Everything you need to know about accounting reconciliation in Brazil

If you are thinking to invest in Brazil, you need to know about one of the most important analysis tools for managing your business’s financials: accounting reconciliation. In this way, Gescon’s experts team has prepared a special content with main tips about this process. Check out the post below!

What is accounting reconciliation in Brazil?

The accounting reconciliation is the analysis of the accounts and financial sector of your company and their respective movement. The purpose of accounting reconciliation is to adjust its balance to the actual reality of your company, promoting necessary adjustments in accounting bookkeeping.

In this process, the accounting accounts are reconciled with the documents and the different reports of the other sectors which support the accounting entries.

For an efficient analysis, it is necessary to use spreadsheets, reports and detailing balances of financial statements. All those things can prove correction existing balances in the accounting.

The purpose of the reconciliations is that financial statements show the company reality within accounting principles, conventions and postulates.

All balances in Balance Sheet need to be adjusted, so that there aren’t errors in the equity analysis of reality.

Tips for performing accounting reconciliation in your business

The preparation and review of individual accounts should have a basic understanding of usefulness of the account and what should be used to support the balance sheet.

1. Ensure that all due accounts are being reconciled, including new accounts.
2. Make sure there is a unique reconciliation policy for every organization and that it is respected throughout the company.
3. Verify if each reconciliation has a title, account description, and procedures and / or instructions on how to complete the reconciliation (applicable contacts, reports to be executed or obtained, etc.).
4. Include documentation supporting account balance in reconciliation.
5. Make sure the correct and most up to date balance sheets are being reconciled.
6. Seeing whether reconciliation really supports balance is not just a repetition of the general reason.
7. Pay attention to accounts which have unusual balances (such as a provision with a debit balance or a receivable with a credit balance).

It is also important to say that accounting reconciliations must be completed and analyzed in a timely manner. Therefore, it is necessary:

• Create due dates for reconciliations.
• Have a mechanism to track the status of each reconciliation.
• Perform high risk account reconciliations early in the closing cycle to identify potential issues.
• Review unidentified differences and make any necessary adjustments while the accounting period is still open.

Properly reconciled and adjusted, the accounting balances will show the actual equity reality, releasing partners, managers and owners from responding with their personal property in tax, civil, commercial and criminal questions, proving that they didn’t act in a manner misleading or harmful.

If you are looking for a specialized accounting firm, you must contact us! The Gescon has the best solutions for international clients who want to invest in Brazil. Visit our website and talk to us!