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The bank reconciliation still shows an unexplained difference after all known timing items have been listed.
Prove the statement arithmetic, prove the cash book arithmetic, then compare running balances date by date; the first date of divergence holds the error, and the size of the gap suggests its type.
The full bank statement for the period, the cash book with a running balance column, and the list of known timing items.
The difference is traced to a single date and entry, corrected, and the reconciliation tallies.
When a bank reconciliation will not tally, do not scan every line hoping to spot the problem. Narrow it down in three moves. First prove the bank statement’s own arithmetic. Then prove the cash book’s arithmetic. Then compare the two running balances date by date to find the first day they part ways. The error sits on that day.
What are the three proofs?
| Proof | Formula | If it fails, it usually means | Next action |
|---|---|---|---|
| 1. Statement proof | Opening balance plus credits less debits equals closing balance | A page or rows missing from your PDF or download | Download the statement again for the full period |
| 2. Cash book proof | Opening balance plus receipts less payments equals closing balance | A broken spreadsheet formula, or a closing balance typed by hand | Fix the formula or recalculate the balance |
| 3. Running balance comparison | Book balance and bank balance compared for each date | An entry missing, duplicated or wrong on the first date they diverge | Inspect that date’s entries |
Do the proofs in this order. There is no point comparing two sets of numbers if one of them does not add up on its own.
How do you find the day the gap starts?
Make a small table with three columns: date, cash book balance at the end of that day, and bank balance at the end of that day. Add a fourth column for the difference.
Known timing items, such as a cheque issued but not yet presented, will make the difference move and then come back. Ignore those. Look for the first date where the difference jumps and never returns. The entry you need is on that date, or one or two days either side if dates were typed carelessly.
Worked example
Your March bank statement shows:
- Opening balance: ₹3,10,000
- Total credits: ₹6,42,500
- Total debits: ₹5,98,200
₹3,10,000 plus ₹6,42,500 is ₹9,52,500. Less ₹5,98,200 is ₹3,54,300. That matches the statement’s closing balance, so proof 1 passes.
Your cash book also proves on its own arithmetic but closes at ₹3,48,300. There are no timing items this month. The cash book is ₹6,000 lower than the bank.
You compare running balances. They agree every day up to 16 March. On 17 March the bank balance is ₹6,000 higher, and it stays that way to the end of the month.
On 17 March the statement shows a ₹6,000 UPI credit from a customer. There is no matching receipt in the cash book. Enter the ₹6,000 receipt dated 17 March, and the cash book closes at ₹3,54,300, the same as the bank.
What if the balances disagree even on day one?
Then the problem is not in this month’s entries. Your opening balances differ. Perhaps last month’s reconciliation was never finished, or an entry was changed after it was closed.
Go to the opening balance reconciliation guide and fix the starting point first. Hunting for this month’s entries before that will waste time.
Does the size of the gap help?
Yes. A few quick tests:
- Gap equals one transaction amount: that entry is missing.
- Gap equals double a transaction amount: that entry is on the wrong side (a receipt entered as a payment).
- Gap divisible by 9: two digits may be swapped, such as ₹5,640 typed as ₹6,540.
What mistakes should you avoid?
- Starting the hunt before checking that the statement and cash book each add up on their own.
- Scanning the whole month line by line instead of finding the first date of divergence.
- Fixing the difference with a balancing entry. The error stays hidden and returns next month.
- Forgetting that the gap may be made of two errors that partly cancel. If the running-balance difference changes more than once, check each change.
What to read next
Next, read manual detection techniques for reconciliation, then the carelessness family of reconciliation errors, which covers swapped digits, duplicates and wrong-side postings in depth.
TransactIG matches bank statement lines to your books every period and shows unmatched lines in an exception queue, so a difference is found on the day it appears; see bank reconciliation software for India.