Page 244 - Accounting Best Practices

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12–8 Defer Routine Work
is issued, say to the 25th day of the month, which allows the accounting staff to
complete the bank reconciliation much sooner, though there is still a risk that
the final few days of the month may contain an unrecorded expense that will
not be found until the following month’s bank statement. Also, the outside
auditors will object to a bank statement that does not extend to the last day of
the month, so the final statement of the year must be converted back to the tra-
ditional month-end variety. Third and best, the accounting staff can subscribe
to its bank’s on-line transaction review system (assuming it has one), which
allows someone to review all checks received every day and to maintain a run-
ning bank reconciliation. By using this final approach, the bank reconciliation
is always perfect and all expenses are spotted on the same day they are
recorded by the bank. As a result, there is no need to worry about unexplained
expenses appearing on the bank statement and the reconciliation can safely be
shifted out of those few frenzied days when the financial statements are being
produced. Though any of the three variations noted in this paragraph can be
used, only the last one is a completely foolproof way to avoid missing some-
thing on a bank statement that should be recorded as a current expense.

Cost: Installation time:

12–8 DEFER ROUTINE WORK
An accounting department is usually overwhelmed by its ongoing volume of
work, without the extra crushing load of creating and distributing the periodic
financial statements. Many of these tasks, such as payments to suppliers, invoic-
ing to customers, daily or weekly reports to management, or the processing of
cash, are vital ones, and cannot be delayed for long. As a result, the accounting
staff is accustomed to working long overtime hours during the first week of each
month, not to mention a blackout on vacation time during this period. Also, the
following week is sometimes a frenzied one as well, since the accounting depart-
ment must catch up on the necessary work it did not quite have a chance to com-
plete in the previous week. In short, producing the financial statements is a hard
lump for the accounting department to swallow.
The solution is to carefully review the tasks currently scheduled for comple-
tion during the first week of the month and see if there are ways to eliminate them
or shift them into a (much) later week. For example, management may be accus-
tomed to receiving a daily report of sales and cash receipts; it may be possible to
completely eliminate this report for a few days during the beginning of the month
so that the workload is completely eliminated, rather than being shifted into the
next week. Completely avoiding work is always the best option, but for some
tasks, there is no alternative to shifting it forward a few days. Examples of this
kind are paying suppliers or billing customers—this must be done, but a judi-
cious delay of a few days will not do an excessive amount of harm to these basic