Accounting Best Practices, Fifth Edition

13–1. Consolidate All Accounting Functions

A company with many locations will frequently have a separate accounting staff in each location. By doing so, the overall cost of accounting tends to be much higher than the industry average because there is a great deal of staff duplication. For example, each location requires its own controller, assistant controller, and accounting manager. Also, transaction volumes may not be great enough to fill the time of the accounting staff in each location, leading to underutilized personnel. Also, the quality of management may vary significantly between locations, resulting in differences in the level of efficiency, with locations experiencing the same transaction volume requiring significantly different volumes in the number of required accounting staff. Further, with accounting conducted in many locations, a well-run company must schedule a large number of internal audits in all of those locations to ensure that procedures are completed in accordance with corporate standards. Finally, extra labor is needed at corporate headquarters to consolidate all of the accounting records for financial reporting purposes. This formidable array of inefficiencies results in a significant increase in accounting expenses.

The solution to this tangled web of accounting problems is to consolidate all or most of the functions into the smallest possible number of locations. By doing so, fewer accounting managers are needed, while procedures can be standardized ...