I have a problem finding if there is point to do some task. The purcheses invoice over the financial year was posted with the wrong nominal code, the date , genaraly is big mess. Is there a sens to go through all the invoices, pick up the mistake and correct them or it could stay as it is and just start posted from now one with the all part correct.
I would think the nominal code can be a problem but it depends if it was posted consistently to the wrong code and nothing else was posted there, in this case you might can amend your coa. at the end of year you will need everything to be in the right place in order to get the right figures in your end of year reports,etc. you possibly(not necessarily) could get away with the dates if the company is not vat registered but in general all mistakes should be corrected and your books should be showing everything how it should be. So in my point of view you should start everything from the beginning (especially as you said the books are big mess) or if it is not that many mistakes you might can correct them thru journal entries. Knowing there is mistakes and ignoring them generally not leading to good result and can have serious consequencies.
So basicly it should be correct any way either by remove all wrong transaction and posted them as they should be or through journal.
Is there the value of transaction matter. For exemple the invoice for low amount should be divided for 3 different account but was posted as one?
I am only the junior staff and when I start looking into ledger I have been told by the senior member if the transaction are already 6 month old and has been paid is no need to correct them and they should stay as they are. Could be that statement correct in any way or as you explain above should be corrected to make everything agree. I belive if there is any mistake whatever small should be fixed. thank you
Hi, if the transaction is more than 6 months old I suppose they mean VAT return is done for those. I would just think through the whole process let's say you have an invoice posted to the wrong nominal code with a wrong date, you should think about what accounts does it involve and what are the consequences of the mistake and take it from there. If the mistakes add up to a high amount and they involve in any ways balance sheet items then they should be corrected in my opinion. High turnover companies generally seem to care less about really small amounts but it is not always the case. When I said nominal codes can be a problem I meant that above. Really it depends on the nature of error, you can't leave in a purchase posted to NIC instead of purchases... But mainly don't do anything just because I said so. If you are concerned speak to your manager about the problems you discovered.
Oki thank you it seem I know more about that issue. I don't do anything unless it will be agreed with the senior staff but is there is no discuss about that with the senior staff. You mention the balance sheet but of course some mistake will have also impact on profit and loss and cash flow statement. I mean if the machinery is posted as car expenses ans so on. So is there any way to pick that mistake independend from the account and prepare above document straight from the invoice so all of them will be correct even if the figure in the account will be wrong. All that information is just for my knowledge. Thank you very much.
-- Edited by HoFu on Friday 25th of June 2010 09:56:41 AM
those mistakes which have to be corrected should really be corrected through journal entries to give a narrative about the mistake itself but any way you do it will be in the audit trail so the changes in the accounts can be justified before those balances are taken to produce the end of year accounts.
