Introduction
Bank reconciliation are instituted processes that
enable organizations both private and government agencies establish evidence on
transactions that are contained in the organization’s books but not the
corresponding bank account statements and vice versa for the period under
consideration. In doing so, if there are differences (which there often are),
the job of the Accounting Officer in-charge of reconciliation would be to
logically justify the difference between the bank balance as contained in the
bank statement and the cash book balance contained in the organization’s books
for the period in question. Banking reconciliation is analytical in nature but
is supported by accounting theories such as “matching conceptâ€. By
definition the matching principle is premised on accrual accounting where
income and expenditure are matched within the period they occur. As part of the
financial reporting obligations of businesses in many countries, modern day
accounting theories attempt to put theories in the context of conceptual
framework of Accounting rules and principles. Because policy decisions have to
be made by top executives or business managers, the financial reporting that
comes from bank reconciliation provides vital information that has short and
long term consequences to the organization and the business environment as a
whole. For this policy decisions to be effective, the information required by
users at various stages of the bank reconciliation process has to show that the
quality of information has to be relevant, the results have to be reliably
accurate, and the standard rules and regulations that guides the country of
operation should be comparable and consistent.
This
researcher was motivated by the seeming indifference and in some cases outright
apathy of many government agencies in Nigeria towards instituting bank
reconciliation in their Accounting & Finance units. These attitudes by
government agencies are often common in Government parastatals and even small
scale businesses, especially sole-proprietors and partnerships. Many government
agencies do not have qualified Accountants others who have them find out too
late that many have little or no grasp in the theoretical and practical aspects
of bank reconciliation. Sequel to that, many businesses have lost billions of
naira through fraud perpetuated by bank officials and Accounting Staff either
independently or collaboratively. Many of these fraudulent misappropriations go
undetected, unreported or unproven at best. Where fraud is not the intent,
businesses may lose money from not detecting wrong entries or credit omissions
in their business bank accounts. In the longer run many businesses had gone
under for relying on faulty information in making decisions, especially
businesses with negative balances on their bank accounts as a possible result
of an existing loan facility.
The
broad objective of this research work is to evaluate bank reconciliation in
Government. The specific objectives of this paper includes the following;
1.
To
examine the effect of bank reconciliation on the performance of
government establishments in Nigeria
2.
To identify the challenges of bank
reconciliation statement in various government agencies in Nigeria.
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