| With today's technology once the bills are entered, the | | | | Either way now is the time to correct the problem. |
| checks printed, the invoices posted and cash receipts | | | | Payroll reconciliation will ensure that your payroll and |
| are recorded, computer programs print out financial | | | | payroll taxes are posted correctly. Ascertain that your |
| statements with a click of the mouse. However, you | | | | payroll tax liability accounts are showing the correct |
| can bring much more to your company than data | | | | balance (the amounts withheld from employee |
| entry. A careful review of the books and analysis of | | | | paychecks plus the companies share of payroll taxes |
| key accounts will assure that not only are your | | | | that remain undeposited at the end of the month). Also |
| financial records in balance, but also meet accounting | | | | check the amounts posted to your labor accounts and |
| standards. | | | | payroll tax expense accounts. Do you break out your |
| Bank reconciliation is one of the most common | | | | labor costs to departments? Do you break out |
| examples of this approach. Your bank reconciliation | | | | vacation, sick, holiday, etc to separate general ledger |
| should agree with your computer records and your | | | | accounts? Reconcile your payroll records to those |
| manual checkbook. All cash accounts should be | | | | accounts using your outside payroll service reports or |
| reconciled monthly including your petty cash fund. | | | | your internal reports should your payroll be done in |
| The next two accounts to be reconciled are Accounts | | | | house. |
| Receivable and Accounts Payable. The ending | | | | And lastly, take a look for reasonableness. Does it |
| balances in these accounts should correspond to the | | | | make sense that you spent $10,000 on office supplies |
| balances shown on your aging reports. | | | | in one month? Depending on the size of your |
| Accounts that often get overlooked when preparing | | | | company, that might make perfect sense, but then |
| an internal financial statement are the Note | | | | again maybe there is a posting error. It is better to take |
| Receivables or Note Payables. Do the general | | | | a few minutes to review the financial statements |
| balances match the statements provided by the bank? | | | | before you hand them to your boss, then to be |
| If not, it is easier to locate the problem within the month | | | | questioned after the fact. |
| the discrepancy happened instead of waiting for year | | | | Taking these extra steps will build trust in your ability to |
| end. And of course if there is a variance, either your | | | | produce accurate financial statements which is after |
| books are wrong or the bank has made a mistake. | | | | all, what we all strive for. |