Accounting-The Power of Process
Ever wonder why a routine activity is so easy? Is it because of the repetition? Most likely that plays a part, but the bigger factor is the process. That series of tasks used to accomplish a certain activity is what really provides the power to affect the outcome; the process is what makes it easy. If you performed a routine activity, using a different set of tasks (a different process), would it be as easily accomplished? Would it be efficient?
Turning to the topic of accounting, many different processes are used. These processes are somewhat uniform across business applications, but they are also very specific to the individual scenario and circumstances involved. The first goal is to provide an efficient process to capture the data and record the transaction into a system that will ultimately report those outcomes in a meanigful way. Again, if there are many different ways to accomplish the end result, its critically important to build a well thought out process, which will increase the efficiency of the accounting or bookeeping and secondly breed consistent application of the tasks - making it easy(ier). This consistency is often overlooked, but is very important to the end result or outcome. Consider recording the same transaction in difffernet ways to different categories? How inefficient is this? And what about the conflicting results that creates?
Once the processes are implemented, the accounting becomes efficient and productive. The benefits - its easier, produces results that are meanigful, are performed consistently and hopefully in regular fashion, and the bigger issue is the fact that efficiency reduces oeprating costs through greater productivity. Now for the more advanced lesson: if you maintain an open mind, you will continuously refine those processes to become even more efficient. Technology, changes in circumstances and simply a better understanding of the activities and end result will necessitate changes and refinement. What soon becomes apparent is that you become more effective. Why? Information is available, that you probably did not have before; time is leveraged by the efficiency gains achieved as the activity becomes routine and knowledge is gained from the results. So, with process comes efficiency that increases productivity, ultimately enabling effectivenss in management and business decision making. There you have it - the power behind effective accounting is the process.
Michael S. Nord | 11/09/2011