Reconciliation can be very time consuming and labor intensive, thus expensive. In recognition of this, our next step in the review process is to sort register entries based upon their remaining value (and useful life expectancy).
Doing so provides focus of effort based upon the value being returned. For example, unless there are some other relevant reasons for reconciling an asset that has reached end of life and has no remaining financial value, little extra effort is made other than standard comparison actions, to reconcile the register entry.
Reconciliation activities follow a pattern of effort. The pattern starts with direct matching, without any assumption, and progresses to matching following sets of assumptions.
There are clear risks associated with matching under assumption and will be expounded upon later in this blog series.
The first reconciliation pass seeks to match physical assets to logical records utilizing information which is unique to a given asset, such as a serial number.
These are considered “exact matches” and no assumptions are made. From this point forward assumptions are introduced into the reconciliation equation, such as comparison by description.