Error Account - Transaction Processing

Transaction Processing

When many hundreds or thousands of transactions are being done each day, and whenever there is human input involved, error accounts are necessary to keep the audit trail intact. Error accounts also play a role in improving customer service. GAAP recommends daily or weekly monitoring of error accounts depending on volume and transaction size. It is typically up to the company or applicable government department's accounting department to monitor the error accounts that it has in place.

Error accounts, if not monitored correctly, can lead to disaster as in Nick Leeson's use of an error account at Barings Bank.

Error accounts can be implemented in manual accounting as well, but this is much less common in the developed world since personal computers became pervasive.

Read more about this topic:  Error Account

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