Account Reconciliations - Corporate Guidelines - Final

Date Issued: September 2013, Updated July 2017

Author: Corporate Accounting

1.0: Purpose

The following policy is intended to be a resource for finance professionals at Ingredion (the
“Company”) for guidance on specific accounting methods and application of US Generally
Accepted Accounting Principles (“US GAAP”). This policy does not replace or alter applicable
US GAAP; however, it is merely intended to assist in the consistent accounting across the
Company. Since all circumstances cannot be addressed in their entirety by these
guidelines, professional judgment is necessary in their application. When handling is in
question, please contact the Corporate Controller’s Group (Assistant Corporate Controller).

2.0: Persons Affected

This policy is applicable to all domestic and international locations for Ingredion Inc. and all
consolidated subsidiaries.

3.0: Applicable Accounting Guidance

Not Applicable

4.0: Policy

The following discusses the Company’s policy regarding balance sheet account
reconciliations for both Cadency and non-Cadency account reconciliation preparation.

4.1 A balance sheet account reconciliation is a comparison of the ending balance in the
general ledger with the ending balance in the sub-ledger or other supporting detail
information. Reconciling items adjust the general ledger balance or the sub-ledger, if
appropriate. Account reconciliations represent more than a roll-forward of activity or
isolation of differences between the general ledger and supporting documentation. Account
reconciliations are identified by the Company as a key internal control activity for Sarbanes-
Oxley compliance and are extremely important for the completeness and accuracy of the
Company’s financial statements. In general, an account is considered reconciled if it is
documented that the account balance accurately reflects the underlying asset, liability, or
equity position of the company as of the reconciliation date.

4.2 A separate balance sheet account reconciliation should be prepared for every balance
sheet account or group account at least on an annual basis, but generally more frequently
(monthly or quarterly) for all general ledger balance sheet accounts.

4.2.1 The frequency of account reconciliations should be based on a risk ranking of

accounts and/or the volume of transactions in the account. The risk ranking may
depend on a number of factors including level of judgment required, complexity,
materiality and account history. In addition, the volume of transactions may
increase frequency of reconciliation for low and medium risk accounts such as
intercompany receivables / payables, cash and accruals. These factors should be
weighed against the potential for errors and risk of misstatement for the appropriate
frequency to be established. It is expected that most accounts will be reconciled
monthly. At a minimum, the following accounts should be reconciled monthly:
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

 Cash and Cash Equivalents (excluding petty cash)

 Accounts Receivable Bad Debt Reserve
 AR and AP Margin accounts
 Derivative Asset and Liability accounts
 Due To/From Affiliates ST and LT
 Inventory Valuation Allowance accounts
 Construction Work in Progress (CWIP)
 A/P Sales Rebates
 Suspense and Clearing accounts (including GR/IR)
 Accrued Expenses
 AOCI – Deferred Gain/Loss on Cash Flow Hedges

4.2.2 Quarterly account reconciliations should be completed as of the last month of

the calendar quarter. Annual account reconciliations should be prepared once per
calendar year in the last month of the year.

4.2.3 The risk rank of accounts will be reviewed at least annually by Corporate
Accounting to determine if any factors changed that would impact the frequency of
account reconciliations. In addition, each entity should also review accounts that are
no longer used or could be merged with other accounts, thereby reducing the
number of accounts to be used and reconciliations required.

4.3 Certain situations may exist where accounts have no reported balance. In such cases,
the risk relating to the completeness of the financial statements must be addressed. In this
context, accounts for which balances may be potentially unrecorded (e.g. reserves,
obligations, liabilities) should be analyzed. To the extent no balances are recorded in the
financial records, a memo documenting the reason for the “no balance” assertion should be
prepared and reviewed in lieu of a formal account reconciliation. This should be performed
at least on an annual basis at year-end.

4.4 Timely completion of balance sheet account reconciliations is imperative in detecting

financial statement misstatement.

