General Ledger Reconciliation: The Cornerstone of Financial Accuracy

In addition, it helps you streamline future reconciliations by formalizing your reconciliation process. A company’s bookkeeping general ledger (G/L) is a comprehensive record of all your accounting transactions. Whenever a transaction is made, that transaction is recorded in the general ledger. Each journal consists of a debit to one account and a credit to another. For example, a bank account subledger records all bank-related transactions such as withdrawals, wires, reconciliations, deposits, etc. Examples of subledgers follow a similar logic and include account payable subledger, inventory subledger, cash subledger, etc.

Rebate Management Data Sheet

” In this instance, GL recs are the rectangle; balance sheet recs are the square. Discover how to hire a healthcare data analyst from LATAM, avoid common mistakes, and leverage offshore talent for your US healthcare company. Documenting each reconciliation improves accountability, transparency and facilitates auditing.

• Bank reconciliation is one type of GL reconciliation, focused specifically on cash accounts.
• It documents every step, including adjustments and the reasons behind them.
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• Establish detailed responsibility matrices defining who prepares, reviews, and approves each reconciliation, with explicit timelines and escalation paths.
• A reconciled general ledger gives you confidence in your financial data, allowing you to create accurate financial reports, detect potential fraud, and make smart business decisions.

Key Takeaways

With Excel, managing a large amount of data becomes burdensome and increases the risk of errors and typos. Automating the general ledger reconciliation process minimizes the risk of these errors while making reconciling accounts a more efficient process. When the company receives the June bank statement, the $12,547.22 will show up there and this matching will clear the reconciling items the following month. The value in the general ledger reconciliation process comes from identifying these discrepancies and taking action to correct as needed. High transaction volumes increase general ledger reconciliation meaning the chance of errors, making reconciliation more time-consuming and error-prone.

Common Reconciliation Errors

On the other hand, the key goal of data provenance is to specifically track the data origination and segregating data in three key stages. To understand the full story, you have to analyze the segments that power your aggregated numbers. You have to https://blackdiamondsint.com/index.php/2021/11/24/efficient-bulk-payout-and-vendor-payment-solutions/ be able to dive deeper into them individually so you can better reconcile items that don’t match. Unfortunately, there are a number of things that can slow you down in the process. It’s easy to manipulate or delete transaction data, especially when Excel is used as a bridge between source data and the general ledger. A «fat finger» error here, an Engineering mistake there, or a report pulled an hour earlier than normal and missing some of yesterday’s transaction, and all your calculations are skewed.

• By the time data reaches the GL, it has already passed through multiple systems where errors are introduced.
• As a result, your balance sheet may reflect the accounts receivable balance for last month that you can’t substantiate with operational data anymore.
• GL reconciliation is the process of checking that the information recorded in the general ledger is accurate.
• Next, we look at how a bank uses debit and credit when referring to a company’s checking account transactions.
• Documenting the reconciliation is vital for future reference and audits.
• This review evidence gets noted on the reconciliation documentation before formal approval.

How do I reconcile a subledger to the general ledger?

You can look at your account variance in these instances, i.e., the difference between the beginning and ending balances. If your monthly activity matches the monthly account variance (and if you started off with an accurate beginning balance), you can be confident that your ending balance is accurate. Today, most GL systems are computerized, so you won’t see your entries laid out in a T-account like this. But understanding how a T-account works can help you see how transactions net with each other and how general ledger balances accumulate.