Account Reconciliation Best Practice
Information and guidance on account reconciliation best practices is provided below:
Best practice guidance
The amounts relating to recorded transactions in the account have been recorded appropriately and the overall account balance is accurate.
1. Ensure you understand the account. What is the account purpose, and what information should be used to support and understand the account transactions and balance. If you are not sure ask colleagues for advice and help.
2. Ensure the reconciliation is regularly completed and issues are promptly resolved. It is much easier to understand and clear an issue shortly after it has happend rather than struggling to remember what occured and why several months later.
3. Ensure the reconciliation has actually been performed. Do not simply roll forward a previous reconciliation without evaluating whether it is still accurate.
4. Where available agree the account balance and/or transaction values to an external source of information such as a bank statement, supplier statement, contract or schedule.
Ensure all items that should have been recorded in the account have been recorded.
1. Review general ledger journals and confirm none are missing. Compare to the previous period to identify any recurring journals not posted and determine if these need to be processed in the period being reconciled.
2. Review the following period for any processed items such as invoices that should have been recorded in an earlier period.
1. Ensure relevant supporting documentation is attached to the reconciliation.
2. A list of the examples of suitable supporting documentation is included in the attached document - Supporting documentation examples (Reconciliations)
3. Include explanatory notes and narrative to ensure yourself and others understand what the supporting documentation is and why it is relevant.
4. If supporting documentation is held elsewhere include a link to that location.
5. When linking to supporting documentation consider whether the documents will be available at that location in the long-term. If there is a risk that the documentation will change over time, be moved, or become unavailable consider attaching dated copies of the documentation to the reconciliation as well as linking to the original source.
6. Any files and documents uploaded in support of the reconciliation containing sensitive information must be password protected.
The recorded transactions represent the events that actually occurred and have been executed in accordance with College's policies and procedures.
1. Consider whether the account should have a balance in the period. What is the account used for and what type of transactions would you expect in the account?
2. Ensure the reconciliation explains why the account balance exists.
3. Do not just attach a list of all the transactions that occured in an account without explaining why they occured. A transaction is not necessarily valid just because it has been processed to an account. Without understanding why the transaction occured it will be difficult to spot errors which invalidate the account balance.