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https://intuit-payroll.org/s have long been an important control for ensuring the accuracy of financial statements. Validating balances in general ledger accounts through the reconciliation process provides management with assurances that controls are in place and are working effectively.
What Is Account Reconciliation?
A company’s books are comprised of seven types of GL accounts that track its financial activity: assets, liabilities, equity, revenue, expenses, gains and losses. As part of the bookkeeping process, every business transaction is posted to two or more GL accounts using corresponding debits and credits that indicate value coming into or going out of the business. Account reconciliation confirms the accuracy of each GL account — not just cash accounts, as commonly thought of — by comparing the details to data from another source, such as a bank statement. The process may uncover errors, omissions or duplications in the GL, any of which would have to be investigated and corrected before reconciliation can occur.
Campus entities are not responsible for reconciling these university accounts, as opposed to department accounts. Account reconciliation is an important internal control in the financial reporting process. Public companies are required to perform these steps as part of their financial close. Accounting software is one of a number of tools that organisations use to carry out this process thus eliminating errors and therefore making accurate decisions based on the financial information. Reconciliation of accounts determines whether transactions are in the correct place or should be shifted into a different account. COMPARE supporting documentation to system generated line item reports ensuring all transactions are allowable, reasonable, allocable, accurate, and approved for the program or project. Review both actual line items and budget line items (i.e. budget transfers and revisions) during the reconciliation process.
Flexibility to Choose a Reconciliation Method
Exceptions are flagged for investigation, allowing staff to skip to step five in the reconciliation process, which calls for determining whether corrective action is required for each reconciling item. Further, the simplified chart of accounts helps eliminate miscoding, which is one of the most common causes of reconciling errors.
In these situations, accounting teams greatly benefit from having a collaborative accounts receivable solution, which allows them to communicate directly with customers in a single platform. Even with an online payment portal, you’ll still get payments coming in from outside of the platform via checks or electronic payments. With an AR automation platform that has built-in image recognition and AI-enabled matching capabilities, you can automate the majority of those applications too. If you have a staff bookkeeper or accountant, they can certainly handle the reconciliation process, but as the business owner, it’s your responsibility to oversee what they’re doing. Once the trial balance looks accurate, you can rest assured your accounts have been reconciled properly.
Make Sure the Balances Are Accurate
The Account Reconciliations of analyzing account balances and providing a justification for the balances. Examples include purchasing documents, procard reconciliations/submissions, payroll estimates, submitted journal vouchers, etc. Establishing this best practice requires a thorough and balanced analysis of both quantitative and qualitative factors for each account. Those accounts can then be categorized and given a high, medium, or low-risk rating. Ultimately, the risk rating of the account determines how often it needs to be reconciled as well as the due date of the reconciliation (I.e. business day 5) and where human review is needed. Below you will find six best practices that can help your organization improve the account reconciliation process. Banking and Financial Services Streamline and automate your reconciliation and financial close processes.