Large or small, efficient bookkeeping is vital in any business. Bookkeeping is ‘the activity or occupation of keeping records of the financial affairs of a business’. Ledgers, journals, income tax records, and financial statements are examples of documents that a bookkeeper would need to organize and store efficiently. Without up to date and coherent financial transaction records, a company can find themselves in very hot water.
$500 billion of hot water, in fact.
Fox News revealed recently that the U.S. Department of Housing and Urban Development (HUD) under the Obama administration had reissued financial statements for fiscal 2015 and 2016, after an inspector general audit revealed over $500 billion in “errors corrected”.
Thankfully for the HUD, the “pervasive material errors” identified were solely in presentation of financial information which has since been corrected, hence them reissuing the financial statements. To put it plainly, they weren’t actually missing $500 million.
Nevertheless, this incident highlights the importance of accuracy when recording financial information in a business. If a company isn’t balancing its books well, or the bookkeeper isn’t keeping up with the businesses’ financial affairs, problems such as theft, inaccurate data entry, inconsistent coding of expenses and poor accounts receivable tracking can easily occur.
For example, if a business doesn’t have workers’ compensation insurance, which covers medical costs, they could end up facing a fine as high as $10,000. This responsibility would be one that a bookkeeper needs to be on top of. Or put it this way – no one wants to find themselves face to face with an auditor, without being able to explain the numbers on their tax return – you could end up having to pay thousands in taxes and penalties.
Because of the significance of efficient bookkeeping, business owners will look to hire accountancy professionals who have a high level of understanding and usage of bookkeeping software. There are
Luckily for aspiring accountants, bookkeeping is usually a module studied in the first stages of an accountancy qualification, underlining its importance. There are, of course, other important modules on the accountancy syllabus, but take it from us, you’ll want to be ‘one’ with bookkeeping.
An AAT course in accountancy will give aspiring accountants the effective training they need, which they can they go on to use in the workplace.