This guide provides an overview and covers basic concepts of accounts reconciliation.
Reconciliations are analyses of secondary data sources (sub-ledger, bank, third-party statements, internal schedules) and the record of reference (general ledger). This is an important process to complete as it reduces the risk of misstatement of balance sheet and income statement accounts and helps identify journal entries or adjustments that are not properly validated, supported, authorized or posted. Account reconciliations can include subledger report reconciliation, analysis/reserve analysis reconciliation, analytic schedule reconciliation, third-party statement reconciliation and back-up reconciliation. This guide covers types of account reconciliations, why they are important, characteristics of a good reconciliation, characteristics of a bad reconciliation and auditor considerations.