In order to have useful financial information (or numbers), they have to be complete and accurate. Complete and accurate is crucial for your numbers to be useful.
So what does complete and accurate mean?
Complete and accurate can be separated by definition only. Complete means that ALL the transactions that occurred in your business have been recorded. Accurate means that the transactions that have been recorded are correct (or accurate). As you can see, in practical application, they cannot be separated. This is because, if your records are complete, they will be accurate.
How do I know if they are complete and (therefore) accurate?
Number one.
ALL the transactions in the bank statements are in the accounting system you are using. How do you know this is true? A simple check determines this. The bank balance at a particular date (usually at month end) in the accounting system is the same as the bank balance on the bank statement for the same date.
TOP TIP: Bank statements are a source document which means it is the foundation from which you work. ALWAYS start here.
Number Two.
In business activity, there is often money paid out for sundry expenses. This could be done via the petty cash or possibly a reimbursement by the directors to an employee for travel costs for example. These expenses can add up quite quickly and it is imperative that these are recorded too.
TOP TIP: record any “sundry or adhoc” expenses on a regular basis, eg: every week or as soon as it happens.
Number Three.
Number three involves being aware of what the “numbers” are. This is when you get a report and you can see something is “not right”. This may be a gut feel from years of experience or it will be from knowing your business and the numbers should be. If your gut is saying something is wrong, go with it and investigate because it is generally correct.
the best way to know if something is “wrong” is to actually know your business numbers. This does require active involvement in the accounting function. This does not have to be looking over the accountant or bookkeepers shoulders 24/7 but rather checking in weekly or at best monthly.
What reports do you need to know your numbers?
You need a report that is useful. A useful report is based on complete and accurate information from your accounting system. If this information is not accurate, don’t waste your time with any reports, they are no good to you. In fact, they will be harmful to your business if used. 
Every business has certain reports that will apply to their business. There are “generic” or “standard” reports like profit and loss (income statement) and balance sheet etc. These are useful in most businesses but you may only need to know certain details in that report eg: the total salary bill for the month or how much VAT is to be paid or refunded.
Example of specific reporting could be
- Food retail. They may need to know what the gross profit is per day or week. A report sowing slow moving stock may be useful too. This may be a monthly report.
- The cost to produce a certain product, like a shoe or cardboard box.
- Car manufacturing, what the cost of machinery breaking down is and how it is impacting the productivity.
The list could go on forever but you can see that the costing report is unlikely to be useful in an accounting business because it is not producing goods.
Knowing how to spot something is “not right” is fairly easy but it all starts with the information going into the system being complete and therefore accurate.