Accounting Errors and How to Avoid Them

Why is accurate and reliable accounting important?

Tracking a company’s revenues and expenses is a critical task, as these figures form the basis for strategic decisions:

• Are the company’s results aligned with forecasts or budgets?
• Are corrections needed (e.g., new sales strategies, cost reductions, process optimization, or restructuring)?

Inaccurate accounting information can lead to poor decisions that negatively affect the company’s operations. These inaccuracies often stem from accounting errors. While several factors can cause such errors, most can be avoided or minimized with proper attention and care.

What can the client do?

First and foremost, maintaining precise documentation is essential. An accountant doesn’t request documents out of formality — each one is necessary to ensure that transactions are recorded correctly and in compliance with regulations. Incomplete or partial documentation leads to inaccurate accounting. Experience shows that obtaining or correcting missing documents afterward is always more difficult and time-consuming.

“For example, only the company can track whether an order for which an advance payment was made has actually been fulfilled. The accountant won’t automatically know this — but during the pre-VAT return review, it may turn out that the final invoice was never issued.”

One frequently misunderstood area is business trips and travel expenses (e.g., conferences, travel, accommodation). The travel order tells the accountant who traveled, why, and whether it served the company’s interests. A plane ticket and hotel booked for the company director to attend a professional conference in Madrid are legitimate business expenses. However, the plane ticket purchased for the director’s spouse on the company card is not.

On the accountant’s side, common issues include incomplete data entry — when something “gets left out” — and a lack of proactive communication, meaning the accountant doesn’t ask questions. Without interactive, constructive, and continuous communication between the company and the accountant, collaboration becomes inefficient.

How to avoid accounting errors?

1. Accounting errors and their consequences
2. The importance of accurate accounting for strategic decision-making and proper performance analysis.
3. The potential negative impact of inaccurate accounting data on the company.
4. Maintain precise documentation and data recording to ensure accounting accuracy.
5. Collaborate closely and communicate proactively with your accountant to minimize mistakes
6. Accounting practice and optimal performance
7. The importance of correctly recording business trips, transactions, and other financial data for reliable accounting.
8. Establishing an interactive and constructive relationship between the company manager and the accountant to ensure effective accounting practices.