sandbaseai Reconciliation
Important: This skill assists with reconciliation workflows but does not provide financial advice. All reconciliations should be reviewed by qualified financial professionals before sign-off. Work from copies or derived artifacts; do not edit source accounting records or post adjustments without a separately authorized workflow.
Methodology and best practices for account reconciliation, including GL-to-subledger, bank reconciliations, and intercompany. Covers reconciling item categorization, aging analysis, and escalation.
When inputs are supplied through report URLs, read the SandBase API map. Resolve the current schema with sandbase_describe_tool before using a listed capability through sandbase_call_tool.
Reconciliation Types
GL to Subledger Reconciliation
Compare the general ledger control account balance to the detailed subledger balance.
Common accounts:
- Accounts receivable (GL control vs AR subledger aging)
- Accounts payable (GL control vs AP subledger aging)
- Fixed assets (GL control vs fixed asset register)
- Inventory (GL control vs inventory valuation report)
- Prepaid expenses (GL control vs prepaid amortization schedule)
- Accrued liabilities (GL control vs accrual detail schedules)
Process:
- Pull GL balance for the control account as of period end
- Pull subledger trial balance or detail report as of the same date
- Compare totals — they should match if posting is real-time
- Investigate any differences (timing of posting, manual entries not reflected, interface errors)
Common causes of differences:
- Manual journal entries posted to the control account but not reflected in the subledger
- Subledger transactions not yet interfaced to the GL
- Timing differences in batch posting
- Reclassification entries in the GL without subledger adjustment
- System interface errors or failed postings
Bank Reconciliation
Compare the GL cash balance to the bank statement balance.
Process:
- Obtain the bank statement balance as of period end
- Pull the GL cash account balance as of the same date
- Identify outstanding checks (issued but not cleared at the bank)
- Identify deposits in transit (recorded in GL but not yet credited by bank)
- Identify bank charges, interest, or adjustments not yet recorded in GL
- Reconcile both sides to an adjusted balance
Standard format:
Balance per bank statement: $XX,XXX
Add: Deposits in transit $X,XXX
Less: Outstanding checks ($X,XXX)
Add/Less: Bank errors $X,XXX
Adjusted bank balance: $XX,XXX
Balance per general ledger: $XX,XXX
Add: Interest/credits not recorded $X,XXX
Less: Bank fees not recorded ($X,XXX)
Add/Less: GL errors $X,XXX
Adjusted GL balance: $XX,XXX
Difference: $0.00
Intercompany Reconciliation
Reconcile balances between related entities to ensure they net to zero on consolidation.
Process:
- Pull intercompany receivable/payable balances for each entity pair
- Compare Entity A's receivable from Entity B to Entity B's payable to Entity A
- Identify and resolve differences
- Confirm all intercompany transactions have been recorded on both sides
- Verify elimination entries are correct for consolidation
Common causes of differences:
- Transactions recorded by one entity but not the other (timing)
- Different FX rates used by each entity
- Misclassification (intercompany vs third-party)
- Disputed amounts or unapplied payments
- Different period-end cut-off practices across entities
Reconciling Item Categorization
Category 1: Timing Differences
Items that exist because of normal processing timing and will clear without action:
- Outstanding checks: Checks issued and recorded in GL, pending bank clearance
- Deposits in transit: Deposits made and recorded in GL, pending bank credit
- In-transit transactions: Items posted in one system but pending interface to the other
- Pending approvals: Transactions awaiting approval to post in one system
Expected resolution: These items should clear within the normal processing cycle (typically 1-5 business days). No adjusting entry needed.
Category 2: Adjustments Required
Items that require a journal entry to correct:
- Unrecorded bank charges: Bank fees, wire charges, returned item fees
- Unrecorded interest: Interest income or expense from bank/lender
- Recording errors: Wrong amount, wrong account, duplicates
- Missing entries: Transactions in one system with no corresponding entry in the other
- Classification errors: Correctly recorded but in the wrong account
Action: Prepare adjusting journal entry to correct the GL or subledger.
Category 3: Requires Investigation
Items that cannot be immediately explained:
- Unidentified differences: Variances with no obvious cause
- Disputed items: Amounts contested between parties
- Aged outstanding items: Items that have not cleared within expected timeframes
- Recurring unexplained differences: Same type of difference appearing each period
Action: Investigate root cause, document findings, escalate if unresolved.
Aging Analysis for Outstanding Items
Track the age of reconciling items to identify stale items requiring escalation:
| Age Bucket | Status | Action |
|---|---|---|
| 0-30 days | Current | Monitor — within normal processing cycle |
| 31-60 days | Aging | Investigate — follow up on why item has not cleared |
| 61-90 days | Overdue | Escalate — notify supervisor, document investigation |
| 90+ days | Stale | Escalate to management — potential write-off or adjustment needed |
Aging Report Format
| Item # | Description | Amount | Date Originated | Age (Days) | Category | Status | Owner |
|---|---|---|---|---|---|---|---|
| 1 | [Detail] | $X,XXX | [Date] | XX | [Type] | [Status] | [Name] |
Trending
Track reconciling item totals over time to identify growing balances:
- Compare total outstanding items to prior period
- Flag if total reconciling items exceed materiality threshold
- Flag if number of items is growing period over period
- Identify recurring items that appear every period (may indicate process issue)
Escalation Thresholds
Define escalation triggers based on your organization's risk tolerance:
| Trigger | Threshold (Example) | Escalation |
|---|---|---|
| Individual item amount | > $10,000 | Supervisor review |
| Individual item amount | > $50,000 | Controller review |
| Total reconciling items | > $100,000 | Controller review |
| Item age | > 60 days | Supervisor follow-up |
| Item age | > 90 days | Controller / management review |
| Unreconciled difference | Any amount | Cannot close — must resolve or document |
| Growing trend | 3+ consecutive periods | Process improvement investigation |
Note: Set thresholds based on your organization's materiality level and risk appetite. The examples above are illustrative.
Reconciliation Best Practices
- Timeliness: Complete reconciliations within the close calendar deadline (typically T+3 to T+5 business days after period end)
- Completeness: Reconcile all balance sheet accounts on a defined frequency (monthly for material accounts, quarterly for immaterial)
- Documentation: Every reconciliation should include preparer, reviewer, date, and clear explanation of all reconciling items
- Segregation: The person who reconciles should not be the same person who processes transactions in that account
- Follow-through: Track open items to resolution — do not just carry items forward indefinitely
- Root cause analysis: For recurring reconciling items, investigate and fix the underlying process issue
- Standardization: Use consistent templates and procedures across all accounts
- Retention: Maintain reconciliations and supporting detail per your organization's document retention policy