I was recently discussing with somebody about the issues around setting up good financial systems for keeping track of your business and reporting to the government.
I recall many years ago our auditors told our book-keeper that we had submitted a tax withholding for our employees twice for one month in error. The book-keeper based on their advice did not submit for one month to correct the error. The government eventually disagreed but we were told that the reason they disagreed was that the government were confused between years.
This issue never came to our attention as partners for several years. Eventually the government proved that they were right and that we owed them the monthly tax withholding plus interest and penalties. This amounted to a substantial amount of money and we were really angry at our auditors. We fired them and told them they were responsible for any penalties. However we were on the hook for interest. I was quite confused at the time and realized I did not really understand many of the financial issues and my partners did not as well.
I concluded that although the issue was complex my responsible was to understand the financial issues and not simply dismiss them to the specialist. If I do not understand the issue, I must pursue it till I am satisfied that I understand. I also concluded that my confusion was legitimate and I should trust my instinct that something was not right. As an owner of the business I had a responsibility to the employees and my partners to understand the financial statement and reporting as oppose to simply leaving it to the specialist.
I still find myself wishing the complex financial issues would just go away. However they do not and if I do not understand an issue, digging into the issue till I understand it will pay great dividends, literally as well as figuratively.
