A bank reconciliation may contain old outstanding checks, usually because the payees lost them, never received them, or have gone out of business. In these situations, the outstanding checks should be eliminated. The first step in doing so is to contact the payee, to see if the check was lost. If so, cancel the original check, reverse the payment transaction in the accounting records, and send the payee a replacement check.

If it is not possible to contact the payee for some reason, then the amount of the check will probably need to be paid to the applicable state government instead, under the local escheatment laws. Under this arrangement, the check is still cancelled, but the related payable amount is now recorded in a separate liability account, denoting that the firm now has a liability to pay it to the state government (usually as of an annual filing date). When that filing date arrives, the firm sends the payment to the government, along with a form that itemizes all of the outstanding checks being forwarded to it.

In both scenarios, the check is removed from the outstanding checks list associated with the bank reconciliation.