When audit season approaches, Companies are preparing to receive and welcome those who for a few days will be their most demanding and critical colleagues in the accounting exercise. They are responsible for carrying out exhaustive management controlthat has been carried out in the previous year within the company, the main departments affected being accounting and treasury.
And the economic-financial information of the entity went from being exclusive information of the partners to being information required by other social groups such as the Public Treasury, Suppliers, Consumer Associations... For this reason, The company must have effective management in order to comply with accounting valuation principles.
The need to carry out an audit
The auditor must be impartial and review that accounting standards are met within the organization itself issuing a favorable or unfavorable verdict on the financial and patrimonial reality of the entity that has been audited.
Some companies have their own internal audit department, others wait for the auditors to arrive and carry out their work of observing, controlling, and investigating those items that they consider most important, whether due to business volume, company mergers, portfolio management, etc. . There are many types of audits such as fiscal, technological, etc. But the one that companies fear the most is the accountant.
Cash is the most important and delicate part of the company, this asset must be controlled and its manipulation must be effective for its proper use.
Most of the time it is found in bank accounts, so the best way to control this asset is through accounting reconciliation. At the end of the month, the balance of these bank accounts does not usually coincide with the balances in the accounting accounts, so it is necessary to keep track of these differences and analyze the reason for these imbalances.
What is bank reconciliation?
Bank reconciliation It is an internal and routine procedure, that is, it is a control tool that consists of verifying that the records made by the company are also recorded by the bank, in order to verify that everything is correct and detect errors or omissions. This process is concluded when we achieve that the accounting balance, by adding and subtracting the differences, is equal to the bank balance.
The differences that occur In bank reconciliation they can be of several types, mainly:
- temporary, those that are not registered due to a matter of time (differences due to clearing or bank compensation)
- permanent, They refer to errors or omissions of both the bank and the company (bank charges, overdraft interest, etc.). In these cases, an adjustment entry must be made since, otherwise, the difference would remain.
When we finish comparing and detecting all the differences and mistakes, we must prepare a document that supports the preparation of the conciliation, this is the Conciliation Document that must comply with certain standards for these audits:
- The header must include: Company Name, Name and date of the document, Name of the bank and Account Number, etc.
- In the body of the document: both bank and accounting balances, “Items not recorded in the Bank” and “Items not recorded in Accounting Books” will appear.
- At the bottom of the document: the signatures of the person who makes it, as well as the person who forms it.
The traditional way that some companies have when performing bank reconciliations is compare and score bank statement with the bank ledger account. There are tools on the market that allow this work to be done much more agile and effective.
The importance of showing our auditors the reconciliations with fast, reliable information with ease in searching for any movement, power add comments that clarify the reason for the non-conciliation at that moment from any note, to be able to obtain a precise and fast balance report as well as the Reconciliation Document to a date and the most impressive thing is to be able to obtain the historical reconciliation document to a date, that and much more is what allows us have an optimal reconciliation application.
Fountain: SAGE
