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 Table of Contents
ACCOUNT RECONCILIATIONS POLICY: SAMPLE 1 AND SAMPLE 2.................................................................3
ACCOUNT RECONCILIATIONS POLICY: SAMPLE 1............................................................................................ 4
ACCOUNT RECONCILIATIONS POLICY: SAMPLE 2............................................................................................ 6
ACCOUNT RECONCILIATIONS POLICY: SAMPLE 3.......................................................................................... 11

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 ACCOUNT RECONCILIATIONS POLICY: SAMPLE 1,
SAMPLE 2 AND SAMPLE 3

Documented policies and procedures play an integral role in efficient and effective company operations. They are
also key to the company’s internal controls environment.

By definition, a “policy” is any rule or set of rules that require or guide action. A policy should be designed to
promote the conduct of authorized activities in an effective, efficient and economical manner and should provide a
satisfactory degree of assurance that the resources of the company are suitably safeguarded. Also, any policy
formulated should conform to applicable laws and regulations and should be consistent with the mission and
philosophy of the company.

Procedures are the methods employed to carry out activities in conformity with prescribed policies. To promote
maximum efficiency and economy, prescribed procedures should be as simple as possible and should not be
overlapping, conflicting or duplicative.

All teams within a company that follow standardized procedures for operations related to specific policies
established by the company should establish a formalized policy and practice. A leading practice is to develop a
policy to create guidelines for the formulation, finalization and maintenance of the company’s formal policies and
practices.

This tool contains three sample policies that establish standards and procedures for ensuring that the company
performs account reconciliations in compliance with management’s objectives.

This document can be used as sample policies. The KnowledgeLeader team will periodically update this
document with new content. Organizations should select, update and modify the content included in this
document to ensure that it reflects business operations.

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 ACCOUNT RECONCILIATIONS POLICY: SAMPLE 1

Prepared By:

Approved By:

Revision Date:

Effective Date:

POLICY

This policy establishes the standards and procedures for ensuring that the company performs account
reconciliations in compliance with management’s objectives.

The purpose of this policy is to define the requirements for balance sheet reconciliations and to communicate
those requirements to those responsible for preparing the reconciliations.

It is a key responsibility of financial controllers to monitor their balance sheets to ensure that they accurately
reflect the business. This responsibility should be accomplished by implementing and following a formal process,
which ensures that all balance sheet accounts are reconciled regularly and in a timely manner.

DEFINITION

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.

Specifically, an account reconciliation compares a general ledger account balance with the detail-level subledger,
which should support the general ledger account balance. For this policy, the "subledger" may be a bank
statement, an aging report, a spreadsheet or some other appropriate underlying documentation. Both the general
ledger balance and the subledger balance should be reconciled to an "adjusted" balance (e.g., what the balance
should be) since there may be errors in the general ledger, the subledger or both. In addition, the reconciliation
identifies the source of any differences between the general ledger and subledger’s balances and the reconciler's
plan for eliminating them.

Note: An analysis of the activity in the general ledger does not constitute a reconciliation and is not an appropriate
supporting document in and of itself.

RESPONSIBILITY

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 internal control considerations dictate otherwise) as
well as the accounting skill to prepare the reconciliation.

On the XX business day of each month, a summary of the status of all balance sheet account reconciliations will
be prepared by the general ledger group in the form of a metric, which will be emailed to the reconciliation
preparers, their managers and senior financial management.

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 PROCEDURES

• Each account should be reconciled monthly unless an exception is approved by corporate finance and the VP
controller.
• The reconciliation should be done in a standard format.
• The reconciliation should indicate the general ledger balance at the end of the month and identify each item
comprising the difference, if any, between the actual general ledger balance and what the general ledger
balance should have been (the "adjusted" figure).
• The reconciler should identify the corrective steps taken to clear each reconciling item (note the journal entry
number) or provide a commitment date when the item will be cleared. Reconciling items should be cleared
within one month.
• The reconciliation should indicate the subledger balance at the end of the month and identify each item
comprising the difference, if any, between the actual subledger balance and what the subledger balance
should have been (the "adjusted" figure).
• The reconciler should identify the corrective steps taken to clear each reconciling item. Items in the subledger
that are unidentified and require further research should be listed in a separate section of the form. An account
containing such items is unreconciled and the amount of the unidentified items will be identified as the
"unreconciled amount" at the bottom of the reconciliation. A commitment date should be provided indicating
when the items will be researched and the subledger (and/or the general ledger) corrected.
• A copy of the subledger should be attached to the reconciliation form. The subledger should contain enough
information such that the reasonableness of each item's inclusion in the subledger is apparent. If the nature of
the account is such that the account does not represent a group of detailed items, the appropriate support is a
detailed calculation of the proper account balance. The exact nature of the supporting documentation will vary
account by account and will be mutually determined by the reconciler and the general ledger group. The
reconciler should maintain enough documentation to support each item comprising the balance in the
subledger. A representative from the general ledger group may request to review the documentation from time
to time. The reconciler should be prepared to explain, for each item, when it will be relieved and how.
• The number of reconciling items and the absolute value of these reconciling items should be computed at the
bottom of the reconciliation. This data will be used to track the total reconciling items in the company and their
dollar value as a measure of the quality of the company's account reconciliations.
• A copy of each reconciliation should be turned in to the general ledger group via email, fax or intercompany
mail by the XX business day of the following month.
• Periodically, the manager of the reconciliation preparer should review the reconciliation and the supporting
documentation to ensure that the reconciliation is complete.

