Reading your trial balance before the accountant does
How an advice practice reads its own trial balance to catch wrong balances, waiting bank lines and posting errors before the books go to the accountant.
By Achekam · · 4 min read · For Financial services businesses in South Africa, Nigeria, Kenya
Every year the same thing happens. The practice sends its books to the accountant, and a week later an e-mail arrives with a list of questions: why is the bank overdrawn when the statement shows money in it, why does a client appear to owe a negative amount, what is this suspense balance. Each question costs time, and some cost fees.
Most of those questions can be answered, or avoided, by reading the trial balance yourself first. You do not need to be an accountant to do it. You need to know what the report is, what it can and cannot prove, and which balances look wrong at a glance.
Debits equal credits, and what that does not prove
A trial balance lists every account in your ledger with its balance, debits in one column and credits in the other. In double-entry books, every posting has two equal sides, so the two columns should add up to the same total. Investopedia's explainer on the trial balance covers this check in more detail.
Achekam's trial balance says whether debits equal credits. In your own books they normally will, because a manual journal that does not balance is refused before it posts. So a balancing trial balance tells you very little on its own. It does not tell you that:
- a fee was posted to the right income account;
- a receipt was matched to the right client;
- an expense was not posted twice;
- a transaction was posted at all.
A balanced trial balance can still be wrong in every one of those ways. The value of reading it lies in the individual balances.
All time, for a period or at a date
The trial balance can show each account for all time, for a chosen period, or at a date. Use each for a different purpose:
| View | Use it to check |
|---|---|
| At a date, such as your year end | The balance sheet accounts: bank, debtors, creditors, loans, VAT |
| For a period, such as the financial year | Income and expense accounts for that year |
| All time | Whether old balances are still hanging around from previous years |
Two quirks to know before you start. There is no year-end closing entry, so profit is not moved to retained earnings and shows as its own line on the balance sheet; an "all time" view of income accounts therefore includes every year since the books opened. And for Nigerian and Kenyan practices, the ledger screens currently show every amount in rand, even though your business works in naira or shillings. Read the figures as your own currency, and mention it to your accountant so nobody is confused.
Balances that look wrong
Read down the list with a pencil. These are the balances that usually signal a problem:
- Bank overdrawn when the statement is in credit. Usually a receipt not recorded, a payment recorded twice, or a statement line booked to the wrong side.
- Debtors in credit. A client paid more than was invoiced, or a payment was recorded against the wrong client. Overpayments are held on the client's account, which is fine if you meant it; often you did not.
- Debtors that never go down. Matching a bank receipt to an invoice in banking does not record the payment on the invoice; it must also be recorded in receivables. If you only match on the bank side, the invoice stays unpaid and debtors stay high.
- Expense accounts with credit balances. Something was refunded or reversed into the wrong account.
- Accounts you do not recognise. Your chart of accounts can be added to, renamed or switched off. An account someone created for a single transaction years ago is worth asking about.
- Suspense or clearing accounts with a balance. These should be empty at a clean year end.
For debtors in particular, the receivables ageing groups what clients owe into 0-30, 31-60, 61-90, 91-120 and over 120 days. Compare its total with the debtors balance on the trial balance. They should tell the same story.
Unmatched bank lines still waiting
Bank lines are matched by suggestion, and a person accepts each match. A line not yet in the books becomes a suggested journal that a person approves. A reconciliation completes only with no difference left or with every leftover line explained.
Before reading the trial balance, finish the bank reconciliations for the period. Unapproved suggestions are transactions that are not yet in your ledger at all, so the trial balance cannot show them. The month-close screen checks for exactly these items: before closing, it looks for posting suggestions, unposted bills and unmatched bank lines still waiting.
Fixing by reversal, not by editing
When you find a mistake, resist the urge to fix it quietly. A posted journal is corrected only by a reversal, then the correct entry is posted. That leaves a visible trail of what was wrong and what replaced it, which is exactly what your accountant wants to see.
If the mistake sits in a month that is already closed, the correcting entry cannot be dated in it, because a closed month refuses postings from every source. Reopening a hard-closed month needs a second approver. Often the better route is to post the correction in the current open month and note why.
A checklist before the hand-over
- Finish every bank reconciliation for the year.
- Run the trial balance at year end and for the year.
- Check bank, debtors, creditors, VAT and loan balances against outside documents.
- Compare the debtors balance with the receivables ageing.
- Investigate every credit balance on an expense account and every unfamiliar account.
- Correct mistakes by reversal, with a short note.
- Send the accountant the trial balance with your notes on anything unusual.
For the mechanics of correcting a wrong posting, read correcting a journal posted to the wrong account, and once the year's figures are agreed, lock the closed months so they stay that way.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
