In: Accounting
Provide detail description of how the organisational policy and procedures to reconcile and monitor financial accounts so that all the transactions match all available source document and how to address the discrepancy? (200 words) (Please consider in Australian accounting environment) (Please type up your answer)
The Success of the Organisation is based on their Policies and procedures. This procedures and policies should comply with their countries laws and regulations. In many Governments has developed many policies and procedures to keep the standards and protect the public who may be directly or indirectly part of the organisation. for exampel, investor, customer or an employee. All rights has to be protected.
Financial Accounts are one of the key pillars of an organisation as there is direct monitory involvement.
There is General Accounting Standards to record the transactions. In Australia there is Australian Accounting Standards Board, which is a Government Agency which maintain and develops financial reporting standards. Accounting system is concrete and structured one as the each transaction is accounted and reflected in two aspects. For example cash payment, one side cash is paid and other end is cash is received. here one action is done then the second action should be reflected. This way the gap should be able to reconciled in all area of recording.
Appoint internal or corporate or external auditors normally one of the organisational policy to monitor and reconcile and find out any discrepency. Then The auditors will start vouching, checking and reconcile transactions after verifieing company policies on business with countries Generally Accepted Accounting Standards. Any discrepancy will report to the mangement with their Auditor's Report.
To address Discrepancy there is many methods, for example, verify supporting documents., Missing transactions etc.
It is common in Organisations that the discrepancy in hte system stock/inventory level and physical stock level. They will go for stock taking and normally find one item is booked in different stock code or quantity. Once physical stock count is over they will reconcile with the system. There is some tolerance percentage.