How do I check that my books came across correctly after switching accounting systems?

What should you compare, and where does each side come from?

Pick the cutover date first. Every comparison is taken as of that date, and every report comes from both systems.

Vendor instructions give you a starting point. Intuit's post-move steps for QuickBooks Desktop to QuickBooks Online tell you to compare the Profit and Loss and the Balance Sheet in both products. They also tell you to check each Accounts Receivable balance, the Undeposited Funds balance and the overall report totals. Intuit's guide for converting from Xero to QuickBooks Online goes further. Before converting, it has you pull the Income Statement, Balance Sheet, Trial Balance and the aged receivables and payables summaries for the period ending at the conversion date, so you can compare them once the conversion is done.

Whatever systems you're moving between, treat that list as the minimum. The trial balance is the report everything else ties back to, because it lists the total in each account, not just the subtotals a financial statement shows. Behind the balances, add these listings:

• open invoices by customer and open bills by vendor
• bank and credit card balances, with the last reconciled balance and date
• inventory quantity and value by item
• year-to-date payroll by employee
• the fixed-asset register
• sales tax owed

Doing the conversion itself, and deciding what to carry over, is a separate question covered in the related guide on moving your books between systems.

How do you make the two sides comparable?

A difference between reports run on different settings tells you nothing about the conversion. Before comparing, match the as-of date or period, the accounting basis, the filters and grouping, and the rounding or number format.

For a QuickBooks Desktop to QuickBooks Online move, Intuit says to run both reports with the report period set to All Dates and the accounting method set to Accrual. Its data-transfer article states that accrual reports in QuickBooks Online will match the Desktop reports and cash-basis reports may not. The Xero guide gives the same advice to cash-basis users: compare the trial balances on an accrual basis, because the two systems may record income and expenses on different dates.

In QuickBooks Online, you can adjust a report's period and dates. You can also filter by account or customer, change the accounting method and adjust the number format. The options available depend on your subscription. Some reports look different in the classic view than in the new enhanced experience, so export both sides into a layout you can compare line by line.

The most common false alarm is a report run on a different basis, date or filter, which gets mistaken for a conversion defect. Rule that out before you look for anything else.

Why isn't agreeing totals enough?

Matching totals can hide real errors. A trial balance can't catch errors that leave debits equal to credits, such as omissions, errors that cancel each other out, and correct amounts posted to the wrong accounts. Accounting software also rejects unbalanced entries, so a new file whose trial balance balances has proved very little. Auditing standards make the same point: breaking figures into smaller pieces makes it less likely that errors are hidden by others that offset them. So tie the detail, too:

• Receivables and payables by name. On the Xero route, spot-check customer and vendor balances on the aging reports. Payments that were never matched to an invoice come over as journal entries, and historical receivables and payables may then be wrong. If a zCustomer or zVendor appears, the source file probably had more than one linked receivables or payables account, and QuickBooks Online allows only one of each.
• Bank and card accounts. Check both the balance and the reconciliation status. On the Xero route, converted bank transactions arrive unreconciled, and the ending balance you enter should match the last reconciled balance in Xero. On the Desktop route, past reconciliation reports don't move, so save them from the old system.
• Inventory. On the Desktop route, QuickBooks Online calculates inventory on a first-in, first-out (FIFO) basis, so inventory reports may not match exactly. Compare quantity by item first, then value. The FASB gives an example of verifying inventory: check quantities and costs, then recalculate the ending balance with the same cost-flow assumption. If quantities match but values don't, suspect the valuation method, not missing stock. Intuit also says you may need to notify the IRS about this change by filing Form 3115, using the as-of/effective date you entered during the import. If inventory accounting is important to your business, it says to consult your accountant or CPA about the impact on your books.
• Year-to-date payroll. On the Desktop route, when payroll moves into QuickBooks Online payroll, the current year's paycheck information is copied as lump sums, and Intuit's post-move steps include checking the historical year-to-date pay entries. The Xero route doesn't convert payroll information at all, so the old system or its exports remain your payroll record. The IRS says that if you have employees, you must keep all employment tax records for at least 4 years after the date the tax becomes due or is paid, whichever is later.
• Fixed assets. The Xero route doesn't convert fixed-asset records. Match each asset's cost and accumulated depreciation in the old register to the new balance sheet accounts, and rebuild the register if it didn't come across.
• Suspense and clearing accounts. On the Xero route, the conversion books payments to a suspense account, which should be empty when the conversion finishes. Amounts in suspense accounts often mean an entry is incomplete or wrong.
• Sales tax. On the Desktop route, some taxes move as journal entries, and sales tax doesn't copy for every transaction. Sales tax payments made in Desktop are applied to the wrong filings in QuickBooks Online. Intuit's fix is to delete those migrated payments and recreate them in the QuickBooks Online sales tax center.

