What is account reconciliation?
Also called: balance sheet reconciliation, reconciliation
Last updated
Account reconciliation is comparing the balance of an account in the accounting records with an independent source, such as a bank statement, a supplier statement or a sub-ledger, and explaining every difference. It confirms the books are complete and correct before financial statements are produced, and is usually reviewed and signed off.
In more detail
The most common is the bank reconciliation, but every balance sheet account should be reconciled regularly: receivables and payables, accruals and prepayments, fixed assets, payroll liabilities and amounts owed between group companies. Most teams reconcile monthly as part of the close.
Differences fall into two kinds: timing differences, such as a payment the bank has not yet cleared, and errors, which need correcting. A good reconciliation lists each reconciling item, attaches the evidence, and is reviewed by someone other than the preparer.
Example
At month end, the ledger shows £48,200 in the main bank account and the statement shows £50,950. The accountant finds a £3,000 cheque not yet presented and a £250 bank charge not yet posted, posts the charge, attaches the statement and sends the reconciliation for review.
Reconciliations in CheckFlow
In CheckFlow each reconciliation can be a task in the monthly close checklist, with the statement attached in a File Upload field, the reconciling items in a Table field, and a separate review step assigned to someone else that halts the checklist until it is done.
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