This article explains how to clear entries and finalise the bank reconciliation in Insight™ Legal. 

What is a Bank Reconciliation 

The Bank Reconciliation is a function designed to help users tally the entries made on their accounts system to the entries on their bank statements.

When making payments or receiving money, transactions are not always immediately shown on your bank statement. For example, a cheque paid out would be recorded on your accounts system and then potentially take several days to get to the client and then to clear through the client’s own bank. In the same way, monies that you pay into your own bank account would be recorded with the date that you pay them in, but it would not be until a few days later that they appear on your statement.

Reconciling the entries gives you the opportunity to match the entries from your bank statements to the entries on your accounts system.

Why are Bank Reconciliations performed? 

Your accounts system must be a reflection of what has happened at your actual bank. As entries are made over a large number of different ledgers rather than in one long list, it can be difficult to see at a glance whether all the entries have been posted.

When are Bank Reconciliations Performed? 

It is up to the firm to set policies for how often bank reconciliations should be performed. Your regulators will likely have published rules regarding the frequency of your bank reconciliations that must be adhered to.

Most firms run a bank reconciliation at the end of each month as part of their month-end routines. However, for firms with access to online banking or who have a large volume of transactions, a bank rec can be run more frequently.

Where can the Bank Reconciliation Function be Found?

The Bank Reconciliation functions can be found under the Accounts menu. It is in the Banking section and under the heading Bank Reconciliation.

How to Clear Entries? 

The first thing to do when starting a reconciliation is to choose which bank account you wish to reconcile. Starting from the left of the screen, use the drop-down box labelled Bank Type to select whether you wish to reconcile Client, Office, Deposit, or Petty Cash. Once you have selected the type of account, you can then select the individual bank from the Bank drop-down list. Click the Reconcile button to begin the reconciliation process.

You need to input the Date of the bank statement that you are reconciling and the Statement Balance. 

A list of entries posted to that system bank will be displayed in the top part of the screen. The transactions are listed in date order, not necessarily in the order in which they were posted. For each entry, you will see the Date, Reference, Ledger, Description, and Payee (if one was entered). The amount of the entry will then appear in either the Money In or Money Out column, depending on whether the posting was a credit or a debit.

The final column is marked Cleared and consists of tick boxes. This indicates whether the individual entry has cleared through the firm’s bank account.

With your bank statement in front of you, check the details of the first entry. You must then find that entry on the Bank Reconciliation. There is a Search feature in the top right to help you locate this entry.

When you click on a transaction, you will receive a pop-up window containing details about the posting. 

Entries that have been posted using the same date and reference (either as part of a batch posting or just through the normal posting screens, but which happen to have the date and reference in common) will be grouped on the bank reconciliation. This is to assist when reconciling items such as a number of cheques paid in on the same paying-in slip, which would appear as one total on your bank statement. If you would prefer to see entries listed out separately rather than being grouped together, click the Toggle Grouping button at the top of the list of entries.

Work your way through the bank statement, ticking off entries as you go. Only items that appear on the bank statement should be marked as cleared. Once you have finished ticking the entries, the Difference should be zero, meaning your bank reconciles.

This screen automatically saves, so you can close this screen if required without losing any work.

Manual Adjustments

If a manual adjustment needs to be made to the bank reconciliation, this can be done using the Adjustments section on the left-hand side. You may need to do this if your bank contains opening balances from where your data was converted into Insight™ Legal, or if you started on a blank version of Insight™ Legal. 

Any Adjustments added to a bank reconciliation session will automatically roll into the next session until they are removed. To add a new Adjustment, click the + symbol and enter the Date, Name and Amount. Click the tick symbol to finish adding this adjustment. The X symbol can be used to remove an Adjustment from this session. These Adjustments will save automatically, and multiple Adjustments can be added to each bank reconciliation.

Finalising the Bank Reconciliation 

Once you are confident that all relevant entries have been marked as cleared, and the Difference box is zero, you will need to Finalise the session. Click into the Finalise tab and check the details listed here. You will see a breakdown of any Cleared Transactions, Uncleared Transactions, and Adjustments, and each group can be expanded to see the relevant entries.

If you wish to Suppress the transactions you marked as cleared during this session, tick the Suppress Transactions checkbox at the bottom of the screen and enter the relevant Suppress up to date. 

When you are ready, click the Finalise button in the bottom right. You will receive a pop up message to confirm the session has been finalised.

Reconciliation Report

Finalising your session will automatically generate the Reconciliation Report with the default settings. However, this report can be customised to include the details that the firm requires. This report can also be run again later if required.

To run a previous session’s report, select the relevant session from the Session dropdown. You can use the Year and Month dropdown menus to assist with this. Once you have chosen the details you require, click the Generate Report button.

If the Totals are selected to be included in this report, these will appear at the bottom of the report. The Total box displays the reconciliation total. This is a calculation of the statement balance, less the Unpresented Debits and plus the Unpresented Credits. The Computer Balance is the total of all entries in the system bank account that you are reconciling up to the reconciliation date that you selected (i.e. the Cash Book balance).

If the Total and the Computer Balance are the same, your bank reconciles.

You may then choose to print or save this report using the buttons at the top.

Reverting to a Previous Session

To revert to a previously finalised bank reconciliation session, follow the steps below: 

1. Go to System.
2. Select Settings.
3. On the System Settings section select Banks.
4. Select the relevant Bank and Session from the dropdown menus.
5. Click Revert to Session. 

After clicking Revert to Session, you will be prompted to confirm that you wish to revert to this session and you will then receive a pop up message to confirm this has been completed.

Un-Suppressing Entries

To un-suppress any suppressed items so that they don't appear again within the Bank Reconciliation screen, to do this: 

1. Go to System.
2. Select Settings.
3. On the System Settings section, select Banks.
4. On the Un-suppress Entries section, enter the date range of the entries that need to be suppressed.
5. Click Un-suppress. 

You will receive a pop up window stating how many transactions will be un-suppressed and asking you to confirm you wish to proceed. After you have confirmed this, another window will appear to confirm that the entries have been un-suppressed. These transactions will now be shown within the Bank Reconciliation screen.