You’ve wrapped up recording your transactions for the month and reconciled your bank account—great job! But how can you be sure everything is complete and error-free?
Reviewing your work is a crucial step in the bookkeeping process, whether you’re managing your own books or handling them for a client. Let’s be real—mistakes happen (yes, even to the best of us!). The last thing you want is to provide incomplete or inaccurate financial reports. In this post, I’ll share the steps I use to review my own work—or double-check the work done by someone else—to ensure everything is accurate and ready to go
1. Bank Reconciliations
It might seem obvious, but the first step is to ensure your bank accounts and credit cards are fully reconciled. While doing this, keep an eye out for any uncleared transactions. If you spot any, take a moment to figure out why. It could be as simple as a cheque that hasn’t cleared yet—which is perfectly normal—or it might be a sign that the transaction needs to be moved or deleted. Either way, it’s worth double-checking to keep everything accurate and tidy.
2. Accounts Payable
Be sure to review your accounts payable aging report regularly to confirm that all balances are accurate. Take a closer look at each vendor account to ensure that no bill payments were accidentally recorded as expenses. This quick check can help you catch and correct errors before they cause bigger issues down the line.
3. Accounts Receivable
Reviewing accounts receivable is similar to reviewing accounts payable. Check that any outstanding invoices are truly outstanding and that no payments were accidentally recorded directly as revenue instead of being applied to the correct invoice. It’s crucial to match incoming payments to their corresponding invoices to avoid overstating your revenue in the books.
4. Review the Balance Sheet
Check your balance sheet every month and make sure the balances here make sense. A thorough balance sheet review helps you identify potential errors and ensures your books reflect your business’s true financial position.
Prepaid Expenses – verify that any amounts here make sense and adjust for any items that should have been expensed already.
Capital Assets – Review this account carefully to ensure everything recorded here actually belongs. Is there any depreciation that needs to be booked? A common mistake is misclassifying operating expenses, like office supplies, as office equipment simply by selecting the wrong account. Go through each transaction and double-check that no operating expenses have been incorrectly recorded in this category.
Loan Accounts – Ensure that loan balances match the lender’s statements and that payments have been applied correctly to both principal and interest.
GST, Corporate Tax Liability, and Payroll Liability – Verify that these balances accurately reflect the amounts still outstanding. Double-check that any payments made have been correctly recorded and applied to the appropriate accounts. This ensures your records are accurate and that nothing falls through the cracks when it comes to compliance.
5. Review the Profit and Loss
The profit and loss (P&L) statement provides a clear snapshot of your business’s financial performance, so reviewing it thoroughly is essential. Start by scanning for any unusual or unexpected figures. Are your revenue and expense categories showing the correct amounts?
I find it helpful to view this report over several months or even a full year, with columns broken down by month. This format makes it easier to spot missing expenses in one month or duplicate entries in another.
Pay close attention to negative balances in expense accounts or amounts that seem unusually high or low—these could signal a duplicate entry, a missing transaction, or a misclassification. Compare the current month’s figures to the previous month or the same period last year to identify anomalies or trends that warrant a closer look.
Lastly, review for any large purchases. Some of these might belong under capital assets or prepaid expenses instead of regular operating expenses, so be sure they’re recorded in the right category.
Reviewing your bookkeeping for errors may feel like an extra step, but it’s a crucial part of maintaining accurate financial records and ensuring your business runs smoothly. By taking the time to check your reconciliations, review reports, and spot potential mistakes, you’re setting yourself up for confident decision-making and stress-free financial reporting.
Whether you’re managing your own books or reviewing someone else’s work, these steps will help you catch errors early and keep your finances on track. And remember, if you ever feel overwhelmed or unsure, don’t hesitate to reach out for professional help—it’s always better to have peace of mind when it comes to your business finances.
If you’re a fellow bookkeeper, I’d love to hear from you! Do you have any tried-and-true methods for catching errors or tips you’d like to share? Leave a comment below!