At Long Last, A Sexy Accountant!

Accountants have not been treated well by Hollywood.  (I don't need to perpetuate the stereotype here.  Even non-accountants know what I'm talking about.)  So, it was good to see that the Toronto International Film Festival has a film about an accountant on a sexual adventure.  Here's the summary (with thanks to the Globe and Mail):

Jonas Chernick plays Jordan Abrams, a sexually inept accountant/dweeb from Winnipeg who, after getting the heave-ho from his long-time girlfriend (Sarah Manninen), flies to Toronto where he eventually meets Julia (Emily Hampshire), a stripper/lap dancer with a heart of gold, a mountain of debt and culinary ambitions.

Er . . . never mind.

Budgeting Blues

The Division Manager looked at me.  “Don’t ask me why we didn’t meet budget.  Those budget numbers aren’t mine.  They’re way too high.  I never agreed to that.”  If you are a financial analyst, that quote might be very familiar to you.  It should be so simple, right?  The division budgeted $X million in sales.  The year is half over, so they should have reached 50% of $X million, but they’re actually less than that.  All you want is a reasonable explanation.  Instead, you get an argument about the budget.

Sometimes, it’s a stalling tactic, but sometimes the person really doesn’t remember or doesn’t know where the budget numbers came from.  Budgeting is more of an art than a science.  In theory it’s easy.  Every division does some crystal ball gazing and submits their best forecast for the coming year.  The numbers are assembled for the whole company and after a negotiation about who gets what share of the available resources, the budget is set.

In reality, it can get a lot more complicated.  The negotiations can go back and forth.  Numbers get adjusted.  To understand the final number, you have to understand the history.  The problem with spreadsheets is that when you change a cell, whatever was there before is lost.  So there may be nothing to tell you that the final sales number was increased due to a sales promotion that actually never happened.

Some budgeting systems solve this by allowing you to enter a series of budget adjustments instead of changing the cells directly, but if you’re like most of us, still using spreadsheets, having a system that locks in previous versions of a spreadsheet can save you a lot of hassle later on.  If you have locked in versions of the budget, not only will you understand what’s in the numbers, you’ll be able to prove it.

Scaling the Document Mountain

We were standing in “The Archives”, looking at twelve-foot high shelves mounted on rollers so that they could be crammed together.  Each one was filled with row after row of filing boxes.  I had just asked the silly question of whether all of the documents could be scanned to save money on storage.  The Archivist informed me that scanning to Archive Standards would take 37 person-years.  Now, most people aren’t interested in preserving historical documents for future generations of scholars.  All we really want is access to the information on the documents.  Still, staring at row after row of filing cabinets can give you that unpleasant sinking feeling in your stomach.

When you’re faced with a mountain of documents, what do you do?  Here are five practical suggestions:

1. Clean House First – Some documents are more valuable than others.  If there’s anything that can be easily weeded out, start there.  Make sure you have a document retention / destruction policy.
2. Draw a Line in the Sand – Start now.  Maybe scanning all the history is too much work or too expensive right now.  You can still contain the problem by setting a date after which all documentation will be scanned.  Later, as you get to know the system, you can selectively go back into history and scan the most important documents.
3. Different Documents Different Strategies – Some documents are easier than others.  If you have standard forms, for example, where the same information appears in the same place, scanning can actually capture important information, such as company names, as text, as well as creating an image of the document.  That way, you can build a database as well as a library of scanned images.  You may also find that some documents don’t need to be scanned at all because you already have electronic versions that can be transferred, instead of being printed and scanned.
4. Pick the Low Hanging Fruit – Some departments’ documents are more easily scanned than others.  Accounting is usually well organized, with documents filed for later retrieval and an annual transfer of old documents to storage.  Start there and gain some experience.  Don’t take on the whole challenge at once.
5. Look for Golden Opportunities – You may actually get the most bang for your buck from the creative side of the business, which may have the most chaotic filing system.  Being able to browse through work done for previous customers can be a fertile source of new ideas for designers and salespeople.

Bottom line:  get someone who knows scanning in to take a look at your situation.  This is a growing area with lots of new ideas and fresh approaches.  When someone says, “It can’t be done,” don’t just take their word.  Do the research.

Workflow Software

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.”  (Source:  http://www.bls.gov/ooh/office-and-administrative-support/bookkeeping-accounting-and-auditing-clerks.htm)

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 a computer approach called “workflow” can stop employees from shortcutting 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 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.

“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.  Because workflow is based on scanned images, they 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?