Page 274 - Accounting Best Practices

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13–5 Eliminate All Transaction Backlogs
Exhibit 13.3 (Continued) 263
6. Add job titles and pay levels to the staffing page as needed, along with
new average pay rates based on projected pay levels made by department
managers.
7. Run a depreciation report for the upcoming year, add the expected depre-
ciation for new capital expenditures, and add this amount to the budget.
8. Revise the loan detail budget based on projected borrowings through the
end of the year. Be sure to list only loan balance reductions based on prin-
cipal pay-downs, not interest payments.
6. Review the budget. Print out the budget and circle any budgeted expenses or
revenues that are significantly different from the annualized amounts for the
current year (do this by comparing the last two columns on each page). Go
over the questionable items with the managers who are responsible for them.
7. Revise the budget. Revise the budget, print it again, and review it with the
president. Incorporate any additional changes.
8. Issue the budget. Bind the budget and issue it to the management team.
9. Update accounting database. Enter budget numbers into the accounting
software for the upcoming year. All tasks should be completed by mid-
December.

13–5 ELIMINATE ALL TRANSACTION BACKLOGS

Accounting departments get in trouble when they develop a permanent backlog
of standard accounting transactions, usually in the areas of cash receipts process-
ing, billings, and payables. When a backlog arises, the focus of the department
shifts to the servicing of this backlog, to the exclusion of all other value-added
activities, such as improving processes or providing better customer service.
Also, backlogs tend to create piles of paperwork in which other documents can
be lost, resulting in extra search time to locate needed materials.
A crucial best practice is to eliminate these backlogs, usually by allocating
extra staff time to them. Once the piles are eliminated, the controller can focus on
increased levels of training and process improvement in order to reduce the num-
ber of people required to keep the backlog from reoccurring. If a company has a
highly variable amount of transaction volume, some backlog may reappear in
periods of high activity, though this can be avoided through the careful use of the
preplanned hiring of part-time workers to assist the regular staff. There is also
likely to be some buildup in the backlog on a temporary basis at the end of each
month and especially at the end of the fiscal year, as closing activities take priority.