RECONCILIATION OF BUSINESS EXPENDITURE
Reconciliation is an accounting process that uses two sets of records to ensure figures are correct and in agreement. It confirms whether the money leaving an account matches the amount that’s been spent, ensuring the two are balanced at the end of the recording period. Business expenditure falls into three key areas for the purpose of reporting your profit or loss. You can save yourself, or your accountant, time by grouping your costs accordingly in your purchase list or ‘ledger’.
- The three key areas are:
- Cost of sales – the base cost of obtaining or creating your product
- Business expenses
- Cost of equipment you have bought or leased for long-term use
- If your business is VAT-registered, you will need to record details of any VAT included in your expenditure
- Reconciling accounts on a regular basis will help you to manage your sponsored funds to ensure that expenditures and revenues are within appropriate limits and guidelines.
- Reconciliation of your sponsored accounts on regular basis helps to:
- Ascertain that revenues have been received.
- Confirm the availability of project funds as needed.
- Ensure that costs are consistent with the project schedule and incurred between the start and stop dates of the project.
- Discover any errors in your budget, encumbrances, or expenditures, whether these are caused by an end user, a service department, or any other system-generated problem.
- Avoid overspending, which may cause a deficit and limit further spending.
- Give your Principal Investigator a high degree of confidence that the project is in compliance with the sponsor’s spending terms and conditions.
- Verify that cost transfers and corrections have been made or are made in a timely manner.
- Maintain a clear audit trail for the future.
- Do not wait until a problem is brought to your attention or until a project has terminated before reconciling an account.
- Feel free to contact us as we are available to provide you reconciliation for your business expenditures