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Simplification of Accounting Items – Top 10 Ways to Make Your Life Easier
in 2016
By Steve Jordan, CPA - Manager
March 2016
You finally have the 2015 year closed, and your CPA firm has
completed its annual audit and tax work. Now, how can you make
2016 a much more stress-free year?
Our professionals have created a “Top 10” list just for you. Even if all
10 of these suggestions don’t work for you, we hope you can take
away at least a few tips to make your 2016 run as effectively as a
well-oiled machine.
#1: Get organized
Easier said than done, right? But seriously, this could be the one
thing you might have been putting off for months that could lead to
the highest reduction in your department’s waste (and, in turn,
generate increased productivity). Think of organization in two
different ways: paper organization and digital organization.
As we continue to evolve into the digital world, there is still a need for
some paper trails. Hopefully, however, your department has reduced
the use of paper and thus the need for bulky storage cabinets and
large piles all over the office. Take a look at what you really need to
retain on paper and how you can more effectively store that
information for quick retrieval.
The same goes for digital files. We continue to add folders and
subfolders to our computers to store our files. How often do we go
through that storage system and “clean up” files we no longer need?
Also, take a look at how you are storing files. Does it make sense?
Do you need to keep a separate file for each month, or can you move
old files to a different location after a set amount of time? Should
some files be stored on the network for everyone to access? These
questions and others should be answered periodically so you can
assess the best use of space on your computer.
#2: Let your accounting software work for you
Perhaps you think of your accounting software the same way you do
that old Tupperware container in your refrigerator that hasn’t moved
for three weeks—you work around it and try to avoid opening it at all
costs! Remember, while your accounting software might not be
perfect, it likely has several features you can utilize to become more
efficient and effective in your role.
First, utilize those automatic monthly entries. You probably use them
for things like prepaids and accruals, but think outside the box. Are
there other areas that you could use the feature for? How about your
monthly debt payment? Of course principal and interest are different
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each month, but if you know the annual amount for each, you could
set up an automatic entry and record the monthly interest on more of
a “straight line” basis. You may not match up to the bank each
month, but at the end of the year, you should be right on. What other
accounts can you set up as automatic?
Hopefully you are also utilizing your accounting system’s ability to
manage a budget. Budgets can be a powerful tool, but it can be quite
cumbersome if you have to key monthly financial data into an Excel
spreadsheet just to compare it to the budget. Most systems allow you
to enter and manage a budget internally and produce reports
periodically to compare actual results to budgeted numbers.
Budgets aren’t the only tool you should be utilizing your accounting
system for. There’s also the bank reconciliation tool your software
has embedded in it. Are you using it? By manually keeping an Excel
spreadsheet to perform a bank reconciliation, you are creating an
additional administrative burden that might be unnecessary.
Excel is a great tool, but there are times when we overuse Excel and
create unnecessary schedules and reconciliations that your
accounting software is likely equipped to perform for you.
Finally, make sure you take the time to update your accounting
system periodically. Some of your frustrations may come from the
fact that you are not running the latest and greatest version.
#3: Make a list of month-end close procedures
A large portion of our monthly responsibility relates to that sometimes
dreaded month-end close process. We suggest taking some time to
analyze this process. Before you start making recommendations to
change things, however, the first step is to completely understand the
process. This can be done by making a checklist of steps that need
to be completed in order to close out the month.
This might be a project that cannot be completed by one person
alone. Hopefully you have multiple people who are contributing to the
monthly close process. Be sure to include their duties and responsibilities
in the checklist so you have a complete list compiled.
#4: Know that timing is everything
Now that you have a list of “duties” that must be performed in order
for the year-end close to be finalized, it is time to start analyzing the
process. Look at the duties and ask yourself which should be performed
first and which items need to wait until later in the process. One
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factor you might not have thought about is whether a few of the
duties can actually be performed before the month is actually complete.
Another thing to consider is materiality in relation to timing. Do you
need to analyze all accounts on a monthly basis, or are there some
accounts you can review on a quarterly basis? This analysis should
be based on the risk of error with that account and the volume and
dollar value of the respective transactions in that account. If you have
an account, such as prepaid insurance, with very little risk, very few
transactions, and not very many dollars, maybe you could consider
performing a formal reconciliation of that account on a quarterly or
semiannual basis rather than a monthly basis.
Obviously this is not something you would want to implement on a
cash account (high risk, large number of transactions, and large
dollars going in and out throughout the month). However, if you could
eliminate some accounts from your monthly reconciliation list, your
process could become a little more manageable.
#5: Realize you don’t have to do everything
Using the aforementioned “list” in #3 above, consider examining
whether the right people are performing the risk tasks. Delegation is
a powerful thing. Obviously you would want to delegate based on risk.
While you might keep the higher-risk accounts, it is probably time to
think about utilizing the staff you have to help with the other tasks.
