![]() 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. It imports data from all sources, including ERP and other general ledger systems, bank files or statements, and credit card statements. General Ledger reconciliation software automates all steps in the general ledger reconciliation process. How Does General Ledger Reconciliation Software Work? If discrepancies are identified and adjusting journal entries are needed, the adjustments can be recorded, which in turn increases the accuracy of the financial statements. This helps to prevent errors, which in turn increases the accuracy of the financial statements. If a discrepancy is identified during the general ledger reconciliation process, the discrepancy can be investigated, and the necessary steps can be taken to ensure the discrepancy is handled appropriately. Performing general ledger reconciliations provides comfort that the activity captured and the ending balances are accurately stated, as the balances are substantiated with supporting documentation. Performing general ledger reconciliations helps to increase accuracy, prevent significant errors, and identify adjustments in a timely manner. General ledger reconciliations are an important step in the financial close process to ensure the completeness and accuracy of the general ledger and financial statements. Benefits of General Ledger Reconciliation The general ledger reconciliation process is a necessary step that must be completed before a company can issue financial statements. The reconciliation process, including the investigation of any discrepancies and adjusting journal entries, is documented together, and all of this information is stored for audit purposes. If it is determined that a corrective journal entry is needed, accountants should prepare a journal entry to correct any errors. Prepare adjusting journal entries, if necessary Not all discrepancies indicate an error in the general ledger account balance, so it is important to investigate each discrepancy. Discrepancies may arise due to timing differences, missing transactions, mistakes, or other reasons. If the general ledger account balance cannot be substantiated and discrepancies are noted between the general ledger account balances and the supporting documentation, accountants research, investigate, and take appropriate action to correct the discrepancies. This is an important part of the reconciliation process where the accountant substantiates the general ledger account balances. Once you have the necessary details of the account balances, the next step involves comparing the general ledger account balance to information obtained from independent systems, third-party data, or other supporting documentation, such as bank statements and credit card statements. ![]() Reconcile ending account balances to supporting documentation Depending on the account type, you may also need the activity for the period-details of debits and credits to the account. For most reconciliations, you will need the ending balance of the general ledger account-the balance as of the period end date. The first step in preparing a general ledger reconciliation is to obtain the necessary details of the general ledger account that you wish to reconcile. Obtain necessary details of the general ledger account To complete a general ledger reconciliation, accountants typically follow these steps: 1. Accountants go through each account in the general ledger and verify that the balance listed is complete and accurate. This general ledger reconciliation process takes place after the end of a financial reporting period. ![]() How to Prepare a General Ledger Reconciliation General ledger reconciliation is a key part of the financial close process that is used to verify a company’s financial information before releasing it to the public on financial reports. ![]() It also includes thoroughly investigating any discrepancies that are identified and taking the proper corrective actions to resolve them. It involves comparing the general ledger account balances with other independent systems, third-party data, or other supporting documentation such as statements or reports, to verify that the balances are complete and accurate. ![]() Overview: What is a General Ledger Reconciliation?Ī general ledger reconciliation is an activity performed by accountants to verify the integrity of account balances on the company’s general ledger. ![]()
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