Accounting Reconstruction
Rebuilding the accounting when the records no longer explain the balances. We trace what happened and fix it where it started.
When years of unsupported entries, wrong balances, or inconsistent bookkeeping get carried forward, the financial statements stop describing the business. Reconstruction goes back to where it went wrong, traces the history, and rebuilds what has to be rebuilt. We don’t plug a balance to make a report look right.
What This Typically Involves
- General ledger review for unsupported activity
- Misclassified and duplicate entries corrected
- Activity rebuilt from bank and loan statements
- Supportable opening balances and schedules
- Cash-to-accrual conversion where needed
Signs This Is the Right Work
- Balance sheet accounts carry unexplained amounts, some of them for years
- Opening balances were typed in when the file was set up and never supported
- A CPA, lender, or surety has stopped accepting the financials as they are
- The business changed systems or bookkeepers, and the numbers have not agreed since
- Personal and business activity ran through the same accounts for long enough that the records no longer separate them
- A prior cleanup fixed the current year and left everything underneath it alone
What You End Up With
- Every balance sheet account reconciled to outside evidence: bank, loan, payroll, and tax records
- Historical periods corrected at the source rather than plugged with adjusting entries
- Supportable opening balances and a chart of accounts that fits the business
- A documented record of what changed, why, and what supports it, for the CPA, lender, or buyer who will read it
- Financial statements that describe the business and can be defended
Bookkeeping Cleanup vs. Accounting Reconstruction
Cleanup fixes the details in books that are basically sound: miscoded transactions, a few months of unreconciled accounts, duplicate entries.
Reconstruction is for books where the foundation is the problem. The opening balances were never supported. Years of activity were recorded inconsistently, or not at all. Balance sheet accounts carry amounts nobody can explain. You can adjust a balance to what it should be, but that doesn’t fix it. It just moves the problem into whatever account took the other side of the entry.
So reconstruction starts from the source documents: bank, credit card, and loan statements, invoices, payroll records, tax filings. The activity gets rebuilt until every balance is made of items we can identify and support. It takes longer than a cleanup. It’s also the only way to get records someone outside the business can rely on. There’s a longer comparison in Cleanup vs. Reconstruction.
Prepared for the People Who Will Read the Financials
There’s usually a deadline behind a reconstruction. A CPA can’t file. A lender or surety wants supported statements. A buyer is starting due diligence. Or the owner needs to know what the business is really worth.
So every correction gets written down: what changed, why, and what supports it. Your CPA, lender, or bonding agent starts from a clear record instead of a list of unexplained adjustments. Aligned is not a CPA firm and does not provide audit, attest, or tax services. Reconstruction gets the books ready for the people who do.
From Reconstruction to Records That Stay Right
Rebuilt books drift again if the process that broke them doesn’t change. Most reconstructions end with the fixes that keep it from happening again: a chart of accounts that fits, an accounting system set up correctly, monthly bookkeeping with reconciliations that prove the balances, and, where it’s needed, controller-level review of the close.
Who This Is For
- Businesses with years of accounting that was never reconciled or was recorded inconsistently
- Owners who acquired a company with unreliable financials
- Construction and trades businesses, where job costing, retainage, and payroll allocation depend on the underlying accounting being right
When This May Not Be Necessary
If the books are basically sound and the problems are recent, say a few months of miscoded transactions or an unreconciled credit card, that’s bookkeeping cleanup. It’s faster and less involved. Reconstruction is for records whose foundation can’t be trusted, and the assessment will tell you which one you have.