Malone Petroleum Consulting



Your Oil and Gas Suspense Account Should Never Be Written Off

Suspense Account

The worst case scenario is when the accounting department becomes totally behind and disgusted with the suspense account and finally decides to write it off to get rid of it - whether it has an unknown one dollar in it or one million dollars in it. Let's face it, employees in most companies are too busy and are overworked. Also, you cannot waste the time of your best people spending lots of hours of their time digging into an old suspense account - and you are wasting your time if you send in someone that is totally inexperienced. Suspense accounts are an unfortunate but necessary part of almost any general ledger system. There are some things you cannot code since you do not have enough information to code the item to the proper account. In any case, suspense accounts should be handled and reduced as quickly as possible for control purposes. You need to establish the validity of the stale items that you do have in that account since the older any account gets - the colder it gets - and the more difficult it is to find the supporting documents. Time can be saved by narrowing the scope by determining specific items that are cost effective, for instance, the largest dollars. Because internal controls governing the accounts are often weak, a sharp fraudster knows the suspense account is a perfect place to bury the trail of a theft and/or internal fraud. It is important to note that accounting fraud can be perpetuated by consistently suspending material items until they finally are made to disappear. The clearance of the suspense account must be done also to add credibility to your financial statements and peace of mind.

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