Verification of accounting records
Verification of accounting documentation is an important procedure aimed at preventing errors. Inaccuracies and errors in documents arise for various reasons: due to negligence, insufficient qualifications of the staff, overwork of employees, malfunctions of computers.
Errors can be identified when calculating totals and when putting documents to registers. Therefore, all primary documents received by the financial department are subject to mandatory audit of accounting documentation. Specialists evaluate the form and content of documents. In the first case, they check whether the details are filled in correctly, whether there are signatures, or other formal requirements are complied.
Typical formal errors:
- lack of mandatory details;
- erasures and blots, violation of the rules for correcting errors;
- lack of dashes in free lines;
- corrections in cash papers;
- notes made with pencil.
Most often, specialists who check accounting documentation for formal grounds are faced an attempt to make corrections to cash warrant, which is not allowed. Also, when filling in cash warrants for issuing finances, signatures of the recipients are often missing. In such cases, disbursed amount should be considered a shortfall and collected from the cashier. Controllers also encounter signing documents by unauthorized persons, which invalidates documents.
Checking the content of accounting documentation is more time-consuming procedure, since it requires analysis of calculations, business transactions, logical linkages of indicators.
Types of control of primary documentation
Primary documents contain information about financial and economic activities of a company. This is an important data array therefore it requires three types of control in sequence:
- Preliminary: this is a check immediately upon signing documents;
- Ongoing: control that shall be carried out when performing a business transaction;
- Subsequent: revisions, audits, counting checks – all that is carried out.
Stages of verification of accounting documentation:
Control of primary documentation takes place in 3 stages. At the first stage, a substantive check. It implies that specialists will determine legitimacy of business operations, their appropriateness, compare individual indicators of document with main documents (for example, with contracts).
Documents that contradict legislation and acceptance procedure are not accepted for accounting. They are transferred to chief accountant for a decision. He/She should notify executives of violation. However, in practice, there is often a disagreement between executive and the chief accountant over some transactions. In such cases, it is possible to accept documents for execution, but only with written permission of executive. He will be responsible for consequences of disputed transactions and the inclusion of information in accounting.
The second stage is a formal verification of documents. Specialists evaluate forms, requisites, correctness of filling.
The third and final stage is the most time-consuming, it requires several separate operations:
- Sort documentation for economic data. This procedure helps to track actions with property during reporting period, as well as determine obligations of a company.
- Arithmetic check. It consists in recounting indicators, analyzing results, value and number of assets.
- Taxation. Under this procedure is understood conversion of labor and resources into financial equivalent. Calculations are made in documents, multiplying number of working hours and resources by price of one unit.
- Account Assignment. These are marks of accounts for business transactions related with document being checked.
To avoid confusion, the checked documents shall be marked. If they were processed manually, date of recording is put in accounting register. When documents are processed by computer, an imprint of responsible controller’s stamp is placed on document.
How to fix errors in primary documents
Correcting inaccuracies directly in primary documents is a gross mistake. Therefore, if some document is drawn up incorrectly, it will have to be filled in again. But it is important to do this before it is reflected in accounting. If there are cash (receipt and expenditure cash orders) and bank documents (payment and collection orders, payment requirements and payment orders), legislation prohibits making changes to them at all. Presence of blots, erasures in warrants is also a gross mistake, which could result in serious consequences for company and responsible persons.
In all other documents, except cash and bank, corrections are made only through adjustment. What does this mean? You cross out wrong information with one line, label correct information on top. After that, mark document with stamp “alteration valid” and certify it with a signature and seal.
Moreover, it is important that document with corrections is signed by an authorized person, otherwise document will not pass a formal check.
After analysis, all accounting transactions are recorded in accordance with current accounting requirements. In register, documentation is grouped according to homogeneous attributes.
VALEN specialists will conduct a qualified check of accounting documentation, tell about details and accounting options. We cooperate with large and small businesses, Russian enterprises and foreign companies with representative offices in Russia. Our experts will assist streamline workflow and prevent claims to business from the regulatory authorities.
To get a consultation or order a service, contact us through the website or by phone: +7 (495) 7-888-096. We will also be glad to meet you at our office in Moscow.