Bank errors refer to the mistakes made by the bank while recording a company’s bank balance. These mistakes can include the bank recording an incorrect amount, omitting an amount, or recording an irrelevant amount that does not belong on a company’s bank statement. These errors are relatively infrequent in nature and can either increase or decrease the balance per bank. The rectification of these errors has no effect on the balance per books as this error was not made by the company but the bank. These errors are usually highlighted by a bank reconciliation statement.
Examples of Bank Errors
- A deposit mistakenly credited to the wrong person’s account;
- A payment mistakenly debited from a wrong person’s account;
- Wrong amount of bank charges deducted from an account holder’s account balance;
As soon as you discover an error in your bank statement then you should notify your bank immediately about the error. First, you should notify your bank manager about the error by making a call to him and then you should follow it up with a written notice that contains each and every detail about the error. The sooner you notify the management of your bank regarding the error, the more easily the error can be traced and corrected. Typically, the form you fill for opening a bank account contains all the bank’s rules for reporting errors to the bank’s management. If the error involves an ATM withdrawal or deposit or other electronic funds transfer, then you usually have 60 days from the date of your bank statement containing an error to report that error to the bank.
Error in your Favor
If your bank makes an error that is in your favor then you may be tempted to not report that error. Just because your bank has mistakenly deposited an extra $100 or $200 in your bank account doesn’t mean that money is legally yours. Even, if you don’t report the error, the bank conducts audits of its bank accounts on a regular basis so that these types of errors can be identified. Once, these types of errors are identified then banks take the additional money out of the account. You should report errors in the bank statement to the bank irrespective of whether it is in your favor or not.
Advice for Reporting Errors
Keep a record of every person you speak to in connection with the bank error. Make copies of all the supporting evidences before you hand over them to the bank’s management.