Investment Reconciliation Checklist

Download month-end statements from each custodian (Schwab, Fidelity, Pershing, etc.) covering positions, transactions, and income. Save to the workpaper folder using the firm's standard naming convention so the reviewer can trace each balance back to source.

Reconciling against an unlocked prior period is the most common source of phantom variances. Confirm the close date and password are set in QBO/NetSuite/Intacct before pulling balances.

Export the trial balance and detailed transaction listing for all investment, unrealized gain/loss, dividend income, and interest income accounts. Tie the opening balance to last month's signed-off reconciliation before working the current period.

For each CUSIP, compare units held in the GL or sub-ledger to the custodian position report. Watch for stock splits, reverse splits, and spin-offs that update custodian quantities before the GL catches up.

Confirm Level 1 securities are priced at exchange close from an independent source (Bloomberg, IDC, custodian). Level 2 / Level 3 holdings need a documented valuation memo — pricing-source vendors are not a substitute for the fair-value hierarchy disclosure.

Document every position where GL units differ from custodian units. Common causes: pending trades straddling month-end, fractional shares from DRIP reinvestment, in-kind transfers not yet booked.

Open a research ticket with the custodian operations desk for each unresolved variance. Capture the trade ID, settlement date, and contact name so the audit trail survives a SOC 1 walkthrough.

Tie each purchase and sale in the GL to the trade confirmation from the broker. Reconcile trade date vs. settlement date — settlement-date accounting is the default under GAAP for SMB books, but trade-date is required for many fund clients.

Trade-related fees should roll into cost basis on buys and reduce proceeds on sells, not hit a separate expense account. SEC Section 31 fees on equity sells are easy to miscategorize.

Stock splits, mergers, tender offers, and spin-offs require basis allocation entries — not just a quantity update. Pull the issuer's Form 8937 for the basis-allocation ratio; missing this distorts realized gain/loss on the next sale.

Tie dividends and interest credited on the custodian statement to the GL income accounts. Separate qualified vs. ordinary dividends in the sub-ledger now — backing into the split at year-end for 1099-DIV review is painful.

For bonds and notes, accrue interest from the last coupon through period-end. Amortize bond premium / accrete discount per ASC 310-20. Treasuries and munis use different day-count conventions — confirm before keying the AJE.

Foreign dividends are usually reported gross with withholding shown separately on the custodian statement. Track the withholding to a receivable account so the foreign tax credit (Form 1116) can be claimed at year-end.

Roll forward: prior-period unrealized + current-period change = current-period unrealized. The change-in-unrealized AJE hits OCI for available-for-sale debt securities and earnings for trading and equity securities under ASU 2016-01.

Apply the lot-relief method elected at the custodian — typically FIFO, average cost (mutual funds only), or specific-ID. Realized gain/loss on the GL must agree to the custodian's realized-gain report; mismatches almost always trace to wash-sale adjustments.

Run the 30-day wash-sale check on losses across all related accounts — IRS rules apply across the taxpayer's IRAs and spousal accounts, not just the entity being reconciled. Disallowed losses are added to the basis of the replacement lot.

Compare current allocation, concentration, and credit-quality limits to the Investment Policy Statement. Common breach: a single equity drifting above the 5% concentration cap after a strong month — flag for the investment committee.

Every new security opened during the period needs a documented approval from the authorized signer per the IPS or treasury policy. Missing approvals are the most common ICFR finding in investment cycles.

For each breach identified, document the holding, the limit, the breach amount, the cause, and the proposed remediation. Send to the controller and investment committee chair within one business day — the documentation timing is what auditors test.

The workpaper should show: opening balance, activity, closing balance, custodian balance, variance, and explanation for any variance over the materiality threshold. Sign and date as preparer.

Post the unrealized gain/loss, accrued interest, and reclass entries with workpaper references in the memo field. After controller review, set the close date in the GL system to prevent back-dated postings.

Controller reviews the workpaper, ties balances to the trial balance, and signs off. A digital signature in the file plus the timestamped close-date lock is the standard SOC 1 / SOX evidence package.