Three Way Reconciliation

Master the essential three-checkpoint system for flawless trust accounting

Trust Accounting · Monthly Control

What Is AppFolio

AppFolio three-way reconciliation, also called a triple tie-out, is the monthly control that proves your trust accounting is accurate and compliant. It confirms that three independent figures agree to the penny on the same statement date: your bank balance, your AppFolio book (GL) balance, and the sum of every property and owner balance. When all three tie out, you know no client funds are missing, misposted, or commingled. That is exactly what auditors and state regulators expect from a property‑management trust account.

Statement Date Comparison Tied Out
Bank Balance
$184,206.47
AppFolio GL Balance
$184,206.47
Property + Owner Sum
$184,206.47
All three figures match to the penny

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

Step by Step

Follow this proven workflow for accurate reconciliation every time

1

Pre-checks: Resolve Negative Ledgers
2

Run Bank Reconciliation Report
3

Run Supporting Reports
4

Verify All Three Totals Match
5

Finalize & Lock Period
1

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

2

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
3

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
4

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
Success criteria: All three balances are identical
5

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
01

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
02

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
03

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
04

Discover our comprehensive Three way trust reconciliation expertise and how we help streamline your property accounting

Read More
Get Your Free Checklist

Download the complete AppFolio 3-Way Reconciliation Checklist (PDF) and never miss a step

Security 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:

AppFolio Three Way Reconciliation

Frequently Asked

What is three-way reconciliation in AppFolio?
This is a monthly check, which ensures three balances match for the same date: your bank statement balance, your AppFolio book (GL) balance, and the sum of all the property and owner ledger balances. When affirmatively matched, this process proves the accuracy and compliance of your trust account.
What are the three reports used in an AppFolio three-way reconciliation?
This includes the Bank Reconciliation Report, Bank Account Activity Report, and the Bank Balance Detail Report. All three reports must be run to the same statement close date and compared side by side.
How often should property managers run a three-way reconciliation?
This process should be run at least monthly, which is also the requirement of most state real estate commissions. Some firms that have a higher transaction volume run a partial check mid-month to catch issues before the close.
Why doesn't my AppFolio reconciliation balance — and how do I fix it?
This can occur from a variety of reasons, including uncleared, undeposited receipts; duplicate imports; security deposits booked to the wrong GL; and old outstanding checks. You should start by comparing all three reports line by line and isolating which figure is off.
What is a triple tie-out in trust accounting?
This is just another term for three-way reconciliation, where bank balance, book balance, and property/owner ledger balances are tied. This process is also known as a "tie-out" and not just a bank reconciliation, because all three figures must match exactly.
Is three-way reconciliation legally required for trust accounts?
It is a common requirement across the majority of US states to reconcile trust or escrow accounts holding client funds on a regular basis, usually monthly. In audit reviews of real estate licenses, an unreconciled account is frequently one of the top cited violations. Reconciliation violations can lead to license suspension or monetary penalties.
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