Transactional processing is normally seen as a back office job and business owners place little priority on this important business function.  In many companies processing is rushed at month end to produce the required VAT reports or other ad hoc reports for management.  The problem with this method is that processing can at times fall behind and, due to the month end rush, can contain numerous errors.  Bookkeepers also typically wait for information to come in before they start processing. 

So, what controls should be in place to ensure a more efficient accounting department?

Procedure documents

Each job should have a procedure document, which details exactly what has to be done to complete the task as well as what information is required in order to complete the monthly processing. This document should also list the various deadline dates. These include:

  • When to request certain information from banks or suppliers
  • When monthly returns are due such as PAYE or VAT returns
  • When reports are expected by management
  • When reconciliations are due

The procedure document is like a road map for all the users and also assists the department manager to know when to expect certain reports and when to follow up.

Timing of processing and mini-deadlines

Processing should be done regularly throughout the month with enough time provided daily/weekly depending on the volume of transactions which need to be processed. Mini-deadlines should be set throughout the month to assist with the completion of the various tasks within a job so that the monthly work can be split up into bite-size chunks, which will reduce the stress and errors at month end. These mini deadlines could include:

  • Weekly processing of supplier information and bank statements
  • Various reconciliations
  • Follow up of outstanding debtors
  • Payroll processing
  • VAT reports

Teams and training

It is better to work in teams. That way more than one person knows what has to be done and what the progress is at any point during the month. Should the main bookkeeper become unavailable, there is at least someone who can pick up where he/she left off and complete the month’s work. Teams should meet weekly to discuss any issues or identify any delays so these can be dealt with before month end.

Staff should be properly trained, preferably over a few months (for complex companies) so that they can fully grasp each aspect of the job without being overwhelmed. For simpler company setups where there is only one person in the accounting department, the procedure document mentioned above will come in handy and assist the new bookkeeper by providing a checklist of all the various tasks that need to be completed before month end. 

Reconciliations and review

It is very important that monthly reconciliations are done and reviewed by a manager to identify glaring errors, as well as to ensure that all relevant information has been processed into the accounting records. As a minimum, the following reconciliations should be prepared and reviewed:

  • Bank reconciliations
  • Supplier reconciliations
  • Balance sheet account reconciliations

The manager should also review a profit and loss statement and balance sheet on a monthly basis.

The benefits of having an organised accounting department, and up-to-date accounting records are a more efficient year-end audit, happier and healthier staff, faster reporting for end users like the bank, and more reliable data for use in management decision making and forecasting.

Jenal Pullen,  assisted by Nicolette Weymouth

Accounting services, Durban

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