What is General Ledger Reconciliation?
General Ledger Reconciliation is the process performed by accountants to verify the integrity of account balances on the company’s general ledger of accounts. It involves comparing the general ledger account balances with other independent systems, statements, and reports, to verify that the balances are correct and accurate; investigating thoroughly any discrepancies that are identified; and taking proper corrective actions to resolve these discrepancies.
General Ledger Reconciliation is a key portion of the financial close process that is used to verify a company’s financial information before releasing it to the public on financial reports.
What is the Process for General Ledger Reconciliations?
This General Ledger Reconciliation process is carried out as part of the financial close process after the end of a financial reporting 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 to information contained in other independent systems and sources of financial data, such as bank statements and credit card statements.
When discrepancies are found, accountants research and investigate these discrepancies and take appropriate action to correct them. Corrective action may involve making journal entries to correct balance errors. The research and investigation process is documented together with the corrective action, and all of this information is stored for audit purposes. The general ledger reconciliation process is a necessary step that must be completed before a company can issue financial statements.
How does General Ledger Reconciliation Software Work?
General Ledger reconciliation software automates all steps in the general ledger reconciliation process. It imports data from all sources, including ERP and other General Ledger systems, bank files or statements, credit card statements, etc. It then compares account balances between these sources and can auto-certify accounts when data matches and identify any discrepancies that need to be properly investigated by accountants. This prevents accountants from having to verify the balance of every single account and allows them to focus on the analysis of discrepancies.
General Ledger Reconciliation 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 General Ledger Reconciliations?
The BlackLine Account Reconciliations product is designed to automate and streamline all aspects of the General Ledger Reconciliation process. It also adds proper controls to General Ledger Reconciliations.
This product is capable of importing data from almost any source, and is compatible with all major ERP systems. Rules for account balance certification are configurable and can be set based on account risk-profile. Auto-certification capabilities dramatically reduce the manual tasks being performed by accounting staff, and free accountants to focus on analysis. When discrepancies do exist that require research, workflows route them to the account owner and put proper controls in place to ensure proper review and approval of reconciliations and to maintain required segregation of duties.
In addition, the product also contains customizable templates, checklists, and integrated storage for supporting documentation to ensure that reconciliation processes are standardized throughout the organization. Centralized dashboards provide full visibility into the status of the reconciliation process.
The BlackLine Transaction Matching product works together with the Account Reconciliation product when there is a need for automated high-speed analysis of transaction details within an account. This works by identifying transactions that do not match between systems, making reconciliation of accounts with high numbers of transactions simple.
When journal entries are required to correct discrepancies, the BlackLine Journal Entry product integrates in as well, and automates this portion of the process.
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