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Month-end close is a widely accepted accounting standard that is aimed at keeping an accurate set of financial records and detecting errors/fraud. Month-end reconciliation is the most important part of the month-end closeprocess. There could also be errors made in the bank statement that need to be adjusted.
It also helps prevent and detect theft and fraud earlier, assisting organizations to comply with financial regulations such as the Sarbanes-Oxley Act (SOX) , which mandates that publicly traded companies establish internal controls and procedures for financial reporting. Retain all supporting documentation.
At the end of each accounting cycle, the accounting or finance team of a company reviews its accounts and adjusts balances. This process is known as the financial close. Balance sheet reconciliation is a crucial step in the financial closeprocess, serving as a vital control mechanism for organizations.
Step 4: Confirm Once you have identified the transactions that need to be adjusted, it's crucial to record them appropriately. This involves reviewing the reconciled data and ensuring that the adjusted figures align with the overall financial picture, demonstrating consistency between the internal ledger and the bank statement.
The general ledger is a detailed record of all monetary transactions adjusted for the lifetime of your firm. Frauddetection: It enables you to more effortlessly place fraud or any other problem with your books since it is simple to look through and comprehend. This enables you to balance the books.
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