Cap table reconciliation

The cap table is a legal record and an accounting input at the same time. Every issuance, grant, exercise, cancellation, and conversion should appear in board consents, in the equity management system, and in the ledger's equity accounts with the same dates and share counts. When they disagree, the audit stops until they agree.

The reconciliation is done monthly at companies that expect to be audited or to raise institutional money. It catches grants that were promised in offer letters but never approved, exercises that were never paid for, and vesting schedules keyed in wrong. It also feeds the ASC 718 expense, the earnings-per-share calculation, and the fully diluted share count investors negotiate against.

Before a financing or an IPO, counsel and auditors both perform a full historical tie-out from formation. Companies that have reconciled all along complete it in days; companies that have not can spend a quarter on it.