Improving Inefficient Accounting Systems By Tom Sonde CPA

Improving Inefficient Accounting Systems Facts Senior Management Should Know

NYS Society of CPA’s

Technology Assurance Committee

Tom Sonde, CPA

Is this Occurring in your Organization?

Simple tasks take too long to complete

Too much time is spend validating data

Employees, vendors and customers constantly complain

Too much paper is being used

There is a significant amount of manual data keying and

rekeying

Why Isn’t the System Delivering on it’s Promises?

2

Is this Occurring in your Organization?

Information is not easily accessible

Workarounds, renegade processes and spreadsheets exist

External databases / data warehouses supplement the

system

The promised Return on Investment never materialized

Does senior management even realize how many of the

inefficiencies have been institutionalized?

Why Isn’t the System Delivering on it’s Promises?

3

“The System Can’t do That”

There is a Gap Between what the Software Developers Intended and what you End Up With

“The system can’t do that” may mean:

The software does not offer that functionality

- or -

“It can, but it would require some effort to make the changes

and I have more important things to do”

- or -

“I don’t have a clue if it’s possible”

4

Unlock the Hidden Value

Accounting & Finance Systems

Unlock the hidden value hidden

– Without creating the upheaval of an

implementation

– Without bringing in an army of consultants

– Without spending millions of dollars

Achieve a positive Return on Investment

5

System Not Delivering

Many system issues are not the result of the software.

Why isn’t your System Working the way it’s Supposed to?

6

System Not Delivering

Many system issues are not the result of the software.

They were caused by a flawed implementation.

Why isn’t your System Working the way it’s Supposed to?

7

Implementing new technology does not guarantee efficiency

Teacher

completes

requisition form or

fills out pre-printed

list for items

needed

School clerk

enters data into

system from

requisition

Principal or Dept.

Head approves

and signs

requisition

After data is

entered,

requisition will be

funneled into the

following

Non site-based budget

purchases goes to an

approver initially

Based on the type

of purchase,

requisition is

routed to one of

the following:(1)

Finance Dept. (2)

Site-based budget purchases

go directly to Finance

Custodial - Plant

Operations

Exceptional

Children Division

Applied

Technology

Career

Development

Library Services

Chief Academic

Officer-Textbooks

Teaching &

Learning Assmt.

Interscholastic

Supplemental

Funds-Budget &

Management (3)Type 1

Purchasing Dept/

Senior buyers

receives

purchases in

"requisition proof"

Senior buyers

review requisition

proof, checks for

errors (4)

Other purchases

are routed to a

buyer - based on

assignment

Buyer receives

buyer's copy

Buyer requests

quotes/bids from

vendors (fax, mail,

or phone) Request

for Quotation form

Requisition proof

is generated from

information

entered into

system

If no errors found

on requisition proof

If errors

are found

Purchase order is

generated from the

requisition proof

the next day

Senior buyers will

correct errors and

another proof is

generated

Purchases orders

printed at

Southside location

and delivered to

Admin Bldg.

Senior buyers

separate POs (5

copies)

Orange copy kept

on file at

purchasing office

White PO copy

routed back to

original buyer

Blue copy sent to

Controllers Office

Brown/yellow copy

sent to school

(brown copy is

receivers report)

Buyer signs and

dates PO; sends

to vendor by mail

or fax

Vendor receives

PO and ships

order to school

Vendor sends

invoice to Finance

Dept.

Type 2

Finance Dept.

matches invoice to

receiver's report

System generates

payment when

both invoice and

receiver's report

are entered into

systemSchool confirms

purchase by

sending receivers

report to Finance

Dept. (5)

Type A

Type B

Purchases from a contract

company or pre-printed list

Purchases not from a contract


regardless of price

Teacher

completes

requisition form or


list for items

needed

School clerk

enters data into

system from

requisition

Principal or Dept.

Head approves

and signs

requisition

After data is

entered,

requisition will be

funneled into the

following



approver initially

Based on the type

of purchase,

requisition is

routed to one of

the following:(1)

Finance Dept. (2)



Custodial - Plant

Operations

Exceptional

Children Division

Applied

Technology

Career

Development

Library Services

Chief Academic

Officer-Textbooks

Teaching &

Learning Assmt.

Interscholastic

Supplemental

Funds-Budget &


Purchasing Dept/

Senior buyers

receives

purchases in

"requisition proof"

Senior buyers

review requisition

proof, checks for

errors (4)

Other purchases

are routed to a

buyer - based on

assignment

Buyer receives

buyer's copy

Buyer requests

quotes/bids from

vendors (fax, mail,

or phone) Request

for Quotation form

Requisition proof

is generated from

information

entered into

system

If no errors found


If errors

are found

Purchase order is

generated from the

requisition proof

the next day

Senior buyers will

correct errors and

another proof is

generated

Purchases orders

printed at

Southside location

and delivered to

Admin Bldg.

Senior buyers

separate POs (5

copies)

Orange copy kept

on file at

purchasing office

White PO copy

routed back to

original buyer

Blue copy sent to

Controllers Office

Brown/yellow copy

sent to school

(brown copy is

receivers report)

Buyer signs and

dates PO; sends

to vendor by mail

or fax

Vendor receives

PO and ships

order to school

Vendor sends

invoice to Finance

Dept.

