What was broken
A multi-outlet retail chain lost access to a large part of its accounting data after an ERP migration failed mid-way, leaving corrupted ledgers and gaps across several months. With statutory filing and audit deadlines approaching, the company had no reliable books to work from.
What we did
CapEasy reconstructed the affected periods from external and transactional sources — bank feeds, indirect-tax filings, POS and vendor data — rebuilding the ledgers and reconciling them against control totals. The recovered data was validated, the gaps closed, and the accounting process stabilised on a reliable footing before the deadlines.
Where it landed
The company recovered a complete, reconciled set of records in time to meet its filing and audit obligations. The reconstruction also surfaced process weaknesses, which were addressed to reduce the risk of future data loss.
What the IRS expects when your own books go dark
When a business loses its accounting records — to a failed migration, a corrupted database, a fire, or a ransomware event — the IRS treats it as a documented, recoverable situation, not a dead end. Its guidance on reconstructing records after a disaster or casualty loss points to exactly the sources CapEasy used here: bank statements, because "the deposits should closely reflect what the sales were for any given time period"; prior federal, state and local tax returns, including sales tax reports and payroll tax filings; and supplier invoices, ideally reaching back at least a full calendar year, to rebuild purchase and inventory history.
That sourcing order is not incidental. Bank feeds and filed returns are external to the failed system, so they survive a migration that corrupted the internal ledger — which is precisely why they anchor the rebuild instead of whatever fragments the old ERP left behind.
Retention periods decide how far back the rebuild has to reach
A rebuild is only as complete as it needs to be, and the IRS sets that boundary in its recordkeeping guidance: the default is three years from filing, extending to four years for employment tax records, six years if unreported income exceeds 25% of gross income shown on a return, and seven years for a bad-debt deduction or worthless-securities claim. Records tied to a business asset are kept until the statute of limitations closes on the year that asset is disposed of, because they set the depreciation and gain-or-loss basis for every year in between. None of those clocks reset because the ERP failed — a migration gap inside a period still open to examination has to be closed, not waived.
IRS Publication 583 lays out what the rebuild has to reproduce for each open period: gross-receipts evidence (deposit slips, register tapes, invoices), purchase and inventory documentation, expense records, and the acquisition and disposal paper trail for business assets. That is the checklist a reconstruction works against — not "make the ledger balance again," but "reproduce the documents a return would need to defend."
Rebuilding into QuickBooks or NetSuite: pick an anchor month, work outward
The mechanical part of a system-failure rebuild is choosing an anchor: the last month-end where the trial balance, the bank reconciliation and the filed return all agree. Everything before that point is closed and left alone. Everything after it is rebuilt period by period — bank feed imported and matched first, since it is the most complete external record, then POS or invoice data layered in against it, then vendor bills reconciled to accounts payable — with each month checked against a control total (ending cash, ending inventory value, or a known revenue figure) before the next one opens.
Multi-location retail adds a step most single-entity rebuilds skip: outlet-level ledgers have to reconcile individually before they roll up, or an error at one location hides inside a consolidated number that happens to look right. Whether the destination is QuickBooks Online or NetSuite, the sequence is the same — import, match to source, reconcile to a control total, close the month — and it is exactly the discipline that keeps a migration from corrupting data in the first place.
What to take from it
- A failed system is not a lost year — the IRS explicitly expects reconstruction from bank statements, filed returns and supplier invoices, and treats that as sufficient.
- Retention rules do not pause for an outage: a migration gap inside a period still open under the 3/4/6/7-year rules has to be rebuilt, not written off.
- Rebuild from an anchor month where the trial balance, bank reconciliation and filed return all agree — then work forward period by period, not backward from whatever the broken system last showed.
- External sources (bank feeds, tax filings) survive an internal-system failure by definition — sequence a rebuild around them before touching whatever fragments the old ERP left behind.
- Multi-location books reconcile at the outlet level before they consolidate — a rollup can look correct while hiding an unreconciled location underneath it.