A Simple Guide to Bank Reconciliation Statement in Malaysia

A bank reconciliation statement is a document that compares the balance shown on a bank statement with the balance recorded in accounting records, then explains the differences between them.

Bank balances look straightforward until they suddenly are not. Charges appear without warning, deposits show up days later, and records quietly drift apart. When this happens, many people assume something is wrong with the bank. 

In reality, the difference usually comes from timing and record-keeping.

So, let the leading accounting firm in Malaysia explain what a bank reconciliation statement is, why differences happen, how the process works step by step, and how to deal with common issues that arise from it.

What Is a Bank Reconciliation Statement?

A bank reconciliation statement explains why the balance you see in your bank account is different from the balance in your records, at a specific date.

It acts as a simple checking exercise. You are comparing two numbers:

• The balance shown on your bank statement
• The balance shown in your own records, spreadsheet, or accounting system

When they do not match, the bank reconciliation statement explains why.

One common misunderstanding is worth clearing up early, this statement is not prepared by the bank. 

Banks such as Maybank, CIMB, or Public Bank only give you the bank statement. The reconciliation is done by you, your accounts staff, or your accountant to double-check that your cash numbers make sense.

Why Do Bank Balances and Records Rarely Match?

Differences usually happen because banks and accounting records recognise transactions at different times.

This is normal and expected. Common causes include:

• Deposits in transit
  Money received and recorded internally but not yet processed by the bank.

   

• Outstanding payments
  Payments issued or recorded but not yet cleared by the bank.

   

• Bank charges and fees
  Service charges, transaction fees, or penalties deducted directly by the bank.

   

• Interest or adjustments
  Interest credited or debited without prior notice.

   

• Recording delays or mistakes
  Transactions entered late, duplicated, or recorded under the wrong date.

These items explain why a mismatch does not automatically mean something is wrong. The reconciliation statement exists to document and resolve these differences.

A simple example:

Imagine you check your business account with Hong Leong Bank on 31 March.

• Your bank statement shows a balance of RM48,500
• Your records show a balance of RM50,000

At first glance, it looks like RM1,500 has disappeared.

After preparing a bank reconciliation statement, you find two things:

• RM2,000 was received from a customer and already recorded, but the bank has not cleared it yet.
• RM500 was deducted by the bank for charges and direct debit fees, but this has not been recorded.

Once these are taken into account, both balances arrive at the same final figure. No money was missing. The difference was caused by timing and recording, not an actual loss.

How Does a Bank Reconciliation Statement Work: Step by Step?

A bank reconciliation statement works by adjusting both your bank balance and your recorded balance until they meet at the same final figure.

While it may sound technical at first, the process itself is very structured. It follows the same logic whether you are using a simple excel spreadsheet, an accounting software, or working with an accountant.

Step 1: Start with the bank statement balance

Begin with the closing balance shown on your bank statement for a specific date.

This is the balance provided by the bank as of that day. It reflects what the bank has processed and cleared, not necessarily what you have already recorded internally.

It is important to always use the same cut-off date for both sides. Mixing dates is one of the most common reasons reconciliations become confusing.

Step 2: Adjust the bank balance

Next, update the bank balance for timing differences that the bank has not processed yet.

At this stage, you are not changing your records. You are adjusting the bank balance on paper to reflect reality.

Common adjustments include:

• Adding deposits that you have received and recorded, but which the bank has not yet cleared
• Deducting payments that you have issued or recorded, but which have not yet been deducted by the bank

After these adjustments, you arrive at an “adjusted bank balance.” This figure represents what the bank balance should be once all pending items are processed.

Step 3: Adjust the accounting records

Now, update your records for items the bank has processed but you have not yet recorded.

These are usually transactions that happen automatically at the bank level.

Examples include:

• Bank service charges
• Interest credited or deducted
• Direct debits or standing instructions

These items must be recorded in your books so that your records reflect what has already happened at the bank.

Once these entries are made, you arrive at an “adjusted book balance.”

