accounting discrepancies

How to Spot Accounting Discrepancies

Accounting errors are inevitable, especially if you do your own accounting for a small business. If you’re rushing to get everything done by a deadline or after a busy day, you can expect even more accounting errors.

Everyone makes mistakes. However, it’s important that you learn how to detect and correct accounting errors sooner than later.

What Are Some Common Accounting Errors?

If you are looking for small business accounting services in Mesa, you can count on a professional to check and recheck your books to make sure everything is accurate.

But if you’re doing it all yourself, here are some of the common accounting errors you’re likely to encounter:

  • Not reconciling your books
  • Making transposition errors, such as writing 45 instead of 54
  • Throwing receipts away
  • Reversing entries
  • Omitting transactions

Making accounting errors can be expensive and time-consuming, so it’s important to catch them early and prevent problems in the future.

Tips to Detect Accounting Errors

Keep an Audit Trail

If you’re looking for a simple and straightforward way to track down accounting transactions and errors, an audit trail is an excellent start. This is a set of documents that confirm the transactions you record in your books. These entries are based on the business’s purchases, expenses, and sales.

Your audit trail can be used to find accounting errors in your books because it holds all the details of the transactions. You can cross-check this information to find errors more efficiently.

Double-Check Your Accounting

If you want an easy way to handle your books, hire an expert for accounting for small businesses. But if you prefer to do it all yourself, you must be prepared to put some extra work into it. This means double-checking your work.

Go through your transactions to ensure that what you’ve input matches what’s on the documents or receipts. If you see a discrepancy, fix it immediately.

No matter how meticulous you are, you’re bound to make mistakes when inputting transactions. This could include errors like adding a transaction to the wrong account, entering numbers incorrectly, reversing entries, transposing numbers, or forgetting to record a transaction. Mistakes happen easily, which is why you should double-check your work.

Keep a Consistent Process

Whether you record transactions daily, weekly, monthly, quarterly, or annually, you should have a consistent and repeatable process in place to minimize accounting errors. Each time you review your books, check for accounting errors with the same steps each time.

You should be able to find errors before they can snowball into more significant issues. If you don’t have a current accounting process in place, start one or outsource your small business accounting services in Mesa.

Conduct Regular Reconciliations

This tip goes along with a consistent process. To find accounting errors, you need to conduct regular reconciliations. This means comparing the numbers in an account with another financial record to ensure the balances match.

If you find a mistake, adjust the affected entries by creating a new entry to remove or add money to the account. Compare an account to things like credit card statements, business receipts, financial records, and bank statements. The more often you reconcile, the more likely you are to find errors.

Hire a Professional for Accounting for Small Business

You’re a business owner, not an accountant. Mistakes are expected, which is why you may be better off outsourcing your accounting for small business in Mesa. M&M Accounting LLC can take on the burden for you to free your time to work on your business. Contact us today to learn more! 

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