Industry: Corporate / Services
Overview:
One of the client approached us with discrepancies in their loan accounting records. The loan ledger closing balance was not matching the agreed repayment schedule provided by the financing contract. This created uncertainty in financial reporting and posed potential audit and compliance risks.
The challenge:
During our review, we identified several issues:
- Loan ledger closing balance did not match the official repayment schedule
- Historical discrepancies spanning over 2 years
- Misclassification of salary-related transactions incorrectly recorded under “Loan Taken”
- Errors were previously posted by the client’s internal team
- Lack of proper reconciliation between accounting records and contract terms
These issues impacted the reliability of financial statements and created audit concerns regarding accuracy and classification.
Our Approach:
We carried out a detailed review and correction process aligned with accounting standards and audit requirements:
- Thoroughly analyzed loan agreement and repayment schedule
- Performed line-by-line reconciliation of loan ledger against contract terms
- Identified and segregated misposted salary transactions from loan accounts
- Reclassified historical entries in accordance with proper accounting treatment
- Adjusted loan balance to reflect accurate outstanding liability
- Ensured corrections were supported with audit-compliant documentation and working papers
- Verified consistency across general ledger and financial statements
Result:
- Accurate loan ledger fully reconciled with repayment schedule
- Correct classification of all historical transactions restored
- Financial statements aligned with accounting standards and audit expectations
- Improved transparency of liabilities for management reporting
- Reduced risk of audit adjustments and compliance issues
Key Impact:
This engagement strengthened the integrity of the client’s financial records by correcting long-standing posting errors and ensuring proper loan accounting treatment. The corrected records now provide a true and fair view of liabilities, supporting both compliance and future audit readiness.
Key Takeaway:
Proper loan reconciliation is critical for accurate financial reporting. Even small classification errors—if left uncorrected—can significantly distort liability balances and impact audit outcomes.
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