How to audit accounts receivable

how to audit accounts receivable

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Purchase accounting software from a reputable online site or local store that allows you to update records easily. For instance, instead of piling daily receipts, you could enter details into a computer program and generate simple reports.

Identify relevant sub-accounts based on your business, such as manufacturing or service. Instead of tackling a major account like current or long-term liabilities, separate accounts into groups, such as overhead expenses, which can be further divided into employee salary, office supplies, rent and utilities.

Gather bank statements that show business deposits and withdrawals. Remember that outstanding transactions might exist. For instance, a statement generated today might not show an earlier deposit or a check that you wrote last week might not have


Reconcile account debits (generally expenses or charges) and credits (revenue or income) so that your accounting records and actual accounts match.

If your business received $5,000 in sales today, spent $2,000 on staff, and confirmed a future order for $10,000, you could record the transactions as a $5,000 credit, $2,000 debit and wait until you receive payment to record the $10,000. Your accounts will not reconcile if the actual debit was $2,500 because the bank account should be short $500.

Review internal business controls to minimize fraud. Assign different staff essential duties. For instance, an employee who records receipts and counts cash should not be responsible for depositing money. Require accounting staff to confirm their work by signing reports, which are stored carefully.


Category: Forex

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