Project Management Accounting: Budgeting, Tracking, and Reporting Costs and Profitability, Second Edition

Organizational Structure

The organizational structure of your potential client is telling with regard to what it reveals about business ethics as well. You need to focus on whether or not authority, duties, and responsibilities are properly defined within the organizational structure. From a design perspective, you need to determine whether or not information can travel freely through the organization and whether or not this occurs at all levels, is distributed in a timely fashion, and is accurate (see Exhibit 1.1, The STO Model). It is important to note that you are trying to determine whether an organization is designed to operate openly and transparently, not whether it does. In all likelihood, you will not be able to determine if the company operates as designed until you are engaged. After you gain familiarity do not be surprised to learn that there's a formal organizational structure on paper and in reality a slightly different one. When assessing the organizational structure you need to be mindful about the size and complexity of the organization.

At the risk of stating the obvious, the larger and more complex your client is the more important an open and transparent organizational structure. In addition to the characteristics of organizational structure, you should get a sense of whether or not management demonstrates character, integrity, and ethical values. These characteristics are reflected in management's attitudes, awareness, actions, philosophies, and operating styles. ...