What is the need for cost reconciliation statement?

Reconciliation between the results of two sets of accounts is necessary due to the following reasons:

1. Reconciliation helps to check the arithmetical accuracy of both sets of accounts.

2. Management is enable to know the reasons for the difference in results of both cost and financial accounts.

3. Reconciliation explains reasons for difference which facilitate internal control.

4. Reconciliation ensures the reliability of cost data.

5. Reconciliation promotes co-ordination between cost and financial departments.

6. Reconciliation helps in formulation of policies regarding absorption of overheads and depreciation and stock valuation method.

7. Reconciliation ensures managerial decision-making.