- Positive impact of accurate accounting to an organization
Accounting is the systematic recording, reporting, analyzing, verifying, and summarizing of the financial transactions in an organization. The main purpose of the accounting is to provide proper and accurate financial records and information about the financial position of the business, corporation or organization to the investors and the organizations top management to enable them to make major company decisions. The accountant is therefore required to indicate and underline the financial position of the business by preparing the Cash Flow, owner Equity & Income statements as well as the balance sheet (David & David, 2005). The company’s major decisions are based on the profits or loses made within a particular financial period. Some accountants will make company look financially sound on the paper, which may not be the actual situation on the ground. The primary role of accounting is to build the investors’ confidence by preparing proper and accurate accounting reports and financial statements. Therefore, it is only through proper accounting that the investors will have the confidence to invest in the company; otherwise, the poor financial records will not make them to provide monies the organization (David & David, 2005). Therefore, when performed accurately and with high integrity, accounting promotes the Flow of the business as well as increasing the investments of people in the company and with increased investors in the company; the increased return in terms of the profit and the company’s image.
- 2. The best accounting practices that should be applied to any business, no matter the size or industry.
Companies can strategize their implementation through cost cutting as well as chain supply enhancing to improve flow of the goods, services, and information from raw material source to the customers. The efficient delivery of goods and services should not be affected whether the organization operates individually or in conjunction with other companies and organizations. Customers are ever interested in efficient value and supply chains and they should be guaranteed of product quality and uninterruptible supply (Lautze & Lautze, 2008). For the companies to meet the ever-growing demands of their customers they should practice the following accounting practices:
Because of global economic crises, companies tend to reduce prices of their goods or services. It is only through in-depth understanding of all the tasks and activities involved in the production of goods or services that the company accountant can calculate the production cost thus explaining the reasons of the increase in the production cost to all stakeholders. Thereafter, the managers are to carry out a market study to determine the prices the customers are willing and able to pay for the goods and services that they produce. Working with the identified market price of a particular product or service enables the accountant to work out the prices that are acceptable for both the company and the customer.
The quality of goods and services provided to customers is very crucial in any business because customers are widely interested in quality services and products that they purchase. The companies use the Total Quality management (TQM) systems to produce goods and services that meet or surpass their customers’ expectations. The accountants evaluate the operation costs of the TQM and benefits initially to eliminate the costs that may come because of defected and wasted products as well as low inventories.
The newly created product or services need to take the shortest time possible to reach the market since the high level technological inventions make such new products to be short-lived in the market. The company accountant, therefore, measures the production cost and the profit returns associated with new products or services over their life cycles before the commencement of the production. This describes the new-product development time (Lautze & Lautze, 2008). The customer response time should be swift, that is, the organizations should be responding their customers’ request and needs promptly. This will increase the customers’ satisfaction and enhance repeat purchases. To accomplish this successfully, the company accountant works out the cost of deploying more employees in the constrained are without extra cots that may result into losses.
Constant innovation of existing products helps the company to dominate the market with its products. Further, whenever a corporation or company produces innovative products and services, it increases its market share. The company accountant assesses the alternative ways of investment on the existing products through innovation as well as making decision on relevant research and development.
- Identification of the competitors
The company accountant will help in tracking the financial performance of an organization based on some specific factors in relation to the performance of the competitors. This will alert the management to give a different approach to their customers with the motive of maintaining them through improving their service delivery and the quality of products beyond the competitors. This will lead to the company’s continuously improve its products and services delivery, thus building reputation (Lautze & Lautze, 2008).
- The common mistakes that organizations make in regard to accounting
Even though financial statements are at times liable to error, shareholders and stakeholders of a given corporation or company may be unforgiving when the errors that are made affect a nonprofit’s financial books.” (Lautze & Lautze 2008). The following are the common accounting mistakes in organizations:
a) Data entry errors
Most accountants make data entry errors that mostly bring havoc in an organization account. An example is the entry $4500 payment instead of $450.This little errors most of the time build up to become bigger problems.
b) Working with systems lacking backups
The issue of forgetting to backup information during accounting processes is another major mistake that many organizations make in accounting. Even the best error free systems may interfere with the accounts if frequently not backed up, especially when there is a power failure.
c) Playing loose with cash
In most cases, an organization may overspend without realizing; especially the used of petty cash to pick up few office supplies or spending money to buy food or drinks to individuals who have volunteered to extend beyond the normal working hours.
d) Failure to file properly
Most organizations loss money due to the accountants’ failure to properly document files thus leading to loss or misplacement. Example is the misplacement of a receipt or a bank statement.
e) Lacking a budget plan
A budget plan is the most important thing an organization should have to ensure the smooth running of its finances. Lack of a budget may lead an organization to overspending.
4. Discuss what steps a new accounting hire could take to help an organization avoid the common mistakes just identified.
During the interviewing procedure to hire an accountant, the most important thing to do is to choose a person with a lot of experience in accounting. There are various steps that a new accountant should be able to use to avoid the common mistakes of accounting;
- The data entry errors mistakes through simply checking and double-checking entered entries every time. The accountant should not overlook figures even the smallest differences are to be taken into consideration.
- Losing of information due to lack of proper backup strategies can be avoided by establishing a system, which enhances the accounting program to backup automatically thus ensuring systematic data saving.
- The issue of overspending due to playing loose with cash can be evaded simply by being careful while handling cash. This is can be done by placing the petty cash in a safe, that is, to ensure that only the authorized persons can make any cash disbursements and require receipts for all the company expenditures (Lautze & Lautze, 2008).
- Establishing a good filing system that takes care of all accounting paperwork, and ensuring no piling up of these financial papers.
- A new accountant should build a budget that the organization should follow, including that of the petty cash use. Budgets will offer a baseline that to control overspending in an organization or in any business institution.
- An accountant should create a proper accounting procedure that should show detailed procedures for managing accounting chores. These procedures are to be of clear structures and easily understood to enable other managers or the auditors to follow the transaction type described in such documents.