Books that check themselves

Every accounting system can tell you its debits equal its credits. That is the easiest thing to be right about, and almost nothing that goes wrong shows up there. Elvira runs an integrity check continuously, and it names the document.

Balanced is not the same as correct

The failures that cost money are the ones that leave the books perfectly balanced. A credit note that outlives the sale it came from. Stock paid for and never received, sitting in an account nothing reconciles. An end-of-service provision owed to an employee who is no longer on file. A deposit banked twice.

Each of those is two equal sides. Each is silently wrong. And in most systems the only way to find one is for somebody to go looking: usually months later, usually because a figure finally looked odd.

What an integrity check actually says

Not a variance. Not a percentage. A sentence naming the thing to open:

• Landed Cost Clearing holds KD 340 but only KD 180 is unallocated.
• The end-of-service provision carries KD 90 on a line that names no employee: it is kept per person, so nothing can ever release it.
• INV-0099 carries a project that has been deleted: its cost is in the books and on no project.
• SR-0104 has had KD 15 more banked out of Undeposited Funds than it ever received there: a deposit is standing on money that is not behind it.
• Goods in Transit holds KD 2,400 but the bills still awaiting delivery are worth KD 1,900.

Those are the real messages, not illustrations. Each names the account, the amount, the document and what it means, because a number you cannot act on is not an answer.

Where it looks

A control account is one whose balance has to equal the records that explain it. Receivables must equal the unpaid invoices behind them; inventory must equal the stock walk. Elvira ties every one of them to its own subsidiary ledger: and works the two sides out by genuinely different routes, so agreement means something:

• Accounts receivable and accounts payable, against the documents still open on them, each at its own exchange rate
• Inventory, against the stock valuation: built from quantities and costs, not from the journal it is compared with
• Landed cost clearing, against what has not yet reached the goods
• Accumulated depreciation, against the fixed asset register
• Salaries payable, loan balances, lease liabilities and right-of-use assets, against the schedules that explain each of them
• Deferred revenue and prepaid expenses, asked one contract at a time: whether this schedule has recognised more than was ever deferred for it, and whether this policy has released more than was ever paid into it. Asked of the account as a whole the question cannot be answered, because a contract may legitimately be scheduled before it is invoiced; asked of the contract, it can
• End-of-service, leave and employee advances: where every line must name an employee who exists, because those balances are kept per person and one belonging to nobody can never be paid out

Continuous, not at close

Large systems have reconciliation reports. You run them at period end and they hand you a difference to investigate: by which time the entry that caused it is weeks old and whoever made it has forgotten. This runs as you work, on the device, and points at the document while it is still fresh.

It is also why certain accounts cannot be posted to by hand. If inventory is maintained by purchases and sales, a manual journal into it is a way of making the two disagree, so Elvira closes that door and says which one to use instead. The accounts where writing an entry by hand is ordinary bookkeeping: money taken before it is earned, money paid before it is used: stay open, deliberately.

What this does not claim

It does not claim your books cannot go wrong. Every message above is, by definition, a report that something did go wrong: that is the point of it. It does not replace your accountant, and it is not an audit.

What it claims is narrower and worth more: you find out from the software, at the time, with the document named: rather than from a variance at year end, or from nobody at all.