You work in the accounting department of the parent company of your group, which has recently acquired new subsidiaries. Paul, your boss, says that one of your team’s highest priorities is to provide investors information that gives a true and fair view of the group’s financial performance and situation. Inaccurate information can lead to a loss of investor trust, which can have repercussions for the company beyond share price. It can also affect your company’s cost of capital. Should your team fail and the information not present a true and fair view, capital could become unaffordable, seriously affecting the company’s ability to maintain ongoing operations.
As you begin to prepare the first set of financial statements, you soon notice some issues. The new subsidiaries send their financial information at different times, use different procedures, and fail to follow the group’s accounting calendar. You discuss these issues with Paul, and you both conclude the new subsidiaries must apply the group’s reconciliation procedures to ensure the reliability of the consolidated accounting information.
You and Paul schedule a meeting with the CFOs of the new subsidiaries. You begin by sharing both the rationale for the group’s reconciliation policies and procedures and the need for the subsidiaries to follow them. You then detail the group’s policies and procedures for bank reconciliations, reconciliations of the statement of financial position, and reconciliations of the income statement and shareholders’ equity. After your meeting, the new subsidiaries provide timely financial information consistent with that of other group members.
As a result, the investors praise your company’s accounting team for its efficiency and for the truly valuable information produced. Your company’s cost of capital falls below the most optimistic expectation, and you receive a promotion to higher responsibilities.
Have you reviewed your company’s reconciliation policies and procedures? Could you identify areas for improvement? The Accenture Academy course Reconciling Financial Statements
will help you design and apply reconciliation procedures, enabling you to prove that your company’s accounting information is a fair and true view of its operations.