In the previous article we talked about the meaning of the account reconciliations. Now as you now the definition of account reconciliation, in this article let us see why it is carried out.
Account Reconciliations –Why?
Personnel with responsibility for Account Reconciliations hold key Controllership responsibilities. Account Reconciliations are performed for many reasons, including:
Timeliness:
To ensure transactions are timely recorded in the general ledger in the right accounting period, following the matching concept under accrual accounting.
Accuracy:
To ensure transactions are accurately recorded in the correct statutory entity.
Validation:
To identify, document, track and explain transactional differences between general ledger and sub-ledger balances and/or other independent sources. In case of bank reconciliation, general ledger balance is validated against the bank statement.
Controls:
To identify and guard against fraudulent activity, identify errors and reduce losses.
Improvement:
To conduct root cause analysis on any operational defects identified and execute process improvement projects to address them
Treasury Management - Benefits
Effectively using treasury management with cash management and trade finance products brings tangible benefits to both corporates and financial institutions. Let us discuss some tangible benefits of treasury function.
Although there is no straight forward answer to the question, how to best organize a treasury function, this article provides an generic view of the way large MNCs creates departments or sub-functions within the treasury function.
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