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Financial effectiveness is the key aspect in any business to make it sustainable and successful. Relevant knowledge and skill set for financial management are essential so that you can achieve all your company’s financial goals. It can be attained by defining and following a clear approach that focuses on accomplishing all your financial objectives.

The first and foremost step is to define your business goals and your company’s finances limit. This role is taken over by the finance department of your company. They will plan out all your objectives following your other team members. Finally, it will be an indicator of success if your team achieves all targeted goals.

➔ Financial Responsibilities

The finance department is the backbone of any organization that ensures efficient management and financial control. They are responsible for acquiring funds for the company, managing funds, and planning expenses.
It is vital to define roles and responsibilities within the department of a firm. Many firms make a mistake by not defining the responsibilities clearly which leads to miscommunication. The roles and responsibilities of the finance team include:

1. Bookkeeping: Day-to-day recording, analysis and interpretations of a company’s financial transactions, tracking of expenses.

2. Management of cash flow: Ensuring that there are enough funds available to run the daily operations of the company.

3. Budgeting and Forecasting: Preparing company’s budget and forecasts. Updating the manager with the company’s financial standing and building new plans accordingly.

4. Management of Taxes: Handling tax issues and ensuring the implementation of taxes within the defined period.

The Bottom Line
The process of achieving your goals may not be linear but the most important thing is to stay consistent with your plan. However, there may come some unexpected challenges in your way. But your finance team must always stay vigilant and prepare for another strategy. Certainly, you can alter your plan according to the situation you face. But your end goal should lead you towards financial effectiveness.

Internal audit is an evaluation and analysis of the business operations by the internal employee of the same entity. The main purpose to conduct an internal audit is that it improves the efficiency of the company and detect any potential risks. Also, it includes financial reporting and other important areas of the business. Internal audit is performed by a professional auditor who is part of the internal systems of the business. However, it is a continuous process which can be conducted regularly daily, weekly or on a monthly basis as per the company’s requirement. As a result, internal audit will streamline the business operations.

Benefits of Internal Audit

● Effective Management:

This assures the effective management of a company. This is done by in-depth analysis of different areas, detecting weaknesses and underlying risks. Moreover, with these insights’ management can improve and streamline their working operations.

● Compliance with regulations:
It will ensure that your company is maintaining the standard and complying with the rules and regulations of the authorities. But, in case if you fail in following the guidelines of authority, auditors give recommendations on how you can fix that issue.

● Reduced Errors:
Evaluation of financial reports and internal systems of an organization can help detect possible errors. Furthermore, it makes your financial reporting error free and reduce risks within the internal systems of an organization.

● Improved Security:
They examines your security systems and checks all the digital systems if they have any gaps. Lastly, it will save you from security breach by protecting organizations confidential data.

International Financing Reporting Standards (IFRS) are the rules and regulations of accounting. These rules are set by the International Accounting Standards Board and International Financing Reporting Standards Foundation. These rules are followed while preparing comprehensive financial transaction reports of an organization. IFRS regulations are acknowledged internationally, that makes the financial statements globally understandable. While IFRS is adopted by almost 140 nations to maintain their accounting standards. But US follows their own financial principles. For example, United States follows their own Generally Applied Accounting Principles (GAAP).

The main purpose of IFRS rules is to ensure transparency, high standard, and comprehensive, internationally accepted financial reporting. When countries are following the IFRS rules, it is obligatory for them to meet the specified standards in their accounting and financial reports publishing. Analyzing your company’s financial performance will give you a better insight of your business operations, following with your competitors and possibility to make changes accordingly.

Advantages of IFRS

1. Following IFRS helps companies to make comparable financial statements that are accepted globally. This saves a lot of time for companies, instead of making multiple reports according to different standards you only have to follow one set of regulations. The process of evaluation and analyzing of financial reports globally becomes easier.
2. Adopting IFRS framework makes your financial statements accurate, transparent and free of manipulation. This regulation makes sure that all the required information about your financials are provided.
3. It helps companies to attract foreign investors as the framework is recognized globally. It gives you an international market exposure, that facilitates foreign trade and encourages business development. Your business can create international mark following these accounting standards.
4. Under IFRS accounting standards, businesses gets fast access to precise and in-depth financial reports which helps in analyzing your business performance and help improve day to day operations.
5. Improves financial records which minimize any errors in the financial statements as well as reduces risk of penalties.

Value Added Tax (VAT) requires a proper understanding which can be difficult for business owners to understand. Often small businesses are intimidated with the complexities involved in understanding the tax laws and procedures. Many business owners make mistakes by not seeking any professional help to guide them on their taxes because of which they end up making many mistakes that ultimately affects their business operations and face huge penalties by the Federal Tax Authority (FTA).

1. Poorly Maintained Records

This is the most common mistake that businesses make by not maintaining their financial records. Some business owners ignore the importance of maintaining each and every record and keep copies of invoices. They get in trouble when FTA conducts an audit and their invoices are missing. Therefore, it is very crucial to have up-to-date bookkeeping records to avoid such errors.

