Record to report / R2R – Reconciliations

We introduced you to the types of reconciliations in the last post.

The first in the list was “Intercompany”. When a client has outsourced some accounting work to you as an outsourcer or as a back office, the first fundamental presumption is that it has a certain critical size. Logically, it could be spread across multiple locations, cities and countries as well. As organizations grow, they do not blindly invest in an accounting system which is centralized and caters to all geographical diversities right upfront. In most of the cases, as locations and units increase, each gets its own set of accounting installations, which in 80% of the cases are independent. In the balance 20% cases, companies figure a way to port the data to the central or corporate headquarter accounting system periodically.

Now this leads to differences in the balances the books show at two different locations of the same company.

You will ask me, why do these differences arise??….

Look out for the next post.


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