Date: November 18, 2024
By: Sonia Lee Ng, CPA
Many small business owners prefer to do their own bookkeeping, but sometimes if done by inadequate personnel, it may lead to inaccurate financial records and or errors that may result in incorrect taxes, late filing of tax returns, leading to penalties and interests.
If you discovered that your accounting books are unbalanced and are not ready for financial statement preparation or tax filings, you may need to do the following:
Assess the level of work that need to be done in order to fix your books.
Get all the accounting records necessary to prepare the accounting.
Reconcile accounts: Cash, Accounts Receivable, Accounts Payable, Credit Cards, Intercompany Accounts, etc.
Review accounting policies and estimates.
Clean up transactions, accounts, and prepare journal entries to adjust accounts and correct errors.
Make sure all transactions pertaining to the business are recorded properly.
Comply with Financial Statement Assertions to ensure your financials are reliable and accurate:
a. Existence or Occurrence - Assets, liabilities and equity balances exists at specific date. Transactions recorded have occurred during a specific period.
b. Rights and Obligations - The company holds or controls the rights to assets and liabilities at a certain date.
c. Completeness - Transactions and accounts that should be presented in the financial statements need to be included.
d. Valuation or Allocation - Assets, liabilities, equity, revenue, and expense components are included in the proper amounts in the financial statements.
e. Presentation and Disclosure - Components of the financial statements are classified, described and disclosed properly.
Prepare financial statements: balance sheet, income statement, statement of cash flows complying with the financial statement assertions.
Prepare compliance filings with appropriate authorities and parties.
If you need help cleaning up your accounting records, you may contact us for a consultation.
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