Free «Record Keeping» Essay
Office practice is one of the key activities of an organization. These practices include record keeping, communication and production of documents among others. These practices are viewed as the backbone of an organization. For instance, if there is no proper communication between the managerial team and the junior staff members, the production activity in a firm cannot be effective. It is for a reason that there may be production of sub-standards products or the juniors may feel neglected. This paper looks at a problem in the office through an analysis and discussion of the problems associated with record keeping.
Record keeping involves storage and maintenance of organization information and data. This practice starts as early as planning stage of a business where the first record should be a business plan. These records are useful since they are used to assess the performance of the business or an organization (Baye & Beil, 2006). They are used in planning and decision-making because they enhance better internal control of a business, act as evidence to detect internal theft and fraud, helps one to reduce cost and effort when preparing the tax and reporting obligations. Despite its importance, an organization that lacks proper record keeping faces various challenges.
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Furthermore, some of these records include bank statements, transaction records between a business and clients, records of liabilities and assets, revenue and expenditure, profit and losses. Other records such as vouchers, receipts and invoices are also kept. Some of the challenges that a firm can encounter due to lack of proper record keeping include the fact that a business may be unable to plan and work inefficiently (Samuelson & Marks,2006). Moreover, it may fail to meet legal and tax requirements, measure its profit and performance, produce meaningful reports and protect its rights along with managing its potential risks.
Assuming a private hospital, several financial problems can be experienced by the hospital due to lack of proper recording of financial statements. Among these challenges, there is the persistence in loss making. This is as result of fraud because no record is kept by accountants or auditing personnel. Moreover, they may be tempted to give false reports concerning the financial statement of the business. If the business is making loss that will not be reflected and the result will be continuous losses by the firm (Baye & Beil, 2006). If this practice of proper maintenance of records is not upheld, a business is exposed to risks such as fraud whereby employees take it as an advantage and put some amount of money in their pockets. This is due to the fact that there is no proof of a transaction. These transaction records include payment of medical bills, buying of certain medicine by a patient, fueling of the vehicles such as ambulances and payment of bills for example water and electricity bills.
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Thirdly, asset recording in a business is vital. In the case of a private hospital, these assets include land, buildings, vehicles, beds, treatment instruments, and other tangible facilities used for improving patients’ welfare. The records should state clearly whether an asset is appreciating or depreciating (Samuelson & Marks,2006). Most business set-ups fail to include such information and incase of valuing their business they face a problem of over-valuing or under-valuing. Liability statement should also be included due to the fact that for a complete financial statement there ought to be assets and liabilities. For a normal business, financial values of assets and the liabilities should balance. In some cases where there is no proper record keeping, the liabilities can appear to be more than the assets. This depicts a deficit in financial statement that will not be appealing to the business management since no records are kept (Baye & Beil, 2006).
Most importantly, revenue and expenditure constitute business record. Revenue refers to income of a business including all profit gains while expenditure refers to expenses and costs. The difference between revenue and expenditure determines a business gross profit and loss. Therefore, for business owners to determine whether they are operating under profit or loss, they should keep appropriate records. Most business owners face the challenge in attempts of evaluating their profit or loss due to lack of proper records.
Furthermore, management can fail to plan and work efficiently. Business records are used for evaluation purposes and if a business lacks such records, it is a victim of repeating its previous mistakes. These records are used in order to identify some mistakes made and, therefore, the management is able to come up with the solutions to those mistakes and avoid repetition of the same. Through proper record keeping the business is able to learn from its previous mistakes, plan and work efficiently, thus, bearing fruits. In addition, due to lack of proper record keeping, a business fails to meet legal and tax requirements (Baye & Beil, 2006). It is an obligation for any business to comply with legal requirement of a country. These requirements may change over time because the tax rates can be adjusted from time to time. The government can also add some professional requirements in order to prevent incompetent people from offering services. Some of these services are medical and engineering services (Samuelson & Marks,2006). Therefore, business organizations should keep records that act as evidence that they qualify to offer certain services. In addition, tax is levied according to income or services provided. Through record keeping, one is able to determine the amount of tax they should pay.