{"id":1883,"date":"2014-10-22T14:00:25","date_gmt":"2014-10-22T14:00:25","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=1883"},"modified":"2022-08-12T09:46:37","modified_gmt":"2022-08-12T09:46:37","slug":"centralizing-the-account-reconciliation-process","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2014\/10\/centralizing-the-account-reconciliation-process\/","title":{"rendered":"Centralizing the Account Reconciliation Process"},"content":{"rendered":"

The past decade has seen an increased focus on ensuring the integrity of financial reports for all publicly traded companies.\u00a0 As a result, more companies are creating detailed standardized procedures to ensure that account reconciliations are performed timely and accurately.\u00a0 While centralizing may reduce the proximity to where the account transactions originate, a rigorous review process is more likely to yield higher quality results than a haphazard process that takes place in multiple locations by staff with various levels of skill sets and training<\/a>. <\/span><\/p>\n

Peeriosity\u2019s General Accounting research area<\/a> recently held a PeercastTM<\/sup> discussion that featured a company that developed an account reconciliation training program as one output from a detailed review of their overall account review process.\u00a0 As a part of the reconciliation process, reconciled accounts undergo a quality review where an assigned reviewer evaluates the quality of the account reconciliation using a four-part scorecard.\u00a0 These include:<\/span><\/p>\n

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  1. The reconciliation description is available in the account reconciliation software (Assurenet).\u00a0<\/span><\/li>\n
  2. There is proof that the year-to-date balance has been substantiated and investigated.<\/span><\/li>\n
  3. Reconciling items have been identified and the required corrective action has been explained.<\/span><\/li>\n
  4. Specific comments have been added to call out high-risk reconciling items, including a lower threshold for items that are unexplained.\u00a0<\/span><\/li>\n<\/ol>\n

    One of the most challenging parts of the reconciliation is proving that the balance is correct.\u00a0 This step can involve looking at other documentation including sub-ledger detail, bank statements, and supporting schedules.\u00a0\u00a0 It\u2019s important to also consider whether or not the balance falls within tolerance levels, and the trend in the balance from month to month.\u00a0 In many cases, business owners are required to review and sign off that they are comfortable with the account balance.<\/span><\/p>\n

    A related iPollingTM <\/sup>question asked member companies about their status for centralizing the account reconciliation process.\u00a0 The results were almost evenly split, with 52% of companies having achieved either moderate or high levels of consolidation of account reconciliation processes, and 44% who are either currently evaluating the opportunity or who haven\u2019t yet considered it.\u00a0 Here are the details:<\/span><\/p>\n

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    When looking at the primary drivers for consolidating the account reconciliation process, 40% indicated that the centralization effort was included as a part of the overall consolidation of Accounting \/ Finance operations, with 23% indicating the effort was part of a post-consolidation effort to implement a new process design for Accounting \/ Finance.\u00a0 Only 11% indicated that the driver was tied to the implementation of a new technology solution<\/a> that was specifically related to accounting reconciliations.<\/span><\/p>\n

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    Below are a few of the additional comments from iPolling participants:<\/span><\/p>\n