The Real Road to a FAST CLOSE………….really!

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There are books on the Fast Close.  There are seminars and webinars.  We come home with great pointers and ideas.  Now we are going to have internal financials produced on the fifth day after Month End.  But somehow we just never get there.  Isn’t it all just so frustrating?  If you are the Controller you are most likely on the front lines of the Month End Close.  Many controllers working for privately held companies end up closing various sets of books, sometimes including  truly diversified business types.  And, if inventory is involved, that adds another layer of complexity.  Here’s what I have discovered and learned observing CFO’s I’ve been associated with:

  • Consider issuing a set of Preliminary Financial Statements with the following caveats:
    • These statements do not reflect the following: (Example)
      • Depreciation Expense
      • Insurance Expense
      • Other Allocations
  • Review all your POST CLOSING Journal Entries
    • Can your software generate automated entries for the Month triggered by the Closing Process?
    • Are you making entries or reconciliations at month end that could be moved to mid-month as long as there’s 30 days between reconciliations?
  • Can you create a ‘CLOSING’ Team, even if it’s just you and one other person.
  • Do you have a MONTH END CLOSING set of Checklists that can be ticked off as processes are completed?

Start ‘GRADING’ your Closing team as a whole after the  FINAL Financial Statements for the period have been issued.

Then go through the same processes shown above next month and every month.  Continue to look for the ‘constraints’ that slow down the closing process.  Then do something about them!  And, as always, consult your outside Accounting Firm to be sure you are on the right track.



I’m working for a rather large client right now to help them build out a corporate infrastructure in a newly created headquarters operation.  There is a lot of involved,  in depth accounting required.  However, because of turnover they have realized that they must document their accounting and finance processes, policies and procedures.  This is an enormous job that we will be undertaking.  Many businesses, large and small, simply do not have an accounting manual or anything close to that.

Let’s imagine that tomorrow, your boss comes to you and says you need to create an Accounting Manual and an Operations Manual and you have three months to get it done.  Where would you start?

First, don’t start from ‘Ground Zero’.  Take a look at Steven Bragg’s work which can be found at  I have his Fifth Edition of Accounting Policies & Procedures and it is a great publication.  Use its’ many templates and forms and customize them to your particular company.  You will be light years ahead of starting from scratch.  There are other manuals you might already have on your bookshelf.   Many of them are really very good.

Second,  don’t think you can just copy  your documentation verbatim.  To document processes and procedures, you have to spend time interviewing people who are involved in the work you are documenting.  You will quickly find that not everything in a book you are using relates directly to your line of business.  You must CUSTOMIZE, CUSTOMIZE, CUSTOMIZE.  That takes time.  However, if you don’t you will be caught in the act of short cutting your way through the project.  USER input is critical.  Users will need to test your processes & procedures  for relevance and accuracy.  Users will have to keep you updated on changes in a process, policy or procedure.  You might consider forming a USER Committee to help you build the necessary manuals.

Third, three months is an ambitious timeline for such a large project.  If you have a Microsoft Exchange Server you might want to use a shared drive to put your documentation out there for employees in an electronic form. (Always check with your I.T. department before you begin uploading to the drive).   If you have a website, take a look at getting your employees behind a locked door requiring log-in with user name and password required.  (Be sure you get the o.k. from your I.T. Department).

Fourth, you must realize that an Accounting Manual or Operations Manual cannot become a static set of documents.  Don’t pat yourself on the back and think ‘job well done’ when the deadline is met.  The end of the project timeline also means the beginning of a commitment to update, edit and modify the manuals you and your committee  have created.  Obviously, it would be much easier if it was all in electronic form.  Doing the same for printed manuals is almost impossible in a big company because of the large number of books that may have to be updated, reprinted and distributed.

It’s quite a project but the payoff should be substantial.  Truthfully, you may have a working manual at the end of ninety days,  but you probably still have work to refine it.  Remember, as controller, you simply don’t have the time to do it all.  Delegating some of this work, with your oversight, will be key to meeting any deadline you might have.





In today’s column I want to talk about a common problem in companies both large and small, public and privately held.  Even publicly held companies struggle to maintain accounting manuals with policies and procedures.  You may ask why there is a need for concern.  A concept we are all familiar with but often overlooked is ‘continuity’.  For instance, the employee that knows how to write up prepays and enter them in the system as well as making any interest calculations is the only one that knows how it’s done.  She’s the one that developed the process.  However, unfortunately, a dispute arises over her salary and she turns in her notice.  She’s not much help in training her replacement either.  Now you are faced with trying to trace back her steps.  Once you figure it out, wouldn’t it be wise to put the process in writing?  I won’t even mention the cross training that could have taken place in years prior to her leaving.  (That’s another column).

