what is reconciliation statement in cost accounting

A reconciliation statement in cost accounting is a document that reconciles the profits or losses shown by cost accounts with those of financial accounts. It identifies and accounts for the items that have led to the difference in working results as shown by cost accounts and financial accounts. The reconciliation statement is an analytical form presented in the shape of a statement or a memorandum account. The statement is prepared for the purpose of reconciling or agreeing the results of financial accounts with the results of cost accounts by making suitable adjustments for the items responsible for the disagreement. The reasons for the discrepancy between the data reported by each system are detailed in a note of reconciliation. Reconciliation promotes coordination between cost and financial departments and helps in the formulation of policies regarding absorption of overheads and depreciation.