Charles James Lyall, the under-secretary of the Department of Revenue, Agriculture, and Commerce in the British Government of India during the late 19th century, once said: “There are four things that hold back human progress; ignorance, stupidity, committees, and accountants.”
Accountants and accounting services can make any CEO of a company cry, especially if there are accounting errors that impact bottom-line profits. Businesses need accounting services, but not all accountants perform their duties without making an error. Accounting errors are a fact of life. And there are so many errors, the errors have their own classifications. There are Errors of Omission. Errors of Commission. Errors of Principles and there are compensating errors. Accountants know compensating errors can be costly. A good example of a compensation error is the Uber compensation error that cost the company $50 million. Uber drivers in New York were short-changed by the company because of an incorrect accounting formula.
The White House denied an egregious accounting error in the budget. According to Former Treasury Secretary Larry Summers, the new budget double-counts $2 trillion. But budget director Mick Mulvaney told a group of reporters that the White House stands by the numbers. But Summers, a former chief economist at the World Bank, said the budget forecasts about $2 trillion in extra revenue growth over the next 10 years, to pay for Trump’s tax cut. And the same $2 trillion will reduce the budget deficit.
But not all accountants and accounting firms make accounting errors that can destroy profits or can turn in federal budget into a three-ring circus. Gray CPAs, the respected CPA in Loveland Colorado, helps local businesses manage their finances and business taxes without costly accounting errors. Gray CPAs specialize in the local craft beer brewing industry, and their accounting services knock it out of the park in terms of proper accounting procedures.
Big retailers like Amazon, Starbucks, and Walmart may be in for a pleasant surprise in 2018 when the new revenue-regulation law impacts their bottom lines. The new revenue-regulation law is the ASC 606 law. That law allows public retail companies to change the way the unredeemed portion of company-issued gift cards is dealt with. The term for the unredeemed portion of those cards is” breakage revenue.” And thanks to the new law, companies will be able to accelerate breakage revenue instead of holding it until the card expires or until the likelihood of anyone using the card becomes remote. In 2009, Congress passed the CARD Act. That act prohibits the expiration of gift cards for five years.
The bottom line, in terms of accounting errors, is, they are prone to happen because of human error. Businesses are at the mercy of ignorance, stupidity, committees, and accountants. But not all businesses have accountants that are ignorant, stupid or like to participate in committees. Most accountants check, double check, and then triple check their work. So Sir Lyall’s statement about accountants is just one man’s antiquate opinion, according to 21st-century accountants.