No matter what kind of business you own, having accurate, up-to-date financial data is essential to making timely, informed decisions and driving growth.
Yet many business owners find themselves struggling to get the kind of comprehensive financial information they need. Others might receive an abundance of financial reports, but the information lacks relevance, context, or arrives too late to be actionable.
Some are unsure exactly what data they need, but they’re wise enough to recognize that whatever it is, they’re not getting it.
If any of this sounds familiar, don’t waste time searching for answers when accounting isn’t your background. Instead, consider a more measured and effective approach: Get a comprehensive accounting team assessment first.
What is an Accounting Assessment?
An accounting assessment is a thorough evaluation of the staff, processes, performance, and efficiency of your finance and accounting functions. It analyzes areas like financial reporting accuracy, utilization of financial tools and software, compliance with regulations, and internal controls.
None of these factors are observed in a vacuum. They’re considered in context of their overall alignment with the goals of your business and the roles, skills, and responsibilities of your team.
What an Accounting Assessment Isn’t
Rest assured, a well-executed accounting assessment is not a tool for finding fault. When done correctly (see “Best Practices” section for recommendations), it’s an empirical method of analysis that’s designed to pinpoint the finance and accounting functions your business does well — and those it doesn’t, or lacks.
The goal of an accounting assessment is to fully understand and capitalize on your existing team’s strengths, identify gaps and opportunities for improvement, and optimize processes for better accuracy, efficiency, compliance, and data. It’s a tool that helps you ensure the department has who and what it needs to operate effectively, which is key to supporting your business’s financial health and your strategic objectives.
What Does an Accounting Assessment Look At?
To ensure meaningful results, an accounting team assessment should be comprehensive, structured, and tailored to your industry and business. That latter point is an important one. You won’t get a particularly illuminating assessment from a one-size-fits-all questionnaire or approach. A customized analysis led by finance and accounting professionals with experience in your industry, on the other hand, is far more likely to reveal useful insights about the state of your finance and accounting people, processes, and performance. That said, the primary considerations you should expect any assessment to include are:
1. Staff Evaluation
- Skill Level & Expertise: Are your staff equipped with the technical knowledge and skills needed for today’s financial challenges?
- Role Alignment: Is each person performing tasks suited to their strengths, or could roles be better optimized?
- Capacity Assessment: Is your team over- or under-resourced for your company’s needs?
2. Systems & Technology
- ERP Systems & Software: Are your current systems up to date and configured to and/or capable of streamlining operations?
- Automation Opportunities: Are tasks (e.g., payroll or reconciliations) automated to save time and reduce errors, or are there areas still holding on to manual processes?
3. Processes & Workflow
- Efficiency of Current Processes: Are there bottlenecks or repetitive tasks that slow down progress? Where and why?
- Compliance & Risk Management: Are all processes aligned with regulatory requirements to ensure compliance and mitigate risks?
4. Data Relevance & Delivery
- Report Clarity & Timeliness: Do the reports you receive provide actionable insights, and are they delivered before key decision-making deadlines?
- Customized Reporting: Are financial outputs aligned with your specific industry and business demands?
Best Practices for Conducting an Accounting Assessment
Ensuring the integrity of the assessment process is crucial to obtaining accurate and actionable insights. For this reason, I don’t recommend having an internal leader or manager perform your organization’s accounting team assessment. It’s too easy to overlook or misinterpret internal inefficiencies when one is too close to the problem and/or the people.
Instead, seek a professional, external perspective from an independent third-party firm. Ensuring that both the assessment findings and any recommended solutions that follow are unbiased will assure credibility — particularly important when presenting results to stakeholders and allocating resources to make changes and improvements.
If possible, look for firms with industry-specific knowledge and experience that have worked with and/or conducted assessments with organizations similar in size to yours; they’re more likely to understand and offer insights that speak directly to your team’s challenges.
Any reputable firm you consider should be current with the latest standards, laws, and regulations in finance, accounting, and your industry. Their expertise on all three fronts will aid your organization in compliance, best practices, and mitigating risk in areas that might not be evident to internal staff.
What Does an Assessment Reveal?
When done well, an assessment of your organization’s accounting and finance functions will reveal skill gaps in your staff, outdated software or systems, workload overlap or inefficiencies, bottlenecks in processes, wasted resources, areas of risk, and much more.
That’s why, when comparing firms that have experience assessing the accounting and finance functions of organizations like yours, I also advise you look closely at their approach to problem-solving. Are they collaborative? Can they help guide or implement solutions? Do their values align with your organization’s?
Rather than relying on extreme or broad-stroke measures, more experienced firms are usually better equipped to customize solutions to your circumstances, and their approach should reflect that. Ideally, they’ll look at your organization holistically and at its issues individually, focusing on making targeted improvements that impact the whole, such as:
- Upskilling and training staff to ensure they’re adept at relevant software, abiding by regulatory rules, and able to meet your business’s demands now and in the future. Your team’s skills are critical to safeguarding your finance and accounting functions as the organization grows and/or team members transition or retire.
- Replacing or upgrading legacy systems with modern technology tools can drive ease and efficiency. For instance, upgrading to a robust ERP system or adopting cloud-based accounting solutions often streamlines operations, reduces errors common with manual or hybrid accounting methods, boosts efficiency, and enables your team to get you the accurate financial data you need for forecasting and informed decision-making.
- Eliminating unnecessarily duplicated efforts while ensuring strong internal controls can increase efficiencies, mitigate risk, and make better use of existing resources.
- Making clearer distinctions between roles and their tasks and responsibilities, so nothing falls through the cracks, processes don’t slow or get interrupted even if certain staff members are out or leave, internal controls are assured, etc.
- Adding needed bandwidth or skills and expertise by outsourcing functions or roles like bookkeeping, payroll, or fractional CFO services, giving you scalability and reliability without the expense of hiring additional staff.
A Direct Path to Better Performance
Ultimately, an accounting assessment isn’t an expense; it’s an investment in the foundation of your business. Its aim is to empower your finance and accounting team for long-term success, and along with it, your organization.
Ensuring your accounting department has the right people, skills, resources, tools, and processes in place is a critical first step to ensuring you get the financial and operational data you need to make informed decisions, strategize, and lead effectively.
If you’re not getting the financial clarity and support you need, reach out to Tom Shemanski, leader of Rehmann’s manufacturing industry specialists and CFO services team, at [email protected] to determine if an accounting department assessment could benefit your organization.