Common Accounting Mistakes That Can Cause You Trouble

find an auditing firm to help avoid making common accounting mistakesAccounting seems simple, but it requires precision as the slightest mistake could land you in trouble. Not only can it cause a problem in your books, but also result in financial loss. This is why it is imperative that you avoid common accounting mistakes, which can cause you trouble. For this purpose, you have to find an auditing firm to draw up your accounts. These auditing firms are well aware of common accounting mistakes and know how to avoid them.

Bank Account Balancing

One of the most common accounting mistakes businesses make is assuming their books are in perfect order because they use software for maintaining their accounts. Using software is an effective way of keeping your accounts in order, but since the entries have to be done manually, there is the risk of human error. Therefore, assuming your books are perfect simply because you use accounting software is a mistake. You should reconcile your business accounts with the bank statements periodically to ensure your books are balanced. You may have an in-house accountant do this or find an auditing firm to take care of the job for you.

Invoices for Sales

Almost every business uses a credit line. When a sale is made customers may not pay up immediately and are issued invoices for the amount they owe. They may require one or two months to make the payment. Oftentimes, businesses pay for more than one invoice at a time.

At times, customers delay the payments. This is where you need to be vigilant. If you did not know about a customer making a late payment, there is a good chance the customer can get away with not paying at all. This is why you need to have a foolproof invoice system. If a customer delays a payment, you need to contact them and see why the payment was delayed. Even if they have a genuine reason, you should still inquire.

Handling Cash

Accounting for cash in hand is tricky and  is the cause of one of the most common accounting mistakes. This is because excess cash can be given away on some occasions. Moreover, mistakes can be made while counting cash, and cash is also susceptible to theft. If you deal in cash, you should make sure the cash tills are balanced regularly to avoid such issues.

If you have the slightest problems in managing your business accounts, you should find an auditing firm that can do the job for you. This way, you can avoid the common accounting mistakes that can cause trouble.

Potential Big Changes Coming for Every Auditing Firm

auditing firmNew rules that are being proposed by the Public Company Accounting Oversight Board will likely result in a major overhaul of company audits. The board wants accounting firms to start including a potentially large amount of new information in the audit report that is attached to a company’s annual report.

It is said that their proposal is one of the most ambitious to date. The board was set up a decade ago in light of accounting scandals at large companies which revealed serious shortcomings at auditing firms.

As part of the proposal, it would require auditors to communicate details of the difficult parts of the audit, with many situations, especially with large corporations, where the auditor may find the task quite nettlesome.

Requiring this extra information may draw opposition from some auditors due to the added expenses. Some believe it provides a better opportunity to communicate more information, with auditors and audit firms providing greater value for investors and users of financial statements.

This also means that the public and investors will have better insight as to exactly what is going on inside of a company. The proposed changes would certainly mean a bit more work for auditors; companies may look at things a little bit differently before making certain financial decisions as well.

Having a qualified auditing firm on your side may be more important than ever. To find the best for your business, it’s essential to pinpoint your exact needs to eliminate those you don’t want to work with. For example, do you need a firm that can provide a specific type of service or that provides a more comprehensive package of services? Consider your particular budget and whether or not the firm has industry experience.

Don’t seek an auditing firm out of the yellow pages. You might consider contacting other businesses within your industry or professional organizations such as the American Institute of Public Accountants to see who they might recommend. You’ll then need to put together a list of potential firms and contact each to find out their fees and services.

The quickest route to finding a qualified, reputable auditing firm is to contact the consultants at GoodAccountants.com you can locate the one that is right for you with no financial cost or obligation.

What is An Accounting Audit?

accounting audit An accounting audit is a type of financial check that is done externally to monitor a company’s accounting methods.  This check is used to verify financial information has been compiled in a manner that is in accordance with standard practices and there are no errors.  A specialized type of accounting firm, known as an auditing firm performs these external checks.  There are some industries that require companies to submit their books for auditing on an annual basis, to ensure nothing is being overlooked or erroneously reported, either intentionally or unintentionally.

Accounting audits play a very important role in the business world and there is a certain amount of finesse that goes into the process in order to verify the accounting process is done correctly yet the client company is pleased and an ongoing business relationship is established.  This is because if an auditing firm finds many errors and questionable items on a client company’s accounting records, it is very possible the company would opt to not use that firm’s services again.

