Accounts Reconciliation

Explanation: Accounts reconciliation is the process of ensuring that two sets of records (usually the balances of two accounts) are in agreement. It’s a critical process for accurate financial reporting.

Example: Reconciling the bank statement of your coffee shop with your ledger at the end of each month.

Potential Issues: Failing to regularly reconcile accounts can lead to undetected errors, fraud, or embezzlement. It can also result in reporting discrepancies, affecting financial statements’ reliability and potentially leading to legal and tax-related consequences.