4.4.1 Balance sheet account reconciliations should be completed by the preparer and
should be reviewed by an appropriate one-over-one approver by the end of the
month following period end. The one-over-one reviewer should be an individual
different from the preparer and should typically be a supervisor. Exceptions of the
“one-up” review can be made at entities/locations with small accounting teams,
however these exceptions require approval from the Corporate Controller or his/her
designee.

4.4.2 The preparer and reviewer of the reconciliations should have a basic
understanding of what the account is used for and what should be used to support
the balance.

4.4.3 It is the reconciler or reviewer’s responsibility to identify proper back-ups for

reconciliations so that reconciliations are still completed in a timely manner in
accordance with 4.4.1.
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

4.5 Reconciling items should be clearly identified in the account reconciliation and marked
as differences between the balance sheet account and the supporting documentation.
Reconciling items are defined as identified differences in the general ledger balance as the
balance does not agree to supporting documentation.

4.5.1 Unreconciled items greater than $200,000 should be reported to the Corporate
Controller in the period identified and each subsequent period until resolved.
Specific action plans should be identified to properly resolve all significant reconciling
items.

4.5.2 Unreconciled items should be clearly dated within the account reconciliation
and should be resolved within 60 days. Resolution includes not only the
identification of the entries or cause of the difference but the posting of adjustments
to ensure the difference does not continue.

4.5.3 Unreconciled items greater than $200,000 and not resolved within the 60 day
time period should be written off unless further investigation time is approved by the
Corporate Controller.

4.6 Appropriate supporting documentation should be attached to the balance sheet account
reconciliation or easily assessable by the reviewer in order to properly reconcile the account
at period end. Supporting documentation should allow for re-performance of the
reconciliation by another party (i.e. Auditors, Controller’s Group, etc.). Please be aware
that certain types of supporting documentation may be confidential in nature. Please use
your best judgment in assessing the confidential nature of supporting documentation.
Appropriate supporting documentation can include the following:

 Sub-ledger file or first and last page of sub-ledger file it too large (only for
entities not using Cadency Certification module)
 Excel worksheet with details supporting the account balance.
 Invoice or other information from a third party.

Examples of inappropriate documentation include the following:

 A roll-forward of the activity from the previous period end.

 A listing of journal entries recorded that equals the ending account balance.

4.7 Account reconciliations should be maintained in the Company’s records for a period of 7
years.

Cadency Usage

4.8 The following discusses the Company’s policies for the use and administration of
Cadency Certification.

4.9 Cadency is a cloud-based software solution. The Certification module is used to

automate the general ledger account reconciliation process. The Cadency Certification
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

module provides the automation of tracking the reconciliation process, standardization,

quick access to the status of the reconciliation process and risk mitigation and control.

4.10 Please refer to 8.3 “Cadency Frequency, Risk and Template Matrix” in Section 8.0 to
view the risk ranking and frequency of reconciliation for the various types of balance sheet
accounts. The frequency of reconciliation noted in the matrix is the minimum recommended
frequency for each type of balance sheet account. It is acceptable to prepare balance sheet
reconciliations more frequently than the minimum recommendation. It is expected that the
majority of accounts will be reconciled monthly.

4.11 There are four different reconciliation templates available in Cadency as follows with
suggested guidelines for usage:

 Balance Detail: Used to reconcile a general ledger balance against a list of items
that legitimately comprise the general ledger balance.
 Balance Detail Amortization: Used to reconcile prepaid accounts and other accounts
with amortization
 Cash Summary: Used to reconcile a general ledger balance to a bank statement.
 Ledger to Subledger: Used to reconcile a general ledger balance to a subledger
balance.

4.12 Each type of balance sheet account has been assigned a reconciliation template in the
attached “Cadency Matrix”. Regional administrators should refer to this matrix when setting
up new general ledger balance sheet accounts in Cadency.

4.13 The components of the reconciliation template are:

 Reconciliation Header: Format is the same for all templates and contains information
about the account, current state of reconciliation and approval status.
 Reconciliation Summary: Varies by master template and displays the mathematical
proof of reconciliation.
 Steps to Complete (Detail Section): Varied by template. Detail information and
supporting documentation.

