Accounting error definition
/What is an Accounting Error?
An accounting error is a mistake in the accounting records, typically due to a clerical mistake. When spotted, it is typically investigated and corrected by a senior accountant who has experience in error corrections. Accounting errors do not involve fraud, because there is no intent to deceive.
Examples of Accounting Errors
An accounting error can fall into a number of areas, such as entering a transaction in the wrong account, entering the wrong amount in an account, incorrectly setting the auto reversal flag on an account, incorrectly applying a policy or accounting standard, or not entering a transaction at all.
How to Reduce Accounting Errors
Accounting errors can be reduced by training employees properly and installing detective controls. They can also be minimized by standardizing how accounting procedures are conducted, as well as by replacing manual systems with computerized ones. A good way to minimize accounting errors is to conduct a formal review of all errors found as part of the month-end closing process, and adjust procedures to eliminate them in the future.