# Three-way reconciliation checklist: formula, blank form and free templates

By Rotomal team · Updated 2026-10-29 · Part of [Trust Reconciler](https://rotomal.com/trust-reconcile/)

**Short answer:** A three-way reconciliation passes when three figures agree on the same date: the adjusted bank balance (statement ending balance plus deposits in transit minus outstanding checks), the trust journal or book balance, and the sum of every client ledger. Work through the checklist below each month, explain every difference with a specific item, and have the responsible attorney or broker sign. Free official templates include the State Bar of California's reconciliation form and ledgers in PDF and Excel and the Alabama State Bar's Excel workbooks.

## The formula

```
Adjusted bank balance = statement ending balance + deposits in transit - outstanding checks and wires
```

```
Reconciled when: adjusted bank balance = trust journal balance = sum of client ledgers (+ any firm funds held for bank charges)
```

California's form adds the last term: firm money kept in the account for bank charges is tracked on its own ledger and added to the client total, so the two sides still match.

## Step by step

- Pick the cut-off: the bank statement's ending date, ideally month end, for every record.
- Mark each deposit and check in your journal that appears on the statement.
- List deposits in transit and outstanding checks and wires, with date, number, payee and amount.
- Compute the adjusted bank balance.
- Take the trust journal balance on the same date.
- Total every client ledger as of that date, and confirm none is negative.
- Compare the three. If they don't agree, the account is not reconciled: find the error and re-run.
- File the statement, lists and ledger summary together, and have the responsible attorney or broker review and sign.

## Blank monthly checklist

Copy this table for each trust account each month. It is a blank form, not a filled sample.

| Step | Figure or check | Amount or done | Initials |
| --- | --- | --- | --- |
| 1 | Bank statement ending balance (statement date: ____) |  |  |
| 2 | Plus deposits in transit (list attached) |  |  |
| 3 | Minus outstanding checks and wires (list attached) |  |  |
| 4 | Adjusted bank balance (1 + 2 - 3) |  |  |
| 5 | Trust journal (book) balance on the same date |  |  |
| 6 | Sum of all client ledgers (trial balance attached) |  |  |
| 7 | Plus firm funds held for bank charges, if any |  |  |
| 8 | Ledger total (6 + 7) |  |  |
| 9 | Do 4, 5 and 8 agree? If not, list each difference and its cause |  |  |
| 10 | Any negative client ledger? Explain and correct |  |  |
| 11 | Items still outstanding from last month reviewed |  |  |
| 12 | Prepared by and date |  |  |
| 13 | Reviewed and signed by the responsible attorney or broker, and date |  |  |

## Common causes of a mismatch

| What you see | Usual cause | What to do |
| --- | --- | --- |
| Adjusted bank balance lower than the books by a fee amount | A bank or wire fee charged to the account but not recorded | Record it against firm funds, not a client, and re-run |
| Adjusted bank balance higher than the books | A deposit not recorded, or a check recorded twice | Find it on the statement; correct the journal and the client ledger |
| Books agree with the bank but not with the client total | A transaction posted to the journal without a client, or to the wrong client | Post it to the right client ledger |
| A client ledger is negative | More paid out for that client than was held, often before a deposit cleared | Correct it immediately, document the fix and check your state's reporting duty |
| The same difference as last month | An item from last month that still hasn't cleared, or a month that never really balanced | Start from last month's lists of outstanding items |

The State Bar of Arizona's guidance makes the same point: if the client or general ledger totals don't match, you usually failed to log a transaction on one ledger; if the bank side doesn't match, check last month's reconciliation for items that still haven't cleared.

## Free official templates

| Publisher | Template | Format | Link |
| --- | --- | --- | --- |
| State Bar of California | Monthly Trust Account Reconciliation and Review Certification | PDF and Excel | https://www.calbar.ca.gov/sites/default/files/portals/0/documents/ctapp/Reconciliation-Form.pdf |
| State Bar of California | Account journal, client ledger and bank charges ledger | PDF and Excel | https://www.calbar.ca.gov/legal-professionals/maintaining-compliance/client-trust-account-protection-program-ctapp/client-trust-accounting-resources-and-training |
| Alabama State Bar | 3 Way Reconciliation, Trust Account Client Ledgers and Trust Account Journal templates | Excel workbooks (.xlsm, macro-enabled format) | https://alabar.org/trust-account-excel-workbooks |
| Florida Realtors (brokers) | MSR-5 Monthly Reconciliation Statement, Real Estate Trust Account | Through Form Simplicity | https://www.floridarealtors.org/news-media/news-articles/2026/04/florida-realtors-forms-related-escrow |

The Alabama State Bar itself says software automation 'may be preferable to these workbooks, regardless of the size of the practice'.

## When a spreadsheet stops being enough

A template works when one careful person does it every month. It strains with many client files, several accounts or a bookkeeper who isn't sure what three-way means, and it never warns you on the day a ledger goes negative. Trust Reconciler takes the three figures from QuickBooks Online or Xero, lists every difference, alerts you daily to negative client balances and keeps the signed monthly pack. Founding customer pricing starts at $39 a month per firm.

## FAQ

### What is the three-way reconciliation formula?

Statement ending balance plus deposits in transit minus outstanding checks gives the adjusted bank balance. It must equal the trust journal balance, which must equal the sum of all client ledgers on the same date.

### What if the three numbers don't agree?

Then the account is not reconciled. California's form says to identify the errors and re-reconcile; don't post a balancing entry you can't explain.

### How often do I need to do it?

It depends on your state and role. California, Arizona and Iowa attorneys reconcile monthly; North Carolina and Illinois set a quarterly three-way minimum; brokers in California, Oregon, Florida and Utah reconcile monthly.

### Can I use Excel?

Yes. The State Bar of California and the Alabama State Bar both publish Excel templates, though Alabama notes that software automation may be preferable.

### Is this legal or accounting advice?

No. It is a general method and checklist, not legal or accounting advice. Confirm your state's rule with your bar or commission, and your setup with your accountant.

## Sources

- State Bar of California: Monthly Trust Account Reconciliation and Review Certification (lines 1 to 3, attorney certification). https://www.calbar.ca.gov/sites/default/files/portals/0/documents/ctapp/Reconciliation-Form.pdf
- State Bar of California: Client trust accounting resources and training (free PDF and Excel templates). https://www.calbar.ca.gov/legal-professionals/maintaining-compliance/client-trust-account-protection-program-ctapp/client-trust-accounting-resources-and-training
- Alabama State Bar: trust account Excel workbooks. https://alabar.org/trust-account-excel-workbooks
- State Bar of Arizona: Trust account basics (rev. May 2018), monthly reconciliation steps. https://azbar.org/media/1fdhaph1/trust-account-basics-website-rev-may-2018.pdf
- Florida Realtors: forms related to escrow (27 April 2026), MSR-5. https://www.floridarealtors.org/news-media/news-articles/2026/04/florida-realtors-forms-related-escrow
- Oregon Secretary of State: OAR 863-015-0275 (three components; outstanding checks listed by number, date, payee and amount). https://secure.sos.state.or.us/oard/view.action?ruleNumber=863-015-0275

[Trust Reconciler](https://rotomal.com/trust-reconcile/) does this for you. Request it free, no card: https://rotomal.com/trust-reconcile/request/
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