Correcting errors that go back several years

Steve Schweitzer on

I have only recently gotten involved with our club's record keeping. In reviewing the accounting records I discovered numerous omissions and errors going back to the time the club started in 1996. Unfortunately, we are not a model club, although I am trying to change that. We have not properly maintained and audited our records on an annual basis. I am not yet done reviewing our records, but this is what I have found so far - totals represent difference between the statements and records.

Checks     -49.88

Deposits    39.06

Dividends   -8.49

DRPs       500.00

Stocks     -10.20

TOTAL      470.49

The question I have now is what to do about correcting the errors?

Series of correcting adjustments - I could just enter a series of adjustments, which would bring our records up to date and is probably the preferred method with regard to keeping our past tax filings and member withdrawals in sync. This is probably the easiest fix, but it leaves all of the discovered errors as is.

Correct each error - I would prefer to correct each error individually, since I have already taken the time to identify the errors, but this will effectively change all of our past tax filings and member withdrawals. However, this will correct our current member units.

Little of both - Even if I correct each error, I will probably still end up with a difference between our statement balance (account balance) and our recorded balance due to something I missed. I assume I will need a final correcting adjustment.

In any case, the past tax filings and member withdrawals are in error, however insignificant, because of the discovered accounting errors. It would seem that worrying about corrections that might affect past taxes or withdrawals is a moot point.

I did a little searching on correcting past accounting errors, but I haven't come across anything relevant. Have other clubs had to perform similar corrections?

What is the advice here? What is the IRS viewpoint?

Many Thanks!

Steve

Mail