Page 9 - Accounting Best Practices

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Preface

The accounting department is a cost center. It does not directly generate revenues,
but rather provides a fixed set of services to the rest of a company, and is asked to
do so at the lowest possible cost. Consequently, the accounting staff is called
upon to process transactions, write reports, create new processes or investigate
old ones—while doing so as an ever-shrinking proportion of total expenses.
This cost-based environment is a very difficult one for most accountants, for
their training is primarily in accounting rules and regulations, rather than in how
to run a very specialized department in a cost-effective manner. They find a few
ideas for improvements from attending seminars or perusing accounting or man-
agement magazines, but there is no centralized source of information for them to
consult, which itemizes a wide array of possible improvements. Hence the need
for the third edition of Accounting Best Practices.
This book is compiled from the author’s lengthy experience in setting up and
operating a number of accounting departments, as well as by providing consult-
ing services to other companies. Accordingly, it contains a blend of best practices
from a wide variety of accounting environments, ranging from very small part-
nerships to multibillion-dollar corporations. This means that not all of the best
practices described within these pages will be useful in every situation—some
are designed to provide quick and inexpensive, incremental improvements to an
operation that can be installed in a day, while others are groundbreaking events
that require six-figure investments (or more) and months of installation time.
Some will only work for companies of a certain size, and should be discarded as
more expensive and comprehensive accounting systems are installed—it all depends
on the situation. Consequently, each chapter includes a table that notes the ease,
duration, and cost of implementation for every best practice within it. The best
practices are also noted in summary form in Appendix A.
This third edition of Best Practices contains 60 new best practices. These are
concentrated in the areas of internal auditing, accounts payable, finance, and pay-
roll. Some of the best practices involve solutions that have been posted on various
Internet sites, but there are fewer of these best practices than appeared in the sec-
ond edition. Indeed, a great many Internet sites listed in the second edition have
closed down, requiring the author to remove three best practices that had been
listed in that book. The area of application service providers has been especially
hard hit, with about two-thirds of the providers listed in the second edition having
shut their doors in the past two years.
Chapter 15 is new, containing 19 best practices for the internal auditing func-
tion. Though this area sometimes falls outside of the accounting function by
reporting directly to the auditing committee of the board of directors, it more

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