What are Account Reconciliations?
Account Reconciliations are utilized by accountants to ensure account balances are correct between accounts during the end of a particular accounting period.
Accountants perform account reconciliation by using the following steps:
- Comparing of account balances between various independent systems
- Verifying statements and reports for accuracy and investigate discrepancies when identified
- Taking action to correct these identified discrepancies
This process is an important internal control in the financial reporting process. Public companies are required to perform this process as part of their financial close.
What is the process for Account Reconciliations?
This account reconciliation process is generally carried out after the close of a financial period. Accountants go through each account in the general ledger of accounts and verify that the balance listed is correct and accurate. This involves comparing the general ledger account balance with other independent sources of this data, such as bank and credit card statement.
When discrepancies are found, accountants investigate these discrepancies and take appropriate corrective action. This may involve making journal entries to correct balance errors. All information found, analysis performed, and actions taken are stored for audit purposes. The account reconciliation process must be completed before a company can certify the integrity of its financial information and issue financial statements.
How Does Account Reconciliation Software Work?
Account reconciliation software automates all steps in the account reconciliation process. It takes in data from all sources of financial information such as ERP systems, bank files or statements, credit card processors and merchant services, etc. It then compares account balances between these sources, and identifies any discrepancies so that they can be investigated by accounting staff. This removes the burden of manually performing this task placed on accountants, and frees them to focus on analysis of discrepancies.
Account Reconciliation Software Features Include:
- Automated review and approval workflows, with proper segregation of duties
- Reconciliation templates and checklists to standardize processes
- Integrated storage of supporting documentation for easy review and audit
- Link to applicable policies and procedures for easy reference
What Solutions Does BlackLine Offer for Account Reconciliations?
The BlackLine Account Reconciliations product is designed to streamline all aspects of the account reconciliation process. It adds both proper controls and automation to account reconciliations.
This product imports data from any source, and is compatible with all major ERP systems. Configurable validation rules allow for auto-certification of low-risk accounts. This significantly reduces the workload of accounting staff. When discrepancies do exist that require analysis, customizable templates, checklists, and integrated storage for supporting documentation ensures that reconciliation processes are standardized across the organization. Centralized dashboards and automated workflows also provide full visibility into the status of the account reconciliation process.
The BlackLine Transaction Matching product further automates processes by enabling comparisons and validation of transaction-level account data. This allows accountants to view the exact transactions that are not matching in various systems and statements, significantly reducing the time spent locating discrepancies. This is particularly useful for high-volume reconciliations, such as credit card reconciliations.
When correcting journal entries are required, the BlackLine Journal Entry product automates this portion of the process as well.
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