QuickBooks Reconciliation Discrepancy Adjustment

QuickBooks reconciliation discrepancies occur when the transactions recorded in QuickBooks don’t align with those on your bank statement. These mismatches often result from errors, missing entries, or changes made in previous reconciliations. Common causes of these reconciliation discrepancies in QuickBooks Desktop (QBDT) and QuickBooks Online (QBO) include timing differences, incorrectly recorded transactions, and missing transactions, which can lead to confusion and frustration for users.

Before fixing reconciliation discrepancies in Quickbooks (QB), it’s important to carefully review the reconciliation details. If discrepancies are minor, QB allows you to add an adjusting entry to balance the accounts. However, large discrepancies should not be adjusted without consulting an accountant, as improper adjustments may lead to further issues. In this article, you will gain insights on What is QuickBooks Reconciliation Discrepancy, its causes, how to adjust discrepancies in QBDT, and how to fix reconciliation discrepancies in QBO.

What are QuickBooks Reconciliation Discrepancies?

QuickBooks reconciliation discrepancies happen when the transactions in your QuickBooks account don’t match those on your bank statement. This could occur for several reasons, often due to mistakes or missing entries in QB.

This QuickBooks reconciliation discrepancy is common among the users of QBDT and QBO and can be caused by changes in transactions that were cleared during earlier reconciliations. Finding the reason behind such discrepancies can be time-consuming and frustrating. Some possible causes of discrepancies include: 

• Changes to previous reconciliations
• Errors in reconciliation arrangements

How Do You Adjust Reconciliation Discrepancies in QuickBooks Desktop?

In some cases, users might make adjustments to force their QuickBooks accounts to match their bank statements. However, it’s important to avoid making adjustments in QuickBooks reconciliation discrepancies without consulting your accountant, as adjustments don’t fix the underlying errors. In fact, fixing those errors later on could cause bigger issues.

Here’s how to check for discrepancies in QBDT:

• Choose the QuickBooks Chart of Accounts option from the Lists menu.
• Launch the account for Reconciliation Discrepancies.
• In the Dates section, provide the dates of your most recent reconciliations.
• If you notice any adjustments that are affecting your balance, reach out to the person who made them and make sure their corrections don’t conflict with your adjustments.

Causes for QuickBooks Reconciliation Discrepancies

Here are some of the most common reasons why users have been facing reconciliation discrepancies in Quickbooks Desktop and Online:

Timing Differences:

A timing difference happens when transactions are recorded in the wrong period. For example, if you record a January rent payment in February, it will show up as an outstanding item when reconciling your February bank statement.

Incorrectly Recorded Transactions:

One of the most frequent causes of discrepancies is incorrectly recorded transactions. This could be due to entering the wrong amount, date, or account for a transaction. For example, if you have a $500 credit card balance and make a $100 payment but record it as $1,000 in QuickBooks, the payment will appear as an unmatched item when reconciling your credit card statement.

Inexact Matches:

Inexact matches can occur when two transactions have different amounts but are essentially the same. For example, if you have an outstanding reconciling item of $100 and record a $101 payment, it could still appear as an unmatched item.

This can also happen when you write a check for multiple items, but only record the total check amount in QuickBooks, leaving it as an outstanding reconciling item.

Missing Transactions:

QuickBooks Missing transactions are simply ones that you forgot to record in QuickBooks. These could be payments, deposits, or any other transaction that wasn’t entered.

How to Fix Quickbooks Online Reconciliation Discrepancy in Previously Reconciled Accounts?

Users receive a notification if there are any edits made that affect the starting balance. After you receive this message or notification, you must follow these steps to fix discrepancies in your reconciliation process.

Step 1: Open and Review the Discrepancy Report

• Click on We can help you fix it to access your discrepancy report.
• Go through the report to understand what changes need to be made.

Step 2: Confirm Before Making Changes

• Before editing anything, discuss the changes with the person who made them. These changes might have been intentional.

Step 3: Fix Each Transaction One by One

Use the discrepancy report to review each transaction carefully.

If the Amount Changed During Reconciliation

This happens when someone edits a reconciled transaction or moves it to another account. Here’s how to fix it:

• Click on the transaction to expand it.
• Select Edit to open the form.
• Adjust the total amount or update the account if needed.
• Click Save and close when you’re done.

See More: QuickBooks Online Reconciliation Adujustment

If the Transaction Is Unreconciled in the Register

This happens when someone unreconciled the transaction. To reconcile it again:

• Click on Transactions and choose Bank Transactions.
• Choose the account you need to reconcile, then click Go to bank register.
• Select Reconcile.
• Enter the ending balance and date from your bank statement, then click Start reconciling.
• Match the transactions with your bank statement:
• Check the box if the transaction matches.
• Leave it unchecked if it doesn’t.
• Click Finish now when everything matches.

If the Transaction Was Reconciled by Mistake

This means someone accidentally reconciled the transaction. Here’s how to fix it:

• Click on the transaction to expand it.
• In the checkmark column, click the box until it’s blank or shows a “C.” This will remove the transaction from reconciliation.
• Click Save to update.

If the Reconciliation Was Deleted

If someone deleted the transaction by mistake, recreate it as it appears in the discrepancy report:

1. Click + New.
2. Select the correct form (e.g., invoice, sales receipt, or expense).
3. Fill out the details in the fields, and then hit the Save and Close button.
4. Go to Bookkeeping or Accounting, then click Chart of Accounts.
5. Find the account you used and select View Register.
6. Locate the transaction, expand it, and click the box in the checkmark column until you see an “R.” This manually reconciles the transaction.
7. Click Save to finish.

Note: If the deleted transaction still shows on the discrepancy report, ensure the difference is $0.00. This won’t affect your reconciliation.

Step 4: Verify the Total Discrepancy

After fixing all transactions, the Total Discrepancy Difference in the report should show $0.00.

• Double-check the beginning balance in QuickBooks to ensure it matches your bank statement.
• When everything is correct, click Resume Reconciling to continue the process.

How to Adjust Reconciliation Discrepancies in QuickBooks Online?

At the end of a reconciliation, you may notice a small leftover amount, known as a discrepancy. After reviewing everything, you’ll know if the discrepancy is a valid error.

If the difference is small, QuickBooks lets you create an adjusting entry to balance your accounts and complete your reconciliation. This option is helpful when you can’t find the source of the discrepancy.

Important: Adjusting entries should only be used for small discrepancies. They should be a last resort for fixing errors, as large discrepancies might cause bigger accounting issues later on. Always consult with your accountant if you’re unsure.

Here’s how to enter an adjusting entry in Quickbooks Online reconciliation discrepancy.

• Go to Transactions, then select Reconcile.
• Complete the reconciliation process.
• After reviewing everything, select Start Reconciliation.
• When you’re ready, select Finish Now.
• If the account isn’t balanced, select the Add Adjusting Entry link.

This makes the account balance by creating an expense transaction if the difference is negative and an income transaction if it is positive.

Conclusion

QuickBooks reconciliation discrepancies can be tricky, but users can resolve this with the step-by-step guide to fix and adjust these discrepancies mentioned in this article. Whether it’s due to timing differences, incorrect entries, missing transactions, or any other cause, the QuickBooks reconciliation discrepancy can be fixed. If you can’t find the cause, creating an adjusting entry can help balance your accounts just be sure to use this option carefully and consult your accountant if needed. By staying organized and proactive, you can keep your financial records accurate and avoid future issues.

Frequently Asked Questions (FAQ’s)