Monthly reconciliation of general ledger accounts: checks and exceptions

Monthly reconciliation of general ledger accounts compares each month-end balance with support for the same account, entity and date. Rebuild the ledger movement, identify the difference and explain it with documents. The useful output is an account-by-account exception list with an unexplained remainder and a named owner.

Fix the account scope before comparing balances

Start with the final trial balance, the month's journal export and the supporting schedules. Keep the export time and reporting period visible. The SEC's financial statement guide distinguishes balance-sheet amounts at a point in time from income and expenses over a period; comparing different dates defeats the check before any formula runs.

For each account, record the legal entity, account code, currency, closing date, balance, support file, preparer and reviewer. Cash needs a bank reconciliation; receivables need the customer aging; prepaid expenses need the remaining unexpired costs. An accrual needs an estimate with its basis and a rollforward, rather than an unrelated transaction list.

Use the month-end close checklist for the overall timetable. This worksheet handles the evidence for individual accounts inside that close.

Rebuild the monthly movement

Use one sign convention throughout: debits positive and credits negative. For the worked example, all accounts belong to one US distributor, all amounts are USD, and the period is September 2026.

Closing signed balance = Opening signed balance + Monthly debits − Monthly credits

In the journal export named Ledger, put account code in A, posting date in B, debit amount in C and credit amount in D. Enter the first and last dates of the month in reconciliation cells L1 and M1 as actual spreadsheet dates. With account code in A2, the month's debits are:

=SUMIFS(Ledger!$C$2:$C$9999,Ledger!$A$2:$A$9999,$A2,Ledger!$B$2:$B$9999,">="&$L$1,Ledger!$B$2:$B$9999,"<"&($M$1+1))

For credits, use the same formula with the first range changed to Ledger!$D$2:$D$9999. The upper date condition includes all postings on the last day, including exports that retain a time. Increase the source ranges to cover the complete export.

For several entities, add entity as another matching criterion or use separate worksheets. Never let identical account codes merge different companies accidentally.

Build the account comparison

Put these columns in A:I, with the first account on row 2. Ledger closing is imported from the frozen trial balance. Support is the corresponding schedule balance after applying the same sign convention.

The formulas in G2, I2 and an additional rollforward-check column J2 are:

=E2-F2
=G2-H2
=E2-(B2+C2-D2)

Fill down. Every rollforward check is zero. For payables, −90,000 + 65,000 − 80,000 = −105,000, which agrees with the trial balance. Credit balances remain negative rather than being converted inconsistently to positive numbers.

The unexplained column also sums to zero, but the reconciliation still contains open work. Its documented differences have a gross value of $1,700: $200 + $500 + $1,000. Report that amount alongside the unexplained balance so offsetting signs cannot hide exceptions. All example amounts are exact whole dollars; no rounding is used.

Turn explanations into evidence

Maintain a separate item register with account, item ID, signed difference, cause, document reference, owner, expected resolution date and status. In this example:

• Cash has a $200 bank fee in the bank support that has not reached the ledger. An approved credit to cash reduces the book balance to $129,800.
• Receivables has a $500 credit memo already reflected in customer support but missing from the ledger. The approved correction reduces the book balance to $229,500.
• Payables has a $1,000 invoice recorded in the ledger but omitted from the support extract. Correcting the schedule brings its signed balance to −$105,000.

These are three different evidence trails. The IRS recordkeeping guidance explains that purchases, sales and payroll generate the supporting documents used to record transactions. Link those documents to the item rather than accepting an unsupported label such as "timing."

If customer totals depend on sales-system exports, use the separate CRM-to-ledger reconciliation to investigate those mismatches. A general ledger reconciliation should reference that work, not recreate the entire sales matching exercise.

Where it goes wrong

• Support copied from the ledger. Agreement is circular when both sides come from the same balance without independent detail.
• Late postings after review. Rerun affected accounts when the trial balance changes, and keep the reviewed version identifiable.
• Old items accepted indefinitely. A supported timing difference still needs aging, an expected clearing date and escalation when it persists.
• Missing support treated as zero. Mark the account unsupported; do not let a blank schedule produce a reassuring result.

The reviewer should confirm coverage against the full trial balance and inspect the evidence for material or unusual items. Feed the reviewed balances into the management accounts template, carrying unresolved exceptions visibly into the pack.

Reconcile your own monthly files in Covirage

Bring a trial balance, journal export and supporting account schedules to Covirage; its tools compute the account comparisons and check the remaining differences. The external AI model explains the results with every figure traced to its rows. Create a free Covirage account and bring a sample of your own export; see Covirage for finance teams for the supporting reporting context.