Reconciliation

What is Reconciliation?

Reconciliation is the process of comparing two sets of records to ensure they match and identifying any differences. In liquidation, it means comparing the cash advance released with the actual expenses supported by receipts.

The goal is to make sure:

• All expenses are properly documented.

• The total expenses are accurate.

• Any excess cash is returned, or any additional reimbursement is paid.

• The Cash Advance account is cleared.

"Reconciliation is the process of comparing the cash advance with the actual expenses supported by receipts to ensure they match. If the expenses are less than the cash advance, the employee returns the unused cash. If the expenses exceed the cash advance, the company reimburses the employee for the difference. This process ensures that all company funds are properly accounted for and accurately recorded."

Remember these three possible outcomes of reconciliation:

1. Expenses < Cash Advance → Employee returns the excess cash.

2. Expenses > Cash Advance → Company reimburses the employee.

3. Expenses = Cash Advance → No adjustment is needed; the cash advance is fully liquidated.

Example 1: Employee Returns Excess Cash

Cash Advance: ₱10,000

Supported Expenses:

• Taxi – ₱500

• Hotel – ₱5,000

• Meals – ₱2,500

Total Expenses: ₱8,000

Reconciliation:

• Cash Advance: ₱10,000

• Less: Actual Expenses: ₱8,000

• Remaining Cash: ₱2,000

Result: The employee should return ₱2,000 to the company.

Example 2: Company Reimburses the Employee

Cash Advance: ₱5,000

Supported Expenses:

• Transportation – ₱2,000

• Office Supplies – ₱2,500

• Client Meeting – ₱1,500

Total Expenses: ₱6,000

Reconciliation:

• Cash Advance: ₱5,000

• Actual Expenses: ₱6,000

• Difference: ₱1,000

Result: The company should reimburse the employee ₱1,000.

Example 3: No Difference

Cash Advance: ₱7,500

Supported Expenses: ₱7,500

Result: No cash is returned and no reimbursement is needed. The cash advance is fully liquidated.