Protiviti’s latest annual Finance Priorities survey highlights a growing focus by respondents on the period-end close, consolidation and accounts reconciliation. Clearly, organizations are keen to improve in these areas. However, the growing number of systems that organizations now have in place to manage inventory, manufacturing, procurement, vendors and fixed assets, to name a few, make the financial close increasingly challenging, particularly when a failure in one system can have a domino effect on all the others. Add to that a volatile business environment, and a smooth, efficient close can seem almost impossible. Accounting, the final gate keeper for the numbers before financial reporting receives them, usually has to bear the brunt of the extra effort, and can often be unfairly perceived by the rest of the company as the bottleneck in the process.
Help is at hand, but it requires some soul-searching first. There are many areas within the organization you should be evaluating to resolve the financial close bottleneck. Here are some suggestions:
Does your Asset Management System capture and track all assets? Does it provide you with both GAAP and tax-based computations? If not, consider evaluating your current Asset Management System’s capabilities.
Does your ERP accommodate both tax-based and GAAP-based trial balances? If yes, are you leveraging all those capabilities? If not, it should be a point for future consideration. This could result in a significant reduction in time spent by tax professionals reconciling book-to-tax differences.
Are you spending days at month-end calculating employee hours? Consider investing in an automated time-keeping system that integrates with your HR system. This could alleviate time spent tracking, calculating and accruing for hourly employees at month-end.
Are your invoice, PO, and Payable systems fully integrated? Are vendors properly established? How often do you evaluate the vendor list for completeness to ensure that Accounts Payable is always in sync? These are a few areas that could be the cause of additional time spent at month-end remediating and reconciling differences.
There are many questions like these, to which the answers can be straightforward. Implementing a solution is a challenge, especially for larger entities, but ignoring such challenges will only make them bigger. Consider evaluating your own processes and systems to determine if all functionality is being leveraged. You may be missing out on better practices that your own systems already provide. Once you’ve set up your systems and improved your processes accordingly for maximum efficiency, the extra labor in the accounting department that causes so much internal disharmony will vanish. Instead, you’ll be all set for happy holidays – and the only bottlenecks you’ll see will be at festive occasions!