HOW WILL THE PROJECT TEAM ADDRESS THE CHALLENGE OF MEASURING THE ACCURACY OF RECONCILIATIONS PERFORMED DURING THE INITIAL IMPLEMENTATION

The project team will take a multi-pronged approach to effectively measure the accuracy of reconciliations during the initial implementation phase of the new system. First, we will perform rigorous testing and validation of the reconciliation processes and controls that have been configured within the new system. This includes testing reconciliation rules, account mappings, validation checks, reporting capabilities and workflow approval processes. Ensuring these underlying reconciliation components are functioning as designed and configured correctly is critical to obtaining accurate results.

Secondly, we will run sample reconciliations on pre-prepared ‘test’ datasets that contain known and validated beginning balances, transaction data and expected ending reconciliation results. These test datasets can be cycled through the new system over and over to validate the results are consistent with what is expected. Any discrepancies found would trigger further investigation and correction of any issues. Running numerous sample reconciliations with known inputs and outputs allows us to methodically test the reconciliation functionality and build confidence in the accuracy before processing actual data.

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Thirdly, we will manually perform parallel reconciliations on the same underlying data that is being reconciled through the new system. This will involve having experienced reconciliation staff independently prepare reconciliations in the prior/legacy system or through manual processes on the exact same source data. They can then directly compare their results to what the new system generates. Any differences would need to be explained, investigated and reconciled. Performing full parallel manual and system reconciliations provides the most robust accuracy baseline early in the implementation phase.

Fourthly, we will conduct analytical reasonableness tests on system-generated reconciliation results. This involves analyzing key metrics like variance amounts, number of reconciling items, out of balance percentages etc. and determining if the results fall within expected thresholds. Any reconciliations falling significantly outside normal parameters would warrant further scrutiny. The reasonableness tests help identify potential issues even if the final reconciliation balances appear accurate on the surface.

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Fifthly, we will obtain sub-certifications from preparers and reviewers of key reconciling items. Especially for larger, more complex reconciliations, having the preparers and reviewers separately attest to the accuracy and completeness of critical reconciling items recorded provides additional assurance. Any items in dispute could then be escalated for reconciliation. Obtaining sub-certifications of key reconciling details adds an extra layer of verification.

Sixthly, to address smaller, less material reconciliations where a full parallel process may not be practical, we will conduct detailed reasonableness reviews of key supporting details. This involves sampling significant reconciling items like large intercompany balances, accruals etc. and agreeing amounts back to underlying source documentation. Through these detailed substantive reviews of critical reconciling evidence, we aim to validate amounts are properly supported even if a full parallel reconciliation is not possible.

Once the new system has been productive for a period of time, we will go back and retrospectively re-perform sample reconciliations from prior periods on a test basis. By doing reconciliations of past periods with no knowledge of the original results, we can independently validate the accuracy and help identify and correct any uncontrolled deficiencies. The retrospective validations conducted some time post implementation help confirm the integrity of the reconciliation processes.

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By leveraging testing, comparing parallel processes, analytical reviews, sub-certifications, detailed evidence examination and retrospective validations – we believe we have established a robust multi-faceted program to thoroughly assess the accuracy and integrity of reconciliations produced by the new system during initial implementation and rollout. The results and ongoing monitoring would indicate where enhancement efforts may still be required. This comprehensive approach aims to give stakeholders confidence in reported reconciliation accuracy from day one of going live on the new system.

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