COFA: Three-way bank reconciliations
In this article we review the issues surrounding three-way bank reconciliations.
Regular three-way bank reconciliations continue to be an area of focus for the SRA as a key way to identify shortfalls on the client account. The SRA’s guidance, released 4 July 2019, makes it clear that it is important that three-way reconciliations are completed at least every 5 weeks. It should also be noted that, from 25 November 2019, the bank reconciliations must be clearly evidenced as reviewed by the COFA or other manager (partner) of the firm.
While many firms already comply with this rule, sometimes it is not explicitly stated that the COFA has reviewed the reconciliation, therefore we recommend making a small change to the review sheet to ensure this is clearly stated. The SRA’s guidance makes it clear that they expect the COFA’s review to be thorough, and that where there are non-genuine reconciling items (i.e. not genuine outstanding payments and receipts), there should be documentation showing that this has been challenged by the COFA, investigated and that this item should be cleared from the reconciliation within two months.
We recommend that firms consider putting a comments box on the review sheet which allows the COFA to note that they are challenging reconciling items (where required) and the action that has been agreed to be taken.
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