Understanding and Mitigating Financial Reporting Inaccuracies

School: Southern New Hampshire University - Course: HUMAN RESO OL 645 - Subject: Accounting

inadequate review processes, and fraud are other causes of inaccurate reporting. The inaccurate reporting impacts are wasted time and resources, bad decisions, cash- flow problems, fines, penalties, reputational damage, and loss of credibility, as well as bankruptcy (Russo, 2022). Financial risk management is an ongoing process that needs to consider all areas of your business. Financial risk management is a concern for a startup or a mature business. Businesses make the mistake of not treating their financial risk management as a continuous activity (Tollefson, 2023). Consistency is important in every aspect of running a company, but especially when it comes to their financials. Annual budgeting processes and insurance expiration dates are good times for a company to review their risk mitigation strategy, it is also a good idea to have periodic risk evaluations to other business activities. Five financial risk mitigation plan strategies are evaluating business operations for efficiency, nurture your talent-and outsources where it makes sense, create a strong foundation for your HR practices, use metrics for every decision, be prepared to cover a loss. These strategies have worked for three successful entrepreneurs (Tollefson, 2023). Dorian Lam says, "a process that begins with an organizational chart and an employee roster, then break the workflow into a detailed checklist, from order intake to client delivery." Gabriel Shaoolian says one way to reduce risk is not to hire people full time if you don't need to as it lowers overhead. Frank Costa says, "an often-overlooked risk management area includes employee practice". He also says, "Everyone wants to believe their company is like a nice little family, but there's potential financial risk that can be significant drain on resources, create high legal expenses, and have an impact on corporate culture and productivity" (Tollefson, 2023).