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The purpose of account reconciliation is to ensure account balances are correct between two accounts at the end of a closing period.
Companies must reconcile all balance sheet accounts that could contain a significant or material misstatement. Doing so allows entities to identify and post all necessary adjustments to the general ledger in a timely manner, ensuring completeness and accuracy.
Many organisations are unable to complete the reconciliation process in a timely manner, which introduces risk.
The process is often manual, with a suboptimal controlling environment, which also causes major risks of misstatement.
The intercompany reconciliation process typically follows these steps:
What makes intercompany reconciliations so painful?
International firms across the globe and industries have different organisational structures and subsidiaries. It is vital to look at the key challenges the company will face and how a robust intercompany reconciliation process can help to solve the discrepancies between subsidiaries during daily or closure activities.
The nature of such discrepancies could vary a lot across various industries due to the nature of their business, and the root cause of these is due to:
There are several tools available on the market that enable companies to load, match and reconcile their intercompany transactions:
The market solutions meet industry requirements and accelerate intercompany reconciliation processes