Optimizing reconciliation effectiveness with automated workflows and the four-eyes principle

Friday, August 24, 2018 | By Caner Ak

Optimizing reconciliation effectiveness with automated workflows and the four-eyes principle

As markets become more diversified, reconciliation has become more specialized.  Compounding this, rising regulatory requirements, both internal and external, have made it a necessity for operations teams to have a specific tool to effectively manage their daily reconciliation processes.  Automation and in-application investigation tools are critical for reducing exception based risks while improving the tracking of exceptions. 

SS&C’s market leading Recon supports specialized workflow processes to ensure time-critical exceptions are routed to the right person to be fully and accurately investigated and resolved. One such workflow that Recon supports is the four-eyes principle which requires that  two separate individuals review and approve an action before it’s complete. 

Clients that have implemented such processes report significantly improved reconciliation throughput, reducing their reconciliation costs by at least 50%.  They also report being able to provide their front-office with more timely and accurate information.

This approval-based workflow ensures that important exceptions (as defined by client) have been looked at by two levels of users: reconciler and manager. Key benefits for using role-based reconciliation workflow include:

  • Automated segregation and distribution of the workload.
  • Timely and accurate investigation and resolution of holdings, transactions and cash exceptions.
  • Enriched exception investigation and audit trail through the ability to attach notes and annotations.
  • Automated and real-time tracking on the status of exceptions from the initial “outstanding” status to “pending approval” and “approved”.
  • The systems Management View provides high-level approval status of portfolios enabling users to quickly see where “outstanding” exceptions require immediate attention.
  • Exceptions can be easily assigned and routed to the correct person for review and resolution.  For example, a manager can send records in “pending approval” status back to the initial reconciler.
  • Quick access to breaks assigned to a reconciler and for breaks requiring an approval.
  • The permission level of reconciler and the severity of the exception prevent priority items from being “approved” without required review by multiple people.
  • Clients can require that open exceptions carried over from one day to the next can either maintain their current status or require that they be “reset”, requiring another full review the next day.

An approval-based reconciliation workflow using role-based users reduces the risks associated with exceptions.  By implementing such a process, the workflow tools ensure that all exceptions have been viewed by two individual users and adhere to the four-eye principle. 

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