Are Your Accounting Practices Breaking the Law?   by Christine Harrell

in Finance / Accounting    (submitted 2010-03-01)

This job of a virtual accounting department is not simply a matter of adding assets and subtracting liabilities. An organization's financial operations are governed by a maze of local, state and federal regulations that dictate how activities are to take place.
These laws come from many sources. Tax regulations prescribe when taxes are to be paid and what expenses are deductible. Securities rules govern a company's issuance, purchase and sale of stocks and bonds. Newer regulations such as Sarbanes-Oxley have been designed to keep companies honest.
Situations become more complex as organizations operate in different geographical areas. If a company has a central office in New York and an office in California, which tax code applies? Are there differences in the rules between serving customers in the US and customers in other countries?
Ignorance Is No Defense
Keeping track of these myriad rules and regulations is a full time job. A minor change in the law could have a profound effect on a company's operation. Internal policies that go back decades might suddenly be in violation of the new rules. If the business isn't aware of the change, there could be serious penalties in the future.
In many cases, by the time an organization finds out about a change it's too late. They need to know not only about laws just made but also laws coming up so they can alter company operations in plenty of time to meet new regulations. Few companies are in a position to understand and analyze the effects of regulatory changes. They depend on the expertise of virtual accounting departments to keep them abreast of the latest developments.
Virtual Accounting Departments Provide Peace of Mind
Modifications to financial laws typically affect only the financial operations themselves. If these functions are moved outside a company into a virtual accounting department, daily company procedures will seldom be affected by regulatory changes. The accounting department will ensure all company financial transactions are carried out in accordance to current regulations.
A few of these changes will have an indirect impact on the company. For example changes in tax laws may open up new opportunities for an organization to reduce its tax burden, opportunities that would be overlooked without the advice of a skilled accountant. Businesses that take advantage of these new rules will have a competitive edge over competitors that ignore them.
Don't take the chance that your business will ignore the effect of new financial rules. Team up with a virtual accounting department to keep your organization on the cutting edge of accounting operations.