposit records, check details, card statements, and payment processor reports where relevant. These supporting records help explain differences between when a transaction was entered and when it cleared the bank. Use the same statement period and accounting account each month to reduce the chance of comparing mismatched records.
Match transactions systematically
Compare each bank transaction with an entry in the books. Match deposits by amount and source, and match withdrawals by amount, payee, and date. Mark items as cleared in your accounting system or reconciliation worksheet. Then compare the number and value of matched transactions with the bank statement and the general ledger.
Look closely at recurring payments, online transfers, checks, and deposits made near the end of the month. A check recorded in the books may not appear on the statement until it clears; a deposit may also take time to reach the bank. List these timing differences rather than changing the books just to force the balances to agree.
Investigate every difference
If the balances do not agree, check for data-entry mistakes first. A transposed digit, incorrect date, duplicate transaction, or item posted to the wrong account can create a discrepancy. Also look for bank fees, interest, returned payments, and transactions imported from a bank feed but not reviewed or categorized.
Record each adjustment with a clear explanation and supporting documentation. For an unfamiliar or potentially unauthorized transaction, follow your organization’s approval and bank-contact procedures promptly. Do not delete or overwrite an entry simply to make the reconciliation balance; preserve the original record and document the correction so another reviewer can follow the trail.
Close and review the month
When all statement activity is matched and valid timing differences are listed, confirm that the adjusted balances agree. Save the completed reconciliation, bank statement, and supporting documents together using a consistent file name and month. Note who prepared it, when it was completed, and who reviewed it if your nonprofit uses a separate reviewer.
A second-person review can catch an overlooked transaction or an unsupported adjustment. Compare the reconciled cash balance with recent months and investigate unexpected changes, especially around grant receipts, payroll, or large expenses. Keep unresolved items visible on a follow-up list and carry them forward until you can explain and clear them.
A dependable monthly reconciliation is more than a balance check: it helps your nonprofit spot errors, explain cash movements, and retain clear supporting records. Use the same steps each month, investigate differences promptly, and keep a reviewer in the process where possible. If your team needs help building a consistent bookkeeping routine, Civic Ledger can discuss your needs.