Reconciliation is the key process used to determine whether the money leaving an account matches the amount spent, ensuring the two values are balanced at the end of the recording period.
Reconciliation is a process that may benefit businesses as this may help avoid balance sheet errors which may have led to detrimental ramifications, in addition reconciliation may help against fraud and can help instil financial integrity.
Reconciliation in accounting is not only important for businesses, but may also be convenient for households and individuals. It is prudent to reconcile credit card accounts and cheque books on a regular basis, for example. This is done by comparing debit card receipts or check copies with a person’s bank statements.
The benefits of reconciling:
- Mitigates mistakes which have been made by financial institutions or if there have been any fraudulent withdraws from an account.
- Helps create an overall image on spending and helps access if a person is overspending on fees