amit-voais Reconciliation — find the difference, then explain it
Needs Python 3 and internet: runs scripts/fortax.py (the Fortax engine on ai.fortax.in; your file is processed and not stored).
Verdict first: two records agree, or they differ by an exact amount made of named items plus an unexplained balance. This skill helps prepare the working; the CA reviews and signs it off.
The rule
No adjustment before the cause is known. A difference that is plugged, rounded away, or "adjusted to match" is not reconciled — it is hidden, and it will surface in a notice.
This applies hardest when the difference is small. A Rs 118 gap is a wrong tax rate somewhere; a Rs 1 gap is a rounding rule you have not identified yet. Size is not evidence of harmlessness.
Use an engine where one exists
| Pair | Do this |
|---|---|
| GSTR-2B vs purchase register | fortax-gstr2b-reconciliation (fortax.py gstr2b) — it matches; you judge its _pairs_to_judge.json |
| GSTR-1 / 3B vs sales register | fortax-gstr1-and-3b (fortax.py gstr1) |
| Bank statement vs books | fortax-bank-statement-to-books (fortax.py bank, then its BRS part) |
| Everything else | this skill, with the matching done in a script or a workbook with formulas (fortax-xlsx-manipulation) |
Numbers come from code: never add a column, compute a difference or count items by eye.
When to use
Any two records that should agree and do not:
- GSTR-2B against the purchase register; GSTR-1 against the sales register; 3B against both.
- 26AS / AIS / TIS against the books or the computation.
- A trial balance that does not tie; a control account against its subsidiary ledger.
- A portal figure that differs from the working paper.
- Balances between related entities (holding / subsidiary, group companies, branches).
- A total that changed between two versions of your own file.
Step 1 — state the difference exactly
Before anything else, write one line:
As per Rs X; as per Rs Y; difference Rs Z (A - B), for , .
Get the period, the entity and the sign right. Half of all "differences" are two documents covering different months, or one figure inclusive of tax and the other not.
Step 2 — narrow it before you explain it
Split the difference until it is a small set of rows, not one number:
- By month, then by party, then by invoice.
- By tax head — IGST, CGST, SGST, cess separately. A gap that vanishes when heads are separated is a classification issue, not a value issue.
- By status — matched, unmatched in A, unmatched in B, matched but different value.
Stop splitting when each remaining row can be explained on its own.
Step 3 — the usual causes, checked in order
Check these before inventing a theory. Each is a fact you can confirm from the files:
| Cause | How you confirm it |
|---|---|
| Timing | The invoice exists in both, in different periods |
| Not filed by the supplier | Present in the register, absent from 2B; the supplier's return status says so |
| Wrong GSTIN or PAN | The party's identifier differs between the two records |
| Reverse charge, or ineligible credit | The entry is correctly excluded from one side by rule |
| Rate or head applied differently | Same taxable value, different tax split |
| Debit or credit note not carried through | One side nets it, the other does not |
| Rounding | The gap is under Rs 1 per line and matches the line count |
| Duplicate | The same invoice number appears twice on one side |
Typical causes by type of reconciliation are in the next section.
Step 4 — one hypothesis at a time
State it in writing: "I think Rs Z is , because ." Then test only that, against the source document — not against your own earlier working. If it does not hold, say so and take the next hypothesis. Never stack two guesses.
Step 5 — when it still does not tie
After three explanations that do not hold, stop. Do not keep adjusting. Write the CA a short note: the exact difference, the rows you isolated, what you ruled out and how, and what you would need to settle it — usually a document, a supplier or party confirmation, or a portal download. An honest open difference is a working paper. A forced tie is a liability.
Reconciliation types
Control account vs subledger
Compare the ledger control balance to the detailed subsidiary balance at the same date.
- Sundry debtors (control vs party-wise ageing), sundry creditors (control vs party-wise ageing).
- Fixed assets (ledger vs fixed asset register — Companies Act and Income-tax blocks separately).
- Inventory (stock ledger vs valuation / stock statement given to the bank).
- Prepaid expenses (ledger vs amortisation schedule); provisions and outstanding expenses (ledger vs the detail schedules).
Process: pull the control balance at period end; pull the subledger detail at the same date; compare totals (they should match if posting is real-time); investigate differences.
Common causes: a journal passed directly to the control account and not in the subledger; subledger transactions not yet posted to the ledger; timing of batch posting; a reclassification in the ledger without the subledger; an import or interface error.
