Some Common Accounting Problems and their Solutions

Are you still operating your company from a box? In fact, you very well maybe if you work for a […]

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Are you still operating your company from a box? In fact, you very well maybe if you work for a start-up. Ideally, you have switched to a software platform that can help with file organization by this point. If so, you may already be aware that not all accounting platforms are made equal. Here are some of the most typical accounting challenges and fantastic software package solutions that can support the success of your business.

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Dancing Numbers helps small businesses, entrepreneurs, and CPAs to do smart transferring of data to and from QuickBooks Desktop. Utilize import, export, and delete services of Dancing Numbers software.

Businesses may experience accounting difficulties and issues as a result of regulatory compliance issues and delays in using new software technology. These accounting problems can result in huge fines and prison terms for regulatory non-compliance, as well as inaccuracies in financial statements, fraud, and security risks. Modern software that automates regulatory compliance and is used by skilled business finance teams can solve common and new accounting issues. So without wasting time let’s go through this article.

What is Accounting Problems?

The usage of outdated accounting software is a cause of some accounting issues. Other financial issues are brought on by intentional fraud brought on by greed and weak internal control. Accounting issues may result from low staffing levels. Lack of financial team training contributes to accounting issues brought on by improperly applying GAAP. The business needs to protect itself against cyber attacks and stay up-to-date with challenges related to changing regulatory compliance.

How are Accounting Issues Resolved in Businesses?

To avoid or resolve severe accounting issues, financial experts in businesses should use software with advanced technology capable of managing current accounting standards, such as revenue recognition and lease accounting. Businesses can handle accounting issues by requiring CPA workers and accountants to frequently enroll in relevant continuing education courses. Accounting problems can be resolved by accountants with adequate staffing levels.

Key expectations, corporate values, employee empowerment, and an ethical tone must all be communicated by top management.

Here is the List of 15 Common Accounting Problems and Solutions

Find the list of common accounting problems and solutions below:

1. Revenue Recognition

Problem: Revenue recognition issues include incorrectly applying GAAP revenue recognition standards, creating fraudulent revenue schemes, including incorrectly accounting for consignments and third-party product shipments above the level of possible usage, and making unreasonable estimates.

Solution: Find an ERP or accounting software that can help your business correctly recognize revenue. To comply with GAAP revenue recognition, your accounting and finance teams need sufficient training on FASB accounting rules. Spreadsheets in Excel are widely used. However, spreadsheets are ineffective and prone to inaccuracy. Look for a different software solution if at all possible.

2. Impairment Write-downs and Fair Market Valuation

Problem: The necessary adjustments or impairment write-downs for registering required assets or liabilities at fair market value may not be made by accountants.

Accounting experts must routinely assess whether changing economic and business conditions have negatively impacted asset valuations (to recognize the loss of value). Accountants must also take into consideration changes to the fair value of specific assets and liabilities. Accounting professionals use journal entries and financial statement disclosures to make changes as required by GAAP.

The COVID-19 outbreak and supply chain backlogs caused economic conditions that necessitated monitoring for accounting issues, including impairment and fair value accounting, according to EY, a renowned accounting company.

Some Examples of Asset Impairment include:

  • Annually assessing the impairment of goodwill from M&A deals
  • A consideration of the impairment of capitalized lease assets
  • Inventory is recorded at the lower of cost or market, with market value limited to a range that does not exceed net realizable value and a range that is net realizable value less a normal profit margin.

Examples of Fair Market Valuation include:

  • Available-for-sale securities (debt and equity) are held as investments to be sold before maturity; net gains or losses on these securities are included in shareholders’ equity as other comprehensive income (loss), which is listed below.
  • Trading securities (debt and equity) held as short-term investments; gains or losses on trading securities flow to Net Income on the income statement.
  • Liabilities for Fair Value are measured in accordance with ASC 820 Fair Value Measurements and Disclosures.

Solution: When required by GAAP, accountants must have adequate training to accurately record asset impairments, fair market valuation, and make the relevant financial statement disclosures? Look at the financial statement areas that have impairment accounting issues.

3. Lease Accounting

Problem: Lessee companies must capitalize their operational leases with tenant right of use (ROU) and terms longer than a year as a result of changes to GAAP lease accounting requirements. Office space leases and shorter operations leases can both still are recorded as monthly rent expenses. The leases are gradually amortized.

The Financial Accounting Standards Board codifies accounting principles (FASB). Other changes to the Lease accounting standard that accountant must follow.