Let’s talk about the article that appeared in the January 14th edition of The Wall Street Journal’s CFO Journal, “Surprise! Audits Dig Deeper”( .  The premise of the article is that auditors for companies issuing audited financial statements are under pressure to test internal controls beyond what they have ordinarily tested.  At the heart of that testing is documentation and the need for a transaction to have substance over form.

Quoting the article  “Now, auditors are asking for more documentation, going line-by-line through budgets, sitting in on meetings to observe internal controls in action, and meeting with company accountants to understand their thinking when they signed a specific document.”

Even if your company does not have a requirement to provide audited financial statements, I would suggest you take heed of these audit changes.  Think of your accounting documentation as a safety net.  A good example of that is a written policy and set of procedures to set up a new vendor.  Do you have one that your A/P Department can follow?

As a controller, one of the biggest challenges you have is the day to day management of accounting operations and risk.  Just as in publicly held companies, if your transactional processes are not able to scale up for rapid growth or seasonal demands, internal controls will suffer. In the rush to push transactions through A/P policies may be ignored or forgotten because people are new or ill informed about how that works.  In today’s environment, setting up a vendor can result in the perpetration of a fraud.  It’s even possible to commit a violation of Homeland Security’s accounts payable version of a ‘No Fly’ list of companies and individuals banned from doing business in America.    Who would have believed even ten years ago that vendor mismanagement could result in so much risk to a company.

If you are working for a startup, or a small company who is struggling to grow and thus has put internal controls and policies and procedures on the back burner, where do you start?  I highly recommend ‘The Accounting Procedures Guidebook” by Steven M. Bragg.  Steven Bragg writes prolificly for the accounting industry.  The book is full of great information, forms and templates.  It’s a small investment that can render a large payoff.  It’s definitely one you want in your ‘controller toolbox’.  And, for more in depth information on managing A/P there is always Mary Schaeffer who has published more on A/P than any other other author I know. (

Seasoned controllers know that building any kind of operations manual is not a simple undertaking and requires time and effort to complete.  The biggest single challenge is updating existing policies and procedures.  I’ve seen quite a few manuals gathering dust on a bookshelf somewhere.  All those policies and procedures that took so much time and work to document, print and handout are forgotten before the ink is dry.  Now that we are living under a ‘cloud’ we can use our Microsoft Exchange server (sharepoint) or a web based host so that you no longer have to update only periodically to avoid constant reprints.  Make your manual dynamic and timely and I believe it will provide a more enhanced set of internal controls over your accounting function.

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I love books.  I inherited that trait from my parents.

In today’s post I am going to talk about some of my favorite business books and why they made my list.  Some of the smartest and forward thinking business people I have known are avid readers.  And, they are willing to share their favorites.  It also shows that you love what you do and have committed to lifelong learning in order to stay current and relevant.

There are thousands of books out  there championing the latest business buzz words.  There’s no harm in reading them, but, there are some good magazines like CFO Magazine that can present them in a much shorter version.

What makes a good business book is a matter of personal opinion.  Some of them do stand out more than others.  So, without further conversation, below are a few of my favorites.

THE CHECKLIST MANIFESTO – Author: Atul Gawande Published: 2009

I’d describe it as thought provoking and insightful.  It’s a fascinating read and never boring.  Dr. Gawande wrote this book while a surgeon at a major hospital.  If you are a list maker, you’ll agree with his premise that checklists are critical in more ways than you might think.  The section on how big buildings are constructed through the management of lists is enlightening and the reader can find many ways to apply these lessons to their own careers.  See how list making can organize and streamline your life a a controller as well as your personal life.

OUTLIERS – Author: Malcolm Gladwell  Published: 2008

Author of ‘The Tipping Point’ and the recently published ‘David & Goliath’ Gladwell gives new meaning to ‘thinking outside the box’.   While the anecdotal stories in each chapter will definitely broaden your thoughts about the subjects presented, it’s really a book about how data can provide proof that our assumptions are questionable at best.  I think the lesson learned is to look beneath the surface, to investigate and open your mind to other possibilities.  I think the accounting regimen we are taught in school is just that, regimented thinking.  As controllers, how can you reorganize or streamline your business, if needed, when you can’t think openly enough to see there is a problem.  You’ll find this a great read and one you won’t soon forget.

