Important checks to maintain healthy and clean accounts
Accounting is an art and science both. If anything gone wrong can prove costlier to correct. Its required that one keep the track of it throughout the year to avoid last time preparation to answer the auditors and legal departments.
The various checks that should be done are:
- Statutory reconcialiations: (Turnover as per returns filed are same as per accounting books, sometime a bill is entered twice or accounted later get caught). Perform it quarterly.
- Bank Reconcialiations: Most important thing. Keep your reco upto date. Its the main tool if maintained correctly can avoid wrong-accounting. Perform it Weekly or monthly or daily based on transactions volume.
- Ratios: Your accounting ratios are inline with previous years ratios. If any major changes appears than same should be reconciled and reasons for this should be noted. Auditors and statutory bodies will ask it.
- Payments made for expenses: A record of payments made should be kept to inspect the TDS applicability.
- Debtors Turnover: Are your collections on time? Make a track of debtors to keep funds flowing in on time and list the doubtful debtors.
- Inventory checkup: Inventory should be physically verified at certain intervals to identify any wrong accounting or missing items. BRS is to payments, Inventory is to purchase and sales cycle.
Please note that above mentioned checks are general in nature and checks may increase and change as per specific requirements of different organisations.
Please do write for any doubt or suggestions.
To have a better accounting and internal control sysytem it is better to employer a Charteredaccountant to conduct review monthwise
who can take care of all applicable laws and statutory issues so as to avoid Penalty and interst and other serious implications