When the bank gets an agency's transaction wrong
What an estate agency should do when its bank statement shows an amount the bank recorded wrongly, and how to carry it in the reconciliation until fixed.
By Achekam · · 5 min read · For Real estate businesses in South Africa, Nigeria, Kenya
The agency's bookkeeper is working through the month's bank reconciliation when one line will not match. The conveyancer's statement says the commission on a sale was paid in full. The agency's own record shows the full amount. The bank statement shows a different figure. Someone has made a mistake, and it matters a great deal whose.
Bank errors are rare, but they happen: a payment captured at the wrong amount, a deposit credited twice, a fee charged that should not have been, a transfer credited to the wrong account. The temptation is to adjust the books to match the bank and move on. That is right when the mistake is yours and wrong when it is the bank's. This article sets out how to tell the difference and what to do in each case.
What a reconciliation is for
AccountingTools describes the bank reconciliation process as comparing the internal and bank records for a bank account, and adjusting the internal records to bring the two into line, so that the recorded cash balance is accurate. The word to notice is "accurate". The aim is not that the two records agree at any cost. It is that the cash figure in the books is right.
That is why a bank error is not simply adjusted away. If the bank has recorded a commission receipt at less than was actually paid, changing your books to the bank's figure makes your books wrong too.
Step one: whose error is it?
Before doing anything else, go back to the source document. For a cleared cheque, AccountingTools suggests verifying the amount against the cheque image on the bank's website. For electronic payments, the equivalents are:
- the payer's remittance advice or proof of payment;
- the conveyancer's statement of account for the transfer;
- your own payment instruction, if the agency paid out; and
- the bank's own transaction detail, which sometimes differs from the summary line.
Compare all of them. If they agree with each other and with your record but not with the statement, the bank is likely wrong. If they agree with the bank, the error is yours.
When you recorded it wrongly: adjust your books
AccountingTools explains that when a cleared cheque appears on the bank statement at a different amount from the company's record, and the company recorded it incorrectly, an adjusting entry should be made to match the bank's amount. The same logic applies to any transaction you captured wrongly: correct your record.
In Achekam, the correction depends on where the mistake sits:
- If the wrong amount came from a journal, post a correcting manual journal. Achekam refuses an unbalanced journal or one dated in a closed month, and a posted journal is corrected only by a reversal, so the original and its correction both remain visible.
- If the bank line has nothing in the books to match, a line not yet in the books becomes a suggested journal that a person approves.
When the bank recorded it wrongly: a reconciling item
AccountingTools explains that when the bank has recorded a cleared cheque incorrectly, the company should send the bank documentation of the error, and the difference remains a reconciling item until the bank adjusts its records. Again, the principle carries over to electronic transactions. In practice:
- Write to the bank, or log a query through its business channel, with the source documents attached.
- Ask for a reference number for the query.
- Leave your books at the correct amount.
- Carry the difference as a reconciling item, with the reference and the date you raised it.
Do not adjust your books to the bank's wrong figure while you wait. When the bank corrects it, the correction will appear as a new line on a later statement, and it will match the reconciling item exactly.
Explaining the leftover line in Achekam
Achekam's reconciliation is built for this. Bank statements are imported as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053 files, and each import is checked so that the opening balance plus movements equals the closing balance. That check confirms that you have the bank's statement as the bank issued it, error included.
Bank lines are then matched by suggestion, and a person accepts each match. A reconciliation completes only when nothing is left unmatched or every leftover line has been explained. A bank error is exactly such a leftover line. Explain it in terms someone else can follow months later: what the bank recorded, what should have been recorded, the documents that prove it, and the bank's query reference.
Where scanned statements are involved, an AI model can read a scanned or unrecognised PDF if the workspace has one configured, and every amount it reads must appear on the page. Check its reading of the disputed line against the paper statement before raising a query; a misread line is not a bank error.
Following it up next month
A reconciling item that sits for months is a warning sign. Each month, check open bank errors first:
| Status | Action |
|---|---|
| Bank has corrected it | Match the correction to the reconciling item; close it |
| Bank has acknowledged but not corrected | Chase, quoting the reference |
| No response | Escalate to your relationship manager or the bank's complaints process |
AccountingTools advises that if an undocumented difference remains in a reconciliation, the accountant should go back to earlier periods' reconciliations to see whether it arose before. It adds that prior-period reconciling items strongly suggest that earlier reconciliations were not investigated in enough detail. That is the cost of letting a bank error drift: by the time someone looks, nobody remembers what it was.
How often to reconcile in the first place is covered in how often to reconcile the bank. If the line in question is commission from a conveyancer, commission paid by the conveyancer explains how those receipts are usually recorded.
Read the process
AccountingTools' guide to the bank reconciliation process covers each kind of reconciling item, including bank errors. Look through your last three reconciliations for any line explained as "bank error", and check that each one has a query reference and a follow-up date.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
