Hiring a right accounting firm is a critical decision for every business, as the wrong decision can attract a high level of risk. Before we proceed with our topic of choosing a right accounting or, we would highlight some of the misunderstandings about the financial statements and the accounting.
Misconception about the financial reporting
Many people don’t understand the importance of financial statements for a business. They consider accounting and financial reporting as a means to keep track of receipts and payments. Actually, financial reporting means much more than that.
Financial statements are the face of a business as they outline the financial performance and financial position of a business. They help management to make the right decisions as well as gain the trust of investors and stakeholders. Without financial statements a business management team cannot make informed decisions, or confidently devise and implement any strategy. The first thing, a potential investor will look for, is its accounting ed financial statements from a reputable accounting firm.
Why accounting is crucial for a business?
Accounting can be perceived as just a regulatory requirement, to submit financial statements to authorities on time to avoid fines.
Actually, accounting is an important business process because it acts as an external independent health check, where the accounting or expresses an opinion on the financial as well as non-financial information to assesses whether a true and fair opinion can be made. Accounting aims to add value by;
1. Helping to prevent fraud and errors in the financial information
2. Adds assurance and trust in the financial information
3. Highlights weak internal controls
4. Provides opportunity to business owners and management to improve business processes
5. Enhances the goodwill and good reputation of business
6. Protects assets of business
7. Ensures compliance with laws and regulations
Choosing a right accounting firm
1. Choosing a right accounting or for your business is a critical decision and will prevent the following;
2. Incorrect financial reporting may lead to fines, penalties and resubmission of correct financial statements
3. Noncompliance with laws and regulations
4. Reputation risk as badly reputed accounting or will bring negative image for your business in the eyes of general public, authorities, financial institutions and potential investors
5. Wastage of financial resources.
6. Leads to wrong decision making.
