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NAV Updates

NAV General Ledger (GL) & SL Reconciliation

NAV General Ledger Reconciliation

The reconciliation checks for each period sub-ledger so that the balances of the GL Accounts in NAV General ledger match the balances of the assigned sub-ledger accounts. For example, compare the balances of the Trade Debtors accounts in General Ledger against the balances of the assigned Customer in Receivable.

This process helps you find differences between sub-module (i.e. Receivable, Payable, Bank) and General Ledger. The NAV General Ledger balance for the Receivable should agree with the total on the report generated from sub-module (i.e. Aged Accounts Receivable).

Normally, if you are posting everything through from the sub-ledgers to General Ledger, the balances should match without any issue.

What is the NAV General Ledger Reconciliation Process?

This Microsoft Dynamics NAV General Ledger Reconciliation process takes place after the end of a financial reporting period. Accountants go through each account in the NAV General Ledger of accounts and verify that the balance listed is correct and accurate.

This includes comparing the Navision the General Ledger account balance to information contained in the other independent systems and the sources of financial information, such as the bank statements and credit card statements.

When the discrepancies are found, accountants research, investigate, and take the appropriate action to correct them. Corrective action may include creating the journal entries to correct balance errors.

The research and the investigation process is documented together with the corrective action, and all of this data is stored for audit purposes. The general ledger reconciliation method is an important step that must be completed before a company can problem financial statements.

How Does General Ledger Reconciliation Software Work?

NAV General Ledger reconciliation software automates all steps in the general ledger reconciliation process. It imports data from all sources, including ERP and other NAV General Ledger systems, bank files or statements, credit card statements.

It then compares account balances between these sources and can auto certify accounts when data matches, and identify any discrepancies that need to be properly investigated by accountants. This prevents the accountants from having to verify the balance of every single account and allows them to focus on the analysis of the discrepancies.

NAV General Ledger Reconciliation Features Include:

  • Automated review and approval workflows, with proper segregation of duties.
  • Reconciliation templates and checklists to standardize processes.
  • Integrated storage of helping the documentation for easy review and audit.
  • Link to applicable policies and the procedures for easy reference.

NAV General Ledger Account Reconciliations is designed to automate and streamline all aspects of the General Ledger Reconciliation process. It also adds proper controls to NAV General Ledger Reconciliations.

This product is capable of importing the information from almost any source and is compatible with all major ERP systems. Rules for the account balance certification are configurable and can be set based on the account risk-profile.

Auto-certification capabilities reduce the manual tasks being performed by the accounting staff, and free accountants to focus on the analysis.

When the discrepancies do exist that require research, the workflows route them to the account owner and put proper controls in place to ensure that the proper review and approval of reconciliations and to maintain the required segregation of the duties.

In addition, the product contains the customizable templates, checklists, and the integrated storage for helping the documentation to ensure that reconciliation processes are standardized the organization. Centralized the dashboards give the full visibility into the status of the reconciliation method.

Transaction Matching works together with the Account Reconciliation product when there is the need for the automated high-speed analysis of the transaction details within the account. This works by identifying the transactions that do not match between the systems, simplifying the reconciliation of accounts with high numbers of the transactions.

When journal entries are required to correct discrepancies, NAV Journal Entry integrates and automates this portion of the process.

What can cause the difference?

There are a few factors that can cause discrepancies between sub-ledgers and the General Ledger Balances:

  • Entries posted in the sub-ledger is adjusted/corrected at the General Ledger level
  • Manual posting to the sub-ledger control account in General Ledger

Therefore, we suggest that you regularly review the General Ledger accounts to ensure the control account (account assigned in Posting Group such as Customer, Vendor, Bank, Fixed Asset and Inventory) does not allow Direct Posting to the G/L account.

What accounts should be reconciled?

The General Ledger account setup in Posting Group (i.e. Customer Posting Group, Vendor Posting Group, Bank Posting Group, Fixed Assets Posting Group and Inventory Posting) determines which general ledger account system posts the transaction. Therefore, the total value generated from the sub-module needs to match with the control account in General Ledger.

