One of the most important internal controls within any organization involves proper and timely completion of Balance Sheet account reconciliations. Best practices for Balance Sheet account reconciliations are as follows:
1) they must be reconciled each month (ideally before the current period is closed),
2) they must be supported and verifiable (for instance to external reports), and
3) they must be reviewed and approved by supervisor / management.
When all Balance Sheet account reconciliations are completed, the company is essentially verifying that both the Balance Sheet and Income Statement are correct – in the sense that current net income is included in the Balance Sheet. Failure to maintain account reconciliations is an invitation to financial reporting disaster, not to mention in all likelihood a breach in overall internal controls. The work of External auditors will also be much more efficient and effective if the reconciliations are current, and documented in a professional and organized manner. Balance Sheet account reconciliations are the “glue that keeps it all together” when it comes to financial reporting. Yet, how often in your organization do they lack the priority that they deserve?
Trust me when I tell you that account reconciliations are one of the most important functions in an Accounting Department, and that resource limitations will never justify the fallout that will occur when something goes wrong when they are not completed.
Please don’t hesitate to contact me at firstname.lastname@example.org or call me directly at 905-630-1607, if your organization requires assistance with account reconciliations.
Edelkoort | Smethurst | Schein CPAs LLP is located in Burlington Ontario servicing the Golden Horseshoe and Greater Toronto Area and beyond. The firm is fully licensed with CPA Ontario to provide assurance, tax and accounting services as well as registered as tax preparers with the Canada Revenue Agency (CRA) & Internal Revenue Service (IRS). The firm is also registered as an IRS Certified Acceptance Agent.
All blog posts published on this site are for informational purposes only and do not constitute professional advice. Readers should contact a professional to discuss their individual situation. Neither the author or the accounting firm shall accept any liability for any reliance placed on the information posted.