Incomplete records

Incomplete records refers to a situation in which an organization is not using double-entry bookkeeping. Instead, it is using a more informal accounting system, such as a single-entry system, to maintain a reduced amount of information about its financial results. Under a single-entry system, it is possible to maintain a cash-basis income statement, but not a balance sheet.

It is also possible that the managers of a business intend to maintain a double-entry bookkeeping system, but the underlying accounting records are incomplete. There are many reasons for this situation, including the following:

  • Fraudulent behavior. Employees may deliberately obfuscate or never record certain transactions, so that they can abscond with company assets or record excessive levels of profitability.

  • Inadequate systems. There may be an inadequate system of procedures and supporting controls in place, so that various business transactions are never recorded in the accounting system.

  • Loss during transition. A company may not adequately protect its old records when moving to a new accounting system, and irretrievably loses some or all of the old records.

Related Courses

Records Management