In some cases, you may want to post a second, correcting entry in the current period.Generally, corrections to current periods can be made with the owner’s approval – but check with management to see what your internal policy on error corrections is.If the amount of the bad-date transaction is fairly small and in the current accounting period, you can likely proceed with changing the date.
(This includes adding, deleting, or changing the amounts of prior-period transactions.)Ĭorrections to current (“non-reported”) entries: If you believe a correction needs to be made, please get feedback and approval from an experienced accountant.Unless you’re an experienced accountant, you should never make changes or corrections to prior (reported) accounting periods (regardless of the size of the transaction).Will you need to adjust someone’s commissions?).Will it change the amounts of tax owed, or create a change in the prior-period owner’s equity balance?.Does it affect job costing and related calculations?.What is the impact of the dating error? E.g.:.How much is the amount of the bad-date transaction? (I.e., Is it just a few dollars, a few hundred dollars, a few thousand, or a much larger amount?).Is it from a prior accounting period that has been reported to a lending institution or to your tax accountant?.Is it in a current accounting period not yet reported to any outside parties?.What To Do? Investigate and gather information about the problem transaction: And remember… changes could impact paid or unpaid commissions.Plus, if you’ve changed your financial results behind the scenes, your tax accountant will need to pinpoint where your prior-period numbers have changed and fix the issue ( extra time = extra cost). Just imagine the possibility of an audit occurring 2-3 years down the road!
As a result, it could become really difficult to support reported results. BUT if you’ve already turned in your financial results for banking or tax purposes and then delete, make a modification, or post another transaction into that same time period, you’re changing the underlying transactions behind your “official” financial reports.
This can be really frustrating for owners and managers who need to get accurate financial information for decision-making purposes. Then your financial accounting results may look great one month – and terrible the next. So if you have an incorrect date on a transaction you end up with either income or costs posted into the wrong period. (This matching of income and cost is typically referred to as the “matching principle”).