How often should ICMR reconciliation occur?

• A. At least once a year
• B. On a weekly basis
• C. Regularly, typically at period-end or quarter-end
• D. Only when discrepancies are found

Answer: (C)

The frequency of ICMR reconciliation is typically aligned with the closing cycles of financial periods, which is why periodic reconciliations, such as at period-end or quarter-end, are standard practice. This timing ensures that all intercompany transactions are accounted for and reconciled accurately, which is crucial for maintaining financial integrity and compliance. Regular reconciliation helps to identify any discrepancies or issues early in the financial reporting cycle, allowing for timely resolution and reducing the risk of cumulative errors that could complicate year-end financials.

Conducting reconciliations at the end of each period or quarter provides a systematic approach to managing intercompany accounts. It aligns with the overall financial closing processes and helps companies stay compliant with accounting standards. This method encourages a proactive stance towards discrepancies, maintaining the accuracy of financial reporting across different jurisdictions or entities within a corporation.

Reconciliation occurring infrequently, such as only when discrepancies arise or on an annual basis, could lead to unresolved errors building up, making it much harder to address them comprehensively later on. Regular periodic checks ensure that any inconsistencies can be spotted and corrected while they are still manageable.