Granville Board of Education is having to cut more programs due to a $396,000 accounting error, Mohegan Sun resort casino lost $1.5 million in revenue due to an accounting error and Tui Travel in the UK reported a 117 million Euros accounting error that had been building for years. What do all three of these examples have in common? Two completely different companies lost thousands to millions of dollars due to accounting errors that could have been avoided and a school board that will have to cut programs from children due to a loss in funding because of an accounting error.
Accounting errors can cost thousands and be the detriment of a successful business. Small businesses often take care of their own accounting, this comes with its own risks. It’s natural for a small business owner to believe that with growth, an accountant will be required. Although accountants can help to keep finances and financial paperwork in order, this does not mean they can be left unattended to complete work at their own will.
1) When documents are filled out, review them before they are finalized and sent out. The Granville Board of Education error was due to a simple keyboard typing error, review all documents for this form of error.
2) Ensure your accountant requires you to make all final arrangements for everything, don’t just hand over the reins to the finances as it gives someone else control of your money.
3) Ensure the accountant is accountable, what other work have they done, are they new to accounting or do they have experience?
4) Make sure everyone knows how to keep track of income and expenses. Set out a simple way for recording all expenses and revenue. Then train everyone involved in the business how to record these items. This will ensure everything is paid and received quickly without errors.
5) Review your records once a month. Review all bank records, invoices, open accounts and debts to make sure everything is in order. This way, if someone is spending too much, skimming off the top or not paying for your services you know quickly. Don’t be like Tui Travel and Mohegan Sun resort that let accounting errors and anomalies continue for years without noticing.
Growth and success in business are amazing; don’t let accounting errors take that success away. Keep track of your finances and accounts, review your accountants and employees work and set a simple process for recording invoices, debts, expenses and revenue.