Errors and Theft

• In order for checks to clear the banking system electronically, special encoding is required. This system leaves room for random errors. Comparing the amount you wrote on the check to the actual clearing amount on the bank's records uncovers these mistakes.
  
  If anyone is stealing from your bank account, you must discover the transactions and notify the bank quickly.
  
  

Bank Charges

• A check that you receive and deposit to your account might be returned for a reversal of the deposit. This occurs when the issuer of the check has insufficient funds in his bank account. These returned checks and associated handling fees charged by your bank are discovered during account reconciliation.
  
  Bank service charges of any nature are normally assessed without notifying you. Your records cannot be relied upon for accuracy without knowing about assessed bank fees.
  
  

Timing Differences

• Your account statement shows a balance based upon transactions that have cleared the banking system as of a particular date. Checks that are in transit through the banking system are indicated only on your records and not the bank's records. The bank's records are not reliable for an accurate balance due to outstanding checks that have not cleared.
  
  Some checks you have written never clear your bank account. Checks are stale after six months and should never clear your account after that date. Bank reconciliation discovers checks that are older than six months. Your recorded account balance should add back the amount of these checks.