What
are Account Reconciliations?
Account Reconciliations are utilized
by accountants to ensure account balances are correct between accounts during
the end of a particular accounting period.
Accountants perform account
reconciliation by using the following steps:
- Comparing of account balances between various independent systems
- Verifying statements and reports for accuracy and investigate discrepancies when identified
- Taking action to correct these identified discrepancies.
This process is an important
internal control in the financial reporting process. Public companies are required
to perform this process as part of their financial close.
What
is the process for Account Reconciliations?
This account reconciliation process
is generally carried out after the close of a financial period. Accountants go
through each account in the general ledger of accounts and verify that the
balance listed is correct and accurate. This involves comparing the general
ledger account balance with other independent sources of this data, such as
bank and credit card statement.
When discrepancies are found,
accountants investigate these discrepancies and take appropriate corrective
action. This may involve making journal entries to correct balance errors. All
information found, analysis performed, and actions taken are stored for audit
purposes. The account reconciliation process must be completed before a company
can certify the integrity of its financial information and issue financial
statements.
How
Does Account Reconciliation Software Work?
Account reconciliation software
automates all steps in the account reconciliation process. It takes in data
from all sources of financial information such as ERP systems, bank files or
statements, credit card processors and merchant services, etc. It then compares
account balances between these sources, and identifies any discrepancies so
that they can be investigated by accounting staff. This removes the burden of
manually performing this task placed on accountants, and frees them to focus on
analysis of discrepancies.
Account Reconciliation Software
Features Include:
- Automated review and approval workflows, with proper segregation of duties
- Reconciliation templates and checklists to standardize processes
- Integrated storage of supporting documentation for easy review and audit
- Link to applicable policies and procedures for easy reference
What
Solutions Does Practice Eye Offer for Account Reconciliations?
The Practice Eye Reconciliations product is designed
to streamline all aspects of the account reconciliation process. It adds both
proper controls and automation to account reconciliations.
This product imports data from any
source, and is compatible with all major ERP systems. Configurable validation
rules allow for auto-certification of low-risk accounts. This significantly
reduces the workload of accounting staff. When discrepancies do exist that
require analysis, customizable templates, checklists, and integrated storage
for supporting documentation ensures that reconciliation processes are
standardized across the organization. Centralized dashboards and automated
workflows also provide full visibility into the status of the account
reconciliation process.
We product further automates
processes by enabling comparisons and validation of transaction-level account
data. This allows accountants to view the exact transactions that are not
matching in various systems and statements, significantly reducing the time
spent locating discrepancies. This is particularly useful for high-volume
reconciliations, such as credit card reconciliations.
When correcting journal entries are
required, the Pratice Eye product automates this portion of the process
as well.
Please see below for articles
related to account reconciliation, the account reconciliation process,
account reconciliation software, and account reconciliation solutions offered
in the Practice Eye Finance Controls and Automation Platform.
