What Are The Acts Of Reconciliation For?

What Are The Acts Of Reconciliation For?
What Are The Acts Of Reconciliation For?

Video: What Are The Acts Of Reconciliation For?

Video: Truth and Reconciliation for Canada | practice English with Spotlight 2022, December
Anonim

Accounting for settlements with creditors and debtors is one of the key areas in the work of the accounting service of any organization. The act of reconciliation of mutual settlements is a primary accounting document used by counterparties to control the fulfillment of mutual obligations. It is compiled in the form of a register containing all operations for the shipment of goods, the provision of works and services and their payment for a certain period of time.

What are the acts of reconciliation for?
What are the acts of reconciliation for?

The form of the act is not fixed at the legislative level, therefore, each enterprise, subject to all the requirements for registration of primary documents, has the right to develop its own version of the act. A document drawn up by one of the parties to the agreement in duplicate and signed by an authorized person is sent to the counterparty, who, in case of agreement with the correctness of mutual settlements, confirms it with a signature and sends one copy back.

If there are discrepancies, the counterparty has the right to sign an act, indicating inaccuracies in the accounting, or attach its own register of settlements to the document. Refusal to sign the act means that the debtor does not recognize the existence of obligations to the counterparty.

It is strongly recommended to leave the reconciliation report in cases where the parties cooperate on an ongoing basis and plan to renew existing agreements in the future and conclude additional agreements to them. This document is also required in situations where the cost of a product, work or service is high, and the seller provides a deferred payment.

If the parties to the agreement have mutual obligations to each other, then, having drawn up a reconciliation act to confirm them, they can offset them. In addition, the presence of a register of mutual obligations at hand will save time searching for primary documents when it becomes necessary to clarify settlements between counterparties. The reconciliation statements signed by the parties are also confirmation of the balances of accounts receivable and payable at the end of the reporting period and the beginning of the following period in the preparation of financial statements.

Despite the fact that the reconciliation act cannot be used in court as evidence of a transaction and the existence of a debt under it, it can help to extend the limitation period and increase the chances of collecting receivables. Having in hand a signed reconciliation act, which actually means that the counterparty recognizes its debt, the creditor increases the period during which he can sue the debtor for payment of funds. In this case, it is very important to check whether the authority of the person whose signature is on the document is valid.

Popular by topic