It creeps up on you slowly. An inconsistent financial report, a reporting oversight or handful of reclassifications. These occurrences seem relatively minor at first and fixable, but as time passes a domino effect takes place.
One simple misstep and the entire row of black and white tiles fall in a rapid-fire, circular fashion.
This is the kind of scenario organizations across the country dread the most. Once the chain of events has taken place, it can seem nearly impossible to get things back on track. In this case especially, prevention is worth a pound of cure.
If you’re looking to avoid financial mishaps and mistakes in your organization, read on as we take a look at some of the biggest oversights and their solutions.
- Inconsistencies Across the Board
You might be thinking, “Mistakes are to be expected. It’s human nature.” Therein lies the problem of relying completely on human production to facilitate, fill out and file reports. Even the most organized, conscientious person will make a mistake when reporting.
However, your auditors will expect your organization’s financial statements and reports to be the same across the board each and every time. Inconsistencies reveal a major oversight in your organization and can bring about long-term negative effects like misrepresentations, exposure and loss of time and money.
So, how do you solve the inconsistency conundrum?
Instead of relying 100% on human production, look for software that facilitates the reporting and recording process for your organization. The system should be easy to access and use for your team and auditors.
In this case, you’re better off with comprehensive software than storing data across multiple systems.
- Lack of Internal Control
Many organizations find themselves stuck when it comes to executing processes. They’ve spent time developing workflow processes that are productive and compliant. But because of a lack of internal control, these processes are executed incorrectly, poorly or not at all.
In other cases, the processes were never optimal in the first place. Regardless, a lack of internal control puts your organization at risk for exposure and fraud.
Software that works with your internal controls will reinforce the processes you’ve put in place. Make sure it also has the proper capabilities for fund accounting.
- Numerous Allocations and Corrections
Your organization will need to allocate and make corrections sometimes. It’s likely you’ve made some already. A few corrections are par for the course, but making a habit of doing so raises red flags to auditors.
Multiple modifications of allocations and corrections may appear as if you’re trying to hide something: either finances or someone’s incompetence. They also impede the auditor’s ability to make sense of your organization’s finances and spending plan.
That’s definitely a situation you don’t want to be in.
The trick here is to find software that helps you to avoid error corrections and allocations as much as possible. You’ll need a system that’s built for an organization like your own and offers flexibility in the chart of accounts.
The right accounting software is built with your organization’s structure but designed to offer flexibility and personalization.
Abila, the nonprofit and fund accounting software, helps government and nonprofit organizations take control of planning, budgeting, managing and reporting. It works with multiple funds and budget periods to maintain compliance and achieve reporting requirements.
To learn more about Abila and how it can benefit your organization, contact SYGNVS for a free demo and consultation. Be sure to check out our tips on avoiding auditing agony by downloading this informative PDF.