Bank Reconciliation as a Due Process Imperative for Effective Financial Management.docVIP

Bank Reconciliation as a Due Process Imperative for Effective Financial Management 　　[a]Bursary Division, Babcock University, Nigeria. 　　[b]Department of Accounting, Valley View University, Ghana. 　　*Corresponding author. 　　Received 18 March 2012; accepted 20 June 2012 　　Abstract 　　This paper establishes the importance of Bank Reconciliation as a mandatory activity for ensuring effective financial management. Every financial manager wants to keep close tab on the bank balances as his job involves real time decisions that have cost implications in his favour or against. A little delay in the clearing of an effect could result in huge financial losses to the organization in terms of interest charges or other opportunity costs. A delay could also be the source of loss of goodwill which can spell huge consequences for the entity’s business relationships. The paper affirms that there are several ways of carrying out bank reconciliation. However, it further concludes that the bank reconciliation process ensures that undue losses are not sustained through inadvertence of the staff of either the focal organization or the bank. 　　Key words: Bank reconciliation; Opportunity cost; Uncleared effect; Uncredited cheques; Stale effects; Due date; Unpresented effects; Effective financial management; Fair view; Due process 　　Luke N. Onuoha, Emmanuel B. Amponsah (2012). Bank Reconciliation as a Due Process Imperative for Effective Financial Management. Canadian Social Science, 8(3), -0. Available from URL: /index.php/css/article/view/j.css.1923669720120803.2955 　　DOI: /10.3968/j.css.1923669720120803.2955. 　　INTRODUCTION 　　Bank reconciliation prompts the accountant to the proof of actual funds balance for inclusion in the assets of the company at any given time. Timely bank reconciliation is a necessary tool in the hand of the financial manager to knowing the actual cash available for use or for investment on a given date. The bank reconciliation statement is required as frequent