Annual Checkup of Your Account Reconciliation Processes
In between monthly closes, generating reports, and auditor visits, we recommend that all companies, regardless of size, every year conduct a full assessment of their account reconciliation process.
To help you start, consider this a partial checklist of things you and your team should do.
- Review and, if needed, update your policies and procedures for each account. Some accounts may be complex and instructions on how they should be handled may only exist in the heads of the accountants who work on them. What happens when these accountants leave? Also, do the policies and procedures include steps to meet the latest regulations?
- Perform an account reconciliation quality assessment. Does it seem like you are still seeing roll-forwards each month? Are some accounts aging beyond 60 days? Have team members spot check other team members’ reconciliations. Are the policies and procedures adhered to? From an internal controls perspective, how do the reconciliations look?
- Check on the timing of all of your account reconciliations. Would it make more sense to push some into a quarterly reconciliation time-frame? Should other accounts be moved to a monthly schedule?
- Count the number of accounts you are reconciling. Have recent acquisitions or changes in vendors left you with accounts that can be merged.
- Hold an annual account reconciliation refresher course. It is always good to review processes, best practices and regulations. Plus, this is a great opportunity to reiterate why proper account reconciliations are so important.
There may be other items you should add to this list. One additional item might be to make this annual checkup fun.