Page 238 - Accounting Best Practices

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12–1 Move Operating Data to Other Reports
Exhibit 12.1 (Continued) 227
Best Practice Cost Install Time
Work Timing
12–23 Complete allocation bases in advance
12–24 Conduct daily review of the financial
statements

people within the accounting department, which makes it a simple matter to alter
the tasks of just that small group. Also, these are mostly procedural changes, ones
that do not require expensive and problematic computer programming alter-
ations. Further, there is little need for the participation of other departments.
Thus, for all these reasons, the risk and investment associated with most of these
best practices are low.
The two glaring exceptions are automating the period-end cutoff and using
inventory cycle counting to avoid month-end inventory counts. In the first case,
there is a need for programming; and in both cases, the complete cooperation of
the warehouse staff is required. Given these two additional variables, these best
practices become not only the most expensive and time-consuming ones to
implement, but also the ones that are most likely to fail.
However, with these two exceptions, best practices for the production of
financial statements are generally easy to implement.

12–1 MOVE OPERATING DATA TO
OTHER REPORTS

A major factor in the delay in sending financial statements is the inclusion of
operating data in the statements. The reason is that this information, such as scrap
rates or employee turnover, is not contained in the financial information that the
accounting staff normally deals with, nor is it readily obtained by creating ratios
or comparisons of the financial data. In short, this information can be hard to
obtain. The situation is worsened by the lack of control of the accounting staff
over who tracks the information, as well as its accuracy once it is obtained. For
example, a subsidiary may forward information about its customer backlog that
seems suspiciously high; the controller has the options of including the provided
data in the financial statements or of holding off on the financial statement distri-
bution while requesting and waiting for a review of the numbers by the sub-
sidiary—which is under no obligation to do the review. Thus, including operating
data in the financial statements not only can delay the issuance of the statements,
but also does nothing to ensure the accuracy of the operating information.