Accelerating the Financial Close with Oracle Account Reconciliation

While the reconciliation process often does not receive the respect that it should, account reconciliations are a critical component of validating the integrity of a company’s financial statements. In this blog, I am going to provide some guidance on how Oracle Account Reconciliation can create efficiencies within the financial close process, which will accelerate the financial close for financial services companies.

What is Oracle Account Reconciliation?

Oracle Account Reconciliation manages the global reconciliation process by providing real-time visibility into the status of reconciliations and allowing organizations to automate reconciliation tasks to optimize the close process. As organizations have different reconciliation needs, the solution offers two feature sets; Reconciliation Compliance and Transaction Matching.

1. Reconciliation Compliance
   • Reconciliation Compliance represents the monthly, quarterly, and annual reconciliations that validate balances and activities between general ledgers, subledgers, and other source systems.
   • The module offers approval workflow to track preparer and review status and sign-off, email notifications to ensure reconciliations are being completed and reviewed timely, auto-reconciliations for zero balance, low tolerance thresholds, or low-risk reconciliations, and flexible formats to provide the level of detail necessary to meet compliance needs per the reconciliation policy.
   • Variance Analysis is an additional feature to review actual vs budget or other fluctuation analysis.
     
     
2. Transaction Matching
   • Transaction Matching represents the high volume and transaction monitoring validation to support the Reconciliation Compliance process. Transaction Matching typically occurs between general ledgers, subledgers, bank accounts, and other source systems.
   • Transaction Matching can occur on a daily, weekly, and/or monthly basis to ensure transactions are being recorded accurately and clearing in a timely manner.
   • The solution offers multi-match types (i.e. one to one, one to many, many to one, and many to many) and multi-match rules (i.e. automatch, suggested match, and manual match).
     
     

   Oracle Account Reconciliation is a modular solution, meaning that you have the option of turning on one module at a time or both modules simultaneously. Furthermore, the Account Reconciliation application can grow with your company as new account combinations and data sources come online. 

   
   

   Accelerating the Financial Close in the Financial Services Industry

We often find that there is a lack of consistency in the global processes that support the reconciliation process, which creates risks to the financial close. That lack of cohesion in global processes is commonly driven by:

• Multiple General Ledgers
• Multiple Suledgers and Source Systems
• Multiple Basis of Accounting (i.e. GAAP, STAT, IFRS, local)
• Multiple Foreign Currencies
• The Timeline to Close and Consolidate the Financial Statements
• Recording on Top Adjustments, Which is Commonly Cone in Excel or a Consolidation Solution

Looking back at my career, I spent considerable time ensuring all of the reconciliations were complete and accurate, documentation was attached, signatures were present on the face of the reconciliation, and that all of the reconciliations were in the appropriate binders before they were presented to internal and external audit for review. Some of those reconciliations were the typical subledger to ledger reconciliations, some were roll-forwards of accounts, and others were granular interface reconciliations to ensure the integration between the subledger and ledger was working effectively, the foreign exchange revaluation had captured the change in foreign exchange rates properly, and cash transactions were correctly recorded.

Oracle Account Reconciliation creates structure around the reconciliation process by offering a centralized repository, creating a global standardization, and a set of controls that can be aligned to the company’s reconciliation policy, including:

• Segregation of Duties – roles and responsibilities defined within the solution as preparers and reviewers.
• Certification – required electronic signatures to verify preparation and review of the reconciliations.
• Attestations – the ability to incorporate required questions, such as “Was the reconciliation prepared in accordance with the Company’s SOX 404 procedures and standard operating procedures?”
• Aging – ability to age unreconciled amounts to provide visibility to management to take action on amounts that are not recorded accurately or have not been processed in accordance with operating procedures.
• Action Plans – provides clarity into the follow-up steps that need to be taken for amounts that are not reconciled and need to be further reviewed.
• Supporting Documentation – provides the ability to attach reconciliation support to support validation.
• Escalations / Alerts – when reconciliations are not prepared or reviewed or there are amounts that need further attention, an escalation allows for an efficient notification to ensure the issue can be addressed promptly.
• Tolerances – used as a way to monitor and manage materiality within the solution.
• Custom Reports – reports can be generated to extract specific data on a per user basis.

Oracle Account Reconciliation removes the manual activities associated with account reconciliations by providing standardization, automation, workflow, and reporting in a centralized solution. By automating sub-processes (i.e. data integration, reconciliation rules, etc.) that support the account reconciliations, in addition to automating the reconciliation process (i.e. auto-reconciliations, certifications, aging, reporting, etc.), the accounting team will spend less time on the reconciliation process and more time analyzing results and on other value-add tasks, such as trend analysis and management reporting. Ultimately, Oracle Account Reconciliation provides process change that accelerates the close by allowing the accounting team to focus on the priorities of the close and eliminates redundant tasks.

Transforming Your Financial Close with Oracle Account Reconciliation

For financial services companies, the close timeline is tight, which drives a need for technology solutions to help to facilitate efficiencies in order to streamline processes. Account reconciliations are a key financial control to validate the integrity of the financial statements, but, many times, the reconciliations are manually intensive, require considerable oversight to validate balances and activities, and the process is not transparent. With Oracle Account Reconciliation, the accounting department has a centralized repository of reconciliations with the ability to automate the certification of reconciliations and streamline the end to end reconciliation process. In addition to the reduction of the cost related to the account reconciliation process, companies will see that Oracle Account Reconciliation reduced costs associated with paper, printing, binders, and storage.

Ask yourself these questions:

• Does your company have an automated, centralized solution for the reconciliation process?
• Does your company have the ability to track the progress of reconciliations during the close process?
• Are you able to automate the aging of unreconciled differences and create action plans to validate the amount?
• Does your current reconciliation process include automated notifications when reconciliations are available to prepare or review and escalations for reconciliations that are past due?
• Does your accounting team rely on printed reconciliations and storage binders to maintain the account reconciliations?

Our technical and functional knowledge of the accounting close and reconciliation processes provides our clients with insight and leading practices that eliminate redundant processes, automates key controls, and provides a technology solution that is scalable for future change. Alithya’s comprehensive methodology will help you reap the benefits of your Oracle Cloud technology investments.

For comments, questions, or suggestions for future topics, please reach out to us at infosolutions@alithya.com.  Visit our blog regularly for new posts about Cloud updates and other Oracle Cloud Services such as Planning and Budgeting, Financial Consolidation, Account Reconciliation, and Enterprise Data Management.  Follow Alithya on social media for the latest information about EPM, ERP, and Analytics solutions to meet your business needs.