Reconciliation

Two numbers produced by two different institutions from two different sets of records, compared on a defined cycle. The firm's ledger states the sum of what it owes its clients; the bank statement states what sits in the accounts holding client money. Neither party can produce the other's figure, which is exactly why comparing them is informative and why the exercise is an obligation attached to client money segregation rather than an internal courtesy.

The comparison has two possible failures and both are corrected on the same timetable. Where the bank holds less than the ledger says is owed, the firm has to make up the difference from its own money immediately. Where it holds more, the excess is the firm's own money sitting in a client account and it has to be withdrawn, because money that is not client money does not belong in a pool that would be distributed to clients.

Timing differences are the reason the two figures are rarely identical in the instant. A transfer that has left a client's own bank and has not yet been received and allocated is in neither place, and the same applies to a withdrawal in flight. That does not make segregation ineffective; it makes it a specific arrangement with a defined boundary rather than a general reassurance, and the reconciliation is what keeps the boundary observable.