Accounting Best Practices, Fifth Edition

12–10. Eliminate Multiple Approvals

A typical problem when financial statements are produced is to have employees wait for approvals before they are allowed to complete their tasks, or to pass along work to other employees, who cannot begin until the approvals are given. When there are many approvals to obtain, especially in areas where the approvals are holding up key work products, there can be a substantial impact on the speed of financial statement completion. Typical spots in the financial statement process that include approvals are journal entries, footnotes, the final version of the statements, and the final results from all of the major accounting modules: accounts payable, accounts receivable, payroll, and fixed assets. Given the number of approvals in some companies, it is a wonder that the financial statements are ever produced in less than a month.

There are several solutions that bypass the approvals problem. When reviewing them, one must consider the underlying reason for using approvals, which is to ensure that information is correctly processed. Without an approval, there must be a countervailing system in place to ensure that accurate information is still transmitted to the financial statements. Some solutions are as follows:

• Designate a back-up approver. If there is a continuing problem with finding the person who is allowed to issue approvals, then there should be a back-up approver available. This should still be a person who has a sufficient level of technical ...