improving inefficient accounting systems by tom sonde cpa
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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
company or pre-printed list
regardless of price
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
company or pre-printed list
regardless of price
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
company or pre-printed list
regardless of price
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
company or pre-printed list
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
Why Doesn’t your System Perform as Promised?
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
Why Doesn’t your System Perform as Promised?
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
Accounting System Improvement Methodology
20
Understand Best
Practices
Understand System
Functionality
Conduct Process Reviews
Accounting System Improvement Methodology
21
Understand Best
Practices
Identify
Opportunities
Understand System
Functionality
Conduct Process Reviews
Accounting System Improvement Methodology
22
Understand Best
Practices
Identify
Opportunities
Understand System
Functionality
Conduct Process Reviews
Develop Future State
Accounting System Improvement Methodology
23
Understand Best
Practices
Identify
Opportunities
Quantify / Prioritize Opportunities
Understand System
Functionality
Conduct Process Reviews
Develop Future State
Accounting System Improvement Methodology
24
Understand Best
Practices
Identify
Opportunities
Quantify / Prioritize Opportunities
Understand System
Functionality
Conduct Process Reviews
Develop Future State
Obtain Agreement /
Funding
Accounting System Improvement Methodology
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
Improvement Opportunities - What to Look For
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
Improvement Opportunities - What to Look For
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
tsonde@silverroad.net
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
tsonde@silverroad.net
Silverroad.net
Copyright © 2012 SilverRoad Solutions.
33
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