#0x2525 How Transaction Matching & Variance Analysis Bolsters Risk Management Efforts | ProtoMinds

As the culture of risk
management spreads across more and more boards and C-suites, don’t lose sight
of the fact that understanding, assessing, and managing risk is a complex
endeavor. And it begins with the solutions employed for Accounting and the
financial close.

For many companies, automated account
reconciliations and journals
, while best known for saving time and
costs during the month-end close, also form a backbone for improving risk
management through automated audit trails and other functions.

But two automated solutions that
are not necessarily on the CFO’s shortlist, transaction matching and variance
analysis
, are fast coming into their own as additional safeguards
against the risk of error or fraud.

They too deliver substantial
benefits in time saved and improved decision-making, and also fit nicely into
the bigger risk management picture.

Getting It Right With Transaction Matching

BlackLine Transaction Matching compares
the detailed transactions
that make up any two or more accounts,
automatically moving on as each transaction is matched. Customizable workflows
channel any unmatched transactions to appropriate personnel for resolution.

This is valuable because transactional
details, which can’t be seen at the account-summary level typically used for
account reconciliations, are visible to the transaction matching process.

If there’s a difference between the
GL and bank balances, the matching process can be used to help explain the
reason. For example, a check may be slow to clear, or a reference number may be
incorrect.

This makes the process of ticking
and tying transparent to the user, showing only those matches that couldn’t be
resolved automatically. From there, BlackLine workflows help automate the
resolution process, with BlackLine’s matching engine processing millions of
transactions every minute, on average.

Logic-driven rules help users set
precision levels, and can even “suggest” matches by identifying transactions
that may have some but not all of multiple characteristics. Intelligent
workflows forward open-item queries to appropriate reviewers for action.

These workflows help raise the
visibility of risky transactions to the appropriate reviewers. It doesn’t
matter if a reviewer works in a different division or is miles away from the
accounting function, because the workflows can travel across any boundaries.

Another feature that helps
highlight and describe risk is the solution’s reason-code facility, where user-customizable
reason codes facilitate analysis by automatically documenting and categorizing
the reasons for missed matches.

Of course, functions such as these
can be—and often are—done by humans, and shortness of time is often cited as a
reason why errors are made or overlooked.

By automating them, BlackLine’s
software not only avoids the extra risk of human error, it also greatly speeds
up the process of matching.

Gaining
Control With Variance Analysis

Variance analysis is an
essential tool for monitoring the effectiveness of internal controls. But to
have the greatest impact on managerial decision-making, it should be performed
frequently and in a timely manner.

Because it can analyze actual versus projected activities,
variance analysis has many uses, from measuring sales price or volume variances
to assessing variable or fixed overhead spending and direct-labor overhead.

In a large retail chain, it can compare seasonal performance
of retail outlets. In manufacturing, it can help analyze actual versus budgeted
overhead costs.

It’s regarded by auditors as a key internal control
component for monitoring risk management. But as with manual transaction
management, the more quickly it can deliver results, the better for corrective
intervention.

BlackLine’s variance analysis solution offers a number of
timesaving advantages:

  • Immediate results from large
    data volumes.

    Users can drill quickly into live data via real-time dashboards and reports
    that display policy, purpose, and procedure for every identified variance.
  • Fast reviews with full
    documentation.

    Automated workflows deliver variance results to appropriate reviewers so no
    time is lost in taking corrective action or initiating further tests.

BlackLine’s process automation features—its end-to-end integration
and unified codebase
—make it possible for organizations to perform both transaction
matching and variance analysis on an ongoing basis, as part of a Continuous Accounting workflow.

This equips accounting professionals to regularly fine-tune processes without holding up the financial close. It also relieves the typical pressure and time constraints caused by manual operations that can lead to errors and increased risk.

Join this webinar on Valentine’s Day to discover how to automate your high-volume reconciliations and help your transactions find their perfect match. 


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