I have just had to try and unwind two attempts at a bank reconciliation because the reconciliation process does not appear to recognize some fundamental issues in accounting. These relate to recognition and timing.
For example the reconciliation process does not allow me to match expenditures on the bank statement against the actual accounting entry irrespective of the differences that may occur in the date of recognition of the expenditure and its appearance in the bank statement. these are seldom the same dates particularly if using cheque payments.
Another example is where I have deferred receipts. These are recognized on the day of sale but the funds may not appear in my statement until some days later. Since I do not have staff to be able to monitor bank statements daily then matching of these differences is impossible.
If I were to rely solely on Bank statements to run my accounts then the use of a package is relatively pointless. I should be able to reconcile my entries back to the bank account and make allowances for unpresented cheques/payments and unbanked sales. I can not see any easy way that this can be done in this system and have the details of what I have done correctly recorded for audit purposes.
It appears to me that there is very little flexibility in the reconciliation process and the ability to allow timing differences between the bank and my accounts is completely absent - or am I missing something?