Accounting Cleanup Services: Books You Can Make Decisions On Again

Not every error in the ledger needs fixing. A $40 miscoding from 2021 does not change a decision. A $140,000 receivable that will never be collected changes several. Cleanup starts by sorting the mess into what affects the decisions in front of you: the covenant calculation, the bonding renewal, the sale price, the tax return, the question of whether the service division makes money. Those get fixed first, completely, with support. The rest gets fixed if the budget allows and noted if it does not.

The diagnostic does that sorting. Two weeks in the trial balance, the reconciliations that exist, the ones that do not, the subledgers, the CPA's prior adjustments, and the systems. It ends with a written finding: what is wrong, how far back it goes, what it will take to fix, and what it costs. You can take that document to anyone. Most clients take it to us.

The alternative, which we see often, is a cleanup that starts at the first bank statement and works forward until the money runs out. It produces very accurate books for 2022 and nothing for the decision due Thursday. Sorting first costs two weeks. It saves the rest of the budget, and usually the decision.

Cash first. Every bank, credit-card, loan, and merchant account is reconciled from the last clean month to today, with unexplained items listed by date and amount rather than cleared to expense. Undeposited funds gets emptied. Transfers between accounts get matched. This step alone usually explains half the balance sheet.

Then the subledgers. Receivables aged and matched to customer statements, with write-offs and credits documented. Payables matched to vendor statements, with duplicates and unrecorded liabilities found. Inventory counted or reconciled to the count. Fixed assets listed, located, and depreciated. Payroll liabilities tied to the registers and the filings. Intercompany balances agreed across every entity and eliminated correctly. Accruals, prepaids, and deferred revenue rebuilt on schedules.

Finally, the corrections. Prior-period entries are posted with a memo and a workpaper. Where statements already issued to a bank or a surety need restating, we coordinate the restatement with your CPA and prepare the explanation the lender will ask for. We do not give tax advice. We do give the CPA a file that lets them give it faster.

• Bank, credit-card, loan, and merchant reconciliations, month by month
• AR, AP, inventory, fixed-asset, and payroll-liability subledger tie-outs
• Intercompany reconciliation and elimination across entities
• Accrual, prepaid, deferred-revenue, and debt schedules rebuilt
• Prior-period corrections with workpapers and CPA coordination

A chart of accounts that grew by accretion, one new account per question, ends up with 14 kinds of 'Other Expense' and a revenue structure that matches the 2016 org chart. Transactions land in the wrong place because there is no right place. Cleanup includes a redesign: a chart that maps to how the business is managed, with departments or jobs as dimensions rather than duplicated accounts, and a written policy for where things go.

The redesign is done before the reconstruction so the corrected transactions land in accounts that mean something. It is done in your accounting system, with a mapping from old to new so history stays comparable. It is the least glamorous part of the project and the part that keeps the books clean after we leave.

Fourteen kinds of 'Other Expense' is not a chart of accounts. It is a confession, arranged alphabetically.

At the end of the project you get clean books. You also get a binder, or the digital equivalent, with a workpaper for every balance-sheet account: the balance, the support, the reconciliation, the adjustments made, and the person who reviewed it. That binder is what the CPA uses for the return, what the bank's field examiner asks for, what a buyer's diligence team wants on day one, and what your next controller starts from.

Without the workpapers, cleanup is a rumor. Someone says the books are fixed, and everyone has to take their word for it until the next reconciliation. With them, the state of every account is a fact that can be checked. That is the difference between a cleanup and a clean start.

A cleanup has an end date, and the end date is the point. When the defined scope is complete, we walk the owner and the CPA through the workpapers, post the final corrections, and deliver a closing memo that lists what was fixed, what was left as immaterial, and what must be done monthly to keep the books from drifting again.

That last list is the handoff. Most clients move directly into a fractional controller engagement, where the close calendar and the reconciliation checklist keep the reconstructed books current. Some have an in-house bookkeeper who takes the checklist with a monthly review from us. A few hire a controller, and the workpapers become the onboarding manual. What we do not do is clean the same books twice.

If the diagnostic shows that the problem is bigger than the books, that the people, the systems, and the process all need rebuilding, we say so and propose a finance department reset instead. Cleanup fixes the ledger. A reset fixes the department that produces it.