Financial Reporting System Weakness

Automatic DefibrillatorHow much time is spent preparing financial reports?  For many organizations, the simple answer is “a lot”.  As a consultant, much of my time is spent helping companies with financial reporting systems for:

  • Results analysis and forecasting by management,
  • Oversight by the Board,
  • Regulatory requirements imposed by government, and
  • Project and program evaluation.

Recently, I have been using some powerful packages that all suffer from the same weakness:

The weakness is simple and far reaching:  people just don’t use the software.  We spend a lot of time determining the requirements, setting up the system and training the staff, but in the end, if a new report is required, a lot of people go back to Excel.  They take the accounting data they need (or worse yet, enter it manually), do their calculations, format it and print it:  a one-off custom spreadsheet that has no future value other than the immediate need.

True, this approach gets the job done.  However, it can also result in mistakes in the data, inaccurate calculations, and unplanned overtime expense or delays.  And next month, when a similar request comes in, the staff member has to start from scratch with a new spreadsheet.

If you ask them why, their answer is something like, “I don’t have time to fiddle with the new package.”

And it’s true.  People don’t feel they have time to remember how to use the software.  They don’t take time to review their training notes.  They just don’t feel comfortable with the reporting software, so they revert to the tried and true, that second language of accounting, Excel.  Let’s face it:  when you’re in a hurry, you often don’t stop to question whether or not you have chosen the right tool for the job.

Get Creative

In the planning session for the new reporting system, set aside time to talk about those last minute, I-need-this-right-away reports.  You might find that they fall into certain categories.  You might be able to design general report templates with parameters (such as the report beginning and ending dates, the programs / products covered or a range of vendors).   With a pre-designed and tested report template as a base, people will no longer have to start with the proverbial blank slate each time they sit down to create a report.  All of a sudden, spending hours slaving over a spreadsheet doesn’t seem so appealing!

Warning

There is always the risk that when you give managers faster, more accurate reports, they will want more.   Oh well, just think of the good performance review you’ll get!

Tagged with: , , ,

3 Comments on “Financial Reporting System Weakness

  1. Illustrating the importance of sound financial records for non-profit organizations is the recent discovery of accounting problems at some universities that could land them in hot water with the IRS. Details are mentioned in the article at http://fastforwardacademy.com/updates-556-name-cpa-study-material-preparer-for-helping-nonprofit-organizations-too.htm. Apparently even large non-profits are not properly utilizing their accounting resources.

    • Great example, Brian. This is also true in the Canadian context. While the taxation authorities work to help charities by allowing them to claim sales tax rebates, the rules for these rebates are complex and vary from province to province. At the very least, a professional accountant should be involved in the setting up of the system.

Leave a Reply

Your email address will not be published. Required fields are marked *

*