Like many accounting departments in small businesses, you may
have a very limited staff to pull from. In fact, you might be the only
one in the accounting department. Don’t let that stop you. Think
outside the box. I have a few clients who have begun using the
receptionist for certain low-risk monthly close tasks. This can be
advantageous on multiple levels: while you are delegating these
tasks off your (full) plate, you are also engaging the receptionist. You
might be surprised how much they actually appreciate being able to
make a greater contribution to the company, and in my experience,
they have taken their new responsibility very seriously and have
produced very accurate results.
Other “outside the box” thinking might be to involve a board member
in this process. Again, you will want to match their skill set with the
task at hand, but this could be another way to not only ease the
administrative burden, but at the same time strengthen your internal
control structure by eliminating certain duties that create problems
with segregation of duties.
#6: Make it a game
Now that you have this month-end close process working efficiently,
you can up the ante a little. I had one client who used a stuffed
monkey called the “adjustments monkey.” When the auditors
identified an area in which an adjustment was needed, the stuffed
monkey was delivered to that department or person’s desk. While it
was all in good fun, you would be surprised at how few adjustments
they had the next year.
© Wipfli LLP
You could use a similar program with the month-end close process.
Whoever gets their assigned tasks completed last would get the
monkey (or other stuffed animal) for the rest of the month. This could
be a lighthearted way to increase the speed of the closing process.
You might be surprised at the results you see!
#7: Document policies and procedures
Many companies have very good policies and procedures in place to
function on a day-to-day basis and prepare accurate and timely
financial data. Preparing accurate and timely data is so important to
the management of a company because it allows the opportunity to
respond and react to situations as quickly as possible. Time is
money, right? Unfortunately, these same companies which have
great policies and procedures fail to document these policies and
procedures. If one key person were to leave, the entire company
would be in flux. This is why it is critical to have policies and
procedures written down and saved. If your company has a
documented policy and procedures manual, assign someone to
analyze and update that manual at least annually. Employee turnover
is something we often neglect to think about, but it is inevitable in
most organizations and can be planned for.
The other thing to consider in this area is cross-training. The more
people you have who are capable of performing the functions of
others, the more flexibility your organization has. This will also allow
you to transition smoothly through times of employee turnover.
#8: Don’t let little problems become big problems
While you are probably familiar with the song from the Disney movie
Frozen, “Let it Go,” you don’t necessarily want to take this approach
when you notice small differences and errors in your company’s
financial data. If you take that approach, you are creating an unnecessary
risk that you will let it grow into a larger problem. This is an area we
suggest investing time in upfront rather than trying to look back after
the fact and determine when and where the problem started.
Small problems are always easier to diagnose and fix. Also, by
digging into these items on the front end, you might identify other
problems and risks that you can avoid in the future.
#9: Take a fresh look
A client recently had four different payrolls: one for weekly hourly
associates, one for biweekly hourly associates, one for management,
and one for biweekly salaried associates. It was like that for years.
One day, I asked the million-dollar question, “Why?” Amazingly, they
didn’t really have an answer (other than, “That’s the way we have
always done it.”). They discussed it internally and eventually made
the decision to move everyone to the same biweekly payroll. They
have since noted large savings in time and money.
If you are constantly tracking down data for multiple payrolls, maybe
it is time to make the switch to simplifying your payroll process. What
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other procedures do you think your company is doing only because
“that’s the way we have always done it”?
#10: Ask your CPA
While you prefer to handle all of your accounting-related issues
internally, don’t be afraid to reach out to your CPA if you encounter
an unusual situation or if you are planning on making some
substantial changes to your policies and procedures. A fresh look
from an outsider can sometimes be very beneficial.
Conclusion
Again, not all 10 of these tips may pertain to your company, but
surely you were able to take away a few ideas that can directly help
you and your company. At the very least, the article has, we hope,
heightened your awareness that there might be better ways to do
things. By constantly analyzing the process by which you operate,
you can identify areas of weakness that can be improved. Each of
these process improvements should not only lead directly to saving
time and money, but also help you to drastically reduce your stress at
work in 2016.
© Wipfli LLP
About the Author
Steve Jordan is a manager in our Rockford, Illinois, office and serves
the manufacturing, construction, government, and employee benefit
industries while contributing to Wipfli’s internal training and
development team through the development and delivery of several
training programs. Contact Steve at 815.484.5626, or email him at
sjordan@wipfli.com.
About Wipfli LLP
With associates and offices across the United States, Wipfli ranks
among the top accounting and consulting firms in the nation. The
firm’s associates have the expertise, skills, and experience to advise
in areas from assurance and accounting to tax and consulting
services. In addition, through the firm’s membership in Allinial Global,
Wipfli can draw upon the resources of firms in over 100 countries
from around the world. For more information, visit www.wipfli.com.
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