Accounting mistakes on the decline
September 04, 2014

Some of the most simple accounting mistakes can have big consequences. Small firms need to be especially wary of financial errors if they don't want to suffer any unexpected setbacks that may impede their growth. Accounting software can be used to reduce risks, but such efforts need to be employed as soon as possible to reduce the threats companies constantly face.

After a host of accounting faults, agencies of all sizes are taking steps to improve their accounting resources in an attempt to preserve their integrity and reputation.

Even the mighty feel pain
An error made years ago can still find a way to come back and haunt even the largest groups. Take car rental company Hertz for example. On the surface, Hertz might seem like a very successful and a worthy investment, suggested by its stock prices and revenue. However, due to some accounting mistakes and inconsistencies made back in 2011, the company continues to face its share of challenges regaining the world's confidence, reported Equities.

During an attempt to separate the auto and construction equipment rental divisions of the organization, the unclear financial records and books prevented the split from being completed. Surprising assets and seemingly misplaced accounts in Brazil showed that Hertz had not done much to inspire investors' faith, the source stated.

These preventable errors have caused panic among stockholders and have been adversely affecting the company ever since.

Learning from the mistakes of others
However, other organizations and firms are learning from the mistakes of Hertz and taking greater care with their accounting processes to avoid any causes for concern. According to a study by the University of Kansas, advances in financial reporting caused by instances such as these have led to a large decrease in accounting errors.

"There are fewer instances of companies reporting inaccurate financial results. More importantly, not only are the absolute numbers of restatements dropping, the serious ones are going way down," said Susan Scholz, professor of accounting at the university's School of Business.

As accounting firms begin to take greater care when handling their bookkeeping, the chances for mistakes will continue to drop. Whether by seeking out advice from financial experts or using accounting software to reduce human error, companies now have numerous tools at their disposal to evade costly mishaps.

Nexus: G-WEBCD5