The audit and assurance side
Nothing is deleted: voiding, not editing
Why the correction is more valuable than the tidy-up, and how a void keeps both the mistake and the fix in the record.
The temptation
You post an invoice to the wrong customer. Or an amount is typed as $1,290 instead of $1,209. The tidy thing is to fix it: change the number, and the books look as though the mistake never happened.
That is exactly the habit this chapter is here to break.
What ByteBook does instead
Nothing in ByteBook is deleted and nothing is edited in place. A mistake is voided. Voiding marks the original entry as void and posts the mirror image of it: the same accounts, the same amounts, the opposite direction. Both stay in the books, and every report sums only the entries that are not drafts, so the pair cancels out. The figures end up where they should have been, and the record shows both what happened and what was done about it.
Three consequences follow, and each is worth knowing:
- The net effect is correct. The books are not wrong because a mistake was made and corrected. They are wrong only if the mistake is still uncorrected.
- The history is intact. Anyone can see that an entry was raised in error, on what date, and what was done.
- The fingerprint chain still holds. A voided entry keeps the fingerprint it was sealed with, so voiding does not break the chain that chapter 12 describes. Editing the original would break it immediately.
What this has to do with auditing
An auditor's working papers have to do a specific job: they must allow another auditor, who has never seen the engagement, to understand what was done. The auditing standard puts it plainly. The auditor shall prepare audit documentation that is sufficient to enable an experienced auditor, having no previous connection with the audit, to understand the nature, timing and extent of the procedures performed, the results, and the significant matters and judgements ISA (NZ) 230.8.
Now read that against the two habits:
| Habit | What the next auditor can see |
|---|---|
| Edit the entry | A number that has changed, and no record of what it was |
| Void and re-post | The original, the correction, the dates, and the reason |
The second one is a working paper. The first one is a gap, and an unexplained gap in a set of books is worse than a visible mistake.
The same discipline applies to the person doing the books. Documentation has to be prepared on a timely basis ISA (NZ) 230.7 — which in practice means correcting an entry when you notice it, not at the end of the year when you have forgotten why.
How to void something in ByteBook
Open the document or the transaction, choose Void, and give the reason. Both are required, and the reason is the part that matters six months later.
The entry and its mirror image remain, the reports stop counting either of them in the totals, and the audit trail records what happened.
A practical rule
Before you correct anything, ask what a new person would need to see in order to agree with your corrected figure. If the answer involves knowing something that is not written down, write it down. That is the whole of it.