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Bank cash reconciliation, an internal control practice, could be useful in identifying cash embezzlement as because in order to prevent and detect fraud, bank reconciliations are a crucial internal control tool.
What is Bank cash reconciliation?
A bank reconciliation statement compares an entity's bank account to its financial records and describes banking and commercial activity. Statements of bank reconciliation attest to the processing of payments and the depositing of cash earnings into a bank account.
Some characteristics of bank cash reconciliation are-
- By explaining the discrepancies between the cash balances in the accounting record and the bank balance position according to the bank statement, they also assist in identifying accounting and banking problems.
- The likelihood of errors in the data used to produce accounts is decreased by the bank reconciliation process, which makes sure that all transactions that have been recorded on the bank statements have been examined and verified.
- By confirming that all payments and transactions that have passed through the bank account have likewise been noted in the accounting records, bank statements also serve to assure completeness.
- Any variations are noted and explained.
All reconciling discrepancies must be noted, and any journal entries required to correct them must be recorded no later than 90 days after the reconciliation has been completed.
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