Create a Standardized and Automated Reconciliation Process with Oracle Reconciliation Compliance

I have written a few blogs on Oracle Account Reconciliation to highlight the key functionality and capabilities of the solution, as well as how the solution will help to streamline the account reconciliation process, leading to a faster financial close. As mentioned in my previous blogs, Oracle Account Reconciliation has two feature sets; Reconciliation Compliance and Transaction Matching. In this blog, I am going to focus on the Reconciliation Compliance feature set of Oracle Account Reconciliation to provide some clarity into the key benefits of the solution.

What is Oracle Reconciliation Compliance?

Proving the integrity of a company’s financial statements is critical to gaining confidence from key stakeholders and shareholders. As a result, having sound financial controls that govern the close process is at the core of the accounting department’s responsibilities. A key element to validating the integrity of the financial statements is through a sound account reconciliation process that ensures the reconciliation policy is being followed and that an appropriate level of rigor has been placed over the process.

The Reconciliation Compliance feature set of Oracle’s Account Reconciliation solution provides companies with a platform for completing the monthly, quarterly, and annual reconciliations between general ledgers, subledgers, and other source/sub-systems. Oracle Reconciliation Compliance offers:

• email notification to alert:
  • preparers when the reconciliations have been created to commence the process
  • the users that the reconciliation is a number of days from being due
  • when reconciliations are available for the review cycle
  • when a reconciliation has been rejected
• approval workflow to track preparer and review status and sign-off
• auto-reconciliations based on specific criteria, thresholds, and tolerances
• flexible formats to allow organizations to select the level of detail necessary to provide effective evidence that an account is appropriately reconciled
• attributes that can be customized to add more detail to the reconciliations

An additional feature is Variance Analysis, which allows companies to identify potential outliers and require explanations to provide fluctuation analysis insight to support the substantiation process.

What are the Benefits of Oracle Reconciliation Compliance for Financial Services Companies?

Many financial services companies do not have a global standard for managing the reconciliation process. This exposes them to potential risks, such as a financial misstatement. Given the short timeline to close the financial review and various accounting complexities, providing a solution is critical to assist in avoiding audit flags and further scrutiny. Those accounting complexities include:

• complex legal entity structures and intercompany relationships
• multiple basis of accounting (i.e. GAAP, STAT, IFRS, local GAAP) and reconciling between them
• new and changing accounting standards
• a lack of consistency in the approach to handling foreign currencies (i.e. original, transactional, functional, and reporting) in the reconciliation process
• multiple general ledgers, subledgers, and source systems
  
  

For the reconciliation compliance process, financial services companies are commonly using:

• a combination of Microsoft Access, Excel, Outlook, SharePoint, and Word
• homegrown, inflexible database solutions
• legacy solutions for regional reconciliations

These solutions lack the flexibility and scalability needed to integrate new data sources, change reconciliations due to new accounting standards or changes to the company’s business, and to integrate acquired companies. They also do not provide the ability to automate the reconciliation process, nor do they provide transparency into the status of reconciliations and evidence if bottlenecks exist.

Oracle Account Reconciliation creates structure around the reconciliation process by offering a centralized repository, creating a global standardization, and providing a set of controls that can be aligned to the company’s reconciliation policy. There are five key benefits of incorporating Oracle Reconciliation Compliance into your reconciliation process:

1. Centralization – the solution offers a centralized repository of reconciliations, which allows organizations to manage the process for both local and consolidated reporting as separate workflows. Additionally, the solution provides auditability, traceability, and reporting to validate the progress that has been made during the reporting period, identify potential bottlenecks, and provide clarity into open reconciliations, aging analysis, rejected reconciliations, and users with late reconciliations.

2. Process Automation and Standardization – the solution allows companies to automate processes and sub-processes to streamline the reconciliations, including:

• data integration from ERPs, subledgers, and other source systems
• rules based auto-reconciliations and certifications

Additionally, it allows companies to standardize the end to end process, including compliance attestations/questions, action plans for unreconciled items, the aging of stale dated items, the process of reconciling prepaids, and reporting.

3. Multi-Source Integration – the reconciliation process can incorporate a myriad of source systems. The solution provides the ability to eliminate the burden on the reconciliation team of extracting various slices of data manually and inputting the data into Excel or Access files in order to perform the reconciliations.

4. Streamline the Close Process – by automating data integrations and reducing manual touchpoints, companies are able to remove time-consuming tasks; this allows for quicker identification of exceptions, more detailed analysis of aged items, and faster completion of reconciliations

5. Scalability and Ease of Integration – organizations will change due to mergers and acquisitions, new sub-processes, new technology, or new accounting standards. With Reconciliation Compliance, companies are able to seamlessly integrate new data sources (i.e. ERPs and operational systems) and new reconciliations into the process without interruption. This ensures adherence to the financial controls and to the account reconciliation policy.

Transforming the Reconciliation Compliance Process

Oracle Reconciliation Compliance provides a standardized and automated platform, which allows companies to spend less time manually creating, reviewing, and certifying reconciliations and more time focused on the analysis of unreconciled amounts, exceptions, and the governance framework.

Ask yourself these questions:

• Does your reconciliation process include printed, hand-signed reconciliations that are kept in binders?
• Do you have a centralized repository of reconciliations that provides transparency into the status of reconciliations and unreconciled amounts?
• Do you have an automated reconciliation process?
• Do you have the ability to report on aged unreconciled items and provide your auditors action plans to clear those unrealized amounts?
• Are you able to provide your auditors with a self-service platform to review reconciliation controls and certifications?

Alithya’s functional and technical knowledge of the accounting close and reconciliation processes provides our financial services clients insight and leading practices that automates controls, eliminates redundant processes, and focuses on driving efficiencies in their financial close processes.

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.