Solution: To follow the most recent GAAP standards on Lease accounting, business accounting personnel must receive proper training. Moreover, they will gain a lot from using specialized leasing accounting software.

4. Payroll Errors

Problem: Payment errors and accounting problems could happen if a small business decides to calculate its own payroll, payroll taxes, and benefits. Employee morale and productivity are negatively impacted by payroll issues such as incorrectly computing paychecks for hourly wages and salary charges.

Solution: Payroll should be outsourced to a very experienced provider of those services, such as ADP or Paycheck. If the correct amount of hours worked and payroll information are provided, payments and taxes withheld should be computed correctly and in compliance with tax laws. You can count on reliable reporting to take those factors into account. Your business can timely submit payroll tax payments as necessary.

5. Not Enough Financial Analysis

Problem: Without effective accounting systems, an accounting team spends too much time on closing the books and has not had much time for work that adds value. By calculating ratios, identifying and managing business trends, and offering decision assistance for new opportunities, financial analysis creates value.

Solution: Automation of accounting procedures and financial analysis should be done to the greatest extent possible by using improved cloud-based ERP systems and third-party add-on software with integrated artificial intelligence/machine learning. You need real-time dashboards with trend analysis and your company’s KPIs, which all functional areas with permission credentials can see (key performance indicators).

Add to these systems real-time data analytics tools like Tableau or Microsoft Power BI, as well as the regular automated report runs for data your company tracks as temporal trends. Data visualization software and machine learning tools are combined to provide business intelligence.

6. Cash Flow Statement

Problem: The categorization of activities by type and the exclusion of restricted funds, a more recent GAAP requirement, are both subject to error in the cash flow statement. Misclassification of the type of activity for interest and dividends earned and paid is one example of a classification error in the cash flow statement. The interest earned and paid is categorized as an operating activity in the cash flow statement. Dividends received are an operating activity in the cash flow statement, whereas dividends paid are a finance activity.

The CPA firm RSM compares how certain components in the cash flow statement are classified under U.S. GAAP (vs. IFRS), including interest and dividends, and restricted cash.

Solution: Understanding the fundamentals is necessary for cash flow statement issue solving, so it’s important to stay current on FASB revisions and training subjects relating to cash flow statement preparation.

7. Outdated Accounting Software Technology

Problem: Outdated accounting software is inefficient, does not provide real-time results for visibility in managing the company or its sales & marketing processes, and does not automate regulatory compliance because it relies on manual data entry and paper documents for business transaction processing and recording.

Earlier ERP systems might not have been cloud-based. On-premises software access is less efficient, and upgrading the system and resolving hardware and software issues locally requires additional IT department resources. The new realities of remote or hybrid work situations do not suit these non-cloud ERP solutions.

Solution: By switching to modern cloud-based software, you can update outdated accounting software or ERP systems. If you don’t have enough money to completely rebuild your ERP system, think about integrating third-party add-on software to handle your demands for:

  • Software for global mass payments and automated regulatory compliance is also available.
  • Data visualization applications for business intelligence and data analytics
  • Billing for subscriptions ( these are applicable to a SaaS, publishing, or utilities business model)
  • Software for financial management, budgeting, and forecasting
  • CRM software improves efficiency and allows for better tracking of the sales and marketing process
  • Leasing-specific accounting software
  • If not included in your ERP, revenue recognition software functionality

8. Inadequate Internal Control

Problem: Small businesses might not have enough staff to ensure task separation, which is essential for efficient internal control. Their accounting processes might not be sufficient to prevent fraud and duplicate payment errors.

Solution: Get the business owner involved in the approval process as a matched vendor invoice document reviewer and second signature when segregation of duties is not being fulfilled. The finance and accounting department needs the required software and human resources in order to fulfill its duties and deliver results.

9. Regulatory Non-Compliance

Problem: Regulatory compliance includes, but is not limited to, taxation, data privacy and security, sanctions lists like OFAC, and the Foreign Corrupt Practices Act (FCPA).

The Foreign Corrupt Practices Act prohibits making bribes in foreign countries. Additionally, the FCPA’s reach extends far beyond preventing bribes.

The Foreign Corrupt Practices Act and other laws could be broken in the following ways that are mentioned below:

  • Imprisonment
  • Massive fines for convicted individuals and businesses
  • Tarnishing the reputation and ethics of a business and a convicted individual

Solution: Inform your company’s financial and accounting staff about the regulatory issues affecting your industry and company. Perform a project to compile information on regulatory issues, and then broadly distribute the results widely. Hold a training session for the organization’s staff. Highlighting company ideals like ethics encourage employees to act as the conscience of the company. Look for automation software that manages regulatory compliance.

