Downsizing, right-sizing, layoff, restructuring, whatever word you use, accounting departments have been consistently trimming staff for decades.
Computers are taking on more and more of the daily routine.
While this is good news for cost control and efficiency, it’s not so good for accounting controls and segregation of duties.
Where you used to be able to separate incompatible functions between different staff, now there may now be only one person available.
The Controls Environment
The Sarbanes-Oxely Act (affectionately known as “SOX”) enacted in 2002, was legislation designed to reassure the investing public in the integrity of financial statements after the accounting scandals of Enron, Tyco and WorldCom.
It imposes some strict requirements on not just the accuracy of financial statements but also the control systems behind them. Those requirements aren’t going away any time soon.
In fact, the US Bureau of Labour Statistics has this to say about accounting clerical positions:
| “As the number of organizations increases and financial regulations become stricter, there will be greater demand for these workers to maintain books and provide accounting services.” |
So, not only are accounting departments being downsized, but they are also expected to meet increasingly strict requirements.
What are companies to do?
The answer may surprise you.
Most people don’t think you can automate accounting controls, but the right technology can actually prevent employees from short cutting the internal control system and provide an evidence based audit trail that will stand up to outside scrutiny.
And the good thing is that it can be added to an existing system even if that system does not have the feature built in!
The Paper Trail
The basic building block of accounting control is the approved document.
Whether it is a supplier invoice, a customer purchase order or a government document, it follows a pre-set trail through the company’s approval process, depending on how much it is and what it is for.
For example, the purchasing manager may only approve invoices from preauthorized vendors under a certain dollar amount.
Anything from a new vendor or above his limit requires further authorization from a more senior corporate officer.
Workflow systems work on scanned images of the document and email.
The company’s rules are loaded into the software, so it can check if the document is from an approved supplier, as well as knowing the authorization limits of all of the staff.
This automation saves a lot of accounting staff time because they don’t even see the document until it has been properly approved. No more squinting at illegible scrawls wondering if that’s the new division manager’s signature or turning the documents back because they aren’t approved.
The computer takes care of all that work for you.
“He’s in Europe”
One of my first jobs in accounting was for a company with a head office in the United Kingdom.
The Vice President of Finance would let us know when he was going overseas and there would be a scramble to be sure that he had seen everything that needed to be approved.
And when he came back, there would be a stack of papers on his desk for approval.
No large transactions could be processed while he was away.
Now, workflow would really have come in handy. Regardless of where the VP is, processes don’t have to halt; everything can be approved via a computer or even a smart phone at any time, anywhere in the world.
Now, isn’t that nicer than coming home to a stack of papers in your in-box?
You might also like:
A Brief History Of Process – From the Industrial Revolution To Today Battling the Paper Addiction-3 Ways to Help Employees Detox ECM & Workflow for Accounting
About iNSIDER: Bill Kennedy