2. Mistakes in Calculation of VAT

Accurate calculation of your VAT returns is very important. Applying correct VAT rates is significant while calculation. Error arises when relevant rates for goods and services are not identified by the business owners. This leads to disruption in their all payments and their financial system.

3. Delay in filing VAT returns

FTA provides proper guidelines for filing VAT returns and announce application deadlines to avoid any inconvenience for businesses. Still some businesses fail to meet those deadlines due to some issues or incomplete procedures. It is highly important for businesses to stay up-to-date with the FTA deadlines and complete their procedures timely and accurately.

4. Adjustment column misuse

Businesses are still unaware of the purpose of the adjustment column in VAT filing procedure. They make a huge mistake by misusing it and correcting their mistakes in previous VAT returns. The real purpose of the adjustment column is mainly for bad debts. But making unnecessary adjustments leads to more penalties and questioning by FTA. Businesses should always take guidance from VAT experts to avoid such errors which can significantly impact their business.

The role of an accountant is to provide comprehensive financial transaction reports. An accountant must have a thorough knowledge of the implementation of bookkeeping and provide assistance in important business decision-making. It is important for businesses to regularly analyze their business operations. Is your business making profits? How well does your company perform financially? Why does your company have to pay a large amount of taxes? This is when you need an accountant to ensure that all the finances are accurately handled by a professional. He will remove all the glitches and keep your business safe from major financial crises.

An accountant will use his skills and knowledge to understand your business operations. He will maintain your financial records and overview your company’s financial health. With this, businesses get a clear picture of where they stand in terms of their finances and what problems they are facing which they can correct. An accountant can assist your business to work efficiently by providing you with all financial documents such as balance sheets, statements of profit and loss, and statements of cash flows.

Reasons to hire an accountant

● Maintaining financial records:

When you have a large business, it is obvious that you have more things to manage. You have a large number of profits, multiple taxes to pay, and multiple investors to deal with. But if you have not hired an accountant, then your finances are all over the place. You may be facing some major financial declines in your business operations. So to avoid that you need an accountant who will provide you with thorough reports on your financial records.

● Planning Budget:

It is important to make a budget plan if you have any business. Planning a budget will help analyze your expenses, reduce overspending and remain within the budget. Systematic budget planning is possible when your accounts are well maintained. For this purpose, it is essential to hire an accountant to take care of your finances and who can assist you in making budget plans.

● Transparency in Finances:

If you want to attract more investors to your business, it is important to avoid any loopholes in your financial operations. All your transactions and financial records should be accurate and transparent. An accountant will manage everything in a professional way which can make a huge difference in your work operations.

It can be complex for businesses to analyze and understand their finances initially. It is absolutely fine to ask for professional help who has a deep knowledge of accounting and will help you manage all your business affairs and mitigate any potential risks. Hiring an accountant can be very beneficial for your business as it will help you focus on other aspects to make further growth in your business.

Cloud accounting also known as online accounting, is the latest technology used by accountants to store a company’s accounting data online. This software can be accessed online through remote servers. The online approach makes the process faster, efficient, and up-to-date for accountants. This software doesn’t bind you to store data on one computer. However, You just need an internet connection to access the accounting and transactional reports of a company.

The benefit of using this storage medium is that you don’t need to update data on every server. Moreover, your employees can access data from any system using accounting software no matter wherever they are located. This software is easier to use and has a variety of tools to store data. Cloud accounting makes the storage process more smooth and efficient. An accounting revolution came with online software. Also, for small businesses, cloud accounting software is very convenient. Also, they are cost-effective, storing data is a lot easier and less complicated.

This accounting software gives employees the flexibility to update their company’s new data and information from their devices no matter wherever they are located. However, many software’s have security flaws and loopholes but the good part about cloud accounting is that data is highly secure and there is no need for you to worry about your company’s confidential data. Furthermore, it ensures that all your data cannot have access by any unauthorized person.

Cloud accounting VS Traditional accounting

Traditional accounting was highly popular and widely used by businesses. It was the only option available at that time. With the emergence of cloud-based accounting technology, accounting professionals recommend using cloud software to keep your records safe and up to date.

Here are few differences between Cloud accounting and Traditional accounting

1. Cloud accounting is highly accessible for everyone. You just need a good internet connection to get your accounting data and reports instantly. In traditional accounting is not easily accessible. You can only store your data on one server.
2. With cloud software, there is a very low chance of any error in your financial records as data will get regular updating. Whereas, in traditional accounting, manual data updating has a higher chance of having errors.
3. Working on cloud software is less expensive as you only need to pay software installation charges and can store data online. However, in traditional accounting, you need to buy new servers which are very expensive.
4. These accounting systems protect effectively your sensitive data. On the other hand, in traditional accounting servers, your accounting data is at risk. This can result in data damage or server failure.