Type 2

Finance Dept.

matches invoice to

receiver's report

System generates

payment when

both invoice and

receiver's report

are entered into


purchase by

sending receivers

report to Finance

Dept. (5)

Type A

Type B





regardless of price

Teacher

completes

requisition form or


list for items

needed

School clerk

enters data into

system from

requisition

Principal or Dept.

Head approves

and signs

requisition

After data is

entered,

requisition will be

funneled into the

following



approver initially

Based on the type

of purchase,

requisition is

routed to one of

the following:(1)

Finance Dept. (2)



Custodial - Plant

Operations

Exceptional

Children Division

Applied

Technology

Career

Development

Library Services

Chief Academic

Officer-Textbooks

Teaching &

Learning Assmt.

Interscholastic

Supplemental

Funds-Budget &


Purchasing Dept/

Senior buyers

receives

purchases in

"requisition proof"

Senior buyers

review requisition

proof, checks for

errors (4)

Other purchases

are routed to a

buyer - based on

assignment

Buyer receives

buyer's copy

Buyer requests

quotes/bids from

vendors (fax, mail,

or phone) Request

for Quotation form

Requisition proof

is generated from

information

entered into

system

If no errors found


If errors

are found

Purchase order is

generated from the

requisition proof

the next day

Senior buyers will

correct errors and

another proof is

generated

Purchases orders

printed at

Southside location

and delivered to

Admin Bldg.

Senior buyers

separate POs (5

copies)

Orange copy kept

on file at

purchasing office

White PO copy

routed back to

original buyer

Blue copy sent to

Controllers Office

Brown/yellow copy

sent to school

(brown copy is

receivers report)

Buyer signs and

dates PO; sends

to vendor by mail

or fax

Vendor receives

PO and ships

order to school

Vendor sends

invoice to Finance

Dept.

Type 2

Finance Dept.

matches invoice to

receiver's report

System generates

payment when

both invoice and

receiver's report

are entered into


purchase by

sending receivers

report to Finance

Dept. (5)

Type A

Type B





regardless of price

Teacher

completes

requisition form or


list for items

needed

School clerk

enters data into

system from

requisition

Principal or Dept.

Head approves

and signs

requisition

After data is

entered,

requisition will be

funneled into the

following



approver initially

Based on the type

of purchase,

requisition is

routed to one of

the following:(1)

Finance Dept. (2)



Custodial - Plant

Operations

Exceptional

Children Division

Applied

Technology

Career

Development

Library Services

Chief Academic

Officer-Textbooks

Teaching &

Learning Assmt.

Interscholastic

Supplemental

Funds-Budget &


Purchasing Dept/

Senior buyers

receives

purchases in

"requisition proof"

Senior buyers

review requisition

proof, checks for

errors (4)

Other purchases

are routed to a

buyer - based on

assignment

Buyer receives

buyer's copy

Buyer requests

quotes/bids from

vendors (fax, mail,

or phone) Request

for Quotation form

Requisition proof

is generated from

information

entered into

system

If no errors found


If errors

are found

Purchase order is

generated from the

requisition proof

the next day

Senior buyers will

correct errors and

another proof is

generated

Purchases orders

printed at

Southside location

and delivered to

Admin Bldg.

Senior buyers

separate POs (5

copies)

Orange copy kept

on file at

purchasing office

White PO copy

routed back to

original buyer

Blue copy sent to

Controllers Office

Brown/yellow copy

sent to school

(brown copy is

receivers report)

Buyer signs and

dates PO; sends

to vendor by mail

or fax

Vendor receives

PO and ships

order to school

Vendor sends

invoice to Finance

Dept.

Type 2

Finance Dept.

matches invoice to

receiver's report

System generates

payment when

both invoice and

receiver's report

are entered into


purchase by

sending receivers

report to Finance

Dept. (5)

Type A

Type B





regardless of price

New Technology

Inefficient Old Process

New Technology

Inefficient New Process

8

Successfull Implementations Address both Process and Best Practices in addition to the Technology

The Foundation of a Successful System Includes Process and Best Practices

Pro

cess

Tech

no

logy

Be

st P

ract

ice

s

9

Who’s to Blame?

Why Doesn’t your System Perform as Promised?

Project Implementation Team

Process Owners

Training

Consultants

Other

1

2

3

4

5

10


Project Team

Process Owners

Training

Team not adequately represented by process owners

Project team didn’t have a true understanding of the underlying processes

Team assumed “built-in” Best Practices were all that was needed

Project lead was an external consultant who focused on the technology

Process owner requirements were based on the old system

Process owners had limited experience with large IT projects

The end-to-end process was not adequately addressed during the system design

Inadequate training was provided

Training was technology focused and excluded process issues

Training manuals and related documentation were inadequate

11


Consultants

Other Common Issues

Consultants understood technology, not your business

System knowledge resided with the consultants and was lost when they left

Consultants viewed the IT department rather then the end-user as their client

The project was sold on a fixed fee

Scope creep occurred

Not enough resources were available

The wrong resources were involved

Resources were diverted to unexpected issues

There was an aggressive “go-live” date

Issues were addressed by postponing them - “It will be addressed during the next phase or upgrade”

12

TEC

HN

OLO

GY

To be effective a system must address: • Process • Technology • Best Practices

TEC

HN

OLO

GY

How Can you Improve your System and Related Processes?