Step 4: Compare the adjusted balances

The final step is to compare the adjusted bank balance with the adjusted book balance.

If the reconciliation has been done correctly, both figures should now be the same. This confirms that:

• All real transactions are accounted for
• Timing differences are properly identified
• The cash balance is accurate as of the chosen date

If the two balances still do not match, it usually means there is a missing entry, a duplicate record, a wrong amount, or a date issue that needs further checking.

Read more: How to Prepare a Cash Flow Statement: A Beginner’s Guide

What Are Common Items Found in a Bank Reconciliation Statement?

Most reconciliation statements include the same small group of recurring items.

These items are not errors. They are timing differences that reconciliation makes visible.

What Should You Do When the Balances Still Do Not Match?

Persistent differences usually point to missing entries, duplicates, or incorrect dates.

When balances refuse to match, review the following areas in order:

• Check transaction dates rather than amounts only
• Look for duplicated entries or reversed transactions
• Verify that opening balances were carried forward correctly
• Confirm arithmetic and totals
• Review manual entries made near period end

Professionals often resolve most mismatches by carefully reviewing timing rather than searching for large mistakes.

How Often Should a Bank Reconciliation Statement Be Prepared?

Reconciliation frequency depends on transaction volume and risk, not size or formality.

More frequent reconciliation reduces the effort required and limits the risk of unnoticed issues.

Is Bank Reconciliation Still Needed If You Use Accounting Software?

Yes. Accounting software makes reconciliation easier, but it does not remove the need for it.

Automation helps match transactions quickly, especially when bank feeds are connected. However, software only works based on the information it receives and the rules set by users. It does not understand context or intent.

In practice, accounting software cannot always:

• Identify incorrect classifications, such as a payment posted to the wrong expense category
• Detect duplicates created by manual entries or overrides
• Clearly explain timing differences between when money moves and when it is recorded

Because of this, reconciliation still acts as a verification step. It confirms that the system is recording cash movements correctly and that nothing unusual has slipped through.

Tools You Can Use for Bank Reconciliation Statements

There are several common tools people use to prepare bank reconciliation statements, depending on complexity and comfort level.

Spreadsheets (Excel or Google Sheets)

Spreadsheets remain one of the most widely used tools for reconciliation.

They are especially common when transaction volume is low or moderate. A simple spreadsheet allows you to:

• List bank statement transactions
• List recorded transactions
• Mark cleared and uncleared items
• Calculate adjusted balances manually

Many people prefer spreadsheets because they offer full visibility and control, even though they require more discipline to maintain accuracy.

Accounting Software

Accounting systems automate matching, but still rely on review and confirmation.

Popular tools commonly used include Xero, QuickBooks, SQL Accounting, and AutoCount.

These systems can:

• Pull bank transactions directly through bank feeds
• Suggest matches between bank entries and recorded transactions
• Highlight unmatched or suspicious items

However, users still need to review exceptions, confirm matches, and understand why certain items remain unreconciled. 

To understand more, check out our top 10 accounting software in Malaysia to find what suits you the best!

Accountants or Accounting Firms

Many people rely on accountants (like us!) to prepare or review reconciliations.

This is common when:

• Transaction volume is high
• Multiple bank accounts are involved
• Strong internal controls are required

Even in these cases, the reconciliation process follows the same logic. The difference is who performs and reviews the work, not how it works. 

Conclusion: Bank Reconciliation Statement Explained Simply

A bank reconciliation statement is not paperwork for accountants only. It is a great way to answer a very common question people ask: why does the money in the bank not match what I thought I had? 

When this question is not answered clearly, small issues can quietly turn into bigger headaches later.

But if all of this feels confusing, time-consuming, or risky to get wrong, Accounting.my can help. We assist businesses and individuals with bank reconciliation statements, from checking Maybank or CIMB statements to cleaning up records and explaining differences clearly. 

Instead of guessing or worrying whether the numbers are right, you get clarity, confidence, and peace of mind over your cash, the way it should be.