10. Fraud

Problem: Employee collaboration and insufficient internal controls may lead to fraud, including embezzlement.

Solution: Use cutting-edge cloud-based automation tools to assist in the detection of fraud and mistakes like duplicate payments. Use variance analysis to spot any big disparities between your budget and your actual spending, then take action. Before paying vendors, check their master files, run a 3-way document matching on the invoices, and validate vendors for authenticity.

Work to assign tasks to employees in a way that ensures proper separation of duties. Different personnel must exercise control or custody over assets and record transactions in the books.

11. Inadequate Security

Problem: Cybersecurity is a serious problem that might compromise your system’s employee records, data of the customer, and intellectual property.

Solution: Use the most cutting-edge Cybersecurity tools. Make and distribute a current company policy outlining the activities that must be taken to achieve acceptable Cybersecurity. Teach staff members how to avoid email and other scans that could lead to hacks that compromise the security of the company.

12. Incorrect Bookkeeping

Problem: Incorrect bookkeeping is a problem that small businesses frequently encounter. If a company is ever required to conduct an audit but is unable to provide the necessary documents, this could be devastating to the company. A company may face costly fines, increased interest, and perhaps even jail time if it cannot provide the government with proof to support its claim.

Solution: It is crucial to make sure that every transaction, no matter how minor, is thoroughly logged and maintained in order to stop this from happening to your company. These records will help in advising the company’s present state and help to avoid any errors when it comes time to file taxes.

13. Poor Communication

Problems: Ineffective communication with their accountants and co-workers is another major mistake made by small business owners. However, failing to include specific costs and paperwork might result in inaccurate budgets and claims.

Solution: Communication with individuals in charge of the finances must be open if this is to be avoided. This means that owners must give access to all necessary records and thorough information. Additionally, owners ought to try to provide as much information as they can, no matter how minor they may feel the transition to be.

14. In-House Accounting

Problems: A common misconception among small business owners is that they can manage their business bookkeeping. Although it can be a time-consuming process, keeping internal accounts can sometimes lead to errors. If there is a budget computation error, these flaws may result in improper handling of funds.

Solution: It is advised that you consult a financial expert or accountant to help you avoid this happening to your company. Using a third party will help you keep track of all of your financial transactions. They will also be able to accurately record, evaluate, and check all of the company’s financial information.

15. Assuming Budgets

Problems: Budgets are a common mistake made by small business owners. When business owners are ignorant of their financial situation, this frequently occurs. Companies frequently spend earnings before deals are closed and work is finished as a result of this ignorance.

Solution: Owners of small businesses must consistently examine their money by logging into their accounts in order to prevent this from happening to their operations. This will help them stay informed about their current financial situation and avoid making assumptions about their income. In order to determine and provide advice on the company’s finances, it is best for owners to speak with an accountant or financial advisor.

After reading the above blog your mindset will be cleared regarding some common accounting problems and their solutions are also mentioned above. Even while many small business owners think they can manage their finances independently, It can easily become overwhelming. They not only run the risk of suffering additional costs and costly interest rates as a result, but it also has the potential to lead to financial devastation. In case you still face any issue related to this then you can connect with Dancing Numbers team via LIVE CHAT.

Accounting Professionals, CPA, Enterprises, Owners
Accounting Professionals

Looking for a professional expert to get the right assistance for your problems? Here, we have a team of professional and experienced team members to fix your technical, functional, data transfer, installation, update, upgrade, or data migrations errors. We are here at Dancing Numbers available to assist you with all your queries. To fix these queries you can get in touch with us via a toll-free number
+1-800-596-0806 or chat with experts.


Frequently Asked Questions (Faqs)

What are the Three Common Accounting Errors?

• Transposing numbers
• Omitting or duplicating an entry
• Entering items in the wrong account

What issue does an Accounting System Fix for Your Company?

You can not only keep your financial information using an accounting application, but you can also access them whenever you need to. When your system is online, you can access your financial records while relaxing anywhere in the world.

What is the 3 Accounting Equation?

Assets, Liabilities, and Shareholders equity are the three elements in the accounting equation. The equation is simple: Total assets of a company are equal to liabilities plus shareholders equity.

