How would you address discrepancies between your financial disclosures and those of a client's?

You need to dedicate time to understand what the the problem actually is through T account analysis, keeping the bigger picture in mind so not to get bogged down in detail. If you are having difficulty understanding what the problem is, step back, relax, and look at it from a different angle. Why did it happen, then communicate your findings, and propose a remedy to fix the problem within an agreed time frame.

One thing I have found helpful is to always engage the client. I'll start by identifying the root cause of the discrepancies. Review the policies and financial standards as it pertains to the discrepancies. Explain to the client what the standards says and finally reconcile the issue.

This is a key issue when there are multiple differences in such two sets of financial statements. My approach would always be to compare both with the underlying reporting framework (e.g., IFRS) which has been used to prepare such financial statements, to see what are the respective disclosure requirements for each accounting item. By referring the disclosure requirements in conjuction with the accounting policies, can we only understand the reason of such differences and accordingly correct them.

In addition to the standard line-item comparisons, I recommend delving deeper into the underlying assumptions and methodologies used by both you and your client. Discrepancies might stem from differences in how you've interpreted accounting standards, estimated revenue, or calculated depreciation. By meticulously examining these foundational elements, you can uncover discrepancies that might have been overlooked through a simple line-by-line review. This approach demonstrates a higher level of financial acumen and attention to detail.

Sometimes the client may not be able to identify the issues, it is prudent that you engage them analyzing the items line by line i.e income statement, balance sheet and the cashflow statement. Also check on the accounting policies whether there is consistency . Sometime it needs a second eye to see the errors especially accounting errors.

Open and clear communication with the client is crucial. The auditor should discuss the discrepancies with the auditee’s management to understand their perspective and gather additional information. This will be one most crucial is resolving the differences.

In my view, the conversation with the client should centre around three key questions: 1. What is the misstatement in the financial reporting disclosure? 2. What financial reporting standards are necessary for this disclosure? 3. What implications would the misstatement have on the auditor's opinion of the financial statements if left uncorrected? The most important thing is to attack the accounting issue, not the client.

When approaching this conversation, think of it like a detective trying to solve a puzzle. Instead of just pointing out the misstatements, try to understand the bigger picture. Ask questions like: "Can you explain the reasoning behind this particular accounting treatment?" "Are there any underlying assumptions or estimates that might be affecting the numbers?" "Have there been any recent changes in your business operations or industry regulations that might explain the discrepancy?" By asking these open-ended questions, you'll not only identify the misstatements but also gain valuable insights into your client's business and their accounting practices. This collaborative approach can help build trust and strengthen your relationship.

After identifying discrepancies, engage in a professional and collaborative dialogue with your client. Clearly present your findings and actively listen to their accounting perspectives. Effective communication fosters mutual understanding, allowing both parties to converge on accurate and agreed-upon financial disclosures. This approach not only resolves discrepancies but also strengthens client relationships by demonstrating respect for their processes and concerns

When reviewing accounting policies, consider the potential impact of industry-specific guidance or emerging trends. Sometimes, discrepancies can arise because one party is following a more recent or specialized interpretation. It's essential to stay up-to-date on industry developments and ensure that both you and your client are using the most relevant accounting standards.

One thing I have helpful here is the general standards in accounting and disclosures reporting help all companies to understand other policies for client’s and suppliers also

it’s vital to thoroughly review and compare the accounting policies utilized by both parties. Often, variations stem from differing interpretations or implementations of accounting standards. By critically assessing these policies and ensuring consistent application across both disclosures, alignment can be achieved within the prescribed accounting framework, thereby resolving discrepancies effectively.

When analyzing transactions, consider the potential impact of data entry errors, system glitches, or even fraudulent activity. It might be helpful to use data analytics tools to identify patterns or anomalies that could indicate underlying issues. By taking a more data-driven approach, you can uncover discrepancies that might have been missed through a manual review.

In my experience, a meticulous analysis of the transactions leading to discrepancies is crucial. Reviewing supporting documentation such as invoices, contracts, and receipts can illuminate whether errors are isolated incidents or indicative of broader systemic issues. Understanding these transactions in detail allows for precise guidance on corrections, ensuring that both sets of financial records accurately reflect the true financial position

Reconciling records is a critical step in resolving discrepancies between differing financial disclosures. It often involves making necessary adjustments to journal entries to mirror agreed-upon amounts accurately. Proper documentation and authorization of these adjustments are essential to maintain transparency and accountability. This reconciliation ensures that the final financial statements accurately reflect the true financial position, aligning with both parties' records