Account reconciliations are not only a critical task for accurate internal and external reporting, they are also a key tool for fraud prevention. 

The ACFE (Association of Certified Fraud Examiners) 2022 Report to the Nations noted that performing account reconciliations was one of the top methods for discovering fraud. The average size of the fraud discovered by account reconciliations was $74K.

For organizations to implement an effective account reconciliation process, they should establish and routinely monitor internal policies & procedures. These can include general guidelines applicable to all account reconciliations as well as specific guidance and policies around the more complex accounts such as accruals. 

A reconciliation should only be considered complete when it has outside documentation that supports the account activity for the relevant period. Not all supporting documentation is created equal. Subledger activity and external information (such as invoices and POs) would be considered strong support while internal emails would be considered weak and often times inadequate. Strong outside support is especially critical when there are subjective calculations or timing differences reflected within the activity.

Reconciliations should be prepared and reviewed as part of month end close. Accurate and well-supported reconciliations can go a long way in mitigating audit findings (both internal and external audits). 

Nancy Wu with SkyStem is our go-to expert when it comes to account reconciliations and the month-end close. Nancy recently presented a webinar highlighting the key components of an effective reconciliation. You can check it out HERE.

For many organizations, getting “Back to the Basics” can help avoid unwanted surprises.

If your organization is still performing manual reconciliations or your current software solution is not meeting the needs of your team, we invite you to learn more about SkyStem’s ART.       

 The ART features include: 

• Reconciliation/Close Process Automation
• Balance Sheet/P&L Variance Analysis
• Account Certification
• Reports & Dashboards
• Email Alerts and Data Security
• Audit Management

You can schedule a free private demo HERE to see if ART would be a good fit for your organization.