So, I can’t find a single iPhone checkbook app that knows the difference between “cleared” and “reconciled” transactions. In a nutshell: “cleared” is a temporary status that can be easily removed, while “reconciled” is a permanent status that means “this transaction matched an item on my bank statement, it’s accounted for, and it’s part of the permanent record”. In database terms, “cleared” items are part of an open transaction, while “reconciled” items have been committed.

This isn’t just a nitpicky, technical difference. It’s important. Suppose you’re using a checkbook app that doesn’t know the difference, and you have 10,000 cleared items in your history. You’re diligent and your cleared balance exactly matches your bank statement’s closing balance. When your next statement comes, you sit down to clear all the new items - but you can’t get the balances to match up. Now what? How do you undo all the changes you just made so that you can get back to your correct starting balance and try again? What if you accidentally un-check a previously reconciled transaction? You get to break out last month’s statement and pull your hair out while you try to fix it.

Compare this with a real transactional system where items stay reconciled once you’ve marked them that way. Imagine the above scenario. When you discover that you’ve messed something up, you press the “unmark cleared items” button (however it’s labeled) and all the temporary “cleared” marks are removed, rolling you back to your previous, correct starting balance. When you find and fix the problem and clear all the items on your statement, you press the “reconcile cleared items” button (however it’s labeled) and all the “cleared” statuses are upgraded to “reconciled”. Your statement is now completely reconciled and set in stone, and you’re forever done with it.

This is extremely important when regularly clearing your checkbook against your online statement as it progresses through the month. I do this weekly but the online version isn’t my official statement, and I’ve seen items appear and disappear from it. Bank charges me $15 for something? I add it to my register. Bank realizes it was in error and removes it? I don’t notice and it sits on my register until I discover that my checkbook won’t balance.

So why doesn’t any iPhone checkbook app seem to support this? Every serious desktop app knows the difference, and it’s not really all that complicated or difficult to implement. I want the same thing on my iPhone and I’m willing to pay for it.

Update July 1, 2011: Catamount Software’s “Money” made a big step toward getting this right by adding a reconciling view. It’s still not perfect:

1. Items disappear the instant you check them off so you have to restart the process if you select the wrong item, which is easy to do on an iPhone’s small display. A one second or so long pause would help lots.

2. It doesn’t show the running balance as you check off items. Instead, it only shows how much your reconciled balance differs from the ending balance you enter. My bank statement looks a little like this:

   Starting balance: $1000.00
   
   Amount    Balance  Description
   -------   -------  --------------------
   +100.00   1100.00  Paycheck
   - 50.00   1050.00  Grocery Store
   - 40.00   1010.00  Gas Station
   + 75.00   1085.00  Bonus
   

   If Money displayed the running balance as I checked off items, I could tell at a glance whether I’d selected all the correct items so far (and that the amounts of those items was entered correctly). For example, if I start reconciling and select two items, and my running balance is anything other than $1050.00, then I’ve made a mistake.

But that said, it’s still a lot closer to the ideal than any other checkbook app I’ve tried, and I commend Catamount for adding this important feature. With a couple of tweaks it could be very useful.