How to Ensure Accuracy of Financial Statements?

by Zaara 18, Dec 2020

How to Ensure Accuracy of Financial Statements?

The financial statements are the written record of the financial activities and financial performance of a business and are core data sources for all kinds of financial analysis. These statements offer an overview of all types of business assets and liabilities as well. Hence, it is not wrong to say that the financial statements are the core of the financial well-being of every business. As the entire process is never-ending and requires financial expertise, most of the companies opt for accounting firms in Dubai that offer all kinds of financial audit, support, and services.

Outsourcing the financial activities tasks is also suitable for the businesses where the staff is limited or hiring a person for financial audits and services comes as a cost overhead. The companies specializing in financial assistance are experts at their jobs and leave little room for errors. The financial statement recording starts with data entry. Some business owners have manual data entry operators, which can lead to erroneous data recording. Hence, the very first step towards maintaining the accuracy of the financial statements is, to ensure error-free data entry.

In the coming sections of this discussion, we are going to share some of the best ways to ensure the accuracy of your financial statements. So, please read them carefully and make sure you follow the tips to keep your financial statements free of all kinds of errors.

Ways to Ensure the Accuracy of Financial Statements

Ensure Accuracy Right from the Start

Many business owners don’t put effort into the data entry stages, which leads to faulty data recording. As the other calculations are based on the data collected during this stage, all the figures calculated in the next steps are wrong. Hence, the best way to ensure the accuracy of financial statements is to provide accurate data entry. Automated data entry, cross-checking the first data entries and assimilating a suite of technology-based and manual data entry techniques – these are some ways to ensure accuracy.

Account Reconciliation

The next step towards the accuracy of financial statements is the reconciliation of accounting records with the external records. There are various types of external records, such as supplier invoices, bank statements, and credit card statements etc. You can match the balances indicated by your sheets to the actual bank balance.

Account reconciliation is another reliable way to ensure the accuracy of your financial statements. We recommend doing this check regularly to ensure that your financial records are accurate.

Scan the Obvious Errors

This is one of the most crucial steps that you can take for financial statement accuracy. You must check the balance sheets for apparent errors, such as negative balance etc. Another area that you can check is the monthly cost of goods sold. As the sales vary every month, it is rare for this cost to be the same every month. Similarly, the fixed assets must have a monthly record in terms of depreciation. These few checks for apparent errors, when done regularly, ensure the accuracy of financial statements.

Outsourcing the Work

Not all firms have the capital for hiring human resources only for financial services. Further, not all of the businesses can have in-house staff for financial audit, and there can be lots of reasons for this. In such a situation, outsourcing financial work is one of the best things you can do for maintaining accuracy. Now, if you have a business in Dubai, you have to be more confident about the legal processes and regulations that your business has to follow. There are many reputed companies offering accounting and auditing services in Dubai that you can choose.

Apart from general accounting, you can also avail of unique financial advising, business repositioning, and devising innovative financial strategies for your firm. These companies also have best-in-class technological resources and undeniable expertise in their field. Hence, you can trust them and make use of the best talent available for your financial needs.

Supervise the in-house Talent

Even if you have an expert bookkeeper at your company or an experienced accountant with an impressive educational background, it is a must for you to supervise them. Working in association with your employees makes them realize the importance you put in every business process, and they learn to become more responsible in their roles. Educate yourself about the general functioning and procedures related to financial statements and then work with your employees to ensure proper functioning.

Don’t let the Review pile-on

As the owner of a business, you might not have a lot of time on your hands. But, this doesn’t mean that you can let the review work pile-on. You must review the accounts and go through the financial statements with your team and financial advisors regularly. This ensures that no error becomes threatening to your financial health.

We hope this write-up helps all the readers in understanding the importance of the accuracy of financial statements and how to maintain it.