Bank rec is informal shorthand for a bank reconciliation, the schedule that explains every difference between the cash balance on a company's bank statement and the balance in its general ledger Cash account. Bookkeepers and auditors use the short form constantly, as in "the March bank rec is done".
What a bank rec involves
A bank rec is normally prepared each month as soon as the bank statement is available. It has two sides. The bank side starts with the statement balance and adjusts for timing items the bank has not yet processed, chiefly deposits in transit and outstanding checks. The book side starts with the book balance and adjusts for items the company has not yet recorded, such as bank fees, interest, returned checks and its own mistakes.
When both adjusted balances agree, the bank rec is said to "tie out" or "balance". If they do not agree, the difference has to be investigated before the month can be closed. Common causes include amounts entered twice, transposed digits and bank errors.
Because a completed bank rec shows that recorded cash really exists, it is one of the most basic internal controls. Good practice is for someone who does not handle cash receipts or sign checks to prepare or review it, so that errors and misappropriation are more likely to be spotted.