What does everyone do when the books don't balance?

[HankMcSpank]

Ok, for those that keep 100% accurate records, this doesn't apply, but lets say you can't get everything to reconcile...what does everyone do then?

And at what 'out of whack' discrepancy' would most take the stance "this isn't even worth trying to get to the bottom of!"

Assume here something like £100k of turnover....what would be considered normal for a typical company wrt "can't account for everything!" 1%, 2-4% etc?

Is there a category that everyone lobs their 'can't get to the bottom of errors' under so that the books do balance?!

(btw I'm not coming at this from any angle of planned deceipt...but rather my record keeping hasn't been 100% watertight & therefore I'm not sure I'll be able to account for everything!)

For example, having to repost stuff out that wen't missing in the post (haven't kept great records here - just rsent them!), or sending out samples to trade buyers ......or stuff damaged at the warehouse by handlers etc - this is all stuff that difficult to prove (other than emails whizzing between the parties involved), yet essentially my stock has depleted...and therefore something in my accounts is going to be out of whack!

 

[Scalloway]

Any income that can't be accounted for usually goes to the owner's drawings.

 

[HankMcSpank]

Any income that can't be accounted for usually goes to the owner's drawings.

Forgive my ignorance, but what does that mean (what's the impact on either the company's or the director's wallet?!)

 

[Scalloway]

If it is a limited company it could be added to the director's loan.

 

[VanillaOnlineAccountancy]

You need to weigh up the risks. If you do the bookkeeping and are the sole employee and can be sure there is no fraud/theft and the difference in small and immaterial then write it off. If anyone else is involved, you need to be careful as even a 2p difference can hide potential fraud or theft as it could be part of many transactions that, together,make a small error. There is no set percentage as it's a personal view that you would need to be able to justify if questioned. If you let us know how much it is I'm sure you will get a few comments about whether people think it's ok. I wouldn't put stock lost to a director's loan. It needs to be entered to an appropriate expense account using your best estimate for the value.

 

[Billmccallum]

I would record the loss of stock as "shrinkage" under cost of sales.

 

[Deleted member 59730]

Ask the world's Finance Ministers. If you add all the trade balances together they should be zero but are actually trillions out every year.

I had one accountant who told me that I shouldn't be more than 49p out over a year.

http://www.reuters.com/article/2013/11/18/us-usa-pentagon-waste-specialreport-idUSBRE9AH0LQ20131118

 

[Fred_the_frog]

Forgive my ignorance, but what does that mean (what's the impact on either the company's or the director's wallet?!)

It means the income has been received personally by the director, so the director now owes the company that money.