Reconciliation Check: Step-by-Step Guide for Accurate Data Matching

“Did you do the reconciliation check?”

This question comes up often in accounting and audit environments. But how many people have been formally trained on the proper way to perform reconciliation checks?

This guide covers everything from the basics to practical checklists and efficiency tips.

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What is a Reconciliation Check?

Definition

A reconciliation check (Japanese: 突合チェック / totsugou check) is the process of comparing two or more data sets to verify that their contents match.

Term	Meaning
Reconciliation	Comparing multiple data sources to find discrepancies
Check	Verification, confirmation
Reconciliation Check	The process of comparing and verifying data

Also called “reconciliation verification” or “matching check.”

When is Reconciliation Check Needed?

Scenario	What to Compare	Purpose
Invoice receipt	Invoice ↔ Purchase order	Verify amounts
Month-end close	Ledger ↔ Bank statement	Confirm balances
Inventory count	System records ↔ Physical count	Identify variances
Audit response	Supporting docs ↔ Journal entries	Verify transactions

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The 5-Step Reconciliation Process

Step 1: Prepare Your Data

First, gather the two data sets you need to compare.

Checklist:

• Are the data periods aligned?
• Are the formats consistent?
• Is this the latest version?

Step 2: Define Key Fields

Determine which fields will be used to match records.

Type of Reconciliation	Key Fields
Invoice matching	Order number, Invoice number
Bank reconciliation	Date, Amount, Description
Inventory matching	Product code, Lot number

Step 3: Match Records

Use the key fields to pair records from both sources.

Source A             Source B
  ↓                    ↓
Order A001  ←→  Order A001  ✓
Order A002  ←→  Order A002  ✓
Order A003  ←→  (not found) ← Discrepancy!

Step 4: Extract Discrepancies

Review the matching results:

Discrepancy Type	Meaning	Action
Amount difference	Unit price or quantity differs	Investigate
One-sided	Data exists in only one source	Check for missing entries
Date difference	Timing mismatch	Evaluate cutoff

Step 5: Investigate and Resolve

For each discrepancy, identify the root cause.

Common Causes:

• Data entry errors (amounts, quantities)
• Timing differences (month-end cutoff)
• Notation variations (“Corp.” vs “Corporation”)
• System integration errors

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Common Mistakes in Reconciliation

Mistake 1: Misaligned Periods

Invoices often arrive the following month.

Source Data	Target Data	Result
January	January	✅ Correct
January	February	❌ Period mismatch

Mistake 2: Ignoring Notation Variations

Excel’s VLOOKUP can’t handle variations.

Data 1	Data 2	VLOOKUP
ABC Corp.	ABC Corporation	❌ No match
ABC-001	ABC001	❌ No match

Mistake 3: Ignoring Unmatched Items

Unmatched records are important information.

Status	Meaning	Action
Source only	No invoice received	Not delivered?
Target only	No purchase order	Incorrect invoice?

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Reconciliation Checklist

Before You Start

• Data periods are aligned
• Using the latest data
• Key matching fields are defined

During Execution

• Matching rules are correct
• Notation variations considered
• Unmatched items reviewed

After Completion

• All discrepancies investigated
• Results documented
• Reported to approver

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How to Improve Efficiency

Method 1: Excel Functions

Function	Use Case	Limitation
VLOOKUP	Key lookup	Can’t handle variations
COUNTIF	Duplicate check	No detail on differences
INDEX+MATCH	Flexible lookup	Complex formulas

Related: Excel Matching Functions 2026

Method 2: Pivot Tables

For large data sets, aggregate before comparing.

Purchase total: $12,345.67
Invoice total:  $12,345.67
Difference: $0 ✅

Method 3: AI Matching Tools

AI can automatically handle notation variations.

Aspect	Excel	AI Matching
Variation handling	❌	✅
Setup effort	High	None
Processing speed	Slow	Fast
Person-dependent	Yes	No

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Industry Examples

Accounting

Monthly AR Reconciliation

Compare	Key Fields	Check For
Sales ledger ↔ Invoices	Customer, Date	Missing invoices
Invoices ↔ Payments	Invoice number	Outstanding amounts

Procurement

Three-Way Matching

Document	What to Check
Purchase Order	Ordered quantity and price
Delivery Note	Actual quantity received
Invoice	Amount billed

All three must match before payment approval.

Related: What is 3-Way Matching?

Audit Response

Vouching

When auditors ask for “vouching to supporting documents”:

1. Extract journal entries
2. Gather supporting documents (invoices, contracts)
3. Verify amounts, dates, and parties match
4. Prepare explanations for any differences

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Frequently Asked Questions

Q. What’s the difference between reconciliation and verification?

A. They’re similar, but reconciliation typically involves comparing multiple records (n-to-n), while verification is usually 1-to-1.

Term	Comparison	Example
Verification	1-to-1	Password check
Reconciliation	n-to-n	Invoice to PO matching

Related: What is Totsugou?

Q. How often should reconciliation be done?

A. It depends on the process:

Process	Frequency
Bank reconciliation	Daily to weekly
AR/AP reconciliation	Monthly
Inventory reconciliation	Monthly to quarterly
Fixed asset reconciliation	Annual

Q. Should reconciliation be documented?

A. Yes. For audit and internal control purposes, record:

• Date performed
• Person responsible
• Data scope
• Number of discrepancies and resolutions

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Summary

The 5 Steps

1. Prepare your data
2. Define key fields
3. Match records
4. Extract discrepancies
5. Investigate and resolve

Key Efficiency Tips

• Use Excel functions effectively
• Watch for notation variations
• Automate with AI tools

When someone asks “Did you do the reconciliation check?”, you’ll be ready to say “Yes” with confidence.

👉 Automate Reconciliation with AI