Earthquake illustrates need for preparedness in accounting

13 March 2011

A senior department head at The University of Auckland Business School says Christchurch's earthquake has tragically highlighted the urgent need for comprehensive accounting systems and reliable back-up records.

Professor David Hay, head of the School's Department of Accounting and Finance, says disaster recovery in an accounting systems sense is incredibly important when natural disasters happen.

Many businesses have emergency plans for maintaining staff safety and plant infrastructure, but neglect to ensure accounting systems and financial information are intact and up-and-running as soon as possible after traumatic events.

"It is incredibly important to have data backed up and stored offsite so you can get to them after a disaster," Professor Hay says.

"Nowadays, this is very easily done, as there are web-based services that will store your data for you. Businesses should also have access to replacement infrastructure, so that they are prepared if their everyday facilities become unavailable.

"I believe many businesses in Christchurch - particularly those which were housed in now destroyed buildings - will suffer upon recovery with the loss of their accounting systems. This could cause serious and ongoing aftershocks for many businesses."

Professor Hay says all businesses should have plans for when a disaster occurs. "Businesses around New Zealand should put themselves in the shoes of Christchurch's stricken counterparts and learn the lessons from last Tuesday’s earthquake in an accounting systems and financial information sense."