On the other hand, if the auditing firm is too lax and does not properly analyze the data, the integrity of the financial accounts of the company being subjected to the audit cannot be guaranteed.  If the company were to suffer a major financial issue, the accounting audit would be called into question, and the reputation of the auditing firm would also be looked into.  The auditing firm may suffer just as much as the company being scrutinized since it may lose business from other companies because of these serious issues.

It is very important that accounting audits be conducted on a regular basis, in a proper manner, by a reputable company.  Being able to know for complete certainty that your financial records are complete, accurate, and up to date is extremely important in the business world.  This will help companies to quickly identify many serious situations that could crop up such as someone embezzling from the company, missing accounts, reporting errors, or internal fraud.

When a company takes the steps necessary to complete these types of audits, and the auditing firm completes them in the correct way, to a high standard, information can be accessed promptly, presented to organizations that request it, and it will not be questioned for authenticity or accuracy.  This level of care and trust can truly make or break a company; especially in today’s extremely competitive marketplace.

Purpose of Auditing Firms

Businesses large and sauditing firmsmall have used auditing firms in the past to ensure the financial responsibility of the company and produce a determination that the business is financially sound and more.  Auditing firms are third-party entities which review the financial aspects of a company by reviewing the financial paperwork and determining the current financial status of a company.  The following will detail the purpose of an auditing firm and highlight why such a third-party entity is important.

What Does An Auditing Firm Do?

An auditing firm will review the various financial aspects of a company and create a detailed report thereafter reporting the findings.  This usually occurs once per year and gives the company owner and its department officials insight into how the business is doing with the state of their finances.  The auditing firm is paid by the business and completes their work with efficiency and thoroughness.

Why Auditing Firms Are Important

Auditing firms are extremely important for a few different reasons.  First, a firm which completes audits for entities ranging from small, privately-owned businesses to large corporations provides the business with a clear picture of their financial status.  In addition, this type of firm compiles the proper information to let shareholders and company clients know how the company is faring.

Also, firms which complete audits help the businesses whom they audit to show that their dealings are fair and honest.  Since the audit firms are independent of the company, they offer a true picture of the state of the company and their finances.  Therefore, outsiders can trust the information and know that it is not coming directly from the company which the audit covers but from an outside auditing entity instead.

In addition, audits of this type help the business and its owners prepare for the future.  The results let the business owners know what their financial status currently is and can use this information to properly proceed in business into the future.  They can tailor future expenses to the results received due to the audit and their shareholders can feel at ease knowing the financial state of the company in which they hold stock in.

Using an auditing firm is a wise move for any business to make.  It will keep the business firmly grounded and help to make it even more of a success in the years which follow.  There are many excellent audit firms out there today and plenty to choose from when it comes time to pick a firm to audit your business.

How To Find The Right Auditing Firms

Auditing Firms

 

If you’re a business owner, you have probably have thought about the benefits to your company from hiring an auditing firm.  Finding the right one to help you go over all of the financials (past, present and future!) of your company can be really beneficial to the financial success of a business.

Finding the right audit firm probably means a few things to you.  First, you want to make sure you find the most affordable firm for you.  The whole point of auditing is usually to increase financial productivity and reach the optimal level of success in a business.  If you’re spending too much of your budget on the accounting firm you choose to audit your business, you’ll kind of defeat the purpose of hiring them in the first place.

When choosing an auditing firm, you’ll next want to consider the type of businesses they usually work with.  You’ll want to find professionals that know your industry and are able to accurately forecast important things about your business that you should be able to determine from an audit.  It’s never a bad idea to ask around and see who other professionals in your area of business usually work with.  This is also good for finding out if an auditing firm has a good reputation, is cost effective, easy to work with and whether or not hiring them was beneficial to the business using their services.

A good rule of thumb when sifting through auditing firms is to give them a small project- really just a piece of the pie- to show you how they would normally perform an audit on your company.  This is a good way to sort of try them on for size and see if you work well together and to make sure that they’re able to provide you with everything you’re looking for in an audit firm.

It’s a good idea to perform an audit on any company at least once a year to manage productivity and monitor progress of a business.  Finding the right firm is all about finding one that’s affordable, comfortable for you to work with and one that is suited to the needs of your business and industry.