How close is close enough?

Decide your tolerance before you compare, and write it down. No single number applies to every business. The FASB says materiality depends on the entity, that size alone generally isn't enough to judge it, and that no general standard could cover everything that goes into the judgment.

Auditing standards give a workable structure you can borrow:

• An overall threshold. Materiality often starts as a percentage of a chosen benchmark, such as profit before tax, total revenue, gross profit, total expenses or total equity. For an owner-managed business whose profit is consistently small because the owner takes it as pay, profit before owner pay and tax may be a better benchmark.
• Lower thresholds for sensitive areas. Set a separate, lower threshold for any type of transaction or account balance where a smaller error would still change a reader's judgment.
• A "clearly trivial" floor. You can set an amount below which differences are clearly trivial. Clearly trivial means far smaller than material, not just below the material line. If you're unsure whether something is trivial, treat it as not trivial.
• The nature of the difference. Some differences count as material even though they fall below the overall threshold.

Below the clearly trivial floor you set, a difference doesn't need to be logged. At or above it, log every difference and find its cause, as auditors must.

If the cutover fell partway through the year and payroll runs in the file, compare year-to-date wages and taxes by employee as a separate, signed check, with no tolerance unless your accountant sets one. Employers must file a Form W-2 for each employee, so those per-employee totals end up on forms filed with the government.

A difference is an artifact when the conversion vendor documents it for that route and it has the documented size and pattern. The Xero route gives examples. Currency rounding differences show up as a Profit and Loss item. In multi-currency files, the foreign balances may line up while the home-currency amounts do not, depending on when the last revaluation was done in the source system. Some amounts may also move from bank accounts to revaluations, though Intuit says those moves shouldn't be more than a couple of dollars. Amounts may be shifted between periods while the conversion's ending balance is still correct. A difference is a defect when it changes an account balance at cutover, an open item or a payroll figure and no documented explanation covers it.

What does a complete checklist look like?

What caused the difference?

Find the cause class first. It tells you where to look.

Check budgets after a Desktop conversion. Intuit lists Profit and Loss budget types among the features that move, but also says budgets aren't recreated in QuickBooks Online due to mapping differences.

When several differences share a feature, such as the same transaction type, customer group or period, check every item with that feature rather than fixing the ones you happened to find.

Should you accept it, correct it, or run the conversion again?

Each difference that has an explanation takes one of four paths.

1. Accept it when it's a documented artifact and within your written tolerance. Record why.
2. Correct it in the new file when it's a single, identified item with support. Use a clearly labeled journal entry or transaction with the supporting documents attached, so someone else can follow it later. Have an experienced accountant review the correction first, because corrections can be wrong too. The vendor-documented fixes fall here: changing broad detail types, remapping suspense accounts, and recreating sales tax payments.
3. Send it back to the provider when a paid conversion service produced the break. Send the two outputs you compared along with it.
4. Run the conversion again when the cause is in the source data or the conversion settings and it affects a whole class of items. Examples are unmatched payments, renamed system accounts or wrong account ranges. Fix the source first, then convert into a clean file. The Xero route expects a QuickBooks Online file with no financial transactions or customized chart of accounts, because the conversion can overwrite them. On the Desktop route, employees with paychecks or pay history can't be deleted, and moving the data again means creating a new QuickBooks Online company without payroll set up. Inventory transactions dated after the FIFO start date can't be edited either. Each of these gets harder once new activity is in the file.

