Accounting Best Practices, Fifth Edition

13–11. Track Function Measurements

The role of the accounting department does not just include completing daily transactions and issuing financial statements. In addition, it must issue periodic measurements to the rest of the company that show the results of key activities. A poorly organized accounting department may issue this information only grudgingly when senior management demands it. This approach does not allow the accounting staff to derive a set of standard procedures for the collection of measurement information, nor does it build up much goodwill with the management team.

A better approach is to create a standardized set of performance criteria that the accounting staff will calculate and distribute at set intervals. An example of such a report is shown in Exhibit 13.5. By using this report, management can spot operational problems at once and correct them. Also, the controller can play a key role in determining which measurements are used; this can be a pivotal item in some situations, for other department managers may not want to have their poor performance measured and reported. Also, with a standardized set of measurements, the controller can build the measurement task into the accounting department’s daily work schedule in a manner that does not interfere with other operations, while also allowing for the construction of a procedure that standardizes the calculation ...