Three Way Reconciliation
Master the essential three-checkpoint system for flawless trust accounting
Three Checkpoints
AppFolio's own guide mandates that all three reports agree on the same date
Bank Reconciliation Report
Your primary reconciliation document tracking all transactions
Bank Account Activity
Complete activity log for verification and audit trail
Bank Balance Detail
Detailed balance breakdown confirming accuracy
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Step by Step
Follow this proven workflow for accurate reconciliation every time
Pre-checks: Resolve Negative Ledgers
Before starting reconciliation, ensure:
- All negative ledgers are resolved
- Deposit ledger equals GL liability
- No outstanding discrepancies from prior periods
Source: NARPM best practices
Run Bank Reconciliation Report
Generate your primary reconciliation document:
- Run report to the exact statement date
- Save the report immediately
- Note the ending balance for comparison
Run Supporting Reports
Generate the two verification reports:
- Bank Account Activity - to the same statement date
- Bank Balance Detail - to the same statement date
- Save both reports for your reconciliation packet
Verify All Three Totals Match
Cross-check all three reports:
- Compare ending balances across all three reports
- They must match exactly to the penny
- If discrepancies exist, proceed to the Fix It section below
Finalize & Lock Period
Complete the reconciliation process:
- Save complete reconciliation packet
- Sign and date all reports
- Lock the prior period in AppFolio
- Archive documentation for compliance
Fix It:
When your three reports don't match, start here
Undeposited Receipts Not Cleared
Problem: Receipts showing in system but not reflected in bank balance
Solution:
- Locate uncleared receipts in AppFolio
- Deposit them immediately OR
- Re-date to match actual bank deposit date
- Verify receipt appears on correct statement period
Undeposited Receipts Not Cleared
Problem: Same transaction imported multiple times
Solution:
- Identify duplicate entries by date and amount
- Delete the extra/duplicate transaction(s)
- Keep only one accurate record
- Review import settings to prevent future duplicates
Security Deposits in Operating GL
Problem: Security deposits incorrectly booked to operating account
Solution:
- Identify all security deposit transactions
- Reclassify from operating GL to deposit GL
- Verify proper account segregation
- Update procedures to prevent future misclassification
Old Open Checks
Problem: Outstanding checks from previous periods
Solution:
- Review all checks older than 90 days
- Contact payees to verify status
- Void stale checks in the system
- Reissue new checks if payment still needed
- Document all void/reissue actions
Source: These solutions are derived from AppFolio's official trust accounting and reconciliation documentation.
Get Your Free Checklist
Download the complete AppFolio 3-Way Reconciliation Checklist (PDF) and never miss a step
Book your free consultationSecurity Deposits
Simplify compliance and your 3-way reconciliation with proper account segregation
Recommended Setup:
Operate two separate bank accounts:
Operating Trust Account
For rent, fees, and operating expenses
Security Deposit Account
Exclusively for tenant security deposits
Benefits:
