Skip to content
Visit Website
  • There are no suggestions because the search field is empty.

What are transaction errors and how do they impact reconciliation?

Transaction errors are mistakes that are made as part of your practice which result in reconciliation discrepancies. These mistakes can be the result of an internal error or a bank error.

Errors play a role in line 1 of the reconciliation formula. More specifically, an withrawal made in error, increases the Reconciled Balance (the amount you actually have in your bank, after adjustments) in line 1 of the reconciliation formula. This is on the basis of the assumption that the error will be corrected in due course, which would result in increasing the balance of the bank account. On the other hand, a deposit made in error, reduces the Reconciled Balance. This is on the basis of the assumption that the error will be corrected in due course, which would result in reducing the balance of the bank. 

Internal Errors vs. Bank Errors

Internal errors are transaction errors that are caused by the law firm staff. An example of an internal error is a cheque that is drawn in the amount of $1,000, when it was meant to be drawn in the amount of $100. Bank errors on the other hand are errors that are caused by the bank. An example of a bank errorr are banking charges that are in error posted to the trust account by the bank.

Internal errors and bank errors are treated similarly in Nojumi. Their only difference is the party responsible for the error. We distinguish between bank errors and internal errors to allow you to see what errors are caused by the bank and which are caused by you and your staff.

Errors that are connected to a matter

An error, whether an internal error or a bank error, may or may not be connected to a matter. When an error is connected to a matter, it will be reflected in the balance of the matter in the trust listing report. When a withdrawal that is connected to a matter is marked as an error, on the trust listing report, the matter is shown to have a balance equal to the balance on the matter transactions page plus the amount of the error. On the other hand, when a deposit that is connected to a matter is marked as an error, on the trust listing report, the matter is shown to have a balance equal to the balance on the matter transactions page, less the amount of the error. In other words, the trust listing report shows how much a client is supposed to have in the absence of errors.