Reconciliations and Current Records

Reliable records create the starting point for a reliable reconciliation: compare the records, identify a difference, and record it in the security count difference account if it stays unresolved.

What Must a Reconciliation Identify and Resolve?

• Reconciliation: A comparison of the firm's books and records with related cash, securities, or account records to identify and resolve differences.
• Securities difference: A long or short securities difference found through a required examination, count, verification, or comparison. The firm must record each unresolved difference in a security count difference account.
• Complete and current records: Records must accurately support the firm's assets, liabilities, customer activity, and securities positions.

Record flow: records and physical or external evidence -> comparison -> identified difference -> unresolved difference recorded in the difference account.

Think of it this way: A reconciliation is a matching exercise, not a glance at two totals. If the securities count says 1,000 shares and the firm's position record says 1,020, the 20-share difference is the item that needs a record and follow-up.

Exam Tip: Gotchas

• A reconciliation is not satisfied merely because aggregate totals appear close. A securities difference found during a required count, verification, examination, or comparison must be recorded and addressed.

What Should You Check on Exam Day?

• Compare the firm's records with the related cash, securities, or account evidence.
• Record and resolve each long or short securities difference found through a required examination, count, verification, or comparison.
• Require all records to remain complete and current.