Reconciliation discrepancies in QuickBooks, found and fixed.

Reconciliation discrepancies in QuickBooks come in two flavours. Either the reconciliation you're working on won't reach a $0.00 difference, or QuickBooks warns you that the beginning balance doesn't match your statement, which means a month you already reconciled has changed underneath you. Both are fixable, and both get much easier once you know where to look.

This guide works through both with a methodical process and a worked example. It assumes you know the basics from our step-by-step bank reconciliation guide.

1Two kinds of reconciliation discrepancies in QuickBooks

Always fix a beginning balance problem first. If the starting point is wrong, everything you tick this month is measured against the wrong number.

2Fixing a beginning balance discrepancy

When you open the Reconcile tool and the beginning balance QuickBooks shows doesn't match your statement's opening balance, QuickBooks will usually alert you and offer to show what changed since the last reconciliation. That list shows reconciled transactions that were edited, deleted or added, with the old and new amounts.

• Edited amounts: change them back to the amount on the bank statement.
• Deleted transactions: re-enter them with the same date and amount, then mark them reconciled. Check the reconciliation report from that month for the details.
• Changed dates: a reconciled transaction moved into a different month shifts balances between periods.
• Check the audit log (gear icon, then Audit log) to see who changed what and when. It's often a well-meaning edit while tidying a category.

If several months are affected, an accountant user in QuickBooks Online Accountant can undo reconciliations back to the last good one and redo them. That's more reliable than patching one month at a time.

3Reading the difference: the clues

Before you start ticking through 200 lines, look hard at the difference amount itself. It often tells you exactly what you're hunting for.

• Search for the exact amount. A missing or duplicated transaction usually shows up as a difference equal to its amount.
• Halve it. If something was entered as a deposit instead of a withdrawal (or the reverse), the difference is twice the amount. An $86 difference may be a $43 item on the wrong side.
• Divide by 9. If it divides evenly, look for two swapped digits. $1,520 entered as $1,250 gives a difference of $270, and $270 ÷ 9 = 30.
• Round numbers. A difference of exactly $100 or $1,000 is often a typo in one digit.
• Check the statement details you typed. A wrong ending balance or ending date in the reconcile screen is surprisingly common.

4Worked example: a $412 difference

Say you're reconciling an Edmonton salon's chequing account for October. You've ticked everything that looks right, and QuickBooks shows a difference of $412.00. It doesn't divide by 9 ($412 ÷ 9 = 45.78), and no single transaction is $412 or $206. So it's probably more than one error.

Searching the register turns up two problems:

• A duplicate of $142.00. A supply order was entered manually as an expense, then added again from the bank feed instead of matched. Only one appears on the statement, but you ticked both.
• A transposition of $270.00. A $1,250.00 rent payment was entered as $1,520.00.

Both errors take too much money out of the books, so they add up: $142 + $270 = $412. Delete the duplicate, correct the payment to $1,250.00 (and its GST), and the difference goes to zero. If the two errors had pushed in opposite directions, they'd have partly cancelled out, which is why a small difference can hide bigger problems.

What happens if you force it instead

If you'd clicked Finish with the $412 difference, QuickBooks would post an adjustment to bring the account up to the statement balance, something like this:

The bank balance would now match, but your books would still have a duplicate supplies expense of $142 and rent overstated by $270, offset by a mystery $412 credit in an account nobody understands. Your supplies and rent lines are wrong, and the GST on the duplicate and the overstated rent could flow into your return as input tax credits you're not entitled to.

The correct fix, in entry form

In QuickBooks you'd do this by deleting the duplicate and editing the payment, not with a journal entry, but this is what those changes do to the ledger. (For simplicity we've shown the amounts before GST.)

Cleared, reconciled and blank: what the register is telling you

In the bank register, each transaction has a status. A blank means it hasn't been matched to the bank yet. C means cleared: it was matched from the bank feed or ticked in a reconciliation you haven't finished. R means reconciled: it was part of a completed reconciliation. A transaction that shows C but is dated three months ago is worth a look, because it means it was never included in a finished reconciliation. Sorting the register by status and date is one of the quickest ways to find stragglers.

When the problem is in payment processor deposits

Square, Stripe, PayPal and Shopify pay you in batches, net of fees and refunds. If each sale was recorded separately in QuickBooks, the bank shows one $1,463.20 deposit while your books show eight sales totalling $1,512.00. The $48.80 difference is the processor's fees, and it needs to be recorded as an expense in the deposit, not left as a reconciliation gap. Our guide to Square deposits that don't match walks through this exact problem.

When you've searched and still can't find it

Step back and reconcile in smaller pieces. Run the reconciliation to an earlier date (say the 15th, using a balance from your online banking) to find out which half of the month the difference lives in, then narrow it down again. It's slower than staring at 200 lines, but it always works.

5Common causes and how to prevent them

• Bank feed duplicates. Adding a feed item that should have been matched to an existing entry. Prevent it by always checking for a match before you click Add.
• Undeposited funds. Payments received into Undeposited Funds but never grouped into a bank deposit, so the deposit is entered again from the feed.
• Transfers recorded twice. Once from the chequing feed and once from the credit card or savings feed.
• Editing reconciled transactions while recategorising. Change the category if you must, but never the amount or date.
• Wrong statement balance. Typing the available balance instead of the statement ending balance.
• Sign errors. A refund entered as an expense, so the difference is twice its amount.
• Unlocked months. Set a closing date under Settings, Account and settings, Advanced, so reconciled months need a password to change.

Discrepancy hunting checklist

CRA expects your records to be accurate and kept for six years, and an account full of forced adjustments is hard to defend. If your reconciliations have been off for months, our catch-up bookkeeping rebuilds them properly. Plum works in QuickBooks Online every day for businesses across Edmonton, Sherwood Park, St. Albert and Fort Saskatchewan; book a quick call and we'll find where your difference is hiding.

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This article is general information for Alberta businesses and isn't tax or legal advice. Rules and thresholds change, so confirm your situation with your accountant or CRA.