Adjusting Trust Reconciliations

Modified on Thu, 17 Apr at 1:02 PM

In this article:

Why Are Adjustments Made to a Bank Reconciliation?
How Adjustments Affect Your Next Bank Reconciliation
Simple Example Scenario

As you process a trust bank reconciliation in Actionstep, you can make adjustments to that bank reconciliation. These allow you to finalize your reconciliation accurately. These adjustments will also affect how your next bank reconciliation will be handled. This article explains why adjustments are made to bank reconciliations and why they affect the opening balance of your next bank reconciliation.

To learn about trust bank reconciliations generally, see Reconciling a Trust Account.

Why Are Adjustments Made to a Bank Reconciliation?

Essentially, reconciliations allow you account for a transaction that is in Actionstep but is not included in the bank reconciliation.

This can happen to any trust accounting user but Actionstep users in Australia experience it frequently because of Law Society rules: Because a bank reconciliation can only show transactions that were entered into Actionstep within the bank reconciliation's time period, any transactions that were entered after the bank reconciliation closing date but backdated into the bank reconciliation, do not appear.

When you create an adjustment, you are creating a temporary record of that transaction. The transaction exists in Actionstep already, just not in the bank reconciliation. Once you have checked the transaction is entered correctly, you can create an adjustment.

NOTE: Before you create an adjustment to a trust reconciliation, make sure that the transaction is entered into Actionstep. If not, enter it then refresh your trust reconciliation. If the transaction is still not included, consider creating an adjustment for it.

How Adjustments Affect Your Next Bank Reconciliation

When you start your next bank reconciliation, any transactions you made adjustments for last time will show up again as unreconciled. For example, if you had five adjustments last month, those same five will appear in this month’s reconciliation. If you don’t adjust the opening balance of the new reconciliation to include those previous adjustments, the numbers won’t match, and you won’t be able to reconcile properly.

Simple Example Scenario

Let’s say a firm starts trading on January 1 with no previous transactions, and for the purposes of this simplified example, only deposits are made.

January:

The firm makes 10 deposits of $1,000.
The last one was entered on February 1 but dated January 30.
While reconciling January, the firm notices they’re $1,000 short.
They confirm the deposit is in Actionstep, so they add a $1,000 adjustment.
January is now reconciled, showing a closing balance of $10,000.

February–Without adjusting the opening balance:

February has 10 more deposits of $1,000, and they are all entered correctly.
The opening balance used is $10,000 (from January).
But the bank balance is actually $20,000.
Now there are 11 transactions: 10 from February and the one January deposit that wasn’t in the January bank statement.
After reconciling, the system shows $21,000, which is $1,000 too much.
This happens because the opening balance wasn't adjusted for that $1,000 January adjustment.

The Fix – Adjusting the opening balance:

The correct opening balance for February should be $9,000 (January’s $10,000 minus the $1,000 adjustment).
Now with 11 deposits of $1,000, the total reconciled amount becomes $20,000 — matching the bank.
Reconciliation is successful.

To summarize, always adjust the opening balance of the new reconciliation by any adjustments made in the previous one — otherwise, the numbers won’t line up.