Your membership benefits are suspended for non-payment of dues. Make a payment to renew access.
Renew
by John L. Daly, MBA, CPA, CMA, CPIM, Executive Education, Inc. | Apr 20, 2021
Most accounting departments are not meeting their user’s expectations. According to my informal surveys, only about 5% of companies can create a real-time income statement. Granted, these aren’t, GAAP compliant. However, in some companies, users can confidently pull decision-useful financial information at any time.
In a virtual close environment, month-end involves little more than completing the work for the previous day. Then, the financial reporting focus changes from “Where were we as of the end of last month?” to “Where are we right now?”
How do you achieve a virtual close? It is not a single project, because accounting is not a single process. Getting better is best achieved in the context of a continuous improvement process.
The journey to providing real time information begins with accessing your current business processes. Look for the “low hanging fruit.” What transaction streams are most cumbersome, require the most work and generate the most errors? People who have studied the cost of quality believe most organizations expend 30-35% of their effort redoing things that were not done right the first time. Accounting is no exception.
Errors often occur because the organization has poorly conceived standards. Creating unambiguous standards helps drive out errors, requiring less auditing, faster reconciliations, better data quality and better confidence in your numbers.
In all business processes, complexity is bad. Complexity causes cost. Complexity causes mistakes, slows processing time and increases auditing effort. We need to turn chaos into a simple, reliable process.
Each process improvement project makes your life easier and gets you one step closer to having better information available in real time. When you are able to give your financial statement users usable information at any time, month-end becomes just another day and month-end GAAP financial statements are old news.
Take on month-end improvements with John and the MICPA during this upcoming virtual session: Shorten Month-End: Closing Best Practices (4-hour PM Session).
John L. Daly, MBA, CPA, CMA, CPIM, MICPA member since 1980, is a Chelsea, Michigan-based management consultant specializing in costing, pricing strategy and pricing model development. Previously, John spent fifteen years as a CFO including a Tier 1 automotive parts supplier and a large restaurant chain. He is the author of Pricing for Profitability, published by Wiley & Sons and more recently, a novel, Tool & Die. You can reach him at Daly@ExecutiveEducationInc.com.
Source: Executive Education, Inc.
Back to List