A reconciliation that “closes to a tolerance” is not reconciled — it is unreconciled by an amount someone decided to ignore. We hold the line at zero, and it is one of the most useful disciplines a finance function can adopt.
Why tolerances hide real problems
Small unexplained differences are not noise; they are usually a timing error, a duplicate, a missed entry or a control gap in miniature. Wave them through as “within tolerance” and you train the team to stop looking — and the small differences accumulate into a restatement waiting to happen.
How to clear a residual properly
When a reconciliation will not close, the discipline is to identify each component of the difference, not to plug it: list the reconciling items, age them, assign an owner, and resolve them to source. A residual that genuinely cannot be explained is escalated, not absorbed. Zero is not pedantry — it is the only number that proves you understand the account.
A controls discipline we apply across engagements; adapt the escalation path to your organisation.