Bank Reconciliation: Why Hong Kong Businesses Should Do It Monthly

What it is. At the end of each month, you match every entry in your ledger's bank account with the bank statement. Whatever does not match is investigated and listed.

Steps

1. Start with the closing balance on the bank statement.
2. Add deposits recorded in your books but not yet credited by the bank.
3. Subtract cheques or payments recorded in your books but not yet cleared.
4. The result should equal the ledger balance. If not, look for missed bank charges, interest, wrong amounts, duplicates or entries in the wrong period.
5. Record the missing items (charges, interest) in the ledger and keep the signed or dated reconciliation as evidence.

Example (illustration only): bank statement HK$100,000 + deposits in transit HK$5,000 - uncleared cheques HK$3,000 = ledger balance HK$102,000.

Why monthly

• The law requires records that show financial position with reasonable accuracy at any time (s.373), and the bank balance is the easiest figure to check.
• It exposes unauthorised payments and duplicate supplier payments while the bank can still help.
• It makes the auditor's work faster, because the cash balance is already agreed.

Multi-currency accounts. Reconcile each currency account in its own currency first, then check the Hong Kong dollar equivalent.

Reconcile credit card and payment-platform statements the same way.