Financial reporting inaccuracies and deficiencies can cause serious problems in a business, especially for small businesses where cash flow problems can quickly become an issue. Some of the main problems found in financial reporting include reconciliation of reports, human error, and records that are not up-to-date.
Washington University website states reconciliation as the “process of comparing transactions and activity to supporting documentation. Further, Reconciliation involves resolving any discrepancies that may have been discovered.”
Reconciliation is the cornerstone of good business management and can help resolve any financial reporting deficiencies that may be found. Knowing at all times where you are at financially, in the red or the black, is the ultimate key to a successful a business. On the other hand, not knowing where you are at can be the downfall of your business, especially for tax reporting purposes and other legal issues.
Having a strong checks and balance system for your business can include hard copy, and electronic records. This may also include a third party, such as a certified public account, to verify all records match-up. This will ensure that errors or discrepancies can be found and eradicated before they become financial reporting deficiencies that could cause your business losses involving taxes or legal problems.
Unintentional human error is inevitable. We are distracted by phone calls, emails, fatigue, hunger, and other humans. Having a back-up and cross-reference system can help to find common human errors such as reversed numbers, misplaced entries, and wrongly inputted information before they go to the final books.
The same back-up and cross-reference system can also help find possible intentional errors in your business records. Intentional negligence can create serious deficiencies in your financial reports.
No one wants to believe that a co-worker could be intentionally trying to change information in your business records. Unfortunately, on occasion it could happen. Having a checks and balance system in place, including a third party, can help to create an environment where this won’t be able to happen. A good financial system will also make finding these type of errors, and the party involved, much easier before such a situation creates ongoing financial or legal troubles for your company.
Records not Up-to-Date
Having a record-keeping system in place for your business is not enough to eradicate financial reporting deficiencies. Your financial records must be kept constantly up-to-date. Using information that is out-of-date, even by a short time period, may simply create backlog in paperwork, late fees and additional interest fees. On the other hand, it could result in complicated tax or legal situations for your corporation, according to a bankruptcy lawyer.
A professional bookkeeping and payroll service such as from a certified public accountant can ensure your records are not only accurate but also up-to-date. This is an excellent way to eliminate any financial reporting deficiencies that could arise from previously back-logged paperwork.
Hiring a CPA
Financial reporting inaccuracies and deficiencies can seriously interfere with the success of your business. They can take your precious time and money. Professionals trained in bookkeeping and payroll services, could be the invaluable help your company needs. They can give you your time back by taking over, or assisting with all your financial paperwork so that you can concentrate on other important areas of running your business.
Hiring a professional accounting firm can help your business in many ways including, as already stated, with any financial reporting deficiencies. CPA firms can, of course, assist your business with end-of-the-year income tax returns. They can also offer your business other services including bookkeeping and payroll, retirement planning, and business valuation, and other valuable business services.
Troy has been married for 27 years to his wife Shauna. They have six active children and they love to participate in many extracurricular activities including: boating, flying, mountain biking, hunting, fishing, horseback riding, and adventure motorcycling (pretty much whatever will get them outside).Troy has a vast amount of experience in the following business sectors: medical, dental, manufacturing, retail, restaurants, construction, farming and ranching.He is a shareholder in Cook Martin Poulson a Utah Accounting Firm.