Perform a Trust Reconciliation

A Trust Reconciliation is one of the most important reports in trust account management and should be completed at the end of every month. Our Three-Way Trust Reconciliation compares your internal trust accounting records to the activity in your trust bank account and your clients' individual trust account balances. Completing this process each month ensures that your financial records are accurate, complete, and that any discrepancies are identified and resolved.

During the Trust Reconciliation process, you will match or clear the transactions in your trust accounting records by comparing them to the transactions listed on your bank statement. This provides an independent accounting of all activity flowing into and out of your trust bank account. In a properly maintained trust account, these records should match exactly.

Before you begin, ensure the following:

To complete your monthly Trust Reconciliation, follow the steps below:

1. Click on the Accounting tab, then click Account Ledger.

2. Click on the name of the Trust Account you want to reconcile from the drop down list of available accounts.

3. Click Create Reconciliation to start your Trust Reconciliation.

4. Ensure the correct Bank Account is selected. Enter the Ending Date and Ending Balance from your most recent bank statement.

5. On the Withdrawals tab, review all cleared transactions on your bank statement and compare them one by one with the transactions listed here. Click the checkbox for each cleared and verified transaction.

Note: As you select cleared transactions for Withdrawals, the Cleared Total Withdrawals amount will appear at the bottom. This total should match the cleared withdrawals listed on your bank statement.

Pro Tip: If you want to review a certain transaction, you can click on any blue text to go directly to the original transaction to review it further (e.g. Payment ID, Contact, Matter, Payee, etc.).

6. On the Deposits tab, review all cleared transactions on your bank statement and compare them one by one with the transactions listed here. Click the checkbox for each cleared and verified transaction.

Note: As you select cleared transactions for Deposits, the Cleared Total Deposits amount will appear at the bottom. This total should match the cleared deposits listed on your bank statement.

7. Confirm the Difference shown in the Reconciliation Summary equals zero.

Note: When the Difference is zero, a Ready to Reconcile indicator bar will appear in green.

8. Click Save and Finalize when you're ready to complete the reconciliation.

Pro Tip: If you would like to save your progress and complete the reconciliation at a later time, choose Save for Later. You will be able to access any in-progress reconciliations so these can be updated and finalized.

Note: You cannot begin a new reconciliation until the one that is still in progress is finalized.

If the Difference is not zero, your reconciliation is incomplete.

You've verified the Withdrawals and Deposits from your bank statement against your trust accounting transaction records within PracticePanther and isolated any uncleared transactions.

There are a few possible reasons your total cleared Withdrawals and Deposits in PracticePanther do not equal the total cleared withdrawals and deposits on your bank statement:

1. Uncleared Deposits

Some deposits may be recorded in PracticePanther but haven't yet cleared the bank by month-end. This often happens with deposits made in the last few days of the month and the bank needs one to three business days to process them.

Solution: These deposits should appear on the next month's bank statement. Do not clear them during the current reconciliation - they will remain as uncleared items.

2. Uncleared Withdrawals

Similar to deposits, some withdrawals may be entered in PracticePanther but haven't cleared the bank account yet. For example, a mailed check may not be cashed due to delays or issues with the recipient.

Solution: Carry these outstanding withdrawals forward into the next reconciliation. Once the withdrawal appears on the bank statement, you can mark the transaction as cleared.

3. Missing Transactions in PracticePanther

You may find a transaction on the bank statement that is not recorded in PracticePanther.

Solution: Record the missing transaction(s) in PracticePanther to match the bank records.

4. Erroneous Entries in PracticePanther

You might have recorded a transaction in PracticePanther that does not appear on the bank statements.

Solution: Contact your bank to investigate. If the entry is legitimate but pending, calculate the Adjusted Ending Balance by adding uncleared deposits and subtracting uncleared withdrawals from the ending bank statement balance.

5. Payment is missing from the Reconciliation list

You have confirmed the payment has been entered in PracticePanther, has the correct date and should be appearing on the list to be reconciled.

Solution: View the individual payment details to confirm it has been posted to PantherAccounting Plus. This posting process occurs automatically upon creation of the payment but in the rare instance where there could be an issue you can view the posted status of a payment and can retry the posting as needed. Once posted, the payment will be available once you resume the reconciliation process.
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Your adjusted ending balance should now match the month-end balance in your trust accounting records. If the balances still don't match, revisit each step, carefully reviewing for any discrepancies.