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 ACCOUNT RECONCILIATIONS POLICY: SAMPLE 2

Prepared By:

Approved By:

Revision Date:

Effective Date:

The following sample outlines a set of policies and procedures for the account reconciliation process.

POLICY

This policy establishes the standards and procedures for ensuring that the company performs account
reconciliations in compliance with management’s objectives.

The purpose of this policy is to define the requirements for balance sheet reconciliations and to communicate
those requirements to those responsible for preparing the reconciliations.

It is a key responsibility of the accounting staff to monitor their assigned balance sheet accounts to ensure that
they accurately reflect current business conditions. This responsibility should be accomplished by implementing
and sustaining a formal process that ensures that all balance sheet accounts are reconciled regularly and in a
timely manner.

DEFINITION

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.

Specifically, account reconciliation compares a general ledger account balance with the detail-level subledger,
which should support the general ledger account balance. For this policy, the "subledger" may be a bank
statement, an aging report, a spreadsheet or some other appropriate underlying documentation. Both the general
ledger balance and the subledger balance should be reconciled to an "adjusted" balance (e.g., what the balance
should be) since there may be errors in the general ledger, the subledger or both. In addition, the reconciliation
identifies the source of any differences between the general ledger and subledger’s balances and the reconciler's
plan for eliminating them.

If a general account or primary account represents the consolidation of several secondary general ledger
accounts, then the reconciliation must be done at each secondary general ledger account. All secondary general
ledger balances must be summarized to the primary general ledger account and its balance.

Note: An analysis of the activity in the general ledger does not constitute reconciliation and is not an appropriate
supporting document in or by itself.

RESPONSIBILITY

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 internal control considerations dictate otherwise) as
well as the accounting skill to prepare the reconciliation.

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On the last business day of each month, the following month’s reconciliation matrix will be prepared by the
company’s finance administrator. As reconciliations are completed, the company’s finance administrator will
update the status of each account on the matrix. The reconciliation matrix will be included in the monthly
reconciliation binder.

RECONCILIATION MATRIX
The purpose of the month-end reconciliation matrix is to ensure that:
• An effective process is sustained.
• Timely clearing of reconciling transactions is made.
• Timely reconciliations are performed on a scheduled basis.
• Adequate segregation of duties and responsibilities exists.
• A strong centralized control, tracking and reporting process is maintained.
• The reconciliation schedule is based on account activity risk.
• Formalized reconciliation policies and procedures are adhered to.
• Management’s oversight/commitment/authorization is assured.
• "Employees responsible" are fully aware of their assignments and their responsibilities are completed on time
and conducted properly and accurately in conjunction with the financial closing internal control structure.

The company’s reconciliation matrix document is organized by a balance sheet schedule ID number legend, the
account reconciliation matrix and an instruction matrix.

Within the reconciliation matrix, the following key information is defined by schedule:
• The frequency (monthly or quarterly)
• The schedule number for referencing its location in the month-end close notebook
• The due date and actual completion date
• The owner and approver
• A description of the schedule reconciliation
• A reference to the appropriate accounting pronouncement, if applicable

PROCEDURES

• Each account should be reconciled monthly or quarterly as identified in the matrix unless an exception is
approved by the company’s accounting manager or the finance director.
• Accounts that have a zero general ledger balance or no journal entry activity will not require a reconciliation
schedule.
• The reconciliation schedule will be done in a standard format.
• Each assigned owner will ensure that adequate supporting documentation will be retained for their respective
assigned activity. All monthly schedules and supporting documentation must be reviewed with the accounting
manager or the finance director and personnel will sign off on all schedules as evidence of review and
approval. This documentation will be filed in the monthly work papers binder. For schedules that are prepared
by the accounting manager, the finance director must review and sign off. If the VP finance director prepares
schedules, then the accounting manager or the sector controller will review and approve them.
• The accounting manager or the finance director will monitor the completion of reconciliations by
communicating with assigned owners regularly.
• The finance administrator will update the matrix as reconciliations are submitted by the company’s reconcilers.
The reconciliation matrix will be the first schedule in the notebook followed by the final enterprise risk planning

