Managing international accounts reconciliation can throw up a number of compatibility issues, but would increased convergence of accounting standards improve these challenges?
The idea of convergence – defined by international regulators as the development of a single set of high-quality, international accounting standards – has been around since the 1950s. The end of World War II opened up international markets and allowed for the flow of capital between countries, so it is only natural that there would be a desire for some convergence of accounting standards. But it wasn’t until 1973 that the International Accounting Standards Committee (IASC) – now called the International Accounting Standards Board (IASB) – was established as the first international standards-setting body.
The IASB has helped standardise international accounting across the whole of the European Union as well as over 100 other countries. But has it really made international accounting easier for financial staff?
From our recent survey results we can see some marked differences between the challenges faced by both European and American accounting staff. According to the results, 20% less account staff in the United States, (U.S.) completed their monthly close process within 6 days, compared to European staff. However, we can also see that 11% more finance staff in the U.S. trusted the reported numbers than staff in Europe.
So U.S. staff take longer on average to complete the monthly close process than European staff. But perhaps as a result of this extra time spent by U.S. financial accounting professionals they are more confident in their reported numbers.
This raises the age-old question: Is it better to close the books late but with more accuracy, or earlier but with more chance of errors?
The ideal answer would be both accuracy and speed, but this is only achievable with a more reliable process and software that will streamline the process from the beginning to end of the monthly close.
The IASB have been working with America’s Financial Accounting Standards Board (FASB) since 2002 to encourage closer convergence between European and American accounting standards. However, it is hard to see how convergence of these standards would help us close the books quicker and with fewer errors. Furthermore, convergence still wouldn’t help with the other challenges of international reconciliation, such as foreign exchange rates, differences between definitions and languages, and reporting.
What is needed is an international language that will convert and standardise all international accounts. But what language is both international and local, that can standardise all our account reconciliation?
Automated account software runs in a local language, yet is internationally compatible with reconciliations across the globe. It also standardises reconciliation reports taking into account foreign exchange rates and negates any language differences.
With our automatic account reconciliation software you can simply feed in the accounts data to the software, create some automated rules and initiate your reconciliation process. Your co-workers can easily get on with their reconciliation according to policies and procedures which meeting more demands of Governance, Risk and Compliance, then your Chartered Accountant could ever dream of. It’s also far more accurate than reconciling by hand and Excel, and is complete within a fraction of the time – helping to solve the time/accuracy balancing act.
Find out more about Adra Match accounts transaction matching software or look into our brand new enhanced accounts reconciliation software BALANCER – which allows automation of almost the entire workflow, from reconciliation to reporting and auditing.
What is your biggest obstacle when it comes to international account reconciliation? Why not leave your comment below?