Bank vs books
Use fortax-bank-statement-to-books Part B. In brief: bank balance; add deposits in transit; less
cheques issued not presented; add/less bank errors = adjusted bank balance. Book balance; add interest
and credits not recorded; less charges not recorded; add/less book errors = adjusted book balance.
Difference must be 0.00.
Related-party and group balances
Balances between related entities should net to zero on consolidation and agree for the related-party disclosure (AS 18 / Ind AS 24, s.188 Companies Act).
- Pull the receivable/payable for each entity pair.
- Compare A's receivable from B with B's payable to A.
- Identify and resolve differences; confirm every transaction is recorded on both sides.
- Check the elimination entries used for consolidation.
Common causes: one entity recorded it, the other has not yet (timing); different exchange rates; classified as third-party on one side; disputed amounts or unapplied payments; different cut-off practice; TDS deducted by the payer shown net on one side and gross on the other.
Tax records vs books
- 26AS / AIS vs books: TDS credit by deductor TAN and section; income shown in AIS that is not in books; a deductor who deducted but filed against a wrong PAN. Confirm with the deductor's Form 16A.
- GST returns vs books: see the table above; for the annual view see
fortax-gst-annual-return.
Categorise every reconciling item
Category 1 — timing differences. Clear on their own in the normal cycle; no entry needed: cheques issued not presented, deposits in transit, items posted in one system and pending in the other, transactions awaiting approval. Expected to clear within a few working days.
Category 2 — adjustment required. Need a journal entry (prepare it with fortax-journal-entry):
unrecorded bank charges, unrecorded interest, recording errors (wrong amount, wrong ledger, duplicate),
missing entries, classification errors.
Category 3 — requires investigation. Cannot be explained yet: unidentified differences, disputed items, aged items that should have cleared, the same unexplained difference every period. Investigate the root cause, document it, escalate if unresolved.
Ageing of open items
| Age | Status | Action |
|---|---|---|
| 0-30 days | Current | Monitor — within the normal cycle |
| 31-60 days | Ageing | Investigate — why has it not cleared |
| 61-90 days | Overdue | Escalate to the reviewer; document the investigation |
| 90+ days | Stale | Escalate to the CA / management; possible write-off or adjustment |
Report format:
| Item # | Description | Amount (Rs) | Date originated | Age (days) | Category | Status | Owner |
|---|
Compute the age with a formula (=<period end> - <date>), not by counting.
Trending: compare total open items with last period; flag if the total exceeds the materiality level, if the count grows period on period, or if the same item recurs every period (a process problem).
Escalation thresholds (illustrative — set with the CA for each client's size)
| Trigger | Example threshold | Escalate to |
|---|---|---|
| Single item | above Rs 1 lakh | Reviewer |
| Single item | above Rs 10 lakh | CA / partner |
| Total reconciling items | above Rs 25 lakh | CA / partner |
| Item age | over 60 days | Reviewer follow-up |
| Item age | over 90 days | CA / management |
| Unexplained difference | any amount | Cannot close — resolve or document as open |
| Growing trend | 3+ consecutive periods | Process fix |
Good practice
- On time: finish within the close timetable (typically 3-5 working days after period end, and before the return that depends on it).
- Complete: reconcile every balance sheet account on a set frequency — monthly for material ones, quarterly for the rest.
- Documented: preparer, reviewer, date, and a clear explanation of every reconciling item.
- Segregated: whoever reconciles should not be the person who posts to that account.
- Followed through: track open items to resolution; do not carry them forward indefinitely.
- Root cause: for recurring items, fix the process that causes them.
- Standard: the same template for every account.
- Retained: keep reconciliations and support for the statutory period (books of account: 8 years under s.128 Companies Act; confirm for the entity and the tax law).
Output
Into the client folder next to the inputs (<Client>/<FY>/<GST|ITR|Bank|Audit>/), with entity and
period in the name:
- A reconciliation sheet: matched, unmatched each way, value differences, with a
Sourcecolumn on every row and the category and age of every open item. - A difference statement: opening gap, each explained item with its cause and amount, closing unexplained gap — all by formula.
- Any unexplained balance is a blocker in your summary to the CA, not a footnote.
Credit
Reconciliation types, item categories, ageing and escalation are adapted from anthropics/knowledge-work-plugins (Apache-2.0). Changed by Fortax: rewritten for Indian practice (GST, 26AS, Companies Act, rupee thresholds) and merged with Fortax's find-the-difference method.