Record to report / R2R – Reconciliations
Subsidiary to main books
We elaborated on a few items constituting a reconciliation.
- https://faoblog.com/processes-record-report-r2r-reconciliations-bank-4/
- https://faoblog.com/processes-record-report-r2r-reconciliations-bank-5/
- https://faoblog.com/processes-record-report-r2r-reconciliations-bank-6/
I guess that should be good enough for bank reconciliations.
ERP systems have given another reason to do reconciliations. As a basic modular design, the general ledger sections of an ERP Accounting system are separate from the subsidiary units, like accounts payable, accounts receivable and payroll etc. So there is a necessity to upload these subsidiary books to the general ledger module. ERPs have procedures, which can be scheduled. These updates normally happen by closing the modules for a defined period, in most cases, this is a fiscal month (which may or may not be the calendar month). Not it may happen that some entries may fail to upload. Closure of books is critical, so some tolerances are built into this. So some differences may arise.
These differences have to be identified and corrected post closure, mandating manual entries in the general ledger module.
So in a subsidiary book reconciliation, we will compare the general ledger balances with the balance of the subsidiary book as on a certain date, and identify the difference, items causing the difference and correcting the same as may be needed. I have seen situations, where direct entries were made to the general ledger module, without using the subsidiary module, which was quite bizarre. But these things do happen.
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