Reconciliation of Accounts

Reconciliation is an instrument in the hands of accountant to verify and ascertain the accuracy and integrity of balances of accounts. It can also be referred to as a process that compares two sets of records (usually the balances of two accounts) to make sure they are in agreement.

Reconciliation is used to ensure that the money leaving an account matches the actual money spent, this is done by making sure the balances match at the end of a particular accounting period.

A robust reconciliation process improves accuracy of the financial reporting function and can also serves as a good check against fraudulent behavior.

To ensure the reliability of the financial records reconciliations must be performed for all Balance Sheets accounts on a regular and on-going basis and especially on the followings:

Bank and Cash balances
Inventories like finished goods, work-in-progress and raw materials
Account Receivables/ Debtors and Prepayments
Account Payables/Creditors and Accruals
Liquidity/Profitability Statements

Leave a Reply

Your email address will not be published.

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.