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Citrayudha Komaladi
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Goh Kheng Leng

Wednesday, December 02, 2009 9:50 AM
Citrayudha Komaladi
Heng Cheng Chiang Eddie; Tham Hoe Ming; Nick Lim
Account reconciliation policy and procedures

Pleasereadsamplebelowforabetterunderstandingandtohelpyoutoaudit.

September 28, 2009

Account Reconciliation Policy (Sample 2)

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The following sample outlines a set of policies and procedures for the account reconciliation
process
1.0 Policy
This policy establishes the standards and procedures for ensuring that the Company performs
account reconciliations in compliance with managements objectives.
The purpose of this policy is to define the requirements for balance sheet reconciliations, and to
communicate those requirements to those responsible for preparing the reconciliations.
It is a key responsibility of the accounting staff to monitor their assigned balance sheet accounts
to ensure that they accurately reflect current business conditions. This responsibility should be
accomplished by implementing and sustaining a formal process that ensures that all balance
sheet accounts are reconciled regularly and in a timely manner.
2.0 Definition
In general, an account is considered reconciled if it is documented that the account balance
accurately reflects the underlying asset, liability, or equity position of the company as of the
reconciliation date.
Specifically, account reconciliation compares a general ledger account balance with the detaillevel sub-ledger which should support the general ledger account balance. For the purpose of
this policy, the "sub-ledger" may be a bank statement, an aging report, a spreadsheet, or some
other appropriate underlying documentation. Both the general ledger balance and the sub-ledger
balance should be reconciled to an "adjusted" balance (i.e., what the balance should be) since
there may be errors in the general ledger, the sub-ledger, or both. In addition, the reconciliation
identifies the source of any differences between the general ledger and sub-ledgers balances
and the reconciler's plan for eliminating them.
If a general account or primary account represents the consolidation of several secondary
general ledger accounts, then the reconciliation must be done at each secondary general ledger
account. All secondary general ledger balances must be summarized to the primary general
ledger account and its balance.
Note: An analysis of the activity in the general ledger does not constitute reconciliation and is not
an appropriate supporting document in or by itself.
3.0 Responsibility
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Each balance sheet account is "owned" by an individual. Ownership responsibility is assigned to

the person who has the most knowledge and control of the account (unless internal control
considerations dictate otherwise) as well as the accounting skill to prepare the reconciliation.
On the last business day of each month, the following months reconciliation matrix will be
prepared by the Companys Finance Administrator. As reconciliations are completed, the
Companys Finance Administrator will update the status of each account on the matrix. The
reconciliation matrix will be included within the monthly reconciliation binder.
Reconciliation Matrix:
The purpose of the month-end reconciliation matrix is to ensure:
an effective process is sustained,
timely clearing of reconciling transactions are made,
timely reconciliations are performed on a scheduled basis,
adequate segregation of duties and responsibilities exist,
a strong centralized control, tracking and reporting process is maintained,
the reconciliation schedule is based on account activity risk,
formalized reconciliation policy and procedures are adhered to,
managements oversight/commitment/authorization is assured and
"employees responsible" are fully aware of their assignments and their responsibilities are
completed on time and conducted properly and accurately in conjunction with the financial
closing internal control structure.
Companys Reconciliation Matrix document is organized by a Balance Sheet Schedule ID #
Legend, the Account Reconciliation Matrix and an Instruction Matrix.

1.
2.
3.
4.
5.
6.

