Bank Reconciliation Statement (BRS) – Meaning, Purpose, Process & Benefits

Ensuring your records align with the bank’s is vital. A Bank Reconciliation Statement (BRS) bridges the gap between your bookkeeping and the bank’s statements. Here’s a clear, expert guide for 2025.

What Is a Bank Reconciliation Statement (BRS)?

A BRS is a financial report that compares your company’s cash book to the bank statement for a specific date. It explains any differences—such as uncleared cheques or bank charges—helping you align both records

Why Prepare a BRS?

1. Ensure accuracy – spot recording mistakes or omissions
2. Detect fraud – uncover unauthorized or suspicious transactions
3. Manage cash flow – account for timing gaps like pending cheques or deposits
4. Comply with regulations – essential for audit, tax, and financial reporting

Key Items Causing Differences

• Deposits in transit: Recorded by you but not yet credited by the bank
• Outstanding cheques: Issued but not cashed
• Bank charges/fees: Deducted by bank but not in your books
• Interest credits: Credited by bank, missing from your records
• Errors: Misentered amounts in either record

Steps to Prepare a BRS

1. Gather documents: Get bank statement and cash book for the period
2. Compare opening balances and adjust if needed
3. Match transactions one by one—note any differences
4. List reconciling items: deposits in transit, outstanding cheques, charges, interest, errors
5. Adjust balances:
   • Bank side: Add deposits in transit, deduct outstanding cheques
   • Book side: Add interest, deduct fees or errors
6. Ensure adjusted balances match—if not, investigate further
7. Document & update your books; finalize the statement and file it

BRS Format Example

Balance per bank statement (ending)

• Deposits in transit
  – Outstanding cheques
  = Adjusted bank balance

Balance per cash book (ending)

• Interest earned
  – Bank charges, NSF cheques, errors
  = Adjusted book balance

Both adjusted figures should be equal

Benefits of Regular Reconciliation

• Reduces errors and data mismatches
• Detects fraud and bank mistakes timely
• Improves cash visibility and budgeting
• Aids audits and compliance
• Strengthens internal controls

Best Practices & Tips

• Reconcile monthly or more often for high-volume accounts
• Use bank statement downloads (CSV/Excel) for faster processing
• Investigate all unreconciled items
• Keep clear documentation—journal entries and signed statements
• Automate using accounting software like Tally or QuickBooks