4.14 Supporting documentation (Excel files, Word files, PDF documents) for balance sheet
accounts can be attached to an account reconciliation in Cadency.

Non-Cadency Usage

4.15 The following discusses the Company’s policies for non-Cadency account reconciliation
preparation.

4.16 The frequency of reconciliation should be documented in a matrix which is attached in

Section 8.2. The matrix includes all balance sheet account numbers and descriptions, BPC
group account, risk ranking, frequency of reconciliation and the assigned preparer and
reviewer of each account. Please use the risk ranking and frequency of reconciliation by
BPC group account that has been documented in the matrix. The matrix ensures that
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

ownership of each account reconciliation is defined and adequate segregation of duties and
responsibilities exists. Management should ensure the matrix is updated on a timely basis
when a new balance sheet account is created or becomes inactive. The frequency of
reconciliation noted in the matrix is the minimum recommended frequency for each type of
balance sheet account. It is acceptable to prepare balance sheet reconciliations more
frequently than the minimum recommendation. It is expected that the majority of accounts
will be reconciled monthly.

4.17 Account reconciliations should include various pieces of information needed by the
preparer/reviewer to ensure the current status of the account is properly documented and
understood by each party. This information should include, but is not limited to the
following:

 Header information such as entity and period-end date.

 Account Ownership – including name of preparer and reviewer and backups if
appropriate.
 Account Description – account name, account type (i.e. asset), and account
number.
 Account Purpose – description of types of transactions that flow through account
and transactions that result in month-end balances.
 Account Reconciliation Details – references to relevant accounting policy,
supporting documentation, and information on reconciling items.
 Accounting Conclusion – statement that certifies that the account balance is
appropriate and is appropriately supported at period end.

4.17.1 The recommended account reconciliation template is attached in 8.1

6.0: Definitions

Reconciling item – refers to a known item contributing to the difference between the
balance in the general ledger and sub-ledger or other supporting documentation.
Reconciling items generally relate to timing differences (e.g. in-transit inventory) and should
be cleared in subsequent account periods.

Roll-forward – is an account reconciliation that only substantiates the current period

activity. A roll-forward does not represent a properly reconciled account. A properly
reconciled account substantiates the entire ending account balance.

Unreconciled items – represents differences between the balance in the general ledger
and sub-ledger or other supporting documentation that are not identified, understood, or
unsupported. Unexplained differences by nature are more indicative of a risk in the
financial statements. This policy requires unexplained differences to be timely identified,
investigated, and adjustments booked if necessary.

7.0: Responsibilities

7.1 Each balance sheet account is "owned" by an individual. Ownership responsibility is

assigned to the person who has the most knowledge and control of the account (unless
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

internal control considerations dictate otherwise) as well as the accounting skill to prepare
the reconciliation. Account owners are responsible for the complete, accurate, and timely
completion of account reconciliations.

7.2 Entity controllers are responsible for the overall management and review of the account
reconciliation process and to ensure the entity is in compliance with this policy.

8.0: Related Documents

9.0: Exhibits

Account Table: Not applicable

10.0: Change Matrix

Section Reason for Change Date

All Initial issuance 9/01/2013
4.2 Added language to include 7/19/2017
group account usage for
Cadency users
4.2.1 Removed risk ranking and 7/19/2017
frequency of reconciliation
definitions and added language
regarding risk and volume of
transactions in account
4.2.1 Added new accounts to list of 7/19/2017
accounts to be reconciled
monthly
4.2.2 Added section to clarify timing 2/3/2014
of quarterly and annual account
reconciliations
4.2.2 Changed month of 7/19/2017
reconciliation for reconciliations
performed on quarterly and
annual basis
4.2.3 Added that risk ranking of 7/19/2017
accounts to be performed by
Corporate Accounting
4.8 – 4.14 Added policies for use of 7/19/2017
Cadency Certification for
Account Reconciliations - Corporate Guidelines - Final
Date Issued: September 2013, Updated July 2017
Author: Corporate Accounting

account reconciliation
preparation
4.15 – 4.17.1 Added policies for Non-Cadency 7/19/2017
affiliates