There will come a day in every accountant’s career when you or a member of your team will make a calculation or data entry error, miss a reconciliation deadline or apply a payment to the wrong account.
These kinds of mistakes are inevitable – a chilling reminder for accounting teams (where errors can have significant ramifications for accounting clients), but a truism all the same.
The important thing is to be honest about your mistakes and take steps to ensure accounting errors are minimised at every turn.
In this article, we will run through some practical advice for handling common accounting mistakes gracefully and maintaining your company’s reputation with clients. Read on to learn more.
Internally logging accounting errors is key
It’s important to create an open forum where team members feel safe to come forward to ask for advice if they are struggling with certain aspects of their workload. Setting up weekly one-to-one meetings with managers is a good start, as it enables teams to provide feedback on operations and suggest how tasks can be streamlined or improved upon to minimise common accounting mistakes.
It’s also vital to record instances of errors your team encounters on a spreadsheet to help you keep track of what happened, how you addressed the mistake and methods for preventing similar incidents in the future.
Create and review Standard Operating Procedures to prevent common accounting mistakes
Standard Operating Procedure (SOP) documentation can help prevent a range of accounting errors such as:
- Clerical errors – including data entry mistakes, reversing digits, and incorrect calculations
- Errors of principle – such as recording capital expenditure as revenue expenditure, GAAP violations, and incorrect account classification
- Errors of omission – like failing to record transactions or forgetting to adjust inventory quantities
- Errors of commission – for example, debiting vendor purchases to the wrong vendor account or crediting a client payment to the wrong payment account.
Establish and review your SOPs to ensure they are effective in mitigating errors. Make them easy to understand, and use standardised formatting with the help of tools like Scribe’s Accounting Manual Generator or Tango. These solutions can help you identify processes that need SOPs and generate step-by-step documentation automatically.
Disclose your accounting errors to clients
Your accounting firm’s integrity is highly important, so disclose your accounting errors promptly with details on the nature of the error and its potential impact to help keep them in the loop. Apologise sincerely and discuss the preventive measure you’ve put in place to prevent further errors.
For example, let clients know which areas you are evaluating SOPs or upskilling your team. To help you feel more confident in these calls, create a script accountants can read from (including likely complaints clients might raise) to make these conversations less awkward.
Invest in technology in accounting and training
The latest technology in accounting features automated tools to help prevent and flag accounting errors before they become an issue. Look for solutions like Xero, TallyPrime and SolveXia that offer features like real-time reporting, automated audit trails, data entry and reconciliation capabilities.
Additionally, invest in regular training to upskill employees and enhance their confidence in areas of accounting they may find challenging.
INAA is there for accountants every step of the way
Our INAA membership network spans 50 countries over five continents. We’re a network of collaborative and forward-thinking accounting professionals dedicated to helping our members succeed in their careers.
If you would like to learn more about how INAA can help you expand your business to new heights, join us today.