If your organization is looking for expert financial reports and financial analysis services, we have solutions for every small business challenges in accounting information system and help you gain access to financial reports at a cost-effective price.
Accuracy of Financial Statements
The two main sources of financial statement inaccuracy are deliberate dishonesty and incompetence. There are two principle ways to combat these problems. The first method is to regularly hire an outside accounting firm to audit the financial statements. In an audit, the outside accountant tests reported account balances for accuracy. As importantly, the auditor tests to see that the accounting principles used in recording transactions are in conformity with GAAP and applied on a consistent basis. Despite some notorious recent audit failures involving large corporations, the auditing process, in most cases, provides a reasonable safeguard against fraudulent and inaccurate financial reporting.
The second method used to prevent fraudulent and inaccurate financial reporting is the adoption of adequate internal controls. Internal controls are the policies and procedures that a business can take to safeguard its assets, ensure accuracy of financial reporting, and prevent fraud. These methods are not mutually exclusive. In the best of all worlds, firms would have both good internal controls and regular audits.
Unfortunately, hiring outside auditors and having the very best internal controls can be expensive, especially for small firms. The question of how much money should be spent on auditing and internal controls is a matter of perspective and circumstances. For example, a small business owner who uses the financial statements for internal management purposes only has little incentive to hire an outside auditor. On the other hand, small business lenders and outside investors have a much greater need for audited financial statements.
For many, if not most, small businesses, regular audits are an unnecessary expense. The same cannot be said about adequate internal controls. Even the smallest business can benefit from well-designed controls designed to prevent fraud, theft, and accounting errors. In fact, small business owners are more likely to be the victims, rather than the perpetrators, of financial statement fraud. All too frequently a lower level bookkeeper or accountant will “cook the books” in order to cover theft and embezzlement. For this reason, it is important to have some understanding of internal controls.
We can help you prepare for audit - review your financial reporting, internal control and recommend appropriate solutions and help you implement your accounting information system not only the right way but cost-effective.
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