How to verify the managerial statement for the accounting period
Well, your accountant is presenting balance sheet, profit and loss account as well as cash flow statement prepared for the previous month. Even if you trust
your employee and find him/her reliable, you should be able to make the express
check anyway.
your employee and find him/her reliable, you should be able to make the express
check anyway.
First of
all, it is necessary to:
all, it is necessary to:
1. Compare
the closing balance figures in at the end of the accounting period with the opening
balance figures at the beginning of the accounting period.
These figures are to be absolutely identical to each other, up to the
last penny!!!
last penny!!!
Your turnover is not important here, neither your schemes of distribution and
cash flows, nor the sum of money your company is working with. Closing balance figures
at the end of the previous accounting period are to be equal to the opening
balance figures at the beginning of the current accounting period. If these figures
differ, the accountant should provide the reasons and explanations how it has
happened. It is a crucial moment which allows you to realize the absence of
changes in the previous accounting periods.
Turnover balance sheet is an integral part of all the statements
and the verification stated above is to involve the documents from different
statements. For example, when you make the statement for the month of June you should
compare the turnover balance sheets for the months of June and May.
and the verification stated above is to involve the documents from different
statements. For example, when you make the statement for the month of June you should
compare the turnover balance sheets for the months of June and May.
2. Compare
the line 1.4 “Income statement for the accounting period”, Liabilities, Managerial balance sheet with the line “Net profit”, Profit and loss account. These figures are to be identical.
the line 1.4 “Income statement for the accounting period”, Liabilities, Managerial balance sheet with the line “Net profit”, Profit and loss account. These figures are to be identical.
3. Compare
the line 2.9 “Cash assets”, Assets, Managerial balance sheet with the line “Cash assets at the end
of the accounting period”, Cash flow statement. These figures are to be identical.
the line 2.9 “Cash assets”, Assets, Managerial balance sheet with the line “Cash assets at the end
of the accounting period”, Cash flow statement. These figures are to be identical.
Under Clauses
2 and 3 you will see just the right order of these forms construction, no more.
2 and 3 you will see just the right order of these forms construction, no more.
If you need
more thorough check, you should inspect the main clauses of the balance sheet:
more thorough check, you should inspect the main clauses of the balance sheet:
1. Fixed
assets.
assets.
To verify
the correctness of this clause you need to study the inventory of fixed assets.
As a rule, this procedure is used no more than once a year.
the correctness of this clause you need to study the inventory of fixed assets.
As a rule, this procedure is used no more than once a year.
2. Merchandise.
To check if
the inventory storage balances are in compliance with the documents, you need
to study the inventory stock-taking. The procedure of stock-taking is to be
used at least once in three months, but some activities (such as sale of oil products)
require a check on a monthly basis. A full inventory is time-consuming in case
of very large balances and large warehouse product mix, thus, partial inventory
is taken by separate items.
the inventory storage balances are in compliance with the documents, you need
to study the inventory stock-taking. The procedure of stock-taking is to be
used at least once in three months, but some activities (such as sale of oil products)
require a check on a monthly basis. A full inventory is time-consuming in case
of very large balances and large warehouse product mix, thus, partial inventory
is taken by separate items.
3. Accounts receivable and accounts payable (buyers, suppliers, other contractors).
To confirm
the correctness of the data in accounts receivable and accounts payable the accountant should provide
reconciliation statements between your company and each of your debtors. As a
rule, it is useless to check all the contractors, it is enough to check the
basic ones connected with the main trade turnover and money circulation.
the correctness of the data in accounts receivable and accounts payable the accountant should provide
reconciliation statements between your company and each of your debtors. As a
rule, it is useless to check all the contractors, it is enough to check the
basic ones connected with the main trade turnover and money circulation.
4. Cash assets.
Cash assets
of the enterprise are stored on the settlement account and in the cash office. So,
in order to check the correctness of the information in the balance sheet, you
should compare the settlement accounting data with the information from the
“Client-Bank” programme, and cash office accounting data with the cash book
accordingly.
of the enterprise are stored on the settlement account and in the cash office. So,
in order to check the correctness of the information in the balance sheet, you
should compare the settlement accounting data with the information from the
“Client-Bank” programme, and cash office accounting data with the cash book
accordingly.
5. Petty cash.
If you want
to check the correctness of the information about the petty cash in the hands
of employees, you need to ask all the employees to close their subreports on a
given date (within 2-3 day, at most). There are two ways to close the
subreports:
to check the correctness of the information about the petty cash in the hands
of employees, you need to ask all the employees to close their subreports on a
given date (within 2-3 day, at most). There are two ways to close the
subreports:
- To
report on the expenditures. - To
transfer the unused funds to the cash office.
Thus, in
2-3 days (no more!) after the order mentioned above:
2-3 days (no more!) after the order mentioned above:
- the
accountant responsible for the petty cash is to present zero-balance on the
current account; - the
cashier is to present the return of funds to the cash office. Do not be lazy!
Go to the workplace of the cashier and check the actual availability of money
at the cash office and its compliance with the credentials.
After checking
you can distribute the funds among the employees who need them.
you can distribute the funds among the employees who need them.
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