To guarantee a company’s accounting staff is following standard accounting rules, it is important that internal audit is used as a primary tool to checkmate all bookkeeping services that are taking place in the organization.
Cash-based bookkeeping is employed to keep track of cash received by an organization or when cash is paid by the same organization. It doesn’t make provision for goods received when the invoice is not yet raised or goods sold but payment is not yet made by the client. Is a simple financial audit tool helps small firms to keep track of their spending? Cash-based bookkeeping can be done in the following simple ways.
Tips to do Cash-Based Bookkeeping:
Identify audit range
In order not to make the audit work cumbersome, it is better to identify audit period; either you want to audit your account for the first quarter or last six months, it is very crucial to have a period set for the audit.
Scrutinize sales activities
Errors in sales ledger are the main cause of the problem of overstating or understating the revenues by accounting officers. This can be disastrous to the financial statement audit of any firm especially if IRS suspects foul play. Just make sure sales ledger and invoice documents tally.
Reconcile petty cash
Petty cash is the most vulnerable to errors and internal theft, therefore petty cash balance, in fact, must match the cash amount and other calculations must be in other. Make sure every transaction in the register has a receipt to back it up.
Verify payroll account
Without a proper audit, payroll account is susceptible to errors and theft, and mistakes are difficult to detect here without proper scrutiny. Therefore, employees’ rosters must match with payroll transactions to avoid former staff are not still receiving salaries. After making user former employees’ are not receiving salaries, you must make sure that current staff is not overpaid for hours of work.
Analyze bank statement
Make sure that bank statement tally with transactions that are in the ledger. Since cash based bookkeeping has to do solely with recording transaction when money is paid or received, therefore transaction in the ledger must match the bank statement. Hire a professional CPA firm & outsource bookkeeping services to handle the complex transactions.
To monitor payment made and received by an organization, cash-based bookkeeping is a simple financial tool that helps to put right all transactions where money exchanges hands.