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VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

INTERNATIONAL UNIVERSITY

SCHOOL OF ECONOMICS, FINANCE AND ACCOUNTING

FINAL REPORT

WORKSHOP 2 ON ACCOUNTING ISSUES

Name: Chiem Nguyen Bao

Student ID: BAACIU21172

Lecturer: Le Phuong Thao

Topic: Accounting Practice and Mistakes

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I. Introduction

In the complicated business operations landscape, accounting stands as the guardian of

financial integrity, ensuring that the numbers are accurate and reliable. However, even with
rigorous principles and established practices, it is not immune to errors. Accounting mistakes
ranging from normal errors to more nuanced violations, can have profound repercussions on
financial statements, decision-making, and organizational trust. This introduction sets the
stage to explore the multifaceted realm of accounting mistakes. Through this exploration, we
can find some solutions for this problem and also compare the reality knowledge that we
learn from school.

Accounting is a systematic process of recording, analyzing, interpreting, summarizing, and

reporting financial transactions of a business or organization. It plays a crucial role in
providing relevant financial information to stakeholders, aiding in decision-making, and
ensuring compliance with regulatory requirements. Accounting is an extremely important job,
requiring accountants to be meticulous and accurate in recording financial reports or
company entries. Therefore, the main important issue for accountants to do their job well is to
analyze the accounting practice and mistakes that accountants encounter and I will discuss
that problem.

II. Summary

Accounting mistakes can have significant implications for businesses and their financial
reporting. These errors can manifest in various processes and various forms. It can come
directly from humans like wrong input, double input, or missing input. Moreover, the
accounting system and process also bring many mistakes such as wrong data circulation or
weak internal control systems. The consequences of such mistakes extend beyond mere
numerical inaccuracies, impacting decision-making, regulatory compliance, and stakeholder
trust.

1. Why are Accounting mistakes important?

Accounting mistakes are crucial to address and understand for several reasons, each of which
emphasizes the significance of maintaining accuracy are reliability in financial reporting.
Some key reasons that accounting mistakes are important:

- Lost company assets: While accounting errors primarily deal with financial records
and reporting, their indirect impact on asset management and control can lead to
tangible losses and will affect the company assets. Some ways that accounting
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mistakes may result in the loss of company assets are inventory errors, inaccurate
depreciation accounting, and misallocation of costs.
- Penalty from government: Inaccurate reporting can lead to fines and penalties from
the IRS and local government. When an IRS audit finds that a company has failed to
comply with tax regulations and the company underpaid its taxes, the company is
charged interest and penalties on top of settling its tax bill.
- Criminal case: It can happen if they involve intentional fraudulent activities,
misrepresentations, or violations of laws and regulations. While unintentional errors
are generally addressed through regulatory measures, deliberate actions that constitute
fraud or financial misconduct can lead to criminal investigations and charges.
- Default: Accounting mistakes can contribute to financial default through various
mechanisms that impact a company’s financial health, its ability to meet debt
obligations, and the confidence of creditors and investors, and the company will
default in the end.
2. Mistakes and Prevention in P2P

The purchase-to-pay process is an integrated system that completely automates the goods and
services purchasing process for a business. It handles all aspects of acquisition from the
purchase of goods to the payment of the vendor. Although the main benefits of this process
are efficiency, cost savings, and increased financial and procurement visibility, mistakes in
the P2P process can lead to inefficiencies, financial discrepancies, and strained relationships
with suppliers.

2.1. Mistakes
2.1.1. Cash and Bank
- Double payment
- Pay the wrong amount
- Clearing debt to the wrong supplier
- Violate duty segregation (A/P to Cashier)
2.1.2. Inventory
- Determine the wrong purchase value
- Wrong allocation supplies tool value
- Violate duty segregation (Warehouse to Accounting)
- No checking quality Inventory IN
2.1.3. Fixed asset
- Wrong classification (Building or Factory,…)
- Depreciate unused asset
- Wrong depreciation start time
- No asset tag
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2.1.4. Account Payable

