This blog is written by Mr. Mubeen Liaquat, Associate Taxation. Please read this blog and provide your valued comments.
Book Keeping and Challenges in SMEs
A bookkeeper/accountant generally faces following challenges during book keeping in small and medium enterprises that are;
Weakness of Internal Control System
Internal control system operating in SMEs is generally not up-to-mark. The main reason behind this is that the control system generally designed and implemented by owners of SMEs Who has no adequate knowledge of accounting system of the entity.
Lack of Communication
Another major problem that accountant/book keeper generally faces is ‘Communication Gap’. In SMEs, the overall daily operation is generally regulated and operated by owner or his one or more managers. It is generally observed that especially in Pakistani culture, the owner or other concerned are reluctant to provide proper and complete information about particular transaction/matter that resultantly effect ‘True & Fair view’ of financial record maintained.
Close and Personal Relations Striking the Operation of Business
It is observed that intimate and close relations generally effect the operations of SMEs. Many close transactions with close related persons in SMEs are such kind of that no invoices, quotations and other relevant data are maintained for them.
Owners are generally reluctant to provide them invoices confronting the social norms and customs. As a result, accountant/book keeper generally faces great challenge during book keeping.
Lack of Resources
In SMEs, generally resources are limited especially financial resources. These entities generally find it difficult to hire more skilled and trained staff or setup an efficient internal audit system. The accountant/bookkeeper in SMEs are generally not well-versed with latest accounting, taxation and professional development that resultantly effect the appropriate book-keeping.
- Control system should be designed and implemented by those who have sufficient and adequate accounting knowledge.
- Owners or managers or other concerned one who regulating the operation of SMEs should provide accurate and complete information to accountant/book keeper for proper book keeping.
- Proper invoices and other relevant record should be maintained for every kind of transaction took place in SMEs even transaction with close ones.
- SMEs should hire qualified staff properly trained and enthusiastic book keeper/accountant for proper book keeping that have also know-how with latest accounting and professional development.