Audit Trail Best Practices: Building Reconciliation Evidence That Stands Up

There are three moments when your reconciliation working papers actually matter: an HMRC enquiry, a professional body quality review, and a professional indemnity claim. In each case, the question is the same — can you demonstrate, with evidence, that the reconciliation was done properly?

For most practices, the honest answer is: probably not as well as we'd like.

What a Good Audit Trail Contains

A defensible reconciliation working paper should answer five questions for every matched item:

Where Excel Falls Short

Excel-based reconciliations typically answer question one (what was matched) and sometimes question five (what's left). Questions two through four — the reasoning, confidence, and sign-off — live in the accountant's head and never make it onto paper.

This creates a documentation gap that's invisible in day-to-day work but becomes glaringly obvious under scrutiny. When a quality reviewer asks "why were these items matched?" and the answer is "because Sarah thought they looked right, but Sarah left the firm in August," you have a problem.

Best Practices for Reconciliation Documentation

1. Document the matching basis, not just the result

For every match, record why the items were paired. This could be as simple as "exact amount and date match" or as detailed as "amount within 1% (early settlement discount), description contains common supplier name, date within 3 days." The key is that the logic is explicit and reviewable.

2. Use consistent tolerances — and write them down

If your practice allows a 1% tolerance for early settlement discounts, document it. If you accept a 3-day window for posting date differences, document it. These become your matching policy, and they ensure consistency across staff and across clients.

3. Record who reviewed what and when

Every accepted match should have a reviewer name and timestamp. Every rejection should have a brief reason. This creates a reviewable decision log that any partner, quality reviewer, or regulator can follow.

4. Preserve the unmatched items with commentary

Unmatched items are where the real story lives. For each unmatched transaction, note the investigation performed and the conclusion reached. "Timing difference — posted January" or "Query raised with client 15/12, awaiting response" turns a bare list into evidence of diligence.

5. Generate working papers contemporaneously

The working paper should be produced at the time of the reconciliation, not reconstructed later. Contemporaneous documentation is always more credible — and more accurate — than retrospective assembly.

How Automated Matching Builds Better Trails

Confidence-based matching systems generate audit trails as a natural byproduct of the process. Every match includes the confidence score, the signals that contributed to it (amount, date, description), the user who accepted or rejected it, and the timestamp. Unmatched items are automatically listed with their best candidate matches.

The Excel working paper output contains everything a reviewer needs: matched items with full evidence, unmatched items clearly flagged, and split payments documented with their component parts.

This isn't documentation added on top of the process — it is the process. And that's what makes it reliable.