Our client was dealing with a reconciliation issue that proved
to be symptomatic
of a much larger issue-the need to re-engineer their finance
function.
By way of example as to how important balance sheet account
reconciliations are, Accume Partners had a client dealing with a
reconciliation issue that proved to be symptomatic of a much larger
issue-the need to re-engineer their finance function. The
company was faced with a multi-million dollar unexplained
difference on its balance sheet. Their controller recognized
the need for help in framing the project and managing ongoing
communication with their bank, vendors and worldwide offices.
Initially scoped as an assistance project to resolve differences
for specific balance sheet accounts, the engagement quickly became
a comprehensive balance sheet restoration project. We soon
identified that the firm had under-invested in the accounting and
finance infrastructure; so as the firm grew in size and complexity,
the people, processes, technology and reporting were less than
efficient and effective for keeping pace. We found that
accounting policies, procedures and responsibilities were not
clearly defined, daily financial control metrics did not exist,
internal controls were not up to industry standards, and the vendor
approval process required strengthening.
We worked closely with the client to reconcile accounts and
develop meaningful short-term and long-term recommendations aimed
at improving overall daily processing and the control
environment. In reconciling accounts, we identified and
resolved over 700 out-of-balance conditions and aged items in the
detailed sub-ledgers. We re-engineered the receipts and
disbursements functions, developed monthly reconciliation
procedures, introduced automation and provided training to the
client's staff.
One of the strongest control measures available is the
independent preparation and review of balance sheet
reconciliations. This control measure is often overlooked or not
properly measured and monitored by organizations. Read more about
reconciliations in our February 2011 Accume Alert. The alert
emphasizes the importance of reconciliations, provides some best
practices and reminds auditors of the essential steps to consider
during an examination.
Click
here to learn more.