What is the purpose of the reconciliation of value?

A good internal control system provides a mechanism to verify that transactions and activity are for the correct purpose and amount, and allowable.

Ensure that transactions have been properly authorized. Especially, if the source documents are paper based, review for potential changes to the document between approval and processing of transactions.

Ensure that all transactions are allowable.

See more specific information: Budget Activity Reconciliation Process Guidelines

Errors and discrepancies, intentional or unintentional, should be detected, investigated and resolved in a timely fashion.

Document a plan for the research and correction of errors or discrepancies of each type of transaction or activity. Communicate these processes and procedures with the appropriate staff.

Establish expectations for timeliness of error correction.

The oversight of any transaction is strengthened by the process of matching source documentation of the transaction to the appropriate reporting documentation or reporting tool.

Reconciliation processes are most effective when they are consistent and thorough. Employees involved in the reconciliation process should be knowledgeable and clear on their responsibilities and expectations.

It should be clear to an external reviewer when a reconciliation has been completed.

Reconciliation should be documented clearly to verify that a review has been done.

The reconciliation process and procedures should be documented clearly and communicated. Consider documenting:

1. The steps in the process
2. Who performs each step
3. Expectations regarding timeliness
4. A mechanism for providing proof that all activity has been reviewed and reconciled
5. A procedure for error correction.