Within the reconciliation matrix, the following key information is defined by schedule:
Frequency, monthly or quarterly,
Schedule Number for referencing to its location in the month-end close notebook,
Due Date and Actual Completion Date
Owner and Approver,
A description of the schedule reconciliation and
A reference to the appropriate accounting pronouncement, if applicable.
4.0 Procedures
4.1 Each account should be reconciled monthly or quarterly as identified in the matrix, unless an
exception is approved by the Companys Accounting Manager or the Finance Director.
4.2 Accounts that have a zero general ledger balance or no journal entry activity will not require
a reconciliation schedule.
4.3 The reconciliation schedule will be done in a standard format.
4.4 Each assigned owner will ensure adequate supporting documentation will be retained for
their respective assigned activity. All monthly schedules and supporting documentation must be
reviewed with the Accounting Manager or the Finance Director and the personnel will sign-off on
all schedules as evidence of review and approval. This documentation will be filed in the monthly
work-papers binder. For schedules that are prepared by the Accounting Manager, the Finance
Director must review and sign-off. If the VP Finance Director prepares schedules then the
Accounting Manager or the Sector Controller will review and approve.
4.5 The Accounting Manager or the Finance Director will monitor completion of reconciliations
by communication with assigned owners on regular basis.
4.6 The Finance Administrator will update the matrix as reconciliations are submitted by the
Companys reconcilers. The reconciliation matrix will be the first schedule in the notebook
followed by the final ERP trial balance. As a final sign off, the VP Finance Director will review the
completed notebook and sign the reconciliation matrix.
4.7 When a new general ledger account is created or becomes inactive, the Accounting
Manager will be responsible for updating the reconciliation matrix.
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4.8 Any changes to month-end reconciliation process, such as changing the frequency from
monthly to quarterly or not completing a schedule, must be approved by the VP Finance Director
in advance of the change.
4.9 The reconciliation should indicate the general ledger and the sub-ledger balances at the end
of the month and identify each item comprising any variance or difference, if any, between the
actual general ledger and sub-ledger balances. The reconciler will adjust what the general
ledger and/or the sub-ledger balance should have been (the "adjusted" figure). The number of
reconciling items and the absolute value of these reconciling items will be shown and described
at the bottom of the reconciliation.
4.10 The reconciler will tick and tie with letters on the reconciliation schedule to the
corresponding amount in the supporting documentation when applicable or necessary.
4.11 As a final check for completeness, the Finance Administrator will ensure that the total
general ledger balance on the account reconciliation schedules for that Section ID agrees with
the Company Balance Sheet Group and Line Item Report. This validation will ensure all required
accounts have been reconciled. The report will also be included in the front of the quarterly
reconciliation binder.
4.12 The reconciler should identify the corrective steps to clear each reconciling item (note the
journal entry #, etc.) or provide a commitment date when the item will be cleared. An account
containing such items is un-reconciled and the amount of the unidentified items will be identified
as the "un-reconciled amount" at the bottom of the reconciliation. Reconciling items should be
cleared by the quarter-end close of the items discovery. If appropriate delays are required to
correct or clear the reconciled item, a formal document must be completed explaining the
rationale for the delay. This document must be approved by the VP Finance Director and the
Sector Controller.
4.13 All reconciling items will be tracked by the Finance Administrator and reviewed by the VP
Finance Director on a timely basis to measure the quality of the Companys account
reconciliations. The Finance Administrator will summarize all outstanding reconciling items by
the general ledger account to ensure journal entries are processed in the subsequent
accounting period.
4.14 Material reconciling items will be discussed at the monthly Company P&L and balance
sheet review meetings and with the Sector Controller.
5.0 Reconciliation Schedule Definitions
5.1 Reconciliation Statements: General ledger accounts that have external activity performed
against them by a 3rd party use this format. The 3rd party provides all external activity detailed
activities and corresponding values. These activities are then compared to sub-ledger activity or
register activity. All cash accounts require a monthly reconciliation to the respective bank
statement.
5.2 Sub-ledger Reconciliations: ERP Subledgers exists for Accounts Receivable, Inventory
(raw material & finished goods only), Fixed Assets and Accounts Payable. This schedule
compares the respective sub-ledger balance to the corresponding general ledger or trial balance
amount. Most other accounts at the company will use this format or schedule as the sub-ledger
does have underlying documents to support the content in the general ledger account.
5.3 Roll-forward Schedules: GL accounts that have only internal activities or journal entries
processed against them use this schedule. Significant routine and non-routine GL accounts
require roll-forward schedules. A roll-forward schedule shows "rolling" activity by month with an
opening GL balance, all transaction descriptions with an ending GL balance. At various
organizations the roll-forward schedule is generally used for Inventory Reserves, Federal &
State Income Taxes Payable, Accrued Wages Payable, Accrued Corporate & Sector Liabilities
and Intercompany accounts.
6.0 Audit Frequency Checklist
6.1 The following checklist reflects those GL accounts that will require completion before and
after the Company closes the GL. This checklist will be reassessed during the (Insert Month)
200X month-end close using the (Insert Month) 200X trial balances to ascertain if Company can
perform quarterly reconciliations for the listed GL accounts below.
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(insert example checklist)

7.0 Reconciliation Binder Legend - Schedule ID #
(insert example)
8.0 Reconciliation Matrix
(insert example reconciliation matrix)
9.0 File Location
All reconciliations for the current fiscal year will be located and retained within the following
folder on the accounting network drive. These files should remain in this directory and should not
be copied to your local drive or any other network location.
(insert network location)
Included within this folder are subfolders that are created by the Finance Administrator. These
subfolders are titled by the name of the Company reconciler. In each reconcilers folder will be
an Excel file for each of the reconcilers accounts. Each Excel file will contain a tab and a
reconciliation schedule for each month of the current fiscal year.
10.0 Sign-offs & Binder Format
10.1 One binder will be created on a monthly basis. Included in the front of the binder, the
reconciliation matrix and the trial balance will be filed in the front of the binders Schedule ID
Sections. The following is included on all account reconciliations.
Prepared by : ________________ ___ / ___ / ___
Reviewed by : _______________ ___ / ___ / ___
IST Accounting Manager or
Finance Director

As account reconciliations are completed, the total GL balance on the Account Reconciliations
for that Section should agree with the Company Balance Sheet Group and Line Item Report that
will be included in the front of the asset binder. Each person is responsible to ensure any entries
posted agree with the final balances when the month is closed.
10.2 As reconciling items are noted during the account reconciliation process that requires
booking a journal entry, it should be documented by completing the following information which
is reflected on all account reconciliations.
Correcting / Adjusting Journal Entry Required? _____YES _____NO
All corresponding documentation is attached? _____YES _____NO
If NO , documentation is filed : ( specify ) _________________________

Each correcting journal entry booked should be attached to the corresponding reconciliation. If a
non-quarter end month has been closed, the entry may be posted in the subsequent month.
However, a copy should also be retained with the reconciliation. For months concluding a given
quarter end and prior to the close of the month, all journal entries not booked in the proper
quarter should be provided to the Accounting Manager.
Each account reconciliation statement should contain the appropriate documentation to support
the ending balances in the general ledger account and sub-ledger. For sub-ledger detail which is
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greater than X pages and is derived directly from the system, including only the last page with
the total is sufficient (i.e. accounts receivable, inventories, fixed assets and accounts payable
sub-ledger detail). The support should provide the reviewer with sufficient data to comprehend
the information and data included in the account. For example, descriptions should include the
date of an item capitalized to the account, and a thorough description of the transaction. Solely
providing the journal entry # as detail for a reconciling item is not considered sufficient support.

GohKhengLeng
SeniorManager,HeadofInternalAudit
t:(65)68773460www.income.com.sg

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