While Accounting and Cost Control functions and processes should be separated (as described in White Paper 2014-02), it is essential to reconcile very regularly the data from these two processes to ensure that your project is under control. In our new White Paper 2014-06 we expose the principles of this reconciliation and the best practices that need to be followed to get the most out of this useful process.

Reconciliation with accounting will give an indication of the quality of the cost tracking on the project (which forms the basis for the forecast). Reconciliation needs to be performed on a monthly basis at the Work Package level, the lowest level of the Cost Breakdown Structure. This is feasible through the consistent implementation of the Cost Breakdown Structure in both the Cost Control and Accounting systems. The difference between Actual Cost and Invoiced Cost values in accounting shall be examined to detect whether the Actual Cost basis is indeed a sound basis for forecasting. Any excessive difference needs to be explained.

A proper reconciliation process allows to benefit fully from these two independent control systems to increase assurance that the project is effectively under control. It needs to be implemented regularly and its conclusions need to be traced. The Project Manager, without being involved in the details, must keep abreast of its results and of possible identification of issues related to project controls that might have been detected. Understand more in our new White Paper 2014-06 “How to Use Reconciliation between Cost Control and Accounting to Improve Control on your Project” how to benefit fully of the reconciliation process!