What is “Validation” of a Financial Institution?
Validation is a quality assurance process for aggregated data used to ensure quality of data delivered into an accounting, portfolio management, trust, or reconciliation system.
ByAllAccounts performs the validation, or review of the data and data translations, of a representative set of accounts for each financial institution for each ByAllAccounts customer.
Why do accounts need to be validated?
Account data made available by financial institutions is provided in a general purpose way for advisors and clients. The data required by an accounting system may differ somewhat from the data provided by any given financial institution. The data must therefore be transformed for use by an accounting system.
In addition to the required data transformation, financial institutions have a wide variety of data presentations and transaction types. This variation is seen even for different accounts at the same financial institution. The data will also vary by what type of instruments are held in the account and will vary over the course of the year as different activities (e.g. fees, interest payments, capital gains, etc.) occur in the life of the account or its holdings.
Due to the variation and complexity of the data seen, correct behavior must be verified. Factors that contribute to make the number of possible variations are:
- The type of the account (e.g. trust, retirement, annuity, brokerage, insurance, cash management)
- The type of the instruments held within the account (e.g. funds, equities, cash equivalents, bonds, loans, limited partnerships)
- The completeness and clarity of the data provided by the financial institution
