The Importance of Accounting in a Business Organization
Accounting Bookkeeping are the means to record, classify and summarize the transactions in a business and will allow you to create financial documents; Balance Sheet, Trial Balance and Profit and Loss Statement. It provides your management with a process of analyzing, summarizing and reporting business transactions in a comprehensive manner.
Accounting records provide the information that helps owners, managers and investors to evaluate the company’s financial performance, as well as help them make better business decisions for improvement and resolve business problems.
To summarize, Accounting is the process of measuring and summarizing business activities, interpreting financial information, and communicating the results to management and investors.
Records the daily transactions, end of month bank and credit card reconciliations, invoicing, vendor billing and payments and management of accounts receivable and accounts payable.
Accounting Manager and Controller
Compiles information, prepares high level reporting and provides financial analysis to internal management. Individual reports are tailored to aid individual managers within the organization increase departmental performance. These reports are cash roll reporting, inventory allocation, and cost (direct/indirect) allocation reports. We help you keep your business running.
Controller is the “working manager” for the accounting department. The most important task is creating, managing and enforcing the company Internal Controls. These controls are created and submitted to management for approval and are designed to prevent fraud and errors that can compromise the accuracy of your company’s financial statements.
Prepares the organization’s financial statements according to GAAP standard– income statement, statement of owner’s equity, balance sheet and evaluates the company’s monthly and/or quarterly performance and evaluate the company’s current financial condition.
(Generally Accepted Accounting Principles)
GAAP is one of the authoritative statements of best accounting practice issued by expert accountancy entities. GAAP or Generally Accepted Accounting Principles are accepted to be norms of accounting policies by means of guidelines to direct as to how items (which make up financial statements) should be recorded with in the accounts and presented in annual reports.
The purpose of setting this standard is to create uniformity in financial reporting, to ensure consistency and comparability in the information published by companies.
Use and application of GAAP principles implements transparency in management and the organization’s operational activities. The rules, procedures and standards within the GAAP principles provide assurance that the company leans towards openness when providing data to its investors. The Standards creates trust worthiness within the company, as they limit the freedom and flexibility of employees to use clever accounting to commit fraud or obscure errors.
Internal Controls According To GAAP Principles
Internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures.
- Segregation of duties.
- Access to company assets, cash handling, key cards, and pass codes.
- Authorization – specific written procedures for financial transactions, including a list of people with the authority to approve each transaction; Purchase order limits, vendor payments, standard transactions and acceptable amounts, check signing authority (1 – 2 managers).
- Record Keeping – Standardization is the normal procedure for forms, schedules, procedures and processes.
- Verification – Periodical audit of key general ledger accounts. GAAP requires internal auditors to verify accounting manager’s approval. The auditor must sign and date the document as proof of his/her approval.