{"id":3514,"date":"2018-05-18T16:31:13","date_gmt":"2018-05-18T16:31:13","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=3514"},"modified":"2022-09-06T09:44:43","modified_gmt":"2022-09-06T09:44:43","slug":"implementing-an-effective-risk-ranking-process-for-balance-sheet-reconciliations","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2018\/05\/implementing-an-effective-risk-ranking-process-for-balance-sheet-reconciliations\/","title":{"rendered":"Implementing an Effective Risk Ranking Process for Balance Sheet Reconciliations"},"content":{"rendered":"

Introduction<\/strong><\/span><\/p>\n

Being able to effectively evaluate the reconciliation frequency for balance sheet accounts<\/a> can involve the review of a variety of factors, both quantitative and qualitative.\u00a0 While the ultimate objective of balancing effective controls with process efficiency is the same for all companies, the level of effort and overall approach to designing the appropriate schedule can vary significantly between companies.\u00a0 There are many possible reasons for variation including different structures for the chart of accounts, the type of account reconciliation tools being utilized, and the overall tolerance for risk<\/a> by senior finance leadership, and internal and external auditors.\u00a0 In many cases, the reasons for differences between companies are difficult to pinpoint, since account reconciliation processes<\/a> are often developed in isolation and evolve over time.\u00a0 As is true for many processes, there can be great value in directly comparing designs between companies, so that all can benefit from the experience of knowledgeable peers. <\/span><\/p>\n

Company Experience<\/strong><\/span><\/p>\n

During this Peercast, our feature company, a large global company with over $15 billion in revenue, shared its experiences in developing a structured approach to the risk ranking process for balance sheet accounts, including the steps they took in the creation of the appropriate evaluation criteria for their company. <\/span><\/p>\n

The company utilizes SAP as its primary financial system and they also use the Blackline account reconciliation solution.\u00a0 They have both captive and outsourced employees carrying out account reconciliations in a variety of locations across the globe.\u00a0 <\/span><\/p>\n

Some of the challenges the company faced in creating the risk rankings for balance sheet reconciliations included the following:<\/span><\/p>\n