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HOW TO RECONCILE

EVERY organisation is DIFFERENT or so organisations say. However, while processes can be diverse RecWise can accommodate you.

The concept of reconciliations can vary greatly and this can sometimes be problematic in the balance sheet reconciliation process.

HOWEVER, the elements that make up a good reconciliation SHOULDN'T BE UNIQUE to each organisation, they should be UNIVERSAL. What is often lacking is a common understanding of the fundamentals and a failure to adopt a CONSISTENT APPROACH.

What constitutes a GOOD BALANCE SHEET RECONCILIATON? Perhaps the best place to start is with what doesn’t.

 

A reconciliation SHOULD NOT simply be a transaction listing or a roll forward of activity posted to an account.

 

A reconciliation SHOULD begin with comparing the general ledger closing balance to the sub-ledger or other relevant source (such as bank statements or other third-party documents).

 

DIFFERENCES between the two MUST be investigated, quantified and where possible, resolved by posting correcting journals to the general ledger or sub-ledger as required.

 

Any ANOMALIES should be recorded as RECONCILING ITEMS to provide clear evidence of adjustments and any capture any open outstanding reconciling items.

Finally, the adjusted balances should MATCH and be FULLY supported with the APPROPRIATE DOCUMENTATION attached to the reconciliation.

A GOOD reconciliation goes further by resolving open issues and recurring problems as well as investigating and confirming the appropriateness of accounting treatments used.

 

FINALLY, the reconciliation should not be considered complete until it has been independently REVIEWED. A GOOD reconciliation process is one where all of these elements combined are STANDARDISED across the balance sheet.

How can RecWise help?

RecWise provides a STANDARDISED environment to support best practice in the preparation of reconciliations as well as the PROVIDING accessibility for Auditors, Managers and Business Units Heads to review and provide feedback.