Incomplete records definition
/What are 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.
Reasons for Incomplete Records
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 those noted below:
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.
Incompetence. The accountant in charge of maintaining records could be incompetent. This is most likely to be the case in smaller organizations, which are more likely to hire inadequately-trained accountants. This is even more likely when the books are not regularly audited, so that no one notices the absence of records for an extended period of time.
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.