Bank reconciliations should be performed by an authorized signatory on the account.

• A. True
• B. By a bank officer
• C. By an external auditor
• D. False

Answer: (D)

Separating duties and independent verification are essential for accurate cash control. The person reconciling the bank statement should not be the same individual who handles cash or has signing authority, because the reconciliation process is meant to independently verify that the company’s books match the bank’s records and to catch any errors, fraud, or timing differences.

Therefore, having an authorized signatory perform bank reconciliations isn’t appropriate. A signatory can influence cash disbursements, so mixing duties reduces the chance of unbiased detection of discrepancies. In practice, someone from accounting or treasury without signing authority typically prepares the reconciliation, and a supervisor reviews and approves it. External auditors may test reconciliations as part of an audit, but they aren’t the routine preparer.