In accounting, Reconciliation refers to the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. Reconciliation is used to ensure that the money leaving an account matches the actual money spent. This is done by making sure the balances match at the end of a particular accounting period.
To ensure the reliability of the financial records, reconciliations must, therefore, be performed for all balance sheet accounts on a regular and ongoing basis. A robust reconciliation process improves the accuracy of the financial reporting function and allows the finance department to publish financial reports with confidence.
In the United States, the passage in 2002 of the Sarbanes-Oxley Act has emphasized the need for balance sheet account reconciliation to be included within a company's own procedures, not relying only on external auditors.