The detective control that finds most problems.
WHAT RECONCILIATION IS
Comparing two independent records of the same thing and explaining differences.
WHY IT WORKS
Concealment requires both records to be altered, which is much harder.
WHAT TO RECONCILE
Bank accounts to the ledger Cash to recorded sales Stock records to physical counts Debtors ledger to control account Creditors ledger to supplier statements Payroll deductions to remittances Fuel and consumable issues to usage
WHY SUPPLIER STATEMENTS SPECIFICALLY
They are an independent record of what you owe, and they reveal invoices you did not receive and payments that did not arrive.
HOW OFTEN
Monthly at minimum, and daily for cash.
WHO SHOULD DO IT
Someone independent of the transactions.
WHY
Self-reconciliation finds nothing.
WHAT RECONCILIATION REQUIRES TO BE MEANINGFUL
Every difference explained Explanations supported Old items cleared Review by someone else
WHY REVIEW
Reconciliations prepared and never examined are performed carelessly.
WHAT TO WATCH FOR
Reconciling items that persist Large adjusting entries Balancing figures with no explanation Reconciliations completed late
WHY PERSISTENT ITEMS
They are where problems are concealed.
WHAT TO REQUIRE
That old items are investigated and cleared.
WHAT LATE RECONCILIATIONS INDICATE
Either capacity problems or something being avoided.
WHAT TO ESTABLISH
A deadline, and follow-up when missed.
WHAT TO RETAIN
Completed reconciliations, with evidence of review.