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 (ERP) trial balance. As a final signoff, the VP finance director will review the completed notebook and sign the
reconciliation matrix.
• When a new general ledger account is created or becomes inactive, the accounting manager will be
responsible for updating the reconciliation matrix.
• Any changes to the month-end reconciliation process, such as changing the frequency from monthly to
quarterly or not completing a schedule, must be approved by the VP finance director in advance of the change.
• The reconciliation should indicate the general ledger and the subledger balances at the end of the month and
identify each item comprising any variance or difference, if any, between the actual general ledger and
subledger balances. The reconciler will adjust what the general ledger and/or the subledger balance should
have been (the "adjusted" figure). The number of reconciling items and the absolute value of these reconciling
items will be shown and described at the bottom of the reconciliation.
• The reconciler will tick and tie letters on the reconciliation schedule to the corresponding amount in the
supporting documentation when applicable or necessary.
• As a final check for completeness, the finance administrator will ensure that the total general ledger balance on
the account reconciliation schedules for that section ID agrees with the company balance sheet group and line-
item report. This validation will ensure that all required accounts have been reconciled. The report will also be
included in the front of the quarterly reconciliation binder.
• The reconciler should identify the corrective steps to clear each reconciling item (the journal entry number,
etc.), or provide a commitment date when the item will be cleared. An account containing such items is
unreconciled and the amount of the unidentified items will be identified as the "unreconciled amount" at the
bottom of the reconciliation. Reconciling items should be cleared by the quarter-end close of the item’s
discovery. If appropriate delays are required to correct or clear the reconciled item, a formal document must be
completed explaining the rationale for the delay. This document must be approved by the VP finance director
and the sector controller.
• All reconciling items will be tracked by the finance administrator and reviewed by the VP finance director on a
timely basis to measure the quality of the company’s account reconciliations. The finance administrator will
summarize all outstanding reconciling items by the general ledger account to ensure that journal entries are
processed in the subsequent accounting period.
• Material reconciling items will be discussed at the monthly company P&L and balance sheet review meetings
and with the sector controller.

RECONCILIATION SCHEDULE DEFINITIONS

• Reconciliation Statements: General ledger accounts that have external activity performed against them by a
third-party use this format. The third party provides all external activity detailed activities and corresponding
values. These activities are then compared to subledger activity or register activity. All cash accounts require a
monthly reconciliation to the respective bank statement.
• Subledger Reconciliations: ERP subledgers exist for accounts receivable, inventory (raw material and
finished goods only), fixed assets and accounts payable. This schedule compares the respective subledger
balance to the corresponding general ledger or trial balance amount. Most other accounts at the company will
use this format or schedule as the subledger does have underlying documents to support the content in the
general ledger account.
• Roll-Forward Schedules: GL accounts that have only internal activities or journal entries processed against
them use this schedule. Significant routine and nonroutine GL accounts require roll-forward schedules. A roll-
forward schedule shows "rolling" activity by month with an opening GL balance and all transaction descriptions
with an ending GL balance. At various organizations, the roll-forward schedule is generally used for inventory
reserves, federal and state income taxes payable, accrued wages payable, accrued corporate and sector
liabilities, and intercompany accounts.

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 AUDIT FREQUENCY CHECKLIST

The following checklist reflects the GL accounts that will require completion before and after the company closes
the GL. This checklist will be reassessed during the (Insert Month) (Insert Year) month-end close using the (Insert
Month) (Insert Year) trial balances to ascertain if the company can perform quarterly reconciliations for the listed
GL accounts below.

(Insert Example Checklist)

RECONCILIATION BINDER LEGEND: SCHEDULED ID NUMBER

(Insert Example)

RECONCILIATION MATRIX

(Insert Example Reconciliation Matrix)

FILE LOCATION

All reconciliations for the current fiscal year will be located and retained within the following folder on the
accounting network drive. These files should remain in this directory and should not be copied to your local drive
or any other network location.

(Insert Network Location)

Subfolders that are created by the finance administrator should be included in this folder as well. These
subfolders are titled by the name of the company reconciler. An Excel file will be in each reconciler’s folder for
each of the reconciler’s accounts. Each Excel file will contain a tab and a reconciliation schedule for each month
of the current fiscal year.

SIGNOFFS AND BINDER FORMAT

• One binder will be created monthly and will include, in the front of the binder, the reconciliation matrix and the
trial balance will be filed in the front of the binder’s schedule ID sections. The following is included in all
account reconciliations:

Prepared By: ________________ ___/___/___

Reviewed By: _______________ ___/___/___

Accounting Manager or Finance Director

As account reconciliations are completed, the total GL balance on the account reconciliations for that section
should agree with the company balance sheet group and line item report that will be included in the front of the
asset binder. Each person is responsible for ensuring that any entries posted agree with the final balances
when the month is closed.