- Wrong entry (account, amount, and vendor,…)
- Missing additional obligation
- Create multiple codes for one vendor
- Payment earlier deadline
2.2. Prevention
- Checking and reconciling inventory, fixed asset, debt with Suppliers
- Three ways matching: P/O to GRN to INV
- Doing bank reconciliation and supplier debt reconciliation
- Tax code to prevent duplicate vendor code.
3. Mistakes and Prevention in O2C

The order-to-cash process includes all steps from when a customer places an order until the
company receives payment (the cash). The order-to-cash process plays a crucial role in the
overall business operations, contributing to the financial health and success of an
organization. The top benefits from producing this process are revenue generation, customer
experience, and cost savings. Mistakes in the order-to-cash process, however, can lead to
customer dissatisfaction, financial discrepancies, and operational inefficiencies.

3.1. Mistakes
- Clear A/R to the wrong customer
- Forget to issue the invoice
- Over sale, it leads to bad debt
- Create multiple customer codes.
3.2. Prevention
- Reconciling A/R with customer
- Set up procedure for Aging, Collection, or Credit limit
- Tax code for prevent duplicate customer code
4. Mistakes and Prevention in General Accounting

Mistakes in general accounting can have significant consequences for a business, affecting
financial reporting accuracy, compliance, and overall financial health.

4.1. Mistakes
- Missing provision (bad debt and inventory)
- Wrong understanding of law (tax or bank)
- No process for reviewing closing data
- No control for creating account code.
4.2. Prevention
- Setting up a closing schedule in detail
- Segregate authority in the accounting system
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- Preparing a continuous plan

- Work closely with the Auditor or Bank and Tax.

III. Compare and Contrast

Compared with the normal knowledge learned at IU, the knowledge acquired from this
subject is more extended. School knowledge obtained through formal education, structured
curriculum, and classroom instruction emphasizes theoretical concepts, foundational
principles, and academic subjects. On the other hand, we can gain knowledge through the
guest speakers’ experience, interactions, and exposure to working conditions in the
accounting field.

1. Accounting mistakes and Accounting concepts

In university, all we learn about Accounting is the fundamentals, such as cost, management,
and financial accounting. We will learn systematic recording, summarizing, and reporting of
an organizations’ financial transactions to provide information to external users. Or in cost
accounting, we will focus on the analysis, allocation and control of costs associated with
producing goods and services. Nonetheless, this topic gives up a deeper understanding of
accounting problems and offers ways to avoid them by giving solutions. Accounting errors
are extremely useful and practical, combined with the theories taught in school. It can not
only reflect the real-world business situations, but it also enables us to work more
productively and mistake-free in the future.

2. Accounting mistakes and Auditing concept

- Auditing mistakes refer to errors made by auditors during the examination of financial
statements. Its mistakes can be unintentional, stemming from errors in judgment or
application of audit procedures, or they can be intentional, involving fraudulent
activities or misrepresentation. These mistakes can impact the accuracy and reliability
of the audit process and subsequent findings. Accounting mistakes, on the other hand,
refer to errors that occur in the recording classification, or presentation within an
organization. These errors can be unintentional and may arise from various sources.
- Auditing mistakes originate from errors made by the auditors themselves during the
examination and verification of financial records. These can result from oversight,
misinterpretation, or procedural errors. Its mistakes may be detected during the audit
process, through quality control procedures, or during external reviews and
inspections of the audit work.
- When audit failure happens, it can damage the company’s reputation, loss of investor
trust, penalties from authorities, legal implications and higher expenses related to
enhancing internal controls and financial reporting procedures. Effective quality
control methods, adherence to audit standards and procedures, and ongoing training
for auditors are necessary to prevent auditing errors.
→ Accounting mistakes originate from within the organization and are related to errors
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in financial transactions, while auditing mistakes occur during the external examination
of financial records and may affect the reliability of the audit process and findings. Both
types of mistakes have distinct characteristics, consequences, and prevention measures.

IV. Conclusion

Accounting process and mistakes is a significant subject that will help students greatly in
their future accounting work. It offers common mistakes made by accountants to assist us in
avoiding needless reporting errors. Although it has many differences from theory accounting
knowledge at school, the connection between two fields can enhance overall competency,
making individuals more valuable in diverse professional settings.