Is your accounting team working on the right things and categorizing your numbers into the best reports? If you have ever wondered how valuable or effective your internal accounting department is, then an Accounting Department Diagnostic from Kreischer Miller may be exactly what your business needs.
This in-depth review of your accounting department function explores how to identify what your in-house accounting team is doing well — while also uncovering areas where they could improve.
In this article, we’ll explore what exactly this analysis of your accounting team is, as well as how it can, and does, benefit organizations small or large.
What Exactly is Our “Accounting Department Diagnostic?”
Has your in-house accounting team ever been audited to ensure it’s operating smoothly? A surprising number of businesses answer “no” to this question.
Our Accounting Department Diagnostic meticulously examines your company’s accounting and bookkeeping operations to ensure they are accurate and effectively supporting your business.
This custom-tailored diagnostic often uncovers weaknesses in internal controls and identifies ways to improve how information is processed within your accounting function and beyond.
When to Get an Accounting Diagnostic
How do you know if an Accounting Department Diagnostic would be right for your company? Below are four scenarios in which it might make sense to complete an assessment:
1. You’re a New or Start-up Company
Management wants to ensure proper policies and procedures are in place and adequate internal controls are established, implemented, and followed by employees.
2. You’re a Mature Company with Staff Turnover
Even if your established business has low turnover, a review of your accounting department can still create opportunities for improving efficiency. Management wants to review existing processes to assess whether there are any unknown issues or holes while simultaneously evaluating more efficient ways to maintain sound internal controls. Roles within processes may need to be re-evaluated to ensure proper segregation of duties.
Alternatively, if you are a mature company with high staff turnover, then management wants to establish proper policies and procedures surrounding internal controls so institutional knowledge is not lost with the turnover of staff.
3. You Haven’t Reviewed Policies & Procedures for Several Years
Management wants to review policies as a refresher to ensure internal controls are operating properly. Some policies may be stale due to changes in the work environment such as hybrid or remote work.
Additionally, the company’s cloud-based functionality should be documented. Reporting lines and job duties should be assessed and updated so they align with changes that have been made.
It may also be a good time to create a checklist of corporate governance best practices, including fraud prevention, conflicts of interest, whistleblowers, etc.
4. Your Company Went Through Major Changes
Your company may have undergone changes due to a sale, rapid growth, increased staffing, or anticipated expansion. When an organization has large shifts internally, it’s a good time to reassess operations.
How Does an Accounting Department Diagnostic or Review Work?
An accounting diagnostic can help you gain insight into current processes and duties assigned within the financial reporting process as well as identify potential opportunities to streamline activities and improve resource utilization.
The Kreischer Miller team focuses on the following areas during the process, though other companies’ methodologies may vary:
Focus Areas
An accounting diagnostic can include an evaluation of the following areas:
- Cash receipts
- Cash disbursements
- Budgeting
- Payroll
- Tax compliance
- Financial reporting and monitoring
- Board governance
These areas of focus can be adjusted or expanded based on individual company needs.
On-Site Interviews
Typically, several days are needed on-site at your organization to interview members of the accounting department, management, and other key users of the financial information.
This will establish an understanding of how the information is being used and whether the needs of the users are being properly met.
During the interview process, particular attention is paid to how information currently flows through the accounting department and how technology is being integrated into the process.
There are often opportunities to reduce redundancy in a system, particularly one where an accounting department is left to update what seems to be an endless number of spreadsheets.
Finally, during the interview process, there is a review of the financial reports that are generated on a daily, weekly, and monthly basis.
What Does Kreischer Miller’s Diagnostic Report Look Like?
At the end of the process, a written report is reviewed with key members of the company to discuss the findings and recommendations for improvement.
A scorecard highlighting six key areas is included as part of the report. These areas include:
- Accuracy of the information being generated by the accounting department
- The timeliness to which the information is generated
- Effectiveness of the internal controls in processing the cash coming into and leaving the organization
- The overall efficiency of the systems and technology
- Quality of the financial reports and how they are organized
- Overall sufficiency of the personnel
Have Your Accounting Team Assessed
Many companies tend to view their internal accounting team as a data processing department and a necessary cost center. However, more successful companies have integrated their accounting department as part of their key management team and rely on them to provide quality information to assist in making proper decisions for the business.
Explore our Audit & Accounting Services for Owner-Operated Private Companies or for Private Equity-Backed Companies and reach out to start your assessment, today.