Account reconciliation

Account reconciliation is the process of comparing each general ledger account balance with independent records to confirm it's accurate and complete. It focuses on balance sheet accounts such as cash, accounts receivable, accounts payable, accruals, and fixed assets. Accountants match each balance to bank statements, sub-ledgers, invoices, or schedules, investigate discrepancies, and correct errors with an adjusting journal entry.

Reconciliation is a core step of the month-end close. Teams complete it before they finalize the trial balance and financial statements, so errors don't carry into reported results. Teams typically reconcile high-risk accounts every month, and some reconcile continuously through the period instead of waiting for close.

For FP&A, reconciled accounts mean reliable actuals. Those actuals feed variance analysis, forecasts, and plans, so an unreconciled balance distorts every model built on it. Reconciliation also documents each balance for auditors and supports internal controls.