Accounting Best Practices, Fifth Edition

13–2. Continually Review Key Process Cycles

As a general rule, any system will begin to degrade as soon as it is created. For example, a new purchasing process cycle will begin almost immediately to encounter exceptions to the rules, as well as special situations that spawn a subset of extra procedures that do not appear anywhere in the procedures manual. Further, the process will not be maintained very well, resulting in lots of excess data in the system, such as the records of suppliers that have not been used in years, perpetually open purchase orders, even though the orders were filled long ago, and supplier invoices that have a permanent “hold” slapped on them so that they cannot be paid. The example is only for accounts payable, but the same problem applies to all processes. Thus, over time, all of an accounting department’s processes will be in desperate need of a tune-up.

That tune-up is provided by a rarely used best practice in which a designated employee is in charge of constantly reviewing process cycles. In some companies, this person is called the “process owner,” with responsibility for the flow of information through a specific process and for any changes to it. When someone is assigned to review process cycles, there should be a very detailed set of tasks to be reviewed. To use the previous example, the process owner should review the list of suppliers in the computer to see which can be deleted, check on open purchase orders to see what can be closed, review the ...