What is a balance sheet reconciliation?
Balance sheet reconciliation is the period-end process of proving every balance sheet account in the general ledger to supporting evidence: cash to bank statements, receivables and payables to sub-ledgers, fixed assets to the asset register, accruals and prepayments to schedules. Each reconciliation is prepared, reviewed and signed off, and unexplained differences are investigated and corrected.
Also calledbalance sheet substantiationBS reconciliation
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- Covers
- Every balance sheet account
- Evidence
- Sub-ledgers, statements, schedules
- Category
- Financial close
How balance sheet reconciliation works
The starting point is the trial balance: every asset, liability and equity account gets an owner, a reconciliation template and a due date in the close calendar. The preparer shows that the balance agrees with independent evidence, lists reconciling items with an explanation and an expected clearing date, and attaches the support. A reviewer checks it and signs off. Many companies set frequency and review by risk: high-volume or judgemental accounts every month, stable low-value accounts quarterly. Old reconciling items are tracked, because an item that never clears usually hides an error or a loss. Auditors rely on the reconciliations at year-end, and US public companies test them as part of internal control over financial reporting. Close software such as BlackLine, FloQast and Numeric stores templates, support and sign-offs in one place.
Common questions
Why reconcile balance sheet accounts rather than the P&L?+
Because every error in the profit and loss also leaves a wrong balance on the balance sheet, and balances can be proved against outside evidence. Reconciling the balance sheet catches errors on both statements.
What is a risk-based reconciliation policy?+
A policy that sets how often and how closely each account is reconciled according to its risk: volume, value, judgement and past errors. High-risk accounts are reconciled monthly with full review; low-risk accounts less often.
Who should review a balance sheet reconciliation?+
Someone other than the preparer, usually more senior, who checks the evidence, the reconciling items and their age before signing off. Software records who prepared and reviewed each one, and when.
Balance sheet reconciliation software
BlackLineEnterprise close automation for reconciliations and journal entries.Profile →
FloQastClose management software automating reconciliations for mid-market teams.Profile →
NumericAI-powered close management with variance detection and audit prep.Profile →
Stacks AIAI agents automating reconciliation and close tasks.Profile →
Billow AIAI agents that run month-end close and reconciliation, with your team approving.Profile →
MaximaAI layer that sits above existing ERPs to automate close activities.Profile →Part of Accountio’s accounting technology coverage · Glossary
