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The six queries each finance close detective ought to be asking themselves: Who, Why, What, When, Where and How? Tackling account reconciliations is similar in many ways like being a world-class detective; Account items seem to magically hide from interested eyes. We then need the best possible ways of rooting them out. So how would a detective, tackle a case of the Account Reconciliation? What methods does he use to ensure the most effective processes? The start to any investigation is to draw a picture of the accounts in question and analyse the accounts by shaping key areas which you will need to inspect. In order to make the timeline of specific accounts, the initial part the investigation is to ask "When?" From this, a timeline of activity can be built, broken down into three parts: When has the item first appeared in the ledger? This is typically the same month you prepare the reconciliation for, however, referring to past occurrences may give a more accurate account history. When should a item not be included in the reconciliation? It is essential to keep items to a minimum to prevent distractions. If the item was not recorded in the proper time-frame, when should it have been recorded? Correct past mistakes whilst going along, too cut down on fixing the item later. If each financial item is a suspect for error, then its sensible to get under the skin of each suspect in turn. This means asking "What?" as what the purpose was for each account. And "What reconciliation procedure ought to be applied, according to purpose?" This guides you to the next question: As how should such items be reconciled due to accounts purpose, key account or not. Or specifically: how to calculate and evaluate the balance, which needs to be cross-referenced and thoroughly checked. By understanding the accounts using this method you can easily narrow down suspects to pick out entries that aren't adding up. If the account just isn't adding up, like recurring bank or processing errors month after month, or unexplained items that appear to balance your records – then you will to raise questioning. Using best practice reconciliation methods, you need to ask the question "Why?" As in why is the item in this account? Compare alternating answers to get answers. And ask "when" – when did it occur. Maybe you should track the item back to previous reconciliations to simply spot the issue. Then you're able to amend your records and cross it off your suspect list. If the total simply doesn't match up with the previous reconciliations or any invoices, then its a prime suspect. In any great detective cases there is usually a complex situation with many people involved, similarly this can be said for accounts reconciliation processes. We see the strong connections, "Who?" For example: Who else is involved, and should I take action? Will the item refer to a customer? Or does the item refer to a supplier? Is the information accurate? Do any other staff hold additional information or do we need to follow-up ourselves? By finding the these connections and links, you can begin to highlight items or focus on processes that are genuine problems that need to be improved, leaving your case solved!
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