8.3 Reconciling the Data

Reconciliation is the process of comparing the information carried in the Instrument tables to the general ledger balances (contained in Ledger Stat).

The goal of the Asset Liability Management Process is to measure and manage interest rate and liquidity risk for the entire balance sheet, as represented on the general ledger. Many ledger accounts have corresponding data in the Instrument tables. In such instances, the balances from the instrument data must be compared with the corresponding ledger balances.

The reconciliation process involves defining a level at which some piece of information in the Instrument tables is to be compared to the General Ledger data carried in the Management Ledger (also known as LEDGER_STAT). That level can be one dimension (to reconcile for each general ledger account number, for example, General Ledger Account ID) or multiple dimensions (to reconcile for each general ledger account number within each business unit, for example, General Ledger Account and Organization Unit).

The most common type of reconciliation is to compare the current balance of Instrument table data to the general ledger ending balance. The data carried in the database is a snapshot of the portfolio as of a given date. Consequently, comparing the current balances from the Instrument table to the general ledger ending balance measures the degree to which the extracted data is in balance with, or reconciles to, the general ledger.

Variances between the Instrument table and the Management Ledger table should be corrected. If the magnitude of the variances is within an acceptable tolerance, plug entries should be created to force the reconciliation to zero. An Instrument table (FSI_D_LEDGER_STAT_INSTRUMENT) has been seeded in the database to hold these plug balances and any Ledger-specific balances that you wish to include as instrument balances for ALM processing.