What if I have an accounting emergency?
The house is burning down, and the exits are blocked—at least, that’s how it feels when your finances go haywire and you don’t know how to fix the problem. It’s easy to panic if you’re dealing with accounting problems related to:
- Urgent loans
- Bookkeeper turnover
- Tax office inquiries
- Books being brought up in a hurry
But that’s what your accounting services are for! An outsourced accounting partner will always have you covered, including by implementing the right strategies to navigate even the hairiest emergencies and providing additional coverage if your primary contact is unavailable.
Still, try to keep your cool. The truth is that most “emergencies” really aren’t emergencies—they just feel that way. If you feel panicked, consider implementing internal controls to mitigate risk.
What are the types of internal controls?
Control the chaos—both before and after the fire spreads. Internal controls are accounting processes your company can use to ensure the integrity of its financial reporting and regulatory compliance. They help when you have your eye on complying with laws and regulations, preventing fraud, or improving operational efficiency. Internal controls fall into two buckets to keep you safe and sound.
1. Preventive Controls
Get ahead of emergencies before they can even happen. Preventive controls are proactive measures meant to prevent a loss, error, or omission. Your accounting services can help by putting several preventive controls in place:
- Segregation of duties, where different people perform functions ranging from authorizing and recording transactions to verifying and approving accounts receivables to maintaining custody of assets
- Adequate documentation, where each transaction is easy for an independent reviewer to understand the who, what, why, when, and where because it has supporting information
- Proper authorization, where a specific person has the ability to authorize transactions verbally or in writing rather than employees doing it for themselves
- Physical security, where access to cash and assets is limited depending on need and inventory is checked frequently
It can save a ton of time, headache, and money to put processes in place to avoid accounting mistakes and emergencies. Of course, sometimes you fall behind the eight ball, and backup strategies have to come to the rescue.
2. Detective Controls
The red flags of an emergency go up after a major event. Mistakes happen, but detective controls are reactive controls that find problems within your processes or transactions once they have occurred. Accounting services can help you by putting several detective controls in place:
- Monthly reconciliations, where managers check reconciliation records to measure how well timeliness, completeness, and overall goals are being achieved
- Organizational performance reviews, where managers stack up current performance to budgets and forecasts via budget-to-actual analyses to find unexpected differences
- Physical inventories, where someone counts inventory to reveal discrepancies between this count and what you’ve recorded in your accounting records
Accounting emergencies don’t have to be the end of the world. With the right detective controls in place, both your company and its accounting services partner can quickly uncover issues and take steps to repair the damage.
Stay emergency-free with Ignite Spot.
An error just happened, and you need your accounting services to fix it—stat. While that may be the case, more often than not, businesses encounter molehills instead of mountains. The real key is to trust your accounting partner to put controls in place to tackle potential emergencies. With preventive and detective controls in place, you’ll be better equipped to mitigate financial risk.
Ignite Spot can help! Our personalized online accounting services, backed by years of experience, put you on the path to financial success. Explore our accounting and bookkeeping services and get in touch to start your journey.