Never make the reports tie by posting an unexplained difference to a suspense or equity account. That turns a defect you could find into a permanent balance nobody can explain. If an Opening Balance Equity amount is left over, the related guide on that account covers clearing it.

If a difference falls in a period whose statements were already issued or reported outside the business, don't adjust it during verification. Flag it and take it to your prior-period correction decision.

How does one difference go from report break to decision?

Say the cutover date is June 30, and receivables total 48,250.00 in both systems on the aging report and the balance sheet. The totals agree.

The detail differs in form. Before converting, the old system shows Harbor Cafe with two open invoices, #1042 for 2,350.00 and #1057 for 3,100.00, plus a customer payment of 2,350.00 that was received but never matched to #1042. The customer's balance is 3,100.00 (2,350.00 + 3,100.00 − 2,350.00). After conversion, the new file shows #1042 and #1057 open, with #1042 aged over 60 days, and the payment arrives as a journal entry credit of 2,350.00. The customer balance still agrees at 3,100.00, so no total catches the change.

• Cause class: summarisation. The payment arrived in a different form, a journal entry instead of a payment, and on the Xero route unmatched payments come over as journal entries that have to be matched by hand.
• Artifact or defect: the vendor documents this result, and it also warns that historical receivables may not be accurate when unmatched payments come over as journal entries. Here, #1042 shows as overdue even though the customer's payment for it is in the file, and anyone chasing collections or reading the aging would act on that.
• Decision: if a search for journal entries posted against customers finds only this one, correct it in place. Match the credit to #1042, cite the old system's payment record, and log it. If the search finds dozens across many customers and no new activity is in the file yet, match the payments to their invoices in the old system and run the conversion again into a clean file. The vendor's advice is to do that matching before converting in the first place.

What record should the verification leave?

Keep enough that someone who wasn't there can see the new file was checked before anyone relied on it:

• Both sides' outputs, exported, dated and stored together. The Xero guide says to export reports and keep them somewhere safe after the conversion for tax or financial audits. For every accounting period, it lists the sales tax report, an account transactions report with all columns and no grouping, and the trial balance.
• A difference log. For each difference, record the cause class, the decision, the entry reference if any, and your tolerance amounts. Auditors must record the amount below which they treat errors as clearly trivial, every error they collected, and whether it was corrected.
• Sign-off. Auditors record who did the work and when it was finished, and who reviewed it, when and how much. A verbal explanation on its own doesn't count as support.

When can the new file be used?

Record no current-period activity in the new file, and don't report, lend or file from it, until the verification is complete and signed off. Once new transactions sit on top, conversion defects and new errors are mixed together, and several of the fixes above stop being available.

Intuit says the legacy Desktop subscription can be canceled once you've verified your data is fully reconciled in QuickBooks Online.

A paid conversion doesn't mean the file has been checked. Intuit's Xero guide tells you to recognize the risk of data error. For anyone not familiar with accounting transactions, it recommends a certified accounting professional, who can help with the conversion and verify the data afterward. The conversion also leaves a summary report of balances in both systems. Use that report as one input to your checklist, not as a substitute for it.

How long should the old system stay available?

Keep the old system reachable until the verification is signed off and any follow-up questions are settled. While you can still run reports in it, you can trace a difference down to a single transaction. With only exported reports, you can reconcile only at report level. So export transaction-level detail before you retire it.

After a QuickBooks Desktop subscription is canceled, you keep view-only access to your historical data files locally for 12 months. To keep that access, your local software must be at least QuickBooks Desktop Plus 2024 (Windows) or QuickBooks Desktop for Mac 2024. For taxes, keep records as long as they may be needed. That generally means keeping the records that support income or deductions on a return until the period of limitations for that return runs out.

What changes if only balances came across?

If the conversion brought over only balances, such as older years on the Xero route folded into an automatically calculated opening balance, the new file can't prove those years' history. Check the trial balance at the opening date account by account. Check the open items that make up receivables and payables, the reconciled bank balances, the inventory, the fixed assets, and year-to-date payroll if the cutover fell mid-year. Any report for an earlier period has to come from the old system or its saved exports.