Monday, 28 January 2008

Grow the Business, Not the Administration

Charity for the homeless Focus Ireland has tripled in size without increasing its finance department thanks to accounting software from Exchequer.

This item in Ireland's Technology News Service, SiliconRepublic, caught my eye because this is the message accounting software vendors have been preaching for years.
The appeal of the Exchequer product was chiefly the flexibility of reporting it allowed. The ability to upload information directly from Excel and InfoJournals on to the Exchequer system was of great value.

“For our payroll needs alone that saves about one week in working time per month,” says [Finance Director Louise] Callaghan.

Even if you have an older system and don't want to go through a whole system conversion, you can probably make a significant improvement to your system by:
  1. Purchasing flexible, general purpose report writing software such as Crystal Reports.
  2. Reorganizing your Chart of Accounts so that the details needed for reporting are kept separate and not added together.
But don't try to do everything at once. Find the area that is most in need of updating and work there. Also, don't try to go back and change history, implement the changes from now forward. After all, Focus Ireland had been using its new system for six year before the article was written. The savings didn't happen over night.

Friday, 25 January 2008

French Bank Loses $7.2 Billion

Did you hear the one about the rogue trader who cost a French bank two years worth of profits? These days, it's nothing new. We seem to hear about people routinely circumventing companies' control systems and causing an uproar, whether for personal gain or not. One part of the news coverage caught my attention though:

Kerviel shocked and impressed executives with the complexity and scale of his trades. Using his knowledge of Societe Generale's control systems, gleaned in his former monitoring role, he escaped detection. Most of his positions went unnoticed by colleagues and superiors as Kerviel covered his tracks.

Kerviel (the rogue trader) appears to have had inside knowledge that he used to his advantage. This bald statement flies in the face of the reason for internal controls. Every employee should understand their employer's control systems. The problem is that people rely on the "systems" rather than taking personal responsibility. I'm willing to bet that the knowledge Kerviel used focused more on knowing which people would approve his trades without looking at them than at uncovering some hidden weakness in the system.

As a manager I worked for once commented, "computers do not control people, people control people". It doesn't matter how good the system's reports are if people don't look at them and act on them.

Think of that the next time someone from accounting sticks a pile of 50 payments on your desk for your signature. By signing them you are saying "I agree." By initialing the work of a clerk in your department you are saying, "I agree". Think I'm exaggerating? Next time you're standing in line at the bank, watch a junior teller take something to their supervisor for their initials and watch how much attention the supervisor pays to the transaction.

Then take a look at your own organization. In an energized system, everyone understands their responsibility and fulfills it.