Cyber attacks are malicious attempts by individuals or an organization to steal, destroy or breach sensitive information of an organization. Cyber attacks are becoming increasingly popular day by day with new ways used by hackers to steal data. For any organization, the most crucial thing is to protect their organization’s data from cyber security threats but with these rapidly evolving cyber incidents, it is becoming more challenging for professionals to protect their data from cyber-attacks. Accounting professionals have the core responsibility for protecting sensitive data from getting exposed by complying with data protection regulations.

Accountants and auditors are the potential targets of hackers as they have all access to the information. Therefore, they should be extra vigilant to avoid any major security disasters. With technological advancements, accountants are now using computer software to input transaction records, financial statements data. In addition, computer software has made all accounting tasks much efficient and easier with timely storing and accurate data recording. But the major setback of storing information in computer systems means that you are putting your sensitive information at high risk. It is just a few minutes task for a hacker to get hold of all your information and then your data will be in the wrong hands. Your competitors can use this data to destroy your organization’s position in the industry.

What is the solution?

The solution to all these threats and attacks is that you have to make sure that you are using correct malware protection on all your devices. Firstly, it will ensure that your data is secure on all devices. Secondly, it will keep your data up-to-date across all devices. Furthermore, backup of your accounting data is very essential. In case, when your data gets stolen, you don’t lose all your important data. Some organizations find it difficult in securing their company’s data. You can seek help from professionals by hiring a firm that can take care of all these things. Devising an appropriate system is highly important, it will help maintain the integrity of your company. So before it gets too late you should take all the necessary steps.

A cyber attack is a malicious attempt by an individual or an organization to steal or destroy sensitive information of an organization. Cyber attacks are becoming increasingly popular day by day with new ways used by hackers to steal data. For any organization, the most crucial thing is to protect their organization’s data from security threats. But with rapidly evolving cyber attacks, it is becoming very difficult for professionals to protect their data. Accounting professionals have the core responsibility for protecting sensitive data from getting expose by complying with data protection regulations. Accountants and auditors are the potential target of the hackers as they have all access to the information. Therefore, they should be extra vigilant to avoid any major security disasters.

With technological advancements, accountants are now using computer software’s to input transaction records and financial data. Computer software’s have made all accounting tasks more efficient. It allows timely storing and accurate data recording. But the major setback of storing information online is putting your sensitive information at high risk. It is just a few minutes task for a hacker to get hold of all your information and then your data will be in wrong hands. Furthermore, competitors can destroy your organization’s position in the industry using the data.

What is the solution to Cyber attack?

The solution to all these threats and cyber attacks is that you have to make sure that you are using correct malware protection on all your devices. This will ensure that your data is secured and kept up to date across all devices. Backup of all your accounting data is very essential. In case when your data gets stolen, you don’t lose all of your important data. If your organization is finding it difficult in securing their data, you can seek help from the professionals by hiring a firm who can take care of all these matters. Devising an appropriate system is highly important to maintain the integrity of your company and therefore before it gets too late you should take necessary measures.

Technology and new software’s have made business operations smooth, efficient and secure but still accounting companies at some points do make some mistakes ranging from minor to severe which impacts their business growth drastically. Poor accounting practices can cause huge damage to a company’s position and cause disruption in the business operations. It is important for every business to keep a close check on their business performance and analyze if there are any loopholes that can be fixed. Here are some common mistakes that accounting companies make which can be avoided.

1. Lack of Budgeting:

Does your company start new projects without planning their expenses? Starting a project without proper budgeting and planning can cause huge costs to your business in future. At one point you might think that all your expenses are in your control. But the very next moment your expenses go all over the place and you will be unable to detect where you went overboard. Limiting your expenses for every project will not only organize your expenses but will also guarantee success of your project. It is important to take time out for budgeting to help you navigate all your
expenses easily.

2. Lack of documentation

Documentation is one of the most crucial steps in accounting. If your company is not maintaining their financial records then these discrepancies will appear at the time of financial audit which can lead to large penalties. Documenting every small transaction is very significant. This will not only keep you on the top but also managing big transactions will become easier. Keeping record of every transaction will make it easier to manage your company’s books while your business is growing in size and the flow of transactions is increasing.

3. Not seeking for help when needed

If you own a small business then managing all work operations by yourself is possible. But when you have a well-established business, you can’t do all the work on your own. If you do this you will end up making plenty of mistakes ruining your business growth. Asking for help when you need it is normal. Scrutinize your weaknesses and hire professional staff to take care of it. Every company has some areas where they lack but analyzing those areas and taking necessary steps will ensure success of your business.

4. Relying on Untrained staff

Another common mistake that accounting firms make is that they hire staff which is not experienced or sometimes not trained for the kind of work which is required to make their business operate efficiently. Hiring untrained staff is a common practice for small business owners as they don’t have enough money and resources to hire a professional staff. But the fact that they don’t realize that they are not saving money by hiring untrained staff but putting everything on risk which can become a major problem for them on a longer run and cost them double. However, what they can do is provide proper guidance and training to the new employees to run their business function smoothly.