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How to Fix Reconcile Discrepancies in QuickBooks

· 6 min read
Debits

Introduction​

Reconciling your accounts in QuickBooks is essential to ensure your financial records match your bank and credit card statements. However, discrepancies can sometimes arise during the reconciliation process. These discrepancies may occur due to changes in previously reconciled transactions, data entry errors, or other factors. Fixing these discrepancies is crucial for maintaining accurate financial statements. In this guide, we'll walk you through the steps to identify and fix reconcile discrepancies in QuickBooks.

Common Causes of Reconcile Discrepancies​

Reconciliation discrepancies can occur for several reasons:

  1. Edited or Deleted Transactions: If a transaction that has already been reconciled is edited or deleted, it will create a discrepancy.
  2. New Transactions Added to a Closed Period: If transactions are backdated into a period that has already been reconciled, this can cause the balances to be off.
  3. Reconciled Transactions Marked as Unreconciled: Sometimes, reconciled transactions may be marked as unreconciled, causing discrepancies in the reconciliation.
  4. Manual Adjustments: Incorrect adjustments during the reconciliation process can also lead to errors.

Step 1: Review the Reconciliation Discrepancy Report​

1.1: Generate the Discrepancy Report​

  1. Go to Reports: In QuickBooks, navigate to Reports > Reconciliation Discrepancy.
  2. Select the Account: Choose the account you are reconciling, such as a bank account or credit card account.
  3. Review the Report: The report will show any transactions that have been changed, deleted, or modified since the last reconciliation.

1.2: Identify Discrepancies​

  1. Look for Modified Transactions: Review the report to identify any changes made to previously reconciled transactions. Common discrepancies may include changes to the transaction amount, date, or account.
  2. Note the Issue: Make a note of any discrepancies that stand out. This information will help you correct the issues in later steps.

Step 2: Check for Unreconciled Transactions​

2.1: Review the Account Register​

  1. Go to the Chart of Accounts: Navigate to Accounting > Chart of Accounts and locate the account you are reconciling (e.g., your checking account).
  2. Open the Register: Click on View register to open the account register.
  3. Look for Unreconciled Transactions: Look for any transactions that should have been reconciled but are marked with an "R" (reconciled) status or "C" (cleared) status. An unreconciled transaction that should be marked as reconciled can cause a discrepancy.

2.2: Correct the Status​

  1. Edit the Transaction: If a transaction that was previously reconciled has been marked as unreconciled, you can correct this by editing the transaction.
  2. Mark the Transaction as Reconciled: Change the status back to "R" to indicate that it has been reconciled.

Step 3: Look for Deleted Transactions​

3.1: Check for Deleted Transactions​

  1. Use the Audit Log: QuickBooks’ Audit Log feature can help you identify any deleted or altered transactions.
  2. Go to the Audit Log: Navigate to Settings > Audit Log to access the audit trail for your company file.
  3. Filter the Log: Filter the audit log by date or by the user to narrow down the search for deleted transactions.
  4. Look for Deleted Transactions: Check the log for any transactions that have been deleted after they were reconciled.

3.2: Re-enter the Deleted Transactions​

  1. Recreate Deleted Transactions: If you find that a reconciled transaction was deleted, you will need to re-enter it. Ensure that you use the correct date and amount so that it matches your original reconciliation.
  2. Mark the Transaction as Reconciled: After re-entering the transaction, manually mark it as reconciled in the account register.

Step 4: Run the Missing Checks Report​

4.1: Generate the Missing Checks Report​

  1. Go to Reports: Navigate to Reports > Missing Checks to generate the report.
  2. Select the Account: Choose the account you're reconciling (e.g., checking or savings account).
  3. Review Missing Transactions: The report will show any missing check numbers, which could indicate that a check was deleted or incorrectly recorded.

4.2: Re-enter or Adjust Missing Checks​

  1. Investigate the Issue: If checks are missing, look through your records to verify whether they were deleted, not entered, or entered incorrectly.
  2. Re-enter Missing Checks: If necessary, re-enter the missing checks and ensure that they are properly categorized and reconciled.

Step 5: Adjust Journal Entries (if Necessary)​

5.1: Identify Incorrect Journal Entries​

  1. Review Journal Entries: If manual journal entries were made to adjust balances, they might be the source of your discrepancies.
  2. Run a Report on Journal Entries: Go to Reports > Transaction Detail by Account and filter for journal entries to review all manual adjustments made to the reconciled account.

5.2: Correct or Remove Incorrect Adjustments​

  1. Delete Incorrect Entries: If you find incorrect journal entries that are causing the reconciliation discrepancy, delete or reverse them.
  2. Reconcile the Correct Transactions: Ensure that only the correct transactions are reconciled and that any adjustments made reflect the true financial position of the account.

Step 6: Reconcile the Account Again​

6.1: Start the Reconciliation Process​

  1. Go to Accounting > Reconcile: After resolving all discrepancies, go back to the reconciliation tool to re-reconcile the account.
  2. Select the Account and Statement: Choose the bank or credit card account you're reconciling and enter the statement date and ending balance as per your bank statement.

6.2: Match Transactions​

  1. Review the Transactions: Match the transactions in QuickBooks with your bank or credit card statement to ensure that everything aligns.
  2. Make Final Adjustments: If any small discrepancies remain, use the reconciliation tool to make final adjustments, but be careful not to make large adjustments that could skew your books.

6.3: Finish Reconciliation​

  1. Complete the Reconciliation: Once the transactions match, click Finish Now to complete the reconciliation.
  2. Save the Reconciliation Report: After completing the reconciliation, save or print the reconciliation report for future reference.

Best Practices to Avoid Reconcile Discrepancies​

  1. Reconcile Regularly: Perform reconciliations monthly to avoid building up discrepancies that can be harder to resolve later.
  2. Limit Changes to Reconciled Transactions: Encourage users to avoid editing or deleting reconciled transactions without understanding the impact on your financial statements.
  3. Use Audit Log: Regularly check the Audit Log for any unauthorized changes to reconciled transactions.
  4. Train Your Team: Ensure all users who have access to QuickBooks are trained on how to properly handle reconciled transactions and why it's important to maintain their integrity.

Conclusion​

Fixing reconcile discrepancies in QuickBooks is a critical task to ensure your financial records are accurate and match your bank or credit card statements. By reviewing reports, checking for deleted or unreconciled transactions, and making necessary adjustments, you can resolve discrepancies and maintain accurate financial statements. Regular reconciliation and careful monitoring of your records will help you avoid future issues and keep your books in good order.