Question

What action should be taken if an amount is found on a credit card statement that has no supporting documentation in the reconciliation file? Discuss in 80–100 words.

Answer 1

Credit Card Reconciliations

The credit card reconciliation process begins when credit card statements are initially received, or after the close of a financial period. Accountants go through each transaction on the credit card statement and match it to transactions in the company’s internal systems.

This includes both outbound credit card payments to suppliers and service providers, and inbound credit card payments from customers.

When discrepancies are found, an investigation follows to determine the appropriate steps to take.

This may involve disputing transactions with the credit card processor, making journal entries to correct timing items or errors, or other actions to address transaction issues. A company may have a limited time to dispute transactions with a merchant services provider, so speed and accuracy are paramount in this process.

All research performed, information found, and actions taken are stored for audit purposes. For companies with large amounts of credit card transactions, this process is a key step in the verification of financial data.

Reconciliation discrepancies
You may encounter discrepancies as you reconcile your bank or credit card account. Discrepancies are mismatches caused by transactions in the account that don’t agree with your printed statement.