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• As reconciling items are noted during the account reconciliation process that requires booking a journal entry,
they should be documented by completing the following information that is reflected on all account
reconciliations:

Is journal entry correcting/adjusting required? Yes No

Is all corresponding documentation attached? Yes No

If not, is documentation filed? If so, please specify.

Each correcting journal entry booked should be attached to the corresponding reconciliation. If a non-quarter-end
month has been closed, the entry may be posted in the subsequent month. However, a copy should also be
retained with the reconciliation. All journal entries for months concluding a given quarter-end and prior to the close
of the month not booked in the proper quarter should be provided to the accounting manager.

Each account reconciliation statement should contain the appropriate documentation to support the ending
balances in the general ledger account and subledger. For subledger detail, which is greater than X pages and is
derived directly from the system, including only the last page with the total, is sufficient (e.g., accounts receivable,
inventories, fixed assets and accounts payable subledger detail). The support should provide the reviewer with
sufficient data to comprehend the information and data included in the account. Descriptions should include the
date of an item capitalized to the account and a thorough description of the transaction. Solely providing the
journal entry number as a detail for a reconciling item is not considered sufficient support.

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 ACCOUNT RECONCILIATIONS POLICY: SAMPLE 3

INTRODUCTION

This procedure document concerns the company’s general ledger balance sheet account reconciliations. Account
reconciliation is a key internal control that facilitates the timely reporting of complete and accurate information in
the general ledger and the financial statements. The account reconciliation process's timeliness can help identify
and correct errors before quarterly or annual financial statements are prepared. All balance sheet accounts should
be reconciled, reviewed and approved for each monthly accounting period.

PROCEDURES

ACCOUNT RECONCILIATION
• Each balance sheet account should be reconciled monthly unless the controller approves an exception.
• The reconciliation should be done in a consistent format from month-to-month.
• The reconciliation should indicate all transactions included in the general ledger balance at the end of the
month. Every item in the reconciliation should clearly explain what it is and how it relates to the account
balance.
• A report from Oracle showing all transactions during the month and month-end balance should be attached to
the account reconciliation. Suppose the nature of the account is such that the account does not represent a
group of detail items. In that case, the appropriate support is a detailed calculation of the proper account
balance. The exact nature of the supporting documentation will vary account by account and will be mutually
determined by the reconciler and the financial reporting manager or controller. The reconciler should maintain
sufficient documentation to support each item comprising the balance in the general ledger.
• The reconciliation should indicate the general ledger balance at the end of the month and identify each item
comprising the difference, if any, between the general ledger balance and the account reconciliation balance.
• The reconciler should identify the corrective steps taken to clear each reconciling item (note the journal entry
number, etc.) or provide a commitment date when the item will be cleared. Reconciling items should be
cleared before immediately following external reporting requirements or the same month if the month
represents a quarter-end month.
• In reconciliations for accounts receivable, accounts payable or other accounts requiring aging, reconcilers
should provide explanations for balances equal to or greater than 90 days outstanding.
• The bank reconciliation process involves comparing cash balances in the general ledger cash accounts to the
amounts reported on the bank statements, identifying reconciling items and analyzing any differences. The
reconciliation accountant prepares entries for identified corrections that need to be made in the accounting
system and entries for interest income and bank charges for review, approval and input into ORACLE.
• The reconciliation will include a signoff by the preparer and reviewer, along with the date the reconciliation was
prepared and reviewed. By signing off, both the preparer and reviewer acknowledge the following:
− The reconciliation has been reviewed in detail and/or steps re-performed, as necessary.
− The reconciliation has been prepared in accordance with this procedure.
− All reconciling items have been properly identified, along with the appropriate action plan for follow-up and
timely resolution.
− All significant adjustments and stale-dated reconciling items have been reported to the appropriate party so
that the potential impact on the financial statements may be assessed. The individual amounts that
comprise the ending general ledger account balance are accurate, reasonable and complete.
• There must be a separate preparer and reviewer.

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• A copy of each reconciliation should be turned in as a hard copy or scanned and sent via email.

Key Control CLOSE-1: Monthly, all account reconciliations are reviewed and approved by the financial reporting
manager or controller. The reconciliations are reviewed to ensure that the account balances are appropriate, that
reconciling items are identified and resolved promptly, that the reconciliation is performed correctly, and that the
supporting schedules (e.g., TB summary) are mathematically accurate and attached to reconciliation. Evidence of
review and approval by the financial reporting manager or controller is indicated by initialing and dating the
specific account reconciliation.

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