University departments with asset or liability account balances are responsible for reconciling and reviewing the account balances on a quarterly basis. A Balance Sheet account balance reconciliation is the comparison of one or more asset or liability balances on the Statement of Financial Position (also known as the “Balance Sheet”) to another source of financial data, such as a Bank Statement, a Subledger or another system. Balance Sheet account balance reconciliations are different than expenditure reconciliations.
Purpose of Balance Sheet Account Balance Reconciliations
The purpose of a Balance Sheet account balance reconciliation is to verify the accuracy, completeness and validity of accounts included inStanford’s Statement of Financial Position at a particular point in time.
The differences between asset and liability account balances recorded in the Oracle General Ledger and other sources of financial data, are reconciling items. Reconciling items may be caused by timing differences, General Ledger errors (e.g., Subledger errors) or errors in the other sources of financial data (e.g., bank errors).
Balance Sheet account balance reconciliations and Balance Sheet account balance reconciliation attestations are key controls over financial reporting at Stanford.
Policy for Balance Sheet Account Balance Reconciliations
On at least a quarterly basis, each university department with an asset or liability account balance in the General Ledger is responsible for designating individuals to reconcile and review those balances on all ledgers (typically within 30 days of General Ledger close).
Multiple account balances of a similar nature may be reconciled together, as needed. For some object codes, there may be multiple account balances that are the responsibility of different departments. Each department is individually responsible for reconciling its respective balance.
In addition to quarterly reconciliations, some account balances must be reconciled and reviewed monthly. Financial Management Services (FMS) designates the reconciliation frequency for account balances based on multiple factors, including risk, materiality and history.
For further information regarding Stanford’s Balance Sheet Account Balance Reconciliation Policy, refer to Administrative Guide Policy 3.8.1: Account Balance Reconciliation and 3.8.2: Account Balance Attestation.
The Balance Sheet account balance reconciliation process involves verifying that:
- Account balances on the Statement of Financial Position are complete and accurate.
- Account activity is reasonable.
- Reconciling items are properly documented and resolved.
- Unusual activity is identified.
- Aged reconciling items are monitored.
- Account balances are supported with appropriate documentation.
Balance Sheet account balance reconciliations at Stanford can be performed manually or by using BlackLine accounting software. FMS provides guidance as to which reconciliation method (manual or BlackLine) should be used. Learn about BlackLine.
University departments are responsible for maintaining department-specific reconciliation procedures, and it is recommended that departments review all reconciliation policies and procedures yearly for accuracy and validity. For further information on Stanford’s recommended reconciliation best practices, refer to: