Since the inception of quality processes and definitions in the early 1950s by the century’s most notable and respected contributors, W. Edwards Deming and Joseph Juran, every industry has made attempts to wrestle with and apply this elusive practice into their business models. Theorists, statisticians and businesses have made millions of dollars writing books, creating tools, giving lectures and growing consultant teams to rebrand, redefine and remodel business practices around the core value of quality. The accounting industry is not immune.
Quality control focuses on developing and maintaining a service or product that is economical, useful and satisfactory to the customer. Quality involves the entire business process and every employee. Accounting functions are integrally linked to every aspect of business activity. Quality control in every part of the business must be supported by the corresponding level of quality control in accounting.
Accounting practices can have a long-term impact on the success and even survival of a business. Inefficiencies and inaccuracies can destroy value. Managers often consume hours of time reviewing reams of paper that, in the end, do not capture the essentials of costs, expenses and trends. This blocks effective process improvement and quality decision making necessary for optimal performance in their business functions. The management model applied to business’ accounting functions is often focused on explaining variances instead of understanding the financial integrity of the business, forecasting future results and making changes based on quality improvement of the service or product for the customer or end user.
Other quality issues associated with business accounting include poor organization of data, tardiness in receipt or review of financial data, sporadic reporting and assessment of key indicators, erratic allocation methods, and non-standardization of allocations.
Failure to understand the functions behind the spreadsheets can further impact your revenues as that lack of understanding begins to make itself known to your external customers and vendors. The accounting department needs to be aware of policies, procedures and standards required for your industry, corporate structure and customer base. Management needs to monitor compliance with quality standards to ensure that vendor payments and contract terms will be executed, payroll administration and withholdings are managed, adjustments against income are made, and record keeping is adequate. This list is not all-inclusive, and each industry and business will have variables. Reaching and maintaining a balance between your business and customer needs while promoting adherence to legal and regulatory entities is necessary to ensure the growth and maturity of the business.
If you find yourself without all of the accounting resources your business needs, you may wish to outsource these functions. Many public accounting firms offer business services and support designed to assist your internal accounting department or allow the firm to serve as your accounting department. Electronic communications and file-share services make this function seamless to you and your staff. As a business manager, you can select from all of the services available or tailor the menu to meet your individual needs.
You may choose to keep the accounting function internal. In this case, it may be helpful to review the software and the policies and procedures surrounding the accounting processes in order to implement quality practices that meet the growing needs of your company. There are many guidelines created to promote trust and reliance upon the established standards. The accounting industry makes every attempt to safeguard investors, employees and customers in various environments. Recent news indicates that this has not always been a guarantee that a business has good practices in place to ensure the quality of their accounting principles and decisions. This may increase governmental regulation and oversight of business.
To assist in this arena, many public accounting firms also perform audit and assurance activities to review internal practices and ensure the application of general accounting procedures. These services focus on assisting you to achieve your business objectives while reviewing historical and prospective financial statements in accordance with industry and government standards. An independent and objective audit serves to increase the trust level of boards of directors and organizations conducting business with the audited company, while improving and ensuring the accounting and business functions of your organization.
Setting up sound processes across an entire organization and adhering to them allows for efficiency, effectiveness and quality. Failure to build accounting and finance functions into your quality model could be a fatal business error. iBi
