The formula for standard deviation is: 

      

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Where:

            δ = standard deviation                    ΣX² = sum of squared of X scores              

            N = number of case                         ΣX = sum of test

a) Standard deviation for the frequency who answer Yes

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b) Standard deviation for the frequency who answer No

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The formula for Z – test is:

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Where:

            X1 =   mean of the first sample

            X2 = mean of the second sample                                                                    

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39

δ   = standard deviation

            n1 = number of item in the first sample

            n2 = number of item in the second sample

          The researchers use the 5% significance level for the test. Based on the table of critical

values of Z, the tabular value of Z for two-tailed test at 5% significance level is  1.96.

Substituting the given values in the formula:

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Interpretation:

            The null hypothesis is rejected because the z-value is greater than the tabular value, 1.96.

The formula for t- test is:

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Where:

     X1 =   mean of the first sample                     S1 = standard deviation of the first sample

    X2 = mean of the second sample                  S2 = standard deviation of the second sample

     n1 = number of item in the first sample       n2 = number of item in the second sample

                 

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The degree of freedom for two samples is computed below.

df = n1 + n2 – 2 = 5 + 5 – 2 = 8

            The researchers use the 5% significance level for the test. Based on the students t-

distribution table, the tabular value of the test at 5% significance level and 8 df is 1.860.
Substituting the given values in the formula:

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Interpretation: The null hypothesis is rejected because the t-value is greater than the tabular

value 1.860.

            There is a significant relationship between the respondents’ variable and the reconciling

items, accounting policy, presentation of report and importance of information.

The researchers also use correlation analysis to test the hypothesis. Correlation analysis is

concerned with the relationship in the changes of two or more variables.

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 41

Error! Filename not specified.            The formula for computing the correlation analysis is

presented below:

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 Where:

       r = correlation coefficient                        ΣXY = sum of the product x and y

     N = number of case                                    ΣX2 = sum of the squared of X score

   ΣX= sum of X score                                                 ΣY2 = sum of the squared of Y score

   ΣY = sum of Y score

            A correlation coefficient distribution take (Table 2) of the respondents is also provided.

Table 2

Correlation Coefficient Distribution

  Frequency      
Yes (X) No (Y)
XY X2 Y2
Question
           

1 6 9 54 36 81
           

2 13 2 26 169 4
           

3 15 0 0 225 0
           
 4 15 0 0 225 0
           

5 15 0 0 225 0
           

Total Σx = 64 Σy = 11 Σxy = 80 Σx2 = 880 Σy2 = 85

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42

Substituting the given values to the formula:

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-1

A diagram showing the different types or degrees of correlation between the variables is also

provided below.

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43

Interpretation: The correlation is negative since the value false on -1. Since all the points on the

diagram lie on the straight-line, we can conclude that there is a perfect negative correlation

between the two variables where as one variable increases, the other variables decreases.

            According to the test, reconciling items, accounting policy, presentation of report and

importance of information is dependent on the respondent’s variable.

 
  

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CHAPTER VI

CONCLUSION AND RECOMMENDATION

Conclusion

            Reconciliation or verification of financial transaction is the key element that ensures

financial reports are correct.

            However reliability of the information can be affected by certain factors like availability

of documents, knowledge and personality of the individual to whom authority of reconciliation

has been delegated. Therefore, the reconciliation is needed from time to time so that all the error

entry made is treated immediately.

            Every transaction undergone by an entity must be supported by documents like vouchers,

ledgers, bank statements, check and others to easily notice what the items to be reconciled are.

            Knowledge of the person doing the reconciliation process can also affect the reliability of

the information because he should know how to treat reconciling items the way it should be, and

know what accounts created by the entity in that particular period. Also, he should know how to

treat and relate those accounts according to accounting policy of the entity.

            Personality is also a factor, because the individual to whom the authority of reconciliation

has been delegated is expected to deliver information that is free from bias and other hidden

agendas. The credibility of the person doing the reconciliation process

should maintain a good reputation and integrity to be able to convince others that the

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45

reports are valid.

Recommendations
            High–quality accounting control means knowing what’s in your financial statements.

Reconciliation or verification of transaction on a regular basis helps to identify errors before

reporting period in order to report the true amount of cash.

            1. Read your company accounting policy for the account. The first step in reconciling

your financial statement is to know what should be in it. You can’t verify that the balance is

correct unless you know the rules. Read your company accounting policy manual and clarify any

issues with your supervisor/manager.

            2. Gather supporting documents. This will differ on the type of account you are

reconciling. They could be copies of invoices, agreement or contacts, statements from outside

parties (like bank statements) or copies of supporting reports from other systems-like accounts

receivable.

