Record reconciliation

Reconcile records and accounts to detect if something is different from what is standard, normal or expected, which may indicate fraud.

This control targets both internal and external fraud risks.

Examples

Examples of this control include reconciling records by comparing:

travel approvals produced each month with the trips booked using a travel vendor
credit card expenses against required receipts
overtime budgets matched against spending
proof of assets ordered versus assets received.

A lack of records and account reconciliation can lead to:

fraudsters feeling more confident their actions will not be detected
high levels of non-compliance or errors due to inconsistent and unclear processes, rules and decision making
less transparency over the actions and decisions of employees and third parties
fraud or corrupt activity going unnoticed or unchallenged.

Methods to evaluate the effectiveness of this control include:

confirming that the reconciliation is segregated from the processing, e.g. ensuring that one employee cannot process and reconcile the same activity
reviewing who has access to complete the reconciliations
walking through the process with an employee while they complete a reconciliation
confirming a consistent reconciliation process exists
confirming that records cannot be manipulated
reviewing the reconciliation process to ensure it would identify different methods of fraud
conducting interviews, workshops or surveys with employees who complete reconciliations to assess their understanding and feedback about fraud control policies
checking if and how reconciliation results are reported.

Other capability, prevention, detection and response controls that can enhance this control’s effectiveness:

Types of behaviour this control is designed to mitigate:

Explore a range of controls that can be put in place to reduce the risk of fraud happening in your organisation.