Spending time on business analysis will enable you to make better plans for the future of your business. The planning cycle starts with a goal of where to go, an idea of how to get there, and a method for measuring progress. Next comes evaluating the growth, asking what enabled progress, and determining what needs to change.
All these steps should be supported by the numbers and data provided by the accounting system, which is one of the reasons that companies close their books at the end of the month. Over time, the monthly results paint a picture of how the company is doing.
It is not enough for the numbers/data to simply be entered into in the accounting system; the employees in the accounting department must verify the accuracy of the data. To accomplish this, there needs to be work papers to prove the precision of the accounting process.
Here is a list of some of the standard work papers accountants prepare:
Reconciliation
Used to compare the balances of two different sources, the most common form of reconciliation work papers you’ll see are the ones from the bank that compare the general ledger cash balance to the bank statement. Others, such as vendors and creditors, send out statements for the same purpose.
Roll Forward
This starts with the beginning balance and lists debit and credit activity during the month, leading to the ending balance. These explain to the reader why the balance of an account, such as equity, has changed during this period.
Schedule
A schedule is used to list the contents of an account, including accounts receivable, accounts payable, employee receivables, and fixed assets. The total of the schedule equals the balance of the associated general ledger account. In some accounts, this information is also "aged" to reveal how old items are and which items need attention.
Good quality software will help make month end easier. Enterprise resource planning systems like Sage 100 ERP, Sage 500 ERP, and Sage ERP X3 make data retrieval and reporting easier and faster.
If your organization is considering upgrading your management software, Oates & Company can assist you in reviewing your process needs. Contact us to see how we can help.
