Page 249 - Accounting Best Practices
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                                                              Financial Statements Best Practices
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                            ‘‘Create a Closing Schedule” section, a controller has a complete set of documen-
                            tation on hand for producing the financial statements.
                                    Cost:                 Installation time:
                            12–13 CONDUCT TRANSACTION TRAINING


                            Once the preliminary financial statements have been completed, the controller
                            must carefully review all expense, revenue, and balance sheet items to see if there
                            are unusual variances, investigate all of them, and make corrections that result in
                            an accurate financial statement. Depending on the number of errors and the time
                            it takes to research them, this error-checking phase can seriously extend the time
                            required before financial statements are produced.
                                The best practice to eliminate a large number of these errors is to conduct
                            detailed transaction training for all employees who have a role in entering trans-
                            actions into the computer system (typically a sizeable group). The reason for
                            doing this is that the controller’s final review of the financial statements is only a
                            method for removing errors after they have already been made; by eliminating
                            these errors before they happen through proper training, the number of errors that
                            the controller must later research will drop dramatically.
                                The training must be very specifically targeted at eliminating recurring errors.
                            This is done through a feedback loop. All errors discovered in the financial state-
                            ments should be noted in a log, along with the name and position of the person
                            most likely to have caused the error. This information is reviewed each month,
                            and a short training program is created, targeted both at the specific person who
                            made the mistake and the type of error that occurred; if the error appears to be a
                            common one for many employees to make, the training can be given to everyone
                            who enters the same transaction. Also, the training programs may be used to update
                            the initial training that all employees receive in transaction processing, thereby
                            avoiding errors in the initial training program. Mandatory reinforcement training
                            is also useful, both as a reminder for experienced staff and as a part of the core
                            training for new recruits, thereby keeping the focus on error reduction over the
                            long term.
                                The main problem with this approach is the cost of training. If there are
                            many people entering transactions, the training required to cover all of them can
                            be considerable. In these cases, it may be necessary to scale back to a small num-
                            ber of seminars per year, or else to issue bulletins describing problems, or to use
                            on-line training through the computer system. All of these approaches are less
                            expensive than comprehensive and frequent training, but are also less effective.
                            At worst, there should be a follow-up program with the specific individuals who
                            make errors, so the worst offenders can be targeted for immediate improvement.
                            Also, some of the people who need training may work for other departments, so
                            the controller may have to exercise some tact in asking other department heads
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