How To Reconcile GL Accounts in SAP

Why Reconcile General Ledger Accounts?

A business’s financial statements provide the basis for important decisions made by internal and external stakeholders. General ledger account reconciliation helps ensure that GL accounts, and the resulting financial statements, are accurate at month-end and period-end.

During the financial close, incorrect, missing or unauthorised entries must be identified and corrected. Accruals and adjustments are posted, while SAP balances and transactions are validated against supporting reports and external data.

In addition to stakeholder requirements for accurate, complete and validated financial information, organisations must also satisfy regulatory and audit requirements. These controls are particularly important for listed and regulated companies.

How Do You Reconcile GL Accounts in SAP?

Standard SAP does not provide a complete process for preparing, approving and reporting on general ledger account reconciliations.

Finance teams may therefore download SAP data into Excel or other external tools and complete significant amounts of manual spreadsheet-based reconciliation. These processes can be difficult to control, standardise and audit.

BEST Balance Sheet Recons automates GL reconciliation directly within SAP.

• GL reconciliation reports are available within SAP, with drill-down access to the underlying transactions to support the investigation of discrepancies.
• Notes, supporting attachments and approvals are processed within SAP, with complete audit trails recording the user, date and time.
• Existing SAP users can be assigned reconciliation transactions governed by the organisation’s existing SAP authorisation framework.
• GL transactions and balances are reconciled within SAP, removing the need to duplicate or interface key finance data with a separate reconciliation system.
• Historic reconciliations remain available within SAP for query resolution, control reviews and audit evidence.
• Low-risk reconciliations can be approved automatically when no transactions were posted during the period or other configurable criteria are satisfied.
• Open items that meet the specified matching criteria can be matched and cleared automatically, including eligible transactions across company codes and GL accounts.
• The Reconciliation Hub supports the planning and tracking of reconciliations throughout the financial close.

GL Reconciliation Case Study

Dis-Chem processes high volumes of transactions across multiple company codes each month.

Watch the video or view the presentation about Dis-Chem’s GL reconciliation process to learn how the business automated GL reconciliation and open-item clearing within SAP.

Which GL Accounts Should Be Reconciled in SAP?

Most general ledger reconciliations relate to balance sheet accounts, although the same functionality can also be used to reconcile income statement accounts.

The following are some of the most important types of GL reconciliation managed by SAP finance teams.

Bank Reconciliations

A bank reconciliation in SAP typically has two principal objectives:

• Ensuring that the main bank GL account reconciles with the corresponding bank statement and is accurate and complete
• Ensuring that the bank subaccounts are cleared regularly and do not contain long-outstanding items

Find out how BEST supports detailed bank reconciliation within SAP.

Intercompany Reconciliations

Intercompany transactions can be processed in many different ways within SAP. They may involve vendor accounts, customer accounts, GL accounts, trading partners, profit centres, segments and other account assignments.

Mapping and matching transactions across these different entities becomes increasingly difficult when an organisation processes high transaction volumes.

The BEST Intercompany Matrix allows different SAP entities and account assignments to be mapped and reconciled.

Fixed Asset Reconciliations

SAP provides standard transactions for completing the reconciliation between the general ledger and the Asset Accounting subledger.

However, many organisations also perform a monthly review to confirm that the GL and asset subledger agree and to review asset postings according to relevant transaction categories.

BEST provides a dedicated fixed asset reconciliation process within SAP.

Accrual Reconciliations

Overstated or understated accruals can materially affect the balance sheet, particularly liability accounts.

An effective accrual reconciliation should confirm that previous accruals were reversed correctly, current accruals are supported and long-outstanding items are investigated.

Find out how BEST supports accrual reconciliations within SAP.

Vendor and Customer Subledger Reconciliations

SAP configuration ordinarily ensures that vendor and customer subledgers remain aligned with their corresponding reconciliation or control accounts.

The control accounts generally cannot be posted to directly, helping ensure that their balances reflect the transactions recorded in the relevant subledgers.

BEST can perform a specific check to identify entries posted only to a vendor or customer control account, or only to the corresponding subledger.

Vendor and customer control accounts can also be reviewed and approved through the standard BEST GL reconciliation process.

Vendor Statement Reconciliations

Vendor statement reconciliation involves matching and validating SAP vendor line items and balances against statements supplied by vendors. It is generally a key responsibility of the accounts payable team.

The process may involve thousands or millions of transaction lines and hundreds or thousands of vendor statements each month. Statements can also arrive in different PDF, Excel, email or electronic formats.

SAP Materials Management and Financial Accounting processes may involve payments, discounts, down payments, withholding tax, held and parked items, GR/IR accounts and other transaction types.

BEST Vendor Recons automates supplier statement reconciliation within SAP.

Customer Payment Clearing

Customer payments must be cleared accurately and promptly against invoices and other transactions. This helps maintain correct customer balances and reduces the number of open items held on customer accounts.

BEST Customer Clearing allows customer remittance advice to be uploaded into SAP. The module then matches and clears the relevant customer account line items and associated payment.

Open-Item Clearing

Open items should be cleared regularly. High volumes of uncleared entries can make GL accounts difficult to manage and obscure the items that require investigation.

Standard SAP provides automated open-item clearing functionality, but its matching criteria can limit the transactions that can be cleared automatically. Items that do not meet these conditions must often be cleared manually.

BEST Open Item Clearing provides greater matching flexibility and supports the automated clearing of eligible open items across account types, GL accounts and company codes.

See Automated GL Reconciliation in SAP

If your finance team currently completes GL reconciliations manually outside SAP, contact BEST to arrange a demonstration of automated GL reconciliation within SAP.