NetClose - Reconciliations Overview
Account reconciliations is one of the pillars of month-end close processes. Understanding and supporting changes within your G/L is integral to complete and accurate financial statements. We often enter month-end close procedures with a substantial list of G/L accounts that we must reconcile. Our NetClose reconciliations tool aims to simplify and consolidate your reconciliations procedures.
The Reconciliations module has intuitive functionality to reduce the burden of account reconciliations. During the implementation of the Reconciliations module, you will first go through your G/L and create account groupings for all of your G/L accounts (see our guide for account grouping configuration). Within these account groupings, you can then assign an owner to reconcile that group of accounts and a reviewer. Within the account groupings, you can also set up auto-reconciliation rules that will apply to the individual groupings.
The Reconciliations module easily automates excluding/including accounts based on criteria set up during implementation. The auto-reconciliation rules will dictate which accounts are marked as "auto-reconciled" and which accounts need to be manually reconciled. We have three auto-reconciliation types: general, saved search, and threshold. Again, to become more familiar with these different rules, please navigate to the Account Grouping Basic Configuration article and to the Account Grouping Subsidiary Configuration article. Setting up these rules on implementation is critical to using the Reconciliations module to its full extent.
Once your account groupings are set up and you have the necessary rules, you can generate reconciliations and run the auto-reconciliation rules. Once both processes are complete, you will be left with the accounts that need to be manually reconciled. For manually reconciled accounts, the module will provide a reconciliation record with the necessary information to prepare a reconciliation for the account. This record will have beginning balance, ending balance, debit and credit activity, and unexplained balance.
The unexplained balance is the balance that we are most concerned about when completing the reconciliations. To complete the reconciliation, the unexplained balance has to be zero. To explain the balance, you can attach reconciliation items to the reconciliation record to fully or partially describe the unexplained balance. Once the unexplained is reduced to zero, you can mark the reconciliation as complete.