Speeding up closings;

              speeding Up
Closings
by
Richard A. Patterson
The need for timely financial information by deci­sion
making executives and the urgency of communi­cating
periodic as well as annual results of operations
to shareholders and other interested parties is well
recognized. These requirements have placed an in­creasing
responsibility on financial management to
speed up the information system. The purpose of this
article is to discuss Certain techniques that have
proven helpful in accelerating the closing of the books
and preparation of financial and other operating re­ports.
The most important single factor contributing to
faster closings while attaining the desired level of
accuracy is a strong system of internal control coupled
with well organized and documented accounting poli­cies
and procedures. The first step for a company
embarking on a "speed-up" program is a re-evaluation
of those factors influencing the capabilities of the
accounting system with corrective action taken where
necessary.
Tighten Up the Accounting Procedures
One of the most important of these factors is the
standardization of the accounting system. Preprinted
standard journal entries should be utilized to insure
that all entries are recorded and to reduce routine
clerical effort. Standard charts of accounts and pre­printed
standard trial balances should be developed.
This is even more important in a multi-unit company
where the consolidation process is time consuming.
It is also helpful to maintain individual divisions, plants,
or subsidiary companies on a consistent accounting
basis without regard for changes in tax laws, etc. Most
changes necessitated by tax considerations can be
made on a consolidated basis instead of at local levels
with attendant re-training and other complications.
The number of general ledger accounts should be
kept at a minimum with liberalized use of subsidiary
ledgers. Although the subsidiary ledgers should be
retained on a permanent basis, they do not neces­sarily
have to be formal ledgers, but could consist of
handwritten work papers. This approach reduces the
number of journal entries to be written, speeds up
posting and balancing, and allows several people to
work on various aspects of the ledgers simultaneously.
Another technique for reduction of clerical time and
effort is rounding. Although there are some general
ledger accounts such as Receivables and Payables
which generally are recorded to the penny, many ac­counts
(and related journal entries) can be rounded
to the nearest dollar, reducing the number of digits to
be written and balanced by a considerable percentage.
In large companies many reports can be rounded to
the nearest thousand or ten thousands.
2 THE QUARTERLY