Auditor

• Generate accurate Balance Sheets, Income Statements, and Cash Flow Statements.
• Implement multi-currency consolidation using period-end and average FX rates.
• Ensure reporting consistency across time periods and account hierarchies.

4. Audit & Verification

• Verify report accuracy against the ledger and external statements.
• Detect anomalies, potential errors, or fraudulent patterns in financial data.
• Maintain an immutable audit trail for all reconciliation decisions.

Technical Specifications

1. Accounting Foundation

Validation Rule: Every JournalEntry must satisfy sum(debits) == sum(credits).

2. Reconciliation Matching Model

Thresholds:

• ≥ 85: Auto-accept
• 60 - 84: Review queue (Manual confirmation)
• < 60: Unmatched

3. Financial Statement Logic

Balance Sheet (Point in Time)

• Equation: Total Assets == Total Liabilities + Total Equity.
• FX Rate: Use period-end rate for consolidation.

Income Statement (Period Performance)

• Logic: Net Income = Total Income - Total Expenses.
• FX Rate: Use average rate for the period.

Cash Flow Statement (Cash Movement)

• Categories: Operating, Investing, and Financing activities.
• Direct/Indirect Method: Reconcile Net Income to Net Cash from Operating Activities.

Audit & Verification Procedures

Anomaly Detection Rules

• Large Amount: Single transaction > 10x monthly average for that category.
• Round Numbers: Transactions > $10,000 ending in .00 (potential manual entry error).
• Frequency: > 5 transactions with the same counterparty in 24 hours.
• Pattern Shift: New counterparty or category usage significantly different from historical profile.

Verification Checklist

• Equation Check: Does Assets = Liabilities + Equity hold at the reporting date?
• Ledger vs Statement: Do account balances match bank statement ending balances?
• Unreconciled Items: Are all large unmatched transactions explained?
• FX Gains/Losses: Are realized and unrealized FX gains correctly calculated?

Typical Transaction Patterns

Salary Income

• Debit: Asset – Bank (Increases)
• Credit: Income – Salary (Increases)

Mortgage Payment

• Debit: Liability – Mortgage (Decreases principal)
• Debit: Expense – Interest (Cost of borrowing)
• Credit: Asset – Bank (Decreases)

Cross-Currency Transfer

• Debit: Asset – Bank (Target Currency)
• Credit: Asset – Bank (Source Currency)
• Note: Ensure realized FX gain/loss is recorded if using a fixed cost basis.

Workflow: Statement Reconciliation

1. Import: Parse statement into BankStatementTransaction.
2. Match: Generate candidate entries and calculate multi-dimensional scores.
3. Execute:
   • Auto-post matches ≥ 85.
   • Queue matches 60-84 for manual review.
   • Flag unmatched items (< 60) for entry creation.
4. Validate: Perform post-reconciliation audit to ensure ledger balances match statement.