Contract Reconciliation Duties

signing a contract image by William Berry from

When a contract ends, the amount of money budgeted for the contract should match what was paid out. In practice, there may be mistakes, bonuses that weren't earned, withheld fees and other places in the contract budget where the books don't balance. Contract reconciliation is the process of explaining and resolving any financial loose ends: the duties involve finding errors, finding the cause, calculating the size and figuring out how to fix them.


The first task in reconciling a contract is to go over the paperwork, according to the Defense Department. The duties of the staffers working on reconciliation include comparing the basic contract, along with any change orders, with billing records, payment vouchers, official accounting systems and any transactions that have already been processed. The federal government has developed reconciliation computer systems that enable the reconciliation staff to match documentation filed electronically in different departments.


It may turn out there are documents missing which make it impossible to reconcile the contract properly. In that case, the staff's job is to make an exhaustive search of the records, electronic and hard copy, to find the documentation. If some material can't be found, then the staff must do the best they can with the information they do have.


Staff's next duty is to find the reasons for discrepancies. Potential reasons include fraud, accounting errors, a drop in the cost of supplies or a contractor who hasn't returned an overpayment yet.

Adjusting the Books

Once errors are found, the final duty of a contract-reconciliation job is to update the accounts—adjusting them when overpayments are returned, or to remove errors, or when late payment vouchers are finally submitted.



About the Author

A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.

Photo Credits

  • signing a contract image by William Berry from