What reports should be used for reconciliation?

As part of the reconciliation process, we recommend that you run the following report for the reconciliation

NAV General Ledger Reconciliation is the process performed by accountants to verify the integrity of account balances on the company’s general ledger of accounts. It includes comparing the general ledger account balances with other independent systems, statements, and the reports, to verify the balances are correct and accurate.

It involves investigating any discrepancies that are identified and taking the proper corrective actions to resolve them.

NAV General Ledger Reconciliation is a key part of the financial close process that is used to verify a company’s financial information before releasing it to the public on financial reports.

Prepare sub-ledger reconciliation

A NAV sub-ledger is a thorough record of transactions for an individual account. Usually, a sub-ledger contains detail of transactions for an account, which is summarized through the day (or month) and the total is then posted to the general ledger. Therefore, the sub-ledgers serve as help for the amounts posted to the general ledger.

Sub-ledgers are presented in the electronic form as well.  For instance, the accounts receivable sub-ledger may contain detail for all issued invoices and the cash receipts.

At the end of the day, the accountant can summarize all invoices issued and cash receipts and post them to the general ledger in 2 separate journal entries. The general ledger would not contain the detail for every individual transaction.

As there is always the opportunity for a human mistake, it is important to reconcile the general ledger balances to the sub-ledger balances on a periodic basis to spot such mistakes.

If there is no mistake in posting the journal entries to the general ledger, then the 2 balances will match; still, if there are differences, then there would be reconciling items, which require towards remain the scrutinized and corrected if it is necessary. Two important accounts that must be reconciled on monthly basis are accounts receivable and the accounts payable.

Let’s now take a look at a four-step approach for an accounts receivable reconciliation and accounts payable reconciliation.

Step 1: Compare the G/L balance to the sub-ledger balance.

You must start by scrutinizing the G/L and sub-ledger balances to recognize any differences. While doing that, pay more attention to the transactions that are unusual in their nature. For example, non-recurring transactions might have a higher risk of a mistake than transactions completed on a recurring and regular basis.

You must examine the sales journal and the purchases journal; have a look at posted entries, which were posted to the wrong account, transactions posted twice (duplication error), transposition errors, etc. Then you must look at the cash receipts and the cash payments journals. Probably, you will require to repeat with your examination of the invoice register for the accounts receivable and the purchase order journal for the accounts payable.

Step 2: Investigate reasons for the difference

After you have compared the G/L and sub-ledger and found modifications, you must investigate reasons for them. Reasons for the difference can contain the following:

  • Items posted to G/L, but not in sub-ledger
  • Items posted to sub-ledger, but not in G/L
  • Mistakes

Some of the items require the adjustments to the G/L while others need adjustments to the sub-ledger.

Step 3: Adjust G/L and/or sub-ledger

The next step is to create the essential adjustments to the G/L or to sub-ledger(s) based on the reconciliation to precise any errors, omissions, etc. To recognize what requirements to be adjusted, you could use the template of general ledger to sub-ledger reconciliation statement presented above.

Step 4: Compare adjusted balances

Finally, compare the G/L balance to sub-ledger balance again, after all, necessary adjustments were created. If reconciling the items are resolved, the reconciliation procedure is completed. If there is a difference, continue to examine the sub-ledger and journals that are a part of the revenue and expenditure cycles to recognize the problem and correct it.

The main benefits of working with the Reconciliation accounting are below:

Consistent Data Source – The Reconciliation accounting business provide you the consistent and the precise information which can be easily used for the advantages of the decision-making desires. This, in turn, guarantees competence in the workflow and there is no expenditure of the time.

Maximize your ROI: Reconciliation the accounting work provide the significant cost reduction and provides you high Return of asset.

High Superiority Work – Main advantages of the Reconciliation accounting work is to get high-quality work as per your needs with reasonable rates.

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