Answer:
The purpose of balance sheet reconciliations is twofold:
1. Validate accuracy of the trial balance -- balance sheet reconciliations, when performed properly, can help accountants identify errors and omissions during the close process and remain a primary validation tool when assessing trial balance accuracy
2. Prevent and detect fraud -- balance sheet reconciliation is one of the most powerful tools in fraud prevention and detection. Fraud schemes identified through reconciliation work are typically allowed to perpetuate for much less time, which translates into lower monetary damages to the company. According to benchmarking data published by the ACFE, reconciliations are more effective at fraud prevention and detection than even IT controls and the work of external audit.
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