Features of Dancing Numbers for QuickBooks Desktop

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Customization

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Supported Entities/Lists

Dancing Numbers supports all QuickBooks entities that are mentioned below:-

Customer Transactions

Invoice
Receive Payment
Estimate
Credit Memo/Return Receipt
Sales Receipt
Sales Order
Statement Charge

Vendor Transactions

Bill
Bill Payment
Purchase Order
Item Receipt
Vendor Credit

Banking Transactions

Check
Journal Entry
Deposit
Transfer Funds
Bank Statement
Credit Card Statement
Credit Card Charge
Credit Card Credit

Employee Transaction / List

Time Tracking
Employee Payroll
Wage Items

Others

Inventory Adjustment
Inventory Transfer
Vehicle Mileage

Technical Details

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Frequently Asked Questions

 
How and What all can I Export in Dancing Numbers?

You need to click "Start" to Export data From QuickBooks Desktop using Dancing Numbers, and In the export process, you need to select the type you want to export, like lists, transactions, etc. After that, apply the filters, select the fields, and then do the export.

You can export a Chart of Accounts, Customers, Items, and all the available transactions from QuickBooks Desktop.


How can I Import in Dancing Numbers?

To use the service, you have to open both the software QuickBooks and Dancing Numbers on your system. To import the data, you have to update the Dancing Numbers file and then map the fields and import it.


How can I Delete in Dancing Numbers?

In the Delete process, select the file, lists, or transactions you want to delete, then apply the filters on the file and then click on the Delete option.


How can I import Credit Card charges into QuickBooks Desktop?

First of all, Click the Import (Start) available on the Home Screen. For selecting the file, click on "select your file," Alternatively, you can also click "Browse file" to browse and choose the desired file. You can also click on the "View sample file" to go to the Dancing Numbers sample file. Then, set up the mapping of the file column related to QuickBooks fields. To review your file data on the preview screen, just click on "next," which shows your file data.


Which file types are supported by Dancing Numbers?

XLS, XLXS, etc., are supported file formats by Dancing Numbers.


What is the pricing range of the Dancing Numbers subscription Plan?

Dancing Numbers offers four varieties of plans. The most popular one is the basic plan and the Accountant basic, the Accountant pro, and Accountant Premium.


How can I contact the customer service of Dancing Numbers if any issue arises after purchasing?

We provide you support through different channels (Email/Chat/Phone) for your issues, doubts, and queries. We are always available to resolve your issues related to Sales, Technical Queries/Issues, and ON boarding questions in real-time. You can even get the benefits of anytime availability of Premium support for all your issues.


How can I Import Price Level List into QuickBooks Desktop through Dancing Numbers?

First, click the import button on the Home Screen. Then click "Select your file" from your system. Next, set up the mapping of the file column related to the QuickBooks field. Dancing Numbers template file does this automatically; you just need to download the Dancing Number Template file.

To review your file data on the preview screen, just click on "next," which shows your file data.


What are some of the features of Dancing Numbers to be used for QuickBooks Desktop?

Dancing Numbers is SaaS-based software that is easy to integrate with any QuickBooks account. With the help of this software, you can import, export, as well as erase lists and transactions from the Company files. Also, you can simplify and automate the process using Dancing Numbers which will help in saving time and increasing efficiency and productivity. Just fill in the data in the relevant fields and apply the appropriate features and it’s done.

Furthermore, using Dancing Numbers saves a lot of your time and money which you can otherwise invest in the growth and expansion of your business. It is free from any human errors, works automatically, and has a brilliant user-friendly interface and a lot more.


Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


Is it possible to use the Direct Connect option to sync bank transactions and other such details between Bank of America and QuickBooks?

Yes, absolutely. You can use the Direct Connect Option by enrolling for the Direct Connect service which will allow you access to the small business online banking option at bankofamerica.com. This feature allows you to share bills, payments, information, and much more.


Why should do you change the Employee status instead of deleting them on QuickBooks?

If you are unable to see the option to terminate an employee on your list of active employees on the company payroll, this mostly implies that they have some history. Thus, if you change the employee status instead of deleting it on QuickBooks, the profile and pay records remain in your accounting database without any data loss in your tax payments.


What are the various kinds of accounts you could access in QuickBooks?

QuickBooks allows you to access almost all types of accounts, including but not limited to savings account, checking account, credit card accounts, and money market accounts.

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Bulk import, export, and deletion can be performed with simply one-click. A simplified process ensures that you will be able to focus on the core work.

Worried about losing time with an error prone software? Our error free add-on enables you to focus on your work and boost productivity.

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