Regular reconciliations serve as an important internal control to ensure that the bookkeeping at all times corresponds with the actual funds held in bank accounts and in cash. By comparing the balances in the accounting records with bank statements and physical cash counts on a monthly basis, the organisation can promptly identify and correct any errors or discrepancies.
This control task must be carried out by one person and subsequently reviewed and approved by another in order to maintain segregation of duties. In addition, it is a requirement that cheque books and cash holdings are kept securely locked and that cheques are never signed in advance. By carrying out these bank and cash reconciliations on a monthly basis, it is ensured that the project’s liquidity is always documented and available.
