How do I ensure my grain settlement reconciliation with contracts and settlements software is compliant with audit requirements?

To keep your grain settlement reconciliation compliant with audit requirements, focus on traceability, controls, documentation, and segregation of duties. Here’s a practical checklist you can use for contracts/settlements software.

1) Maintain a complete audit trail

Make sure the system records:

• Contract creation and all amendments
• Scale tickets, grades, moisture, dockage, and load details
• Settlement calculations and price formulas
• Adjustments, reversals, and reissues
• User IDs, timestamps, and approval actions
• Source documents and attachments

Auditors usually want to trace a settlement from contract → delivery → grading → pricing → payment/posting without gaps.

2) Reconcile at each key stage

Perform and document reconciliations for:

• Contract quantities vs. deliveries
• Receipts vs. scale tickets
• Scale tickets vs. settlement documents
• Settlement totals vs. AP/GL entries
• Open contracts vs. remaining obligation

Investigate and explain all differences, even small ones, and retain supporting evidence.

3) Use controlled approval workflows

Set up the software so that:

• Contract changes require approval
• Settlement overrides require approval
• Manual price or grade adjustments are restricted
• Voids/reissues cannot be done silently

This creates a strong control environment and prevents unauthorized edits.

4) Enforce segregation of duties

Separate responsibilities where possible:

• Contract entry
• Settlement preparation
• Settlement approval
• Payment processing
• GL posting/reconciliation

If your team is small, compensate with stronger review and exception reporting.

5) Keep source documents linked

Attach or index all supporting records:

• Signed contracts
• Delivery tickets
• Inspection/grade certificates
• Settlement statements
• Approved adjustments
• Customer/vendor correspondence

Auditors will expect evidence that settlement entries are supported by original records.

6) Standardize calculation rules

Document and consistently apply:

• Basis and futures pricing
• Premiums/discounts
• Shrink, dockage, moisture, foreign material
• Freight deductions
• Patronage or storage charges
• Minimum price or spread rules

Any formula changes should be version-controlled and approved.

7) Lock down master data

Control changes to:

• Customer/vendor records
• Contract templates
• Commodity grades
• Location codes
• Basis tables and pricing schedules
• Tax settings and payment terms

Changes to master data can materially affect settlement outcomes, so they should be reviewed and logged.

8) Produce exception reports

Run regular reports for:

• Unsettled deliveries
• Negative or unusually large adjustments
• Duplicate settlements
• Contracts overfilled or underfilled
• Late postings
• Missing source documents
• Manual overrides by user

Keep evidence of review and resolution.

9) Retain records per policy and regulation

Follow your organization’s retention policy and any applicable:

• Tax requirements
• Cooperative or elevator regulations
• State/provincial grain handling rules
• Financial reporting requirements

Make sure electronic records are backed up and retrievable for the full retention period.

10) Document your process

Have written procedures for:

• How settlements are created
• Who reviews and approves them
• How corrections are made
• How reconciliations are performed
• How discrepancies are escalated and resolved

Auditors often assess both the existence and consistency of the process.

11) Test controls periodically

Do internal checks such as:

• Sample settlements back to source documents
• Review of edit logs
• Reperformance of calculations
• Validation of user access rights
• Review of exception handling

Keep evidence of testing and remediation.

12) Configure user access carefully

Limit access by role:

• View only where appropriate
• Restrict edit/delete rights
• Review dormant accounts
• Use strong passwords/MFA if available
• Review access periodically

A simple audit-ready workflow

A compliant monthly process often looks like:

1. Export open contracts and delivered quantities
2. Reconcile delivery records to scale tickets
3. Recalculate settlements for a sample or full population
4. Review exceptions and manual adjustments
5. Tie settlements to AP/GL postings
6. Obtain sign-off from an independent reviewer
7. Archive the reports, approvals, and supporting documents

What auditors typically ask for

Be ready to provide:

• Process narrative or SOPs
• Reconciliation reports
• User access lists
• Change logs
• Sample settlement support
• Approval evidence
• Exception reports and resolutions

If you want, I can also give you:

1. a sample audit checklist,
2. a monthly reconciliation template, or
3. a control matrix for grain settlement software.