Seeking input for what feels like a massive red flag -- the company i work for has struggled to get clients to provide bank statements (obviously not a unique problem), slowing down our ability to reconcile accounts. clients leave citing inaccurate bookkeeping, not seeing value in our services, etc. so leadership is thinking about removing bank reconciliation as a required process for the sake getting more clients to stay. instead they want to use an API to pull the balance of the clients' accounts on the 1st and last day of the month, make sure the transactions tally up, and consider that a reconciliation. no matching to bank statements or statement periods. we only do cash-basis, no accrual accounting. i can't articulate why, but this feels very risky. am i overreacting?
This would include credit cards, and in my experience reconciling some of these client accounts, they also have varied statement periods.
My concerns are whether the API is reliable enough and if there is an issue if the balance dates we reconcile against are different from the statement balance. Is there any risk there?
It's pulling all transactions daily from the OB, then pulling the balance from the OB on the 1st and 30th. No comparison to the TB, only to the balances as reported by the OB on the 1st and 30th (or 31st, etc.)
even if the statement period is different than the reconciliation period?
It's doing that already, so this would be comparing the transactions pulled by the API to the balance from the same API, and if it matches, using that instead of a bank rec
we do that, but not a lot of clients are opting into it
Yeah, exactly. it doesn't solve the need for the statements imo and just makes things messier at year end
Removing bank reconciliation as a requirement for clients??
Accounting