In addition to evaluating the overall accounting system, assessments are made of the coordination of effort involved in processing transactions. Efficiency of systems, procedures, and processes: Systems that are efficient keep costs down and improve accuracy and timeliness.This assessment evaluates how quickly transactions are processed, accounts reconciled and reports produced, and measured against data from like-size companies. Timeliness of processing transactions and reporting:Since accounting data is historical in nature, the speed at which it becomes usable information is critical.A quick barometer of the department’s accuracy is the volume of audit adjustments required each year, or the extent of year-end closing entries versus those made during monthly closes throughout the year. Other assessment areas include cutoff procedures, valuation of assets and liabilities, and the consistency of recording transactions. Accuracy of information: Assessing the overall accuracy of the accounting output focuses on the quality of the reconciliations, account analysis, and the effectiveness of the day-to-day accounting processes.The diagnostic typically focuses on the following six key areas of a company’s accounting: This process, they may monitor gross margins when evaluating direct labor and the production team, order generation statistics for the sales team, or lead times when evaluating the engineering and other indirectīut how is the accounting department evaluated? Is the size of the department appropriate given the volume of transactions running through the company? Do the level of internal controls align with the owner’s risk appetite? How accurate are the reports that are being generated?Īn accounting department diagnostic is a great tool to help an organization answer these questions. Business owners need to be acutely aware of the operational efficiencies of all facets of their company.
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