Accounting System

Improvements are can be Achieved Across your Organization

General Ledger

Accounts Payable

Billing

Budgeting HR Purchasing

The methodology can be applied to any area or function

14

Best Practices

Professional organizations

Conferences

Other companies

Books

Consultants

System Functionality

Best Practices and System Functionality Knowledge

How do you obtain knowledge of Best Practices and

System Functionality?

User manuals

Vendors web site

Books

Consultants

15

System Functionality - What You Need to Know

You don’t need to become a technology expert

– You don’t need to understand the nuts & bolts

– You simply need to understand what it is capable of

You need to be able to speak intelligently with a systems

expert

– Is what your are asking for possible?

– How long will it take to complete?

– What will it cost?

– Will it impact other users?

Understanding System Functionality

16

Obtain an Understanding of End-to-End Processes

Interview process owners (end-to-end)

Develop process maps

Understand inputs and outputs

Document requirements

Use your knowledge of system functionality and best

practices to develop improvement recommendations

Conduct Process Reviews

17

The Time Required For Improvement Varies

Improvements can be accomplished within a day or can

take months

– Quick hits

– System adjustments / Process realignment

– Significant changes

Usually the system work can be performed by in-house

staff or using contract labor

Implement quick wins to gain credibility and traction.

Improvements are Easier to Address then an Implementation

18

Understand System

Functionality

Accounting System Improvement Methodology

19

Understand Best

Practices

Understand System

Functionality


20

Understand Best

Practices

Understand System

Functionality



21

Understand Best

Practices

Identify

Opportunities

Understand System

Functionality



22

Understand Best

Practices

Identify

Opportunities

Understand System

Functionality


Develop Future State


23

Understand Best

Practices

Identify

Opportunities

Quantify / Prioritize Opportunities

Understand System

Functionality




24

Understand Best

Practices

Identify

Opportunities

Quantify / Prioritize Opportunities

Understand System

Functionality



Obtain Agreement /

Funding


25

Process Reviews Uncover Opportunities

Best

Practices

Process

Technology

Look for opportunities to:

– Make an individual process more efficient

– Better utilize the system

– Apply Best Practices

26

Training

Access to Data

Reporting

Obtain a through understanding of the process before developing training

Training should incorporate both process and technology

Training should be developed with the process owners skills sets in mind

Anyone that requires access to data should have the appropriate access

Ideally access should be provided electronically rather then on paper

Access to data should be timely

Reports should be developed with the user in mind

Review how process owners are using their reports

Identify user needs that are not being met by current reports

Reports for routine activities should include all required data on a single report

Improvement Opportunities - What to Look For

27

Self Service

Paper

Integration

Employees, vendors and customers should utilize system self-service functionality whenever possible

Employees should take advantage of vendor provided self-service capabilities

Question why every piece of paper in a process is necessary

Wherever possible replace paper with an electronic solution

Fully integrate all systems

Require large volume vendors to provide electronic feeds

Invoice large volume customers electronically


28

User Manuals, Policies &

Procedures

Data Input

Develop user manuals, policies and procedures that cover the entire process rather then a “How to use the software” solution

Ideally all data should be fed to the system electronically

Manually input data should never be keyed more then once

Eliminate manual forms by requiring staff to complete electronic forms via the web or directly into the system using self-service functionality


29

You’ll be Amazed at What You Find!

Set aside five to ten hours over the course of a week or

two

– Select a simple process area

– Sit with the process owners and review the process in detail

– Review the system documentation to understand the

systems functionality

– Identify best practices

I Challenge You to Try This!!

30

Free “How to”

Helpful Hints for Improving the

Productivity of Accounting

Tom Sonde, Principal

(973) 722-9304

[email protected]

SilverRoad.net

Thank you for

your attention!

Any Questions?

32

Tom Sonde Biography

Tom Sonde, CPA

Tom is a member of the NYS Society of CPA’s Technology Assurance Committee and has written several articles on this topic that have been published in the CPA Journal and Financial Executive Magazine. He is a principal with SilverRoad Solutions, a management consulting firm specializing in business process improvement.

He began his career over twenty years ago as an auditor with KPMG and started performing process improvement work while at The Dun & Bradstreet Corporation. He subsequently worked as a consultant at major consulting firms such as KPMG Consulting and was the VP Global Business Transformation at Misys, plc.

Tom has extensive experience in the designing and implementing process improvement initiatives during system implementations.

Tom Sonde, Principal

SilverRoad Solutions

1362 Tamarack Road

Manasquan, NJ 08736

(973) 722-9304

[email protected]

Silverroad.net

Copyright © 2012 SilverRoad Solutions.

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Improving Inefficient Accounting Systems By Tom Sonde CPA

Economy & Finance

Transcript of Improving Inefficient Accounting Systems By Tom Sonde CPA