The reconciliation process

Two financial analysis and reconciliation processes can be distinguished:

  • The general financial analysis of all reconciliation areas.
  • The reconciliation and financial analysis of the Goods Received not Invoiced (GRNI), which is represented by the reconciliation area Invoice Accrual 3. Refer to The GRNI reconciliation process.
Step 1. Close periods

Usually, reconciliation is performed over a specific fiscal period. Before you start the reconciliation process, use the Close Periods (tfgld1206m000) session to close the Integration period so that no new transactions can be entered.

However, if you generate and print the reconciliation reports, LN does not check the period status. You can print the reports whenever you wish, independent of the period status.

Step 2. Post currency differences

To calculate the currency differences caused by rounding errors and by fluctuations of the currency rates and to post them to the appropriate ledger accounts before you perform the reconciliation process, you can run these sessions:

  • Calculate Currency Differences for Integration Accounts (tfgld4295m400)
  • Calculate Rounding Currency Differences for Integration Accounts (tfgld4295m500)

Important!

To avoid rounding differences, you must run the Calculate Rounding Currency Differences for Integration Accounts (tfgld4295m500) session if any of the following applies:

  • If expense tax is used, run this session for the interim variance reconciliation group.
  • In case of pegged purchase orders, run this session for the invoice accrual reconciliation groups.

Finalize the batches for the currency differences transactions. For more information, refer to Currency differences accounts.

Step 3. Print the trial balance

Use the Print Trial Balance (tfgld3402m000) session to print the trial balance for the integration ledger accounts that you want to analyse.

Step 4. If required, create an opening balance for reconciliation

If you have archived transactions that still contribute to the reconciliation group, for example, Inventory transactions, you can create opening balances to clear the differences in the reconciliation data. Use the Opening Balances for Reconciliation (tfgld4195m000) session.

To create opening balances for specific business objects and reconciliation elements, you can select a transaction in the Operations Management - Financial Reconciliation (tfgld4595m000) session and from the appropriate menu, select Create Reconciliation Opening Balance.

Step 5. Print the reconciliation data

Use the Print Reconciliation Data (tfgld4495m000) or the Print Reconciliation Data Project (PCS) Work In Process (tfgld4495m300) session to print a reconciliation report.

At this stage in the process, you can print a standard report.

  • To print the subtotals on a high level, for example, by reconciliation element, select these check boxes:

    • Print Summary Report
    • Compare Reconciliation with Finalized General Ledger
    • Suppress Zero Balances

  • To print the subtotals on reconciliation element level, on the Options tab, in the Specific Group by section, select either of these check boxes as required:

    • Reconciliation Element
    • Reconciliation Element Combination

For more information, refer to To print the reconciliation reports.

Step 6. Compare the trial balance and the balances on the reconciliation data report

For the ledger accounts on which the amounts match, you can accept the reconciliation data. Continue at Step 8 Accept the reconciliation data.

Step 7. Rebuild the history

If the amounts on the reconciliation report do not correspond with the amounts on the trial balance, you can first rebuild the history of the ledger accounts that you are analyzing.

Use the Rebuild Opening Balance/History from Transactions (tfgld3203m000) session and select all three check boxes:

  • Opening Balance
  • Rebuild Parent Account History
  • Rebuild Parent Dimension History

Go back to Step 4 Print the trial balance.

Step 8. Accept the reconciliation data

Accept the reconciliation data for the ledger accounts for which there are no problems. In the Accept Reconciliation Data (tfgld4295m000) session, select the reconciliation group. Then select the range of ledger accounts for which you want to accept the reconciliation data.

Note Inventory accounts and end accounts must first be analyzed before you can accept the reconciliation data.

Step 9. Analyze the balances on the reconciliation data report

If the amounts on the reconciliation report do not correspond with the amounts on the trial balance, you can take various actions, depending on the type of problem and your auditing requirements.

Use the Print Reconciliation Data (tfgld4495m000) session to print a report of the transactions that could not be reconciled. At this stage, you can clear the Compare Reconciliation with Finalized General Ledger check box because the relation between the reconciliation data and the trial balance has already been examined.

If you wish, and for accounts other than Inventory accounts and end accounts, you can select the Print Only Non Accepted Transactions check box. Start by printing a report with not much detail. For more information, refer to To print the reconciliation reports.

If the differences cannot be easily explained, in the Print Reconciliation Data (tfgld4495m000) session, select these check boxes to print a more detailed report:

  • Logistic Details
  • Financial Details
Step 10. Display the transaction details

In the Operations Management - Financial Reconciliation (tfgld4595m000) session, use the various options to display the transaction details.

For example, if you select a line, from the appropriate menu, you can select:

  • Transaction Origin to display the original transaction in Operations Management.
  • Integration Transactions to display the mapping details and posting details of the transaction.

For reference, you can also print the corresponding reports of the logistic data in Operations Management.

If you are satisfied that the financial data is correct, continue at Step 13 Accept the reconciliation data.

Step 11. Make corrections

You can manually create the corrective transactions for postings that are incorrect. For more information, refer to To create a correction transaction. This type of corrections solves the discrepancies in Financials. They do not solve the differences between the trial balance and the reconciliation report. Such differences must be sorted out by an expert.

Next, repeat the reconciliation process, starting at Step 9: Analyze the balances on the reconciliation data report. You can print a reconciliation report that includes the non-posted corrections.

Step 12. Post reconciliation corrections

Use the Post Reconciliation Corrections (tfgld4295m300) session to post the correction transactions to the General Ledger accounts.

Next, go back to Step 3, Print the trial balance.

Step 13. Accept the reconciliation data

If no more corrections are required for the reconciliation group, in the Accept Reconciliation Data (tfgld4295m000) session, select the reconciliation group. Then select the range of ledger accounts for which you want to accept the reconciliation data.

If you wish, you can select the Select Specific Business Object check box to accept the reconciliation data for a specific business object or range of business objects.

You can select the Only Debit and Credit Balanced check box to accept most of the transactions. You must enter the tolerance amounts in each of the home currencies.

When you click Process, LN checks a number of conditions and sets the status of the transactions that meet the conditions to Accepted. In the Operations Management - Financial Reconciliation (tfgld4595m000) session, you can view the transaction status and you can clear the Accepted check box if required.

After you performed the reconciliation process for a number of reconciliation groups, you can finalize the process and prepare the reconciliation data for deletion. For more information, refer to To complete the reconciliation process.

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