What Provision 29 means for SAP finance teams

A Group Financial Controller opens the month-end reconciliation folder. The completed files are there, organised by entity and account. Most have been signed off. A few contain comments, while others have separate approval emails sitting in somebody’s inbox.

The reconciliations were completed, but proving exactly how each control operated would take considerably more work. The supporting documents, approval history and outstanding actions sit in different places, and the complete story only becomes clear when somebody pieces them together.

Under Provision 29 of the UK Corporate Governance Code 2024, this distinction matters.

For financial years beginning on or after 1 January 2026, boards of companies reporting against the Code must make a declaration on whether their material controls were effective at the balance sheet date. Where a material control was not effective, the annual report should describe the issue and the action taken or proposed to address it.

The declaration comes from the board, but much of the evidence behind it is being generated by finance teams during every month-end close.

The Audit Reform Bill was scrapped, but Provision 29 survived

In January 2026, the government confirmed that it would not proceed with its planned audit reform legislation. That decision removed the prospect of a statutory UK equivalent to the internal control requirements associated with the US Sarbanes-Oxley Act.

Provision 29 had already taken effect.

It remains the main mechanism for increased board-level reporting on material internal controls. It operates on a comply-or-explain basis through the UK Corporate Governance Code, rather than as a statutory requirement, but the practical question for boards remains difficult to avoid.

If a material financial control was not effective at the balance sheet date, is the company prepared to explain that publicly in its annual report?

For finance teams, this means the work taking place now will contribute to the evidence supporting the board’s first declaration.

What does Provision 29 require?

Provision 29 asks the board to monitor the company’s risk management and internal control framework and review its effectiveness at least annually. This should cover material financial, operational, reporting and compliance controls.

The annual report should explain how the board monitored and reviewed the framework. It should also include a declaration on whether the material controls were effective at the balance sheet date.

The Code does not prescribe a single system, control framework or testing process. Companies must decide which controls are material and what evidence the board needs to reach a reasonable conclusion about their effectiveness.

This makes the quality and accessibility of the underlying evidence important. A board cannot make a well-supported declaration if the control record is incomplete, inconsistent or difficult to retrieve.

Where balance sheet reconciliations fit

Balance sheet reconciliations are a core part of the financial control environment. They help confirm that balances are accurate, supporting records agree with the general ledger and unexplained differences are investigated.

Not every reconciliation will be a material control. The significance of an account depends on its value, complexity, transaction volume and risk of material misstatement. Cash, intercompany, accounts payable, tax, inventory and other significant accounts are likely to receive closer attention.

Once a reconciliation has been identified as supporting a material control, the organisation needs more than a final spreadsheet showing that the numbers agree. It needs a reliable record of how the reconciliation was prepared, what was reviewed and how any exceptions were handled.

This is where many spreadsheet-based processes begin to create difficulty.

A completed reconciliation is not the complete control record

A reconciliation spreadsheet can show the general ledger balance, the supporting balance and the resulting difference. It may also include comments explaining individual reconciling items.

What it does not always show is the complete workflow behind the control.

The preparation date may have been entered manually. The reviewer’s approval may sit in an email. Supporting documents may be saved in a separate folder. An outstanding item may have been discussed in Teams and resolved after the spreadsheet was signed off, without the final action being added to the file.

None of these issues necessarily means that the reconciliation was incorrect. The problem is that the organisation must reconstruct the process before it can demonstrate how the control operated.

For a small number of accounts, this may be manageable. Across hundreds of accounts, multiple entities and several month-end cycles, it becomes a significant evidence-gathering exercise.

Provision 29 evidence is being created every month

The first Provision 29 declaration may appear in a future annual report, but the supporting record cannot be created retrospectively at year-end.

Every month-end close contributes to that record. Each reconciliation establishes whether the account was reviewed. Each approval shows whether the required oversight took place. Each exception demonstrates whether the organisation identified and addressed a potential issue.

Where the process is consistent, those records build into a clear history of the control. Where it is fragmented, the gaps also accumulate.

A December year-end company is already progressing through its first in-scope financial year. By the time the balance sheet date arrives, it will be too late to change how evidence was recorded during earlier closes.

The practical point for finance teams is simple: test the evidence process now, while there is still time to improve it.

What strong reconciliation evidence looks like

A strong control record should allow finance or audit teams to open a reconciliation and understand its complete history without searching through several other systems.

They should be able to see who prepared the reconciliation, who reviewed it and when each stage was completed. The supporting documents should remain connected to the relevant account and period. Any unexplained difference should have a recorded owner, status and resolution.

The review process also needs to be visible. If a reviewer raised a question, requested an amendment or rejected the initial submission, that history should remain part of the record.

This creates evidence of the control as it operated. It shows more than the final outcome and makes the process easier for internal audit, external audit and control owners to test.

Running balance sheet reconciliations inside SAP

BEST Balance Sheet Recons moves the reconciliation process into the SAP environment where the financial data already sits.

Accounts can be assessed and prioritised according to risk, with preparation, review and approval responsibilities managed through a structured workflow. Supporting documents, exceptions and actions remain connected to the reconciliation, while the complete history is retained in the system.

For finance teams, this removes much of the work involved in maintaining separate trackers and approval records. For auditors, it provides a clearer route from the SAP balance to the reconciliation, supporting evidence and final approval.

Bacardi uses BEST Balance Sheet Recons to strengthen control over its balance sheet reconciliation process, while Dis-Chem uses BEST across balance sheet reconciliations and open-item clearing inside SAP.

The benefit is not limited to preparing for Provision 29. A consistent system-based process can improve month-end visibility, reduce manual follow-up and make reconciliation evidence easier to retrieve throughout the year.

The question finance teams should ask now

Provision 29 does not prescribe a particular reconciliation system. It does require boards to reach and report a conclusion about the effectiveness of their material controls.

The finance team therefore needs to understand whether its current process can provide the evidence behind that conclusion.

A useful test is to select several material balance sheet reconciliations from an earlier month and attempt to retrieve the complete history. If it takes hours to find the supporting documents, approval messages and evidence that exceptions were resolved, repeating that process across the full account population will be difficult.

The declaration may be made at the balance sheet date. The evidence behind it is being created now.

To see how BEST manages balance sheet reconciliation workflows and control evidence inside SAP, book a demo.