Reconciliation Compliance supports the variance analysis process which is a key control in the overall account monitoring process to ensure balance fluctuations are monitored and explained if certain thresholds are exceeded. Variance Analysis automates the process by automatically comparing balances across periods, for example, period over period, period over quarter, etc. The same powerful rules engine utilized by Reconciliation Compliance allows you to streamline the reconciliation process can be used for the Variance Analysis process to either automatically process accounts that do not require any user explanation or require the variance to be explained.
The suggested best practice from best in class performing customers is to complete the Variance Analysis across all desired accounts prior to period-end close and certainly prior to reconciliation sign-off, so that the accounts can be as accurate as possible when the ledger closes for that period.
Variance analysis uses the same Profile/Format concept as an Account Analysis or Balance Comparison reconciliation methods to create variance analysis records to accomplish the period-to-period comparison. This means that companies who perform both reconciliations and variance analysis may need two sets of profiles (one for reconciliations and one for variance analysis). This enables users to perform the variance analysis at a different level of detail then the reconciliation (more summarized or more detailed) if required.
Setting Up a Variance Analysis
In order to set up variance analysis, you set up and configure Reconciliation Compliance in the same way as for Account Balance or Balance Comparison reconciliation methods including using the Format and Profile concepts. However, you must create a separate set of profiles for Variance Analysis.
See the following topics: