While there are many benefits to implementing integrated software systems and bolt-on technologies, significant performance improvements are often possible from a direct inspection and redesign of underlying work processes.  While it’s never a good idea to automate a bad process, it’s always a good idea to formally review process steps on a regular basis to capture quick wins by eliminating costly work steps and bottlenecks.

The accounting close is a work process that happens frequently (typically every month), requiring significant resources.  It is also a work process that is difficult to benchmark because of industry and company-to-company differences.  No matter how diligent you are it’s hard not to end up comparing apples with oranges.  Rather than completing a complex benchmarking exercise that yields questionable results, at Peeriosity members can explore discrete differences in design using a capability called iPolling^TM, allowing them to quickly canvas leading companies to create a clear picture of design alternatives. 

Recently a Peeriosity member used iPolling^TM to explore how companies were reviewing manual journal vouchers (JVs).  The results were strikingly bi-modal, with companies either reviewing all, or almost all, JVs prior to the periodic accounting close; or they were reviewing less than half, or none of the JVs prior to the periodic close.

Here are the details:

Many of the responses included additional comments to help clarify the member’s response selection.  Here are some of the comments, preceded by the response choice selected:

·        Response: None – a back-end process is in place.  We rely on system access controls and a robust account reconciliation process versus reviewing or approving all manual entries.

·        Response: 90% to 99%.  We may not always get to review manual JVs prior to entering them in the system; however, they are always reviewed shortly thereafter.

·        Response: 100%.  We view this as a key control element and we conduct reviews to ensure that it happens in line with our standards.

·        Response: 100%. Currently 100%; however, we are in the process of implementing a systemic workflow process for approval

·        Response: Less than 50%.  We have a review and approval process on all manual JVs over 250K USD entries prior to the close of the ledger, and after close, the review takes place as a part of the balance sheet reconciliation process.

·        Response: 50% to 59%.  All journals are reviewed prior to results being finalized by Group although the reviews take place at various points prior to this.

·        Response: Less than 50%.  We review specific high-risk JVs prior to closing the ledger. After closing the ledger, JVs above a set dollar amount are reviewed. All remaining JVs are reviewed on a sample basis.

·        Response: Less than 50%.  We apply a manual JV approval process, where depending on the entry amount we will have a review completed by a team lead, a manager, and/or a director.  For recurring low-risk JVs we define a pre-approval process to eliminate the need to review individual JVs.

·        Response: Less than 50%.  We review about one-third of all manual JVs prior to the close, and we also use a back-end review process.

·        Response: None – a back-end process is in place.  We have a very standardized Close process so all JVs are approved after the Close. Unusual JVs are discussed prior to posting but still approved after the close takes place.

What process does your company follow to review manual journal vouchers prior to the periodic accounting close?  What opportunities do you have to stream and improve this part of the close process?

Who are your peers and how are you collaborating with them?

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“iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated e-mail system, Peer Mail^TM, members can easily communicate at any time with others who participate in iPolling.