5 Proactive Steps To Mitigate Accounting Risks

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Stay Above The Fray: 5 Proactive Steps To Mitigate Accounting Risks

Accounting | Updated On June 28th, 2022

Stay Above The Fray: 5 Proactive Steps To Mitigate Accounting Risks

The current accounting scenario is a lot advanced compared to what it was a few years ago. The reason being accounting firms do more than just number crunching. Accountants help their customers in drafting policies, making business predictions, formulate a budget plan for better financial management, and also deal with more client information than any other industry. The accounting industry, therefore, needs to house greater agility when it comes to implementing security measures.

The chances of a data breach multiply with the amount of data an industry deals with and accounting firms obviously have piles of it. The best thing they can and should do is to invest their resources into risk mitigation rather than making amends later.

Here are 5 proactive steps an accounting firm can take to keep risks at bay and to prevent unwanted accidents from happening:

STEP ONE: Securing Electronic Information And Communication

Accounting firms or any other business today cannot function smoothly without the assistance of the internet and other modes of communication. Since accounting firms are dealing with a humongous amount of client information, securing these modes of communication lies on the top of their priority list. Here are 3 things an accounting firm must do to cushion the electronic information and communication and stay away from cyber liability:

Build A Security Strategy For Your Firm

An accounting firm must be fully aware of the contents of the data they are importing and exporting. A network firewall helps filter that data and eventually protects the company from intruders, viruses, and malware. Whether your data is stored in the cloud or it is saved on your office computers, a network firewall is mandatory. Apart from a secure firewall, firms must also implement data encryption and multi-factor authentication for additional security.

Physical Security Is Equally Important

Physical security is just as important as electronic security. Hacking and theft can also be done at the physical level. For office level security, firms must install security cameras and appoint security guards for 24*7 data monitoring.

Bolster Your Communication Policy

As an owner of an accounting firm, you must adequately communicate your security protocol to your employees. Your staff must be vigilant enough and must be quick to respond in case a breach happens.

STEP TWO: Protect Your Firm From Errors And Ensure Accuracy

When data is handled manually, the probability of errors and omissions is significantly high. Human errors are fairly common, as people often phase out or miss out on a piece of information while performing mundane tasks such as entering data in the accounting software. But that does not give them the scope to go ahead with these mistakes. In fact, errors and omissions may often prove to be costly for an accounting firm. Listed below are ways that can help firms to steer clear of this professional liability:

Do Not Overburden Your Employees

The best way to avoid costly errors is to reduce the burden on your employees, especially during tax season. Of course, the work pressure swells during the tax season and it may be tough to reduce the strain when work piles up, but over-stressed employees have a greater probability of committing calculation errors. A simple, cost-effective, and sure shot way to reduce errors is to use an advanced accounting solution, such as QuickBooks hosting.

Work Out A Healthy Relationship With Your Clients

Your clients are your bread and butter and keeping them happy should be a firm’s top priority. Even the slightest of error can tip them off and you might end up losing a valuable client. Healthy communication, round-the-clock availability, and building a long-lasting relationship with your clients will help you in the long run.

STEP THREE: Hone The Communication Skills Of Your Employees

Improper communication has its own outcomes. Respectful communication and delivering your message to-the-point can prevent a number of situations from going out of hand. Here are some of the ways to confirm that your employees ace at communication:

Lay Out Your Expectations Clearly

When conversing with a new client, make sure your employees follow the described protocol. Take time to understand what they expect from you and also communicate your expectations profoundly. Any miscommunication can lead to dire circumstances later.

Communicate Professionally

Every business has its good days and bad. Your employees must be quick-witted and must try to understand the mood of their clients. If they are about to lash-out or sound unhappy, your employees must respond accordingly. Same applies to written communication. Emails must be sent responsibly. At the end of the day, the client must be happy.

Let Your Clients Know They Are Priority

Nothing can be worse for your business than ignoring your customers. They lie at the top of your priority list and care must be taken while taking their calls and replying to their emails. Even if a client calls frequently, your goal must be to be as present as possible.

Do Not Keep Facts Hidden

So what if you missed a deadline? Tax seasons are often hectic and missing a deadline is a common possibility. But if you do, be convinced that your client is aware. Do not wait for them to find out on their own. Trust building needs truth at all times and is imperative for a long-lasting relationship.

Also Read: From Bookkeeping to Strategic Advisory: A Growth Switch for Accounting Professionals

STEP FOUR: A healthy work environment for greater productivity

Accounting can often be stressful. Owners of accounting firms must pay proper attention to their employees’ health: both physical as well as mental. A happy and healthy workplace is a must for a work environment that promotes productivity and increases employees’ efficiency. Here’s what can be done:

Teach Stress-Management And Promote Work-Life Balance

Since accountants are handling a third party’s money, stress is inevitable. The stakes are high, the pressure is real, and the job can often be demanding. Employees must necessarily keep calm in order to avoid expensive mistakes that may affect the company as well as the employee itself.

Firms must formulate policies that encourage work-life balance, delegate responsibilities to their employees according to their capabilities, healthy modes of communication so that employees do not feel overburdened, and there should be scope for social engagement.

Give Importance To  Employees’ Health

Employees who fall sick frequently eventually become a liability for their companies. Business owners can take a few steps at their end to ensure their employees are in good health. A hygienic environment is as important as personal cleanliness. Comfortable seating arrangement, clean drinking water, proper sanitation, and scope for physical activity is a must to assure good health to the employees.

STEP FIVE: Protect your property

A business needs all-around protection for a smooth run. But, most accounting and tax preparation firms are concerned with the above-mentioned risks. What they often forget is that risk to personal property is equally important and adequate arrangements should be made to mitigate it. Although not all accidents can be predicted, some prerequisites can be helpful in avoiding them:

Do not leave your valuables unattended

Your office computers and laptops are home to a colossal amount of data. Leaving the valuables unattended and out-in-the-open is like food for bait. Restrict access to untrustworthy people in the office. When on a trip or visiting a client, be positive that you and your employees keep the gadgets guarded.

Keep Electrical and Fire Hazards in check

Most office fires are a result of inadequate wiring or short-circuiting due to overloading. Employee safety is at risk if wiring and other electrical fittings are not properly installed. A regular visit from an electrician is mandated to make certain that your workspace is free from electrical and fire hazards.

Also Read: 7 Accounting Trends That Will Shape The Industry in 2019

A Final Word

Businesses and risks go hand-in-hand, but being proactive can help protect your firm from all kinds of uncertainties. Having the right policies and providing your team of employees with adequate training can help your firm to identify, avoid and tackle any sort of situation. For more informative content for your accounting practice, visit our blog at Sagenext Blog



Know the author

Pragya

Pragya is a writer associated with Sagenext Infotech, having a niche for cloud technology. Being an avid reader, gives her work a fluid appearance, keeping readers glued and quenching for more. Her major work domain is Cloud hosting, accounting, and trending topics.

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