Reconciliation Break in the Suspense Account
At month-end you are reconciling the branch's suspense account. The general ledger suspense balance is PKR 1,275,400 debit. The supporting schedule shows: an ATM cash-load difference of PKR 210,000 (debit), an inter-branch transfer not yet matched of PKR 640,000 (debit), a cheque-clearing return of PKR 150,000 (credit), a standing-instruction utility payment posted twice of PKR 85,400 (credit), and an unidentified difference of PKR 360,000. The schedule totals do not agree with the ledger. The ATM custodian says the PKR 210,000 was 'probably a jam' and has no log. The inter-branch item has been outstanding for 47 days.
1. Reconstruct the schedule, find the unidentified difference, and state whether the ledger or the schedule is more likely to be wrong.
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Net the schedule. Debits: 210,000 + 640,000 = 850,000. Credits: 150,000 + 85,400 = 235,400. Net schedule = 850,000 − 235,400 = PKR 614,600 debit. The ledger shows PKR 1,275,400 debit. The gap is 1,275,400 − 614,600 = PKR 660,800, which does not equal the stated 'unidentified difference' of PKR 360,000. So the schedule is internally inconsistent by 660,800 − 360,000 = PKR 300,800.
Which is wrong? The ledger is the book of record and is posted from vouchers; the schedule is a manually assembled list. An internal inconsistency of PKR 300,800 inside the schedule points first to a schedule error - a missing line, a transposition, or a misclassified debit/credit. The correct approach is to rebuild the schedule from source vouchers rather than to force the ledger to match the schedule.
Steps. (1) List every suspense posting for the month from the journal. (2) Agree each to a voucher. (3) Recompute the net. (4) Only then investigate genuine differences.
2. What is your treatment of the ATM difference and the 47-day-old inter-branch item? Give the accounting and control actions.
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ATM difference of PKR 210,000. 'Probably a jam' with no log is not acceptable evidence. Obtain the ATM electronic journal, the cassette-load and replenishment records, and the CCTV for the load. If the cash was loaded but not dispensed, the difference is a cash-in-transit item and should be cleared once the physical count and journal agree. If it cannot be explained, it is a genuine shortage and must be escalated as a cash difference with the custodian's written explanation, not left in suspense indefinitely.
Inter-branch item of PKR 640,000 at 47 days. This is an aged reconciling item and should be escalated. Confirm with the counterpart branch whether the mirror entry exists. If it does, clear both legs; if it does not, the sending branch has an unauthorised or unposted transfer and the amount must be investigated and, if necessary, provided for or recovered. Aged suspense items are a classic concealment vehicle and must be reported to the branch manager and internal audit.
Accounting. Do not write off or net items to make the account agree. Each difference needs a documented clearing entry with supporting evidence and approval. The suspense account should trend toward zero at each month-end.