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Ledger balances are carried into the financial statements without anyone checking them against outside evidence, so errors and missing entries reach the audit.
For each balance sheet ledger, pick an independent proof, compare balances at the period end, list every reconciling item and clear or explain it.
A list of ledgers with their proof source, frequency, preparer and reviewer, plus a standard reconciliation sheet per ledger.
A signed reconciliation for every ledger showing book balance, proof balance, itemised differences and nil unexplained balance.
General ledger reconciliation means comparing the balance of each ledger account in your books with an independent proof, such as a bank statement, a vendor statement, a sub-ledger or a tax portal, and explaining every difference before the books close. The ledger says what you think the balance is. The proof says what someone else, or a separate record, says it is. Reconciliation closes the gap in writing.
Which proof does each ledger agree to?
Every balance sheet ledger has a natural proof. A starter list for an Indian business:
| Ledger account | Proof to agree it to | Usual frequency |
|---|---|---|
| Bank (each current account) | Bank statement | Monthly, often weekly |
| Sundry Creditors | Vendor statements of account | Monthly or quarterly |
| Sundry Debtors | Customer confirmations, sales sub-ledger | Monthly or quarterly |
| TDS Receivable | Form 26AS, or Form 168 from tax year 2026-27 | Quarterly |
| Input GST | GSTR-2B and the GSTR-3B filed | Monthly |
| Fixed Assets | Fixed asset register | Quarterly or at year end |
| Salary and statutory dues payable | Payroll register, PF and ESI challans | Monthly |
Income and expense ledgers are usually reviewed for reasonableness rather than reconciled line by line, because they close to profit and loss each year.
A worked example: the bank ledger
At 30 September the bank ledger in Tally shows ₹6,44,000. The bank statement shows ₹6,95,500. The gap is ₹51,500.
- Cheques issued and booked but not yet presented: ₹60,000. These reduced the books but not yet the bank, so the bank is higher by ₹60,000.
- A deposit made on 30 September but credited by the bank on 1 October: ₹7,500. This is in the books, not yet in the bank, so the bank is lower by ₹7,500.
- A bank charge of ₹1,000 that the bank debited but the books have not recorded. The bank is lower by ₹1,000.
Proof: ₹6,44,000 plus ₹60,000 minus ₹7,500 minus ₹1,000 equals ₹6,95,500. Items 1 and 2 are timing differences that will clear. Item 3 is a book entry you should pass now. After you post the ₹1,000 charge, the book balance becomes ₹6,43,000 and the only reconciling items left are timing ones.
How is general ledger reconciliation different from bank reconciliation and from sub-ledger reconciliation?
- Bank reconciliation is one kind of general ledger reconciliation, for the bank ledger only, with the bank statement as proof.
- Sub-ledger reconciliation checks that a control account, such as Sundry Debtors, equals the sum of the individual party ledgers beneath it. Both records are inside your own books.
- General ledger reconciliation is the umbrella. It covers every balance sheet ledger and prefers outside proof wherever it exists.
A useful habit: first make the control account equal its sub-ledger, then agree the sub-ledger to outside statements. Doing it in that order stops you chasing one error twice.
Which ledger balances do auditors expect to see reconciled at year end, and who signs?
At 31 March, auditors usually ask for reconciliations of every bank account, debtors and creditors with confirmations, TDS receivable against the TDS credit statement, GST ledgers against returns, fixed assets against the register, and loans against lender statements. For companies, Section 143(3)(i) of the Companies Act 2013 requires the auditor to report on internal financial controls, and ledger reconciliations are among the most tested controls. CARO 2020 also asks auditors to report on records of fixed assets and on quarterly returns filed with banks against the books.
Each reconciliation should show who prepared it, who reviewed it and the date. Unexplained differences older than one period should be escalated, not carried silently.
What to read next
General ledger reconciliation is a key control, so the next step is to decide scope, frequency and owners in writing. Use the one-page reconciliation control plan template, then read how reconciliations support internal financial controls. If you are comparing tools for many ledgers, see the guide to account reconciliation software in India.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →