Accounting services are broad and complex. That is why some businesses outsource their accounting services to a qualified consultant or accountant. An accountant for small business UK helps businesses to keep track of their financials. As a business owner, you must know that accounting is essential to maintain financial health and manage cash flow. An over-complicated accounting system can suffocate your business and make it hard for you to keep track of your finances. In other words, outsourcing your accounting services is a good idea if you want to run your business smoothly. Here are 4 types of accounting services that businesses can outsource: Payroll Services- If your business hires people, its payroll accounting is one of its most crucial functions. It is the backbone of your business’s finances. If you hire employees, you have to track their benefits, pay, and deductions. You also have to calculate their earnings and taxes. Outsourcing payroll accounting services can help...
Businesses operate in a dynamic environment where change is the only constant. That is why they have to change their existing structures and policies to meet the current environments’ needs. Security is of utmost importance to a company and its data. However, it may or may not be effective enough for a company. Finances are the most vulnerable to frauds, manipulations, and other evil activities. Traditional accounting systems involve using paper and maintaining files for storage in cabinets. There are several rooms for manipulations and frauds in such cases. It is easy to change or replace numbers on files and misplace records. Small numbers can turn into massive amounts leading to the ultimate fall of the company. It is evident from the numerous scams that have happened till now. However, since the advent of accounting and bookkeeping software, companies have had better control and security over their finances.
Financial fraud involves manipulating numbers like inflating or deflating incomes and expenses, etc. Many companies even show massive profits, economic resources, etc., to gain investors. In contrast, others may reduce their profits to avoid paying taxes. Frauds may also involve individual employees or groups of people scamming money for their advantage from the company. Whatever be the purpose of fraud or whoever may be the reason, it creates distrust among the general public and leads to losses and ultimate failure of the business.
It becomes essential to avoid such a situation by practicing the following steps:
Segregating accounting functions:
Often a single person is responsible for many accounting activities like receivables, payables, invoices, cash flow, reconciliation, etc. While it may be feasible for a business, it does not guarantee security. By reducing the incentive or opportunity of fraud, managers can avoid such situations. For example, companies can hire outsourced accounting services to handle reconciliation and review, whereas internal parties can manage record-keeping and authorization.
Strengthen internal controls:
The primary reason for fraud is when the internal control system is ineffective. Firms must encourage employees to provide travel and expense receipts before offering reimbursements. Conduct surprise audits but does not indicate that you do not trust your employees. Instead, tell them you have various internal control policies. You can also monitor the activities of every employee using accounting and bookkeeping software.
Establish solid and ethical corporate policies:
A business’ policies must be ethical and practical. Keep your policies concise and offer clear consequences for disobeying them. Also, your top management must act as a role model for lower and middle-level employees by following them effectively. The trickle-down effect can help you prevent instances of fraud. Also, hiring morally sound employees can benefit you very well.
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