Before we understand the relevance of Bank Reconciliation Statement in the Era of Internet Banking, we need to understand what a Bank Reconciliation Statement is and what purpose it serves.
Bank Reconciliation Statement is a statement prepared by a Business Entity in order to reconcile the banking transactions that have taken place in the Bank Column of its Cash Book with the entries taken place in its Pass Book. The entries for transactions takes place in the Cash Book (Bank Column) of the Business Entity as and when they are known to them and the same entries takes place in the Pass Book (which is the printed copy of entries made by the Bank in the account of the customer) when the transactions are entered in the books of the Bank in the Entity’s account.
On account of such differences in timings or other factors the balance in the Pass Book usually differs from the balance in the Cash Book at a given date. To trace such differences and to recognise the reasons there for, a Statement is prepared by every business entity at regular intervals which is known as Bank Reconciliation Statement.
But in the present era, where a customer is updated with every banking transaction taking place into his account, the relevance of Bank Reconciliation Statement has become very less. But still the relevance of this statement cannot be ignored completely by a Business Entity.
The relevance of Bank Reconciliation statement remains as it is even in the era of Internet Banking. Despite of information about every transaction and transaction trail, it is necessary to tally the balances in Cash Book and that in Pass Book at regular intervals in order to ensure absence of errors and frauds in the business in relation to banking transactions.
The only difference in the Banking in earlier days and in the present time of Internet Banking is that earlier Bank Reconciliation Statement was prepared on receipt of Bank Statement or after update of Pass Book from the Bank, now a days the data till the date of reconciliation is available immediately at the disposal of the account holder on account of Internet Banking.
So from the statement or data of one’s Bank Account downloaded or in the form of print out taken, Bank Reconciliation Statement is prepared so as to understand the reasons for differences in the balances of Cash book and that in the Pass Book and to avoid the possibility of or to locate any error or fraud in relation to transactions of the business taking place with/through the Bank.