Why the date is the anchor
The object of this control is a balance at a cut-off date, not the activity of a period. Each account closes with a balance that somebody has to answer for, and the reconciliation is what turns that balance into a supported number. The comparison puts the recorded balance beside an independent source: a subledger, a schedule, a bank statement, a lender confirmation. The gap between the two gets an amount, a cause and an owner.
How a balance sheet reconciliation runs
- Fix the population and the date. The team decides which accounts enter, at which date, and which source supports each one. Accounts with no subledger, such as accruals, provisions, debt and equity, break first.
- Compare the balance with its support. Each account is matched against its supporting system, schedule or confirmation, so a difference belongs to a named account at a named date.
- Classify what does not agree. A gap is either an error, corrected with a journal entry, or a valid reconciling item, documented and left open with the reason it is expected to clear. A timing item stays a working conclusion until the expected event is verified.
- Close the control with a name on it. The preparer documents the work and marks the account prepared, and a reviewer checks it and signs. The control leaves behind a closed account, the evidence for its balance and an owner.
Example: a duplicate posting in accrued expenses
The figures are illustrative. In this example, accrued expenses is supported by a schedule rather than a dedicated subledger. At the close date its general ledger balance is USD 84,600 and the support schedule totals USD 78,400, so the difference is USD 6,200.
The support review finds a duplicate accrual totaling USD 6,200, allocated in two lines of USD 3,400 and USD 2,800. The original accrual is already included in the USD 78,400 support; the extra two lines have no separate obligation behind them. Reversing only those duplicate lines brings the ledger back to USD 84,600 – USD 6,200 = USD 78,400.
A balance that agrees does not prove that every posting behind it is correct, and this one agreed only after the support was read line by line. An item still open at this date is carried into the next period and reviewed again.
Which accounts are reconciled, and how
Assets, liabilities and equity all enter, cash and intercompany balances among them. Some teams call the same work balance sheet account reconciliation. Not every account is reconciled the same way: some are agreed against a supporting system, and others are explained by listing the transactions that make up the balance and confirming that each is classified properly. An account with no subledger is usually the second kind. The method is a decision the team documents per account.
Where the boundary with the neighboring controls sits
Bank reconciliation is narrower: it agrees cash and bank accounts against the bank statement, and inside a bank account it reconciles one balance sheet account rather than the statement as a whole. General ledger reconciliation takes the ledger as a whole, balance and activity, and can include both balance sheet and income statement accounts. The terms overlap in practice; specifying the account population is more useful than treating them as mutually exclusive controls. Intercompany balances are a balance sheet account and, in a group, the object of a control of their own, while transaction matching works at the individual entry.
Keeping the balance and its evidence together
A reviewer needs to see why a balance is supported, including the items still open at the reporting date. Simetrik’s account reconciliation and certification brings ERP balances, supporting evidence and period variances into that review, with separate preparer and certifier responsibilities.
For accounts supported by schedules rather than a dedicated subledger, the schedule’s assumptions and source documents matter as much as its total. The guide to evidence and account ownership explains how to choose supporting records and assign responsibility for unresolved differences.