Why checklists should be part of risk management strategy for your accounting practice?
Using checklists in your accounting or bookkeeping practice does not only mean simplifying and streamlining your operations. Checklists also ensure that all controls and rules are consistently followed by anyone who is involved in client work. They enhance transparency and accountability within your team and also help your accountants and bookkeepers manage any risks in a more systematic and simplified way.
Why should you implement checklists as part of your risk management? Let’s dive into more details.
Checklists minimise human error
The accounting and bookkeeping tasks that you perform for your clients require precision. But it’s easy to forget a detail or two which can change a lot for your clients. Or it can even result in a client leaving you for another accountant or bookkeeper. The more human errors, the more unreliable and trustworthy you become which can be permanently damaging for your reputation. With the checklists you can easily manage the risks and ensure tasks, whether it’s a tax return or a bank reconciliation, are performed to the same standard each time and regardless of which account or bookkeeper in your team performs them. Additionally, as checklists break tasks into smaller and more manageable steps, they allow accountants and bookkeepers to focus when performing each task. This reduces a risk of any oversights.
Checklists protect your business
As checklists are documented processes used in your accounting and bookkeeping practice, they can be called SOPs – Standard Operating Procedures, they can be useful during audits or any investigations. They can demonstrate that all steps and procedures were properly followed by you or your accountants and bookkeepers and protect your business in the event of any disputes.
Checklists mitigate risks in financial reporting
As an accountant you must follow various rules and standards when preparing statutory reports for your clients like for example, annual accounts. Using checklists can help with making sure these rules are always applied correctly. This reduces mistakes but also a risk of fraud or any misstatements in financial reporting. And as these rules and regulations can be complex, it also ensures that your accountants and bookkeepers are aware of them and they can apply them when performing accounting or bookkeeping tasks for your clients.
Checklists help with knowledge retention
Your business can change at any stage. You may hire new accountants or bookkeepers or your current staff may change their roles, e.g., due to a promotion in the team. With the checklists each time these changes happen, you can be sure the same procedures are followed thus minimising any risks both for your business and your accounting and bookkeeping clients.
Checklists can help with identifying and preventing issues
As the checklists force you to follow the same steps each time when you undertake an accounting or bookkeeping task, they make it easy to identify any discrepancies or even potential fraud. This means the issues can be addressed much earlier in the process protecting both your accounting or bookkeeping practice but also your clients. Prevention is better than cure.