            3. Ask yourself the investigative questions about items in the account- what are they?

When they were created? How do they relate to the company’s accounting policies? Why are

they in this account balance?

            4. Document your explanations and conclusions clearly completely.

            5. The business manager or owner may delegate the reviewer process; however, he

should ensure that the individual reviewing the reconciliations is not the same individual who is

performing the verification.

 
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CHAPTER VII

RESEARCH PROPOSAL

            The researchers propose to the firms or bank the continuous use of reconciliation in

preparing financial statements for you to have reliable, relevant, comparable and understandable

information. Actually, IASB even recommend more entities to use a single or uniform principle

in reconciling their financial statements.

            The one who would do the reconciliation of one’s company or business should not one of

your employees to avoid the manipulation of data. So that, the report being presented has a true

value and is validated.

            According to accounting policy, there must be a consistency of method being used in

order for the report to be comparable to the previous one.

            Reconciliation should still include in the financial statement because this approach are

useful in discovering possible discrepancies that occurs during a transaction.

            Without bank reconciliation, you also expose yourself to risk. People may be stealing

from your account. If you never look through each transaction, you’ll never know about it. If you

don’t notify the bank quickly enough, you may be out of luck.
 

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47

BIBLIOGRAPHY

Books

Martyn Shuttleworth.,Defining Research Problem  (2008).

Justin Pritchard., Why Bank Reconciliation Is Important

Compilation of Research Study, Kolehiyo ng Subic

George Garcia, Cynthia Guerrero de Leon and Cristobal Pagoso.,Fundamental of Statistics for

College,Sinangtala Publishers
 

Slide Show Presentation

Erwin S. Manuel.,Razzel Marie L. Masinda., Descriptive Method

Electronic Sources

http://www.experiment-resources.com/defining-a-research-problem.html#ixzz0TioFnhGk

http://www.aect.org/edtech/ed1/41/41-01.html

 
 

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48

September 23, 2009

Anabelle N. Ng

Branch Manager

Zambank, Barreto Branch

Subic, Zambales

MADAM:

Greetings!

We the students of Kolehiyo ng Subic hereby asked permission in your good office to conduct
our research and survey interview for the partial fulfillment of the requirements for the Degree of
Bachelor of Science in Business Administration and Bachelor of Science in Accountancy. The
researchers would consist of six (6) members names are stated below:

 
                        Geraldine Rosimo                               Cristina Dimalanta

                        Jherty Ann Lorenzo                            Bryan Baleros

                        Rosalie Macaraeg                                Noel Bagares

This study will benefit the other students which regard to this subject Financial Management 3
and could be used as a reference and guide in making other research easy.

Hope for your kind consideration.

Very truly yours,

The Researchers

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49

Survey Questionnaire

Reconciliation on Financial Statements

  

Name of Respondents:                                                   Position:

Age:

Direction: Please support your answer with the question Why below after answering the

following:

1) Does reconciliation of financial statement is time consuming?      (Yes)     (No)

2) Do you reconcile your financial statements regularly?                   (Yes)     (No)

3) Do you use the accounting policy when reconciling your financial statements?

                                                                                                             (Yes)      (No)

4) Is there any specific process you usually follow when reconciling? (Yes)    (No)

 
 

5) Is it really necessary in preparing a financial statement?    (Yes)     (No)

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Executive Summary

            Banks and other business firm prepare their monthly or annual report. In their report, the

reconciliation process is included whereas the researchers are focuses. The researchers gather

information how these bank or business firm treat or apply the accounting standards and policy

in reconciling their financial statements.

            Through the gathered information based on survey, interviews, observation and data

analysis, he/she concluded that reconciliation process is merely an essential element to the

preparation of financial statement. It is a key element to have reliable, relevant, comparable and

useful information.  The results in the statistical treatment shows the significant relationship

between respondents variable and reconciling items, accounting policy, presentation of reports

and information.
            Firms or banks should still continue to apply the process to have a high quality

accounting control. It is because reconciliation process is also a way to easily determine what the

errors are being done during the transaction. The one who would do the reconciliation should

have enough knowledge about accounting standards and policy in order to present a valid and

free from bias information. The one would do this, must not be one of the employee of bank or

enterprise so that you are secured from the result given.

            Anyone who practice or assigned to do reconciliation should always remember to apply

or use the same method when reconciling to have a consistency for the benefit of

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xi

the owner of the business to have a comparison on the previous one. Reconciliation should

include in the financial statement because this approach are useful in discovering possible

discrepancies that occurs during a transaction.

            Without bank reconciliation, you also expose yourself to risk. People may be stealing

from your account. If you never look through each transaction, you’ll never know about it. If you

don’t notify the bank quickly enough, you may be out of luck.

 
 

 
  

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