General Ledger Reconciliation: A Monthly Checklist for Nonprofits

A general ledger reconciliation proves that each balance on your balance sheet is supported by something outside the ledger: a bank statement, a subledger, a grant agreement, a schedule. When reconciliations are done every month, financial statements can be trusted, problems surface while they are still small, and the audit starts from solid ground.

When they slip, everything downstream gets harder. This checklist covers the accounts most nonprofits need to reconcile each month, what to compare them to, and what good looks like.

The Basic Method

For every balance sheet account:

Pull the general ledger balance at month end.
Compare it to independent support (statement, subledger, or schedule).
Explain every difference. Timing items (outstanding checks, deposits in transit) are fine if they are identified and clear the following month.
Correct errors with a documented journal entry.
Prepare, review, and sign off. The preparer and the reviewer should be different people, and both should date their sign-off.

The Monthly Checklist

Account	Reconcile to	Watch for
Operating and savings bank accounts	Bank statements	Stale outstanding checks, unrecorded fees, deposits recorded to the wrong account
Payment platforms (online giving, card processors)	Platform payout reports	Fees netted from deposits, timing between gift date and payout
Grants receivable	Award agreements and billing records	Billed vs. unbilled amounts, reimbursement requests not yet submitted
Pledges and contributions receivable	Pledge schedule	Multi-year pledges needing discounting, uncollectible pledges
Prepaid expenses	Amortization schedule	Annual contracts not being expensed monthly
Fixed assets and depreciation	Fixed asset register	Purchases expensed that should be capitalized, missing disposals
Accounts payable	AP aging	Invoices received but not entered, duplicate vendors
Accrued payroll and benefits	Payroll registers	Wages earned but not yet paid at month end, PTO accruals
Deferred revenue	Contracts and event schedules	Exchange revenue recognized before it is earned
Net assets with donor restrictions	Restricted fund schedule	Releases recorded without support, restrictions tracked outside the ledger

Nonprofit-Specific Points

Restricted net assets. Keep a schedule of every restricted gift and grant with its purpose or time restriction, the amount released to date, and the remaining balance. The schedule total should equal the ledger. If it doesn't, the board's picture of available resources is wrong.

Grant receivables and reimbursements. Cost-reimbursement grants create receivables as soon as allowable costs are incurred. Reconcile spending to billings every month so reimbursement requests go out on time and cash doesn't get stuck.

Federal awards. If you receive federal funds directly or through a pass-through, keep your SEFA (Schedule of Expenditures of Federal Awards) tied to the ledger monthly. It makes Single Audit readiness much easier. See the new $1 million Single Audit threshold.

Interfund and allocation entries. Shared costs allocated across programs or grants should follow a documented method and be reviewed each month.

Timing: When Reconciliations Should Be Done

A practical target for most small and mid-sized nonprofits:

Bank and payment platforms: within 5 business days of month end
Remaining balance sheet accounts: within 10 business days
Review and sign-off: before financials go to the finance committee

If reconciliations regularly run longer, the cause is usually one of three things: too few people, undocumented procedures, or systems that don't talk to each other. Each is fixable.

Common Problems We See

Reconciliations that "tie" because a plug was booked to make them tie
Bank reconciliations with outstanding items that are many months old
Restricted net asset balances that nobody can explain
One person preparing and approving everything
Reconciliations stored in personal folders instead of a shared, dated location

Make It Repeatable

Reconciliations work when the process is written down. Our free nonprofit finance SOP library includes step-by-step procedures, including bank reconciliations, prepaids and amortization, and grant reconciliation and reporting.

When You Need Help

If reconciliations are months behind, or the person who did them just left, Harbor View can help. Our interim accounting and finance staffing covers the seat and catches up the backlog, and our nonprofit accounting and CFO services keep the monthly close on schedule for Baltimore and Maryland nonprofits. Talk to our team.