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These five practices can help you spot accounting errors before it’s too late.
Accounting errors can happen to anyone, particularly during harried times like these. However, more significant problems and confusion can surface if these errors are not found and corrected as soon as possible. Some of the most common mistakes that may occur include not reconciling books, transposition errors, tossing receipts, reversing entries, and omitting transactions. Read on for five tips on how to spot these common errors before it’s too late.
Keep an Audit Trail
An excellent way to track down accounting transactions and correct errors is to start an audit trail. An audit trail is a set of documents that confirms the transactions in your books. When you record transactions, you are basing the entries on your purchases, sales, and expenses. If you are seeking the source of accounting errors, your audit trail can help you cross-check the information recorded in your books.
Double-Check Your Work
To find any accounting errors, you have to take the time to double-check your work. As you input information into your books, make sure that what you have in your documents or receipts matches your recorded data. Occasionally, you may make a mistake while inputting transactions including:
- Adding the transaction into the wrong account
- Flip-flopping numbers, or transposition
- Misentering numbers
- Reversing entries
- Overlooking or forgetting to record a transaction
Be Consistent With Your Process
No matter how frequently you record transactions and review your books, you must have a consistent process. By keeping a routine, you are less likely to make careless accounting errors. If you don’t have an accounting process yet, it’s not too late to develop one.
Conduct Routine Reconciliations
As part of developing a consistent process, you must also conduct routine reconciliations. When reconciling your accounts, you compare the numbers in an account with another financial record like a bank statement to ensure that the balances match. You should compare an account to:
- Credit card statements
- Bank statements
- Business receipts
- Financial records
The more often you reconcile your accounts, the more likely you are to find accounting errors in a timely fashion.
Have Someone Take a Second Look
A simple way to spot accounting errors in your books is to have someone else look over your work once you are finished. Asking a business partner, a manager or supervisor, or an employee or co-worker to help is an efficient way to spot clear accounting errors.
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Unlike other accounting firms, The Harding Group, located in Annapolis, MD, will never charge you for emails or phone calls and will strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, Training + support for QuickBooks, or retirement planning, we have the expertise and years of experience to help. We serve clients in Annapolis, Anne Arundel County, Baltimore, Severna Park, and Columbia. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, YouTube, and LinkedIn.