PowderCoatingLogix/docs/ACCOUNTING_AUDIT.md

Accounting System Audit

Living record of the accounting/GL audit and its remediation status. Keep this file updated whenever an accounting finding is opened or closed — the original audit was lost once because it was never written down. Don't let that happen again.

Last reconciled against code: 2026-06-19 (branch dev, commits through 9532812). Verification at that point: dotnet build clean (0 errors); dotnet test tests/PowderCoating.UnitTests → 290 passed, 0 failed.

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How the GL is modeled (context for the findings)

Balances are computed two different ways, and they must agree:

1. At posting time — controllers call AccountBalanceService.DebitAsync/CreditAsync, which mutate the denormalized Account.CurrentBalance.
2. At report time — FinancialReportService (Trial Balance, Balance Sheet, P&L, AR/AP aging, statements) and LedgerService (per-account ledger + RecalculateBalances) recompute balances from source documents.

LedgerService also backs the Balance Reconciliation report (the detective control added in c2cd19e), which compares stored CurrentBalance vs the ledger-recomputed balance. Any account whose recompute path is incomplete will (a) be silently corrupted by a "Recalculate Balances" run and (b) produce misleading output in the reconciliation report.

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Resolved findings (this audit batch)

#	Finding	Fix	Commit	Verified
#4	Sales Tax Payable (2200) was credited on every invoice but never relieved — the liability grew forever (no remittance flow).	JournalEntries/SalesTaxPayment GET+POST: DR 2200 / CR bank, balanced, in a transaction, honors the period lock and validates amount + bank-account tenancy.	0c921ba	Posting reviewed JournalEntriesController:235-296. Reporting needs no change (posted JE lines already flow through TB/BS/ledger).
#7	Most report queries relied on the global tenant filter, which is bypassed for SuperAdmin → cross-company leakage on P&L / Balance Sheet / Trial Balance / aging / statements.	Explicit CompanyId == companyId predicate added to every query in FinancialReportService.	9532812	Confirmed: every query in FinancialReportService.cs carries an explicit CompanyId predicate.
#9a	A cash refund posted DR AR (control up) while the customer subledger went down — opposite directions → guaranteed AR drift.	Refund now reverses the sale: DR Sales Returns (4960) + DR Sales Tax Payable (tax portion) / CR bank; AR untouched. Split centralized in Core/Accounting/RefundAllocation.Split.	2a82a1d	Posting (InvoicesController.IssueRefund/CancelRefund) and both recompute paths (LedgerService §5b, FinancialReportService TB/BS/P&L) all use RefundAllocation.Split — they agree by construction.
#9b	Store-credit refunds & credit memos posted nothing to the GL on issue (only a CreditMemo + Customer.CreditBalance) → outstanding store credit invisible on the balance sheet.	New 2350 Customer Credits liability. Issue: DR 4950 / CR 2350. Apply: DR 2350 / CR AR. Void remainder: DR 2350 / CR 4950. Updated in all 8 posting sites + TB/BS/P&L + ledger §12b.	9ce3612	Posting sites confirmed (CreditMemosController 180-185/262-270/314-320; InvoicesController store-credit path). Reporting cmContraRevenue/cmIssuedNonVoided math reviewed.
—	No detective control to catch denormalized-balance drift.	Balance Reconciliation report (Reports/Reconciliation): per-account stored vs recomputed, plus AR/AP control-vs-subledger.	c2cd19e	Reviewed FinancialReportService.GetBalanceReconciliationAsync. NOTE: its usefulness is limited by O2 below.

Original numbering gap

The commits reference findings #4, #7, #9a, #9b — implying a list of at least #1–#9. The original audit document was never persisted and is unrecoverable. Findings #1, #2, #3, #5, #6, #8 cannot be matched to commits and their status is unknown. If the original list resurfaces, reconcile it here.

