CPAs have a deep appreciation for numbers. They’re the people who fall peacefully to sleep counting sheep (while calculating the shepherd’s ratio of assets to liabilities) and dream of spreadsheets without errors.

However, much like the history buff who loathes Hollywood inaccuracies, number-obsessed CPAs cringe when their clients commit certain bookkeeping blunders. They know from experience the horror that can unfold when a business’s financial records are askew, and the owners wait to reach out for help after the damage is already done.

So, in the spirit of Halloween, we are going to tell some horror stories of our own – accounting nightmares that make a CPA break out into a cold sweat and scream out in the night.

9 Things That Give Your CPA a Fright

1. Child’s Play: The Insistent DIYer

Certified public accountants are required to earn a bachelor’s degree with 150 semester hours that include courses such as general accounting, financial management, budget management, risk analysis, and business ethics. Only then can they pursue their certification and licensure as a CPA.

Essentially, CPAs are number doctors, so it’s understandably frustrating when they see otherwise savvy business owners insist on keeping their financial records themselves. The result is typically messy books with costly errors, duplicate, unstandardized categories, and unfathomable idiosyncrasies. When you’re trying to run a profitable business, accounting is an area that you should leave to the experts rather than try to DIY.

2. The Hermit: The One-Person Accounting Department

A one-person bookkeeping department is rarely a good idea. What happens when they get sick, need a vacation, or just need a break? When you leave one person in charge of every primary bookkeeping function, including inventory accounting, payroll, and accounts receivable, there is a greater risk of mistakes, oversight, and even fraud.

Your safest bet is to cross-train other employees for the position, consider expanding your bookkeeping department, or if you prefer to save money, outsource your bookkeeping needs to an experienced, online controller.

3. Estranged Accounts: Ignoring Reconciliation

Ensuring that your general ledger is in sync with your accounts is key to determining your business’ financial health. If you let long periods of time pass before you align your books and bank statements, you’re setting your company up to make costly mistakes – and the larger your company, the bigger the snowball.

Your bookkeeper or accountant should perform an account reconciliation after the close of every financial period – quarterly, or every three months is most common. This will allow you to discover and quickly correct any bank errors and know how much money you have on hand at any given time.

4. Pandora’s Box: The Dreaded Shoebox of Unorganized Receipts

The cliché of the shoebox full of receipts is a cliché for a reason. Accountants are often tasked to deal with heaps of unorganized receipts long enough to wrap mummies and put CVS scrolls to shame.

These days, it is incredibly easy to keep your receipts, financial statements, and invoices organized by digitizing your paper trail. There are many apps and software options available that provide a unified space for all your important financial documents. For paper-supported transactions, there are file apps that include easy-to-use phone scanners to convert papers to PDFs.

In addition to keeping you organized, digitizing your financial records will allow you to access them from anywhere, anytime, and the ability to send them to your accountant with ease.

Just a quick side note: please, in the interest of sanity, back up your records and keep these backups updated regularly. Whether you use an external hard drive or pay for cloud services, BACK UP YOUR RECORDS.

5. The Void: Having No Records at All

What do CPAs dread more than the shoebox full of receipts?

Absolutely no receipts, invoices, or records at all.

Business expenses, regular and irregular, should be documented without exception – no matter how big or small of a purchase. We’re talking invoices, receipts, purchase orders, copies of canceled checks – if it has to do with money in and money out, keep it!

6. Silence of the Lambs: Zero Communication with Your CPA

Every business decision has a financial aspect, which means whenever you make changes to your business you should consult with your bookkeeper or CPA to ensure that you both are on the same page. You should inform your accountant of things like a staff shakeup, inventory switch, or even a change in client relations, so they can advise you on the financial impact of such decisions.

7. Looming Deadlines: Waiting Until the Last Possible Moment to Organize Your Year-End Taxes

A deadline in and of itself is not such a scary thing. Procrastination, on the other hand, turns an organizational tool into a three-headed monster waiting to usher you to your doom. Waiting until the last minute to organize the documents needed for your year-end taxes introduces risk and liability that wouldn’t exist if you had kept your financial records organized from day one.

8. Jekyll and Mr. Hyde: Not Regularly Reviewing Your Bookkeeping Department

Lack of oversight leaves you vulnerable to delusion. It might appear you’re making money hand over fist, but in reality, the numbers just don’t add up. If you haven’t conducted an audit of your bookkeeping department recently – or at all – you should consider bringing in an external party to ensure proper procedures and documentation are being used. A thorough department audit will not only review financial records for accuracy and authenticity, but also ensure accounting policies are in writing, review security controls, and assess accounting personnel roles.

9. Death by a Thousand Cuts: No System of Spending Approval

Who has access to your business credit cards or petty cash? Do you have a clear policy about employee spending or for what transactions petty cash can be used? If not, your accounts could end up leaking like a sieve.

You need a clear chain of approval for giving the okay to business purchases. If any employee can make a purchase or arbitrarily decide what qualifies as a business expense, debt is likely not too far behind – not to mention the increased risk of theft, fraud, and abuse of funds.

The best system of spending approval involves designating one or a small group of employees who have access to the business credit card or petty cash and demanding receipts, no exceptions – no receipt, no refund.

How to Avoid Accounting Nightmares

The easiest way to avoid financial tragedy is to seek professional help. This doesn’t necessarily entail taking on the overhead of a traditional, in-house accounting department. Most small businesses and start-ups can outsource their finance departments to a high-quality, low-cost alternative virtual bookkeeping service like Our Bookkeeping Team.

Our Bookkeeping Team aims to provide convenient, cost-effective services to support a company’s primary objective of growing profits. Call us to make Our Bookkeeping Team your bookkeeping team today: 213-468-8316.