Accounting Error

Terry_Turner

Good afternoon,

If an Employee makes an Honest accounting error which means that the net profit appeared greater than the actual. It was an error on the accounting software.
Some bonus's were paid because of this.
In previous years the accountant has created P&L For these purposes.
Can the employee be sacked for this mistake?

antrobus

Terry_Turner wrote: »

Good afternoon,

If an Employee makes an Honest accounting error which means that the net profit appeared greater than the actual. It was an error on the accounting software.
Some bonus's were paid because of this.
In previous years the accountant has created P&L For these purposes.
Can the employee be sacked for this mistake?

I'd say 'yes'.

Competence would be the issue here.

Terry_Turner

I thought that too.
The other argument is; the particular employee is a high flyer with impeccable competence, attendance, commitment etc. They have never made any previous mistakes in the 6/7 year service.

Mr.Generous

Yes can be sacked and hopefully not prosecuted as well.

asajj

The company should have ensured that there are sufficient controls in place to avoid such mistakes. Such as 4-eye review. Accountant's work should have been review by a peer or a senior. What was FD doing ?
Is it a senior accountant making this mistake?
Pretty much every accountant can make mistakes. That's why internal controls should be in place to avoid these. Fraud is a different issue though and harder to detect.

Probably company can argue that accountant should have known better though.

Terry_Turner

The employee was Financial Controller, now GM. Change of duties over the last year.
Final accounts are done by an accountant:
MD asked for PL, GM provided the incorrect figure etc.

asajj

Providing wrong figures and posting wrong figures to PL are not the same though. GM would get those numbers from somewhere , a calculation - wouldn't they? Why there was no controls in place?

Also why MD didn't ask for back up to make sure figures were correct?

Terry_Turner

GM created P&L. Incorrectly posted by finance assistant. GM should of noticed the error.
No further checks are in place.

asajj

Looks like issues all over the place. Directors should have ensured a robust internal control around this process. If it is a listed company, inflated profits also cause other issues.
As said, yes he can be sacked in my opinion. However, company might take a different approach.

Undervalued

Terry_Turner wrote: »

Good afternoon,

If an Employee makes an Honest accounting error which means that the net profit appeared greater than the actual. It was an error on the accounting software.
Some bonus's were paid because of this.
In previous years the accountant has created P&L For these purposes.
Can the employee be sacked for this mistake?

Well, any employee can be sacked for any reason or no reason at all!

I assume what you are actually asking is "were they to be sacked would they be likely to win an unfair dismissal claim"?

If it were a genuine mistake from an established employee with an otherwise good record then I think it would be a close call but even then I wouldn't put a lot of money on the dismissal being ruled unfair.

Even if it was unfair any compensation would be significantly reduced as they would certainly have contributed to their dismissal.

No tribunal can actually force reinstatement. Even if it is "ordered" the company can refuse and the only remedy is a little extra compensation.

Mr.Generous

Did the person who made the mistake benefit financially in the form of a bonus? That's what would settle it.