Problems of accounting and control of assets in companies

It is possible to catch a thief with a bag of jerry cans or even a load in a car, but it is much harder to detect theft and fraud hidden in records, which can have much wider implications. Despite the installation of high fences, state-of-the-art video surveillance systems for machinery, employees and fuel consumption, and the introduction of new technologies, the quality of accounting, on which the success of all other control methods depends, is often overlooked.

Due to the lack of attention to the quality of accounting by government agencies, tax accounting becomes a priority. Accountants, focused on recording and paying taxes, sometimes overlook the completeness and accuracy of accounting transactions that are necessary to control assets and protect the interests of business owners. They often rely on software, confident in its accuracy. However, accounting systems are not perfect, and human error is always present. The larger the company, the more difficult it is to assess what level of accounting is in place and whether it safeguards assets. Accounting irregularities can occur for various reasons: low professional level of specialists, staff shortage, negligence or abuse by the accounting department, pressure from managers, insufficient control by internal or external auditors.

Consequences of weak competencies of accountants

Due to the low level of professionalism of accounting specialists, various irregularities often occur: not all assets are entered in the accounting records, assets are written off without confirmation of their use in the production process, there are confusions with stock balances, data is distorted when calculating the cost of production, requirements for transferring assets to accountable persons with subsequent write-off after the expiration of the period of use or depreciation are ignored, and many others. 

Often accountants neglect the requirement to confirm each operation with documents signed by responsible persons and, at their own discretion, without justification, move or write off assets. If there are insufficient accounting staff, accounting is greatly simplified, which often leads to deterioration in the storage conditions of inventory and other assets. In an attempt to reduce the number of accountants, they are assigned tasks beyond their competence, for example, when an accountant, instead of the foreman of a production unit, draws up certificates for the use of materials or, instead of a mechanic, develops standards for fuel consumption and the operation of machinery.

Popular misconceptions

In addition, it often happens that the management of the enterprise considers the accountant as a simple operator for data entry, without giving him powers and without requiring control over accounts receivable, timely receipt of documents, inventory and other accounting operations. If data is entered into the program and no other steps are provided, the accountant does not have to deal with such issues as bookkeeping or orders for receipt of inventory. The company itself decides how to organize accounting, and accountants often avoid unnecessary hassle by not taking steps to correct problems in a timely manner.

The result is a vicious circle: if an accountant has no authority to demand that someone fulfill his duties, the question arises - what responsibility does he have then? And if there is no responsibility, why demand anything at all? This creates an atmosphere that is conducive to abuse, fraud, theft and unproductive waste and disorder. It is difficult to detect such violations if the theft or fraud is documented, because even video surveillance will not help, and documents may be replaced or destroyed.

What can be done?

One of the effective ways to prevent such abuses is the mandatory distribution of control functions. For example, documents for the removal of goods from the territory should be signed by several people, including a proxy of the business owner who authorizes the removal. It is important to implement mandatory reconciliation of pass-through and weight documents with actual sales documents, as well as approval of write-offs or completion of work by the business owner's authorized competent persons. In addition, it is worth engaging a third-party audit firm or establishing an in-house audit department to review accounting and compliance to ensure that the company's assets are safeguarded and utilized effectively.

Conclusion

To ensure financial transparency and protect against potential losses, a company needs to have highly skilled accountants who not only know how to accurately keep records, but are also able to identify any discrepancies and potential risks. Competent professionals create a system of controls, minimizing the possibility of cash flow manipulation and preventing calculation errors that can lead to financial losses.

In addition, accountants play an important role in protecting against theft within the company, as their experience allows them to notice suspicious transactions and irregularities in time. A well-organized accounting control can be one of the most important factors in preventing fraud, thus ensuring business reliability and maintaining the trust of customers and partners.