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Resolved findings (2026-06-19 remediation)

O1 — Account 2300 mislabeled "Payroll Liabilities" while used as Customer Deposits — RESOLVED

• Root cause refined: there is no payroll feature posting to 2300; the deposit GL code has always used 2300 (resolved by number) as the Customer Deposits liability. Migration AccountingDepositsGL already renamed it to "Customer Deposits" for tenants that lacked a 2300, but its NOT EXISTS guard skipped pre-existing tenants, leaving them mislabeled. The two seed files still created new tenants with the wrong name.
• Fix (chosen approach: rename 2300, move payroll to a new 2400):
  • Seed files now create 2300 = "Customer Deposits" (IsSystem) and a separate 2400 = "Payroll Liabilities" — SeedDataService.Accounts.cs, SeedData.cs.
  • EnsureSystemAccountsAsync self-heals: renames any 2300 still named "Payroll Liabilities" → "Customer Deposits" (preserving user renames) and ensures 2400 exists.
  • Migration 20260619233108_RenameDepositsAccountAddPayroll does the same for existing tenants (rename only where Name is still the default; insert 2400 where missing). Down is best-effort (soft-deletes only empty 2400s; does not re-introduce the mislabel).
• Account number 2300 is unchanged, so the deposit posting code (DepositsController, InvoicesController) needed no changes — its lookups are by "2300".

O2 — LedgerService never recomputed 4950 Sales Discounts → recalc corrupted it — RESOLVED

• Fix: added a 4950 section to both LedgerService.GetAccountLedgerAsync and ComputePriorBalanceAsync that reproduces the actual postings so a balance recalc matches the stored balance: invoice discounts (DR at invoice date) + credit-memo issuance (DR full amount at issue) − the unapplied remainder of voided memos (CR at void). This mirrors what AccountBalanceService posts at InvoicesController:849/1108/1629 and CreditMemosController, so the Balance Reconciliation report no longer shows false drift on 4950.
• Note / micro-discrepancy: the ledger uses memo.AmountApplied for the voided remainder (matching the true posting), whereas FinancialReportService TB/BS derive the voided portion from applications against non-voided invoices. These differ only in the rare case of a voided memo applied to a since-voided invoice. Left as-is (report-side nuance, not O2's target); documented here so it isn't mistaken for a bug.
• Regression test: LedgerServiceTests.GetAccountLedgerAsync_SalesDiscounts4950_IncludesInvoiceDiscountsAndCreditMemoContraRevenue.

Verification of O1+O2: dotnet build clean; dotnet test tests/PowderCoating.UnitTests → 291 passed; migration applied to the dev database successfully.

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Open findings (deferred — to do after O1/O2 per user)

O3 — Write-path account lookups omit explicit CompanyId (defense-in-depth gap) — LOW-MEDIUM

• Finding #7 added explicit CompanyId predicates to the read path, but several posting lookups still rely on the global filter alone, e.g. CreditMemosController (182-184, 268, 317-318) and InvoicesController refund/credit account lookups use FirstOrDefaultAsync(a => a.AccountNumber == "2350" && a.IsActive) with no CompanyId. JournalEntriesController.SalesTaxPayment (246) does it correctly.
• Impact: low in practice (these run under a non-SuperAdmin company context where the global filter applies), but it violates the repo's standing rule and would post to the wrong tenant's account if ever executed in a SuperAdmin/multi-company context.
• Fix direction: add a.CompanyId == companyId to every account lookup on the posting path.

O4 — Sales-tax remittance can over-remit (drive 2200 negative) — LOW

• SalesTaxPayment validates amount > 0 but does not cap the payment at the outstanding 2200 balance.
• Impact: a typo can push Sales Tax Payable negative (a debit-balance liability), which is an abnormal balance that then surfaces oddly on the balance sheet.
• Fix direction: show the current 2200 balance (already shown on the GET form) and reject/​warn when amount exceeds it.

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Suggested priority order

1. O1 (mislabeled/commingled liability — real balance-sheet correctness issue)
2. O2 (recalc corruption + reconciliation report reliability)
3. O3 (defense-in-depth on write path)
4. O4 (input guard)