Three-way reconciliation difference finder

The three balances

A three-way reconciliation shows that three figures agree on the statement date:

1. The adjusted bank balance: the statement's ending balance, plus deposits in transit, minus outstanding checks.
2. The trust ledger balance: your checkbook or journal for the trust account, on the same date.
3. The total of the client ledgers: every client's or matter's balance, added up.

If all three agree and no client ledger is negative, the account reconciles. If not, the size of each difference is the best clue to its cause, and that's what this page uses.

What the finder looks for

• A difference equal to one outstanding item. Usually a check that cleared but is still on the outstanding list, so it's subtracted twice. It can also be a deposit the bank already credited that is still listed in transit.
• A difference equal to one client's balance. That client is on one side but not the other, or listed twice.
• A difference of exactly twice an amount. Something entered with the wrong sign: a deposit recorded as a disbursement, or the reverse.
• A difference that divides by 9. The classic sign of two digits swapped while typing.
• Negative client ledgers and duplicate names. A negative balance means one client's money paid for another's matter. Most rules treat that as a violation even when the totals tie.

When nothing matches, the usual causes are a bank fee, interest or a returned deposit not yet in the ledger, an item outstanding from last month, or a ledger entry posted without a client. The guide when a three-way reconciliation doesn't balance walks through each one.

Doing it every month

The finder works from totals you already have. Tiesheet starts one step earlier: drop the bank statement export and the trust ledger, and it matches them line by line, lists the outstanding checks and deposits in transit, totals every client ledger, flags negative balances and prints the three-way report. Reconciling and checking are free for any number of transactions. Pro ($12 for 7 days, $24/month or $199/year) lists every client ledger in the report and adds the Excel workbook, ledger cards and month-to-month carry-forward. See pricing.

General information, not legal or accounting advice. Your state's trust accounting rules decide how and how often you reconcile; the responsible lawyer or broker should review every reconciliation.