Reconciliations
Broadly defined, a reconciliation is a comparison of different sets of data to one another, identifying and investigating differences, and taking corrective action, when necessary, to resolve differences. Reconciling monthly financial reports from the Web Statements to file copies of supporting documentation or departmental accounting records is an example of reconciling one set of data to another. This control activity helps to ensure the accuracy and completeness of transactions which have been charged to a department's accounts. To ensure proper segregation of duties, the person who approves transactions or handles cash receipts should not be the person who performs the reconciliation.
A critical element of the reconciliation process is to resolve differences. It does not do any good to note differences and do nothing about it. Differences should be identified, investigated, and explained - corrective action must be taken. If an expenditure is incorrectly charged to a department's accounts, then the approver should post a correcting journal entry; the reconciler should ascertain that the correcting journal entry was posted. Reconciliations should be documented and approved by management.
Last Updated: November 17, 2008 (vm).
