Holding Your Bookkeeper Accountable
Whether you use an in-house bookkeeper or use a professional bookkeeping service like BookWerksTM, keeping your bookkeeper accountable helps ensure the accuracy and integrity of your business’s financial records.
Here are several strategies to help you maintain accountability:
Expectations, culture and internal controls
At the outset, you may want to outline the bookkeeper’s duties, such as
- maintaining accurate records,
- reconciling accounts and
- preparing financial reports.
Setting specific deadlines for tasks like monthly reconciliations, financial statement preparation and tax filings can also be useful.
We often set up key performance indicators (KPIs) to help clients measure BookWerksTM’s performance, such as the accuracy of records, timeliness of reports and the number of errors.
A culture of integrity and transparency is ideal. You may want to discuss the importance of ethical behavior with your bookkeeper and talk about the need for a commitment to maintaining meticulous financial records.
A good safeguard is to divide financial responsibilities among different individuals to reduce the risk of errors or fraud. The person who reconciles bank accounts should probably not be the same person who processes payments, for example.
Written approval processes, such as requiring management approval for large expenses or payroll disbursements, are another good practice.
Reviews and audits
If needed, it may be a good idea to set regular meetings with your internal bookkeeper or outsourced bookkeeping company to review financial statements, including
- income statements,
- balance sheets and
- cash flow statements.
This allows you to identify and address any discrepancies quickly.
We suggest reviewing any significant variances between budgeted and actual figures.
Many of our clients regularly conduct internal audits of their financial records. This can be done by a non-bookkeeper staff member or an external party to ensure the bookkeeper’s work is accurate and compliant with company policies.
External audits provide an objective assessment of the bookkeeper’s work and the integrity of your financial data.
Training, communication, transparency and continuing education
It is smart to encourage or require your bookkeeper to attend ongoing training or professional development courses to stay updated on the latest accounting practices and regulations.
We welcome questions about our bookkeepers’ is certifications professional credentials. It is never bad form to make sure your bookkeeper is qualified to handle the work, and has experience in your industry.
Another smart safeguard is to cross-train other employees on basic bookkeeping. This ensures that someone else can review the bookkeeper’s work or take over if the bookkeeper is unavailable, adding an extra layer of oversight.
If you hire BookWerksTM, there is always someone available to take over immediately if your designated bookkeeper needs to step away for a time. This is actually one of the best reasons to use outsource your bookkeeping and accounting; there is never an interruption in service.
We believe in maintaining open lines of communication with clients. You want your bookkeeper to feel comfortable reporting any issues or concerns promptly. Making yourself available to discuss financial matters aids in building this comfort level.
You can request that the bookkeeper provide documentation for significant transactions and explain any unusual entries. This transparency also fosters trust and accountability.
Technology
At BookWerksTM, one of the most respected bookkeeping firms in Cincinnati for small businesses and franchises, we use cloud-based accounting software that tracks changes, logs user activity and generates reports. This reduces errors and allows you to monitor the bookkeeper’s work, tracking any modifications to financial records.
We recommend limiting the bookkeeper’s access to sensitive financial information. For example, you can restrict access to only those accounts necessary for their role, and ensure there’s a clear audit trail.
Regular reconciliation and monitoring
Ensure bank and credit card statements are reconciled regularly (typically monthly). Review these reconciliations yourself or have another trusted team member do so.
Regularly review the aging of accounts receivable and payable to make sure invoices are being issued and paid promptly–and that overdue accounts are being managed appropriately.
Regularly monitor KFIs such as cash flow, profit margins, and expense ratios. Significant changes in these metrics should be investigated and explained by the bookkeeper.
A whistleblower policy
Create a system where employees can report unethical behavior or financial discrepancies anonymously. This encourages the reporting of potential issues without fear of retaliation.
By implementing these strategies, you can keep your in-house bookkeeper or outside bookkeeping service accountable, minimize the risk of errors or fraud, and ensure your financial records are accurate and reliable.