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Connecting the Dots: Account Reconciliations and Financial Statement Assurance

Division Accounting and Finance, BGSF, Professional Division
September 11, 2023

In the world of finance and accounting, every period, whether it’s a month, a quarter, or a year, serves as a crucial checkpoint for an organization’s financial health and reporting. One might assume that these periods are independent of each other, but in reality, they are interconnected, with each quarter-end close playing a significant role in shaping the year-end financial statements. One key component of an organization’s validation of their financial health, and determination of the completeness and accuracy of the financial information, is account reconciliations. The process of reconciliation will ensure and provide evidence to support the accuracy and validity of financial information. Also, a proper reconciliation process ensures that unauthorized changes have not occurred to transactions during processing. To further understand this intricate relationship, we must delve into the world of account reconciliation and balance sheet assurance.

The Quarterly Challenge

Each quarter, businesses undergo a rigorous process to close their financial books. This process involves reconciling accounts, reviewing transactions, and preparing financial statements. While it may seem like a routine task, the impact of each quarter-end close ripples throughout the year and significantly influences the accuracy of year-end financial statements.  This assurance provided from reconciling accounts is key for organizations to leverage in validating the accuracy and completeness of their financial information.

Account Reconciliation

Quarterly account reconciliation is a critical part of the quarter-end close process. This involves comparing the balances in a company’s general ledger accounts to supporting documentation, such as bank statements, invoices, and purchase orders. The goal is to identify discrepancies, errors, or omissions and resolve them.

Why it Matters:

Cleanup of Outstanding Transactions

As part of the quarter-end close, organizations also perform a cleanup of outstanding transactions. This involves reviewing and resolving any open or unresolved items that may have been carried forward from previous quarters or years.

Why it Matters:

The Quarter-End to Year-End Connection

As you connect the dots between quarter-end closes and year-end financial statements, remember that precision in your financial processes is key to success. By maintaining a keen focus on account reconciliation and clean-up, you’ll not only navigate the quarterly challenges but also set the stage for a strong financial year ahead.

Do you need support in your quarter-end and year-end closing processes? Our extensive network of accounting & finance resources are here to help. Contact us today!