DOUBLE ENTRY – Author: Jane Gleeson White Published: 2011

Attention all accountants and accounting students.  This book is for you.  It’s strange that in Accounting 101 or 102 they don’t teach the history of double entry bookkeeping.  ‘Double Entry’ is subtitled ‘How the Merchants of Venice Created Modern Finance’.  It’s a small book but understanding how Luca Pacioli developed debits and credits and two sided entries which must balance provides a foundation for our understanding of how what we practice as accountants was developed.

If you have a budding accounting student you know, this book is for him or her.  I recommend you read it before you wrap it!

MAKING IT ALL WORK – Author: David Allen Published: 01/01/2008

In 2001 David Allen published his best selling book ‘Getting Things Done’.  ‘Making It All Work’ is a follow up to that book and where I discovered the author.

Gone are the days where managers, even top executives, had secretaries or administrative assistants.  They’ve been replaced by laptops, tablets and desktop computing.  There’s no one to hand you a paper phone message, or take dictation, or file your paperwork.  On top of that, all of us have more projects, emergencies, fires, personnel, etc. competing for our time.  It’s all exhausting!  His subtitle is ‘Winning at the Game of Work and the Business of Life’.  Treat this book like a manual that you refer to often as you try to squeeze more time out of your day to be truly productive.

ORGANIZED FOR SUCCESS – Author: Stephanie Winston Published: 2004

Stephanie Winston first became known when she published her ‘The Organized Executive’ over thirty years ago.  Of course, her ‘Organized for Success’ is much more current, it is still nine years old.  I agree, a lot has changed during that time.  However, the bones of the book concentrates on those things that keep us all from being more productive in our daily work life.  I consider ‘The Organized Executive’ and ‘Organized for Success’ a basic primer on how to fill the role of an executive based on how others have succeeded.

I recommend you also treat ‘Organized for Success’ as a manual you will refer to over and over.

You should be able to find all these books on  Pick one and dedicate yourself to some personal enrichment drawn from the pages of the books I have recommended.  Good Reading!

Think Like a Consultant! “How to Streamline Your Company from the Inside” – Part IV

In Part I of ‘Think Like a Consultant’ – I outlined the three critical skills you must have.  The ability to OBSERVE, ASK and LISTEN.

It doesn’t matter if you are a new hire a few years out of college or on the cusp of retirement.  If you want to bring true value to your company beyond just getting through the daily grind, you have to raise your head and survey your surroundings.  One of the best ways I know of to do this is to KEEP AN OPEN DOOR and KEEP AN OPEN MIND!  I always welcomed and encouraged feedback from our administrative employees.  Some of the best things we did in my company towards creating greater efficiency was based on recommendations from employees.

A good example of this is an employee who keys in accounts payable all day.  She comes to you and says, I could do this a lot faster if I had a scanner on my desk (or you can fill in the blanks here).  She is a capable and trusted employee who has proved her value over and over.  Therefore, I made sure she had a scanner on her desk that week.  Don’t dismiss out of hand requests from your staff for products they perceive will make their jobs better.  Try your best to do what you can do for them.

In Part II, we presented two common scenarios where the controller fixed the problem at hand but failed to look at the underlying ROOT cause.  You must review the PROCESS and insure it is not flawed.

In Part III, we followed up on the two scenarios presented and looked at suggested policies, procedures and documentation.

Depend on your staff/team to be your eyes and ears so that you have insights you would otherwise not gain into what I call the life cycle of your company.  Show respect for their thoughts and ideas.  But most importantly, ‘Think Like a Consultant’ so that you can keep your company constantly moving towards efficiencies and policies and procedures that help reduce failures in those areas that you are charged with overseeing.

NEXT MONDAY – I’m going to talk about some of my favorite business books and a few I plan to read.  Let me hear from you.  I welcome your thoughts and feedback.

Think Like a Consultant! “How to Streamline Your Company from the Inside” – Part III

As we move into Part III, it’s time to follow up on the ‘scenarios’ presented in Part II.  We presented two different scenarios in which the Controller reported back to the owner his/her findings on two fairly significant (at least to the owner) mistakes that occurred.  In both cases, the Controller gained understanding of how these events happened.  However, there was no INVESTIGATION!  The controller did not ask ‘Why’ (or, how did this happen and what can we do to prevent this from happening again?)  I would want to insure it wouldn’t happen again, just to prevent the pain and embarrassment of events like this that fell under my watch.  with that said, let’s explore Scenario I.

As you will recall, in Scenario I, the company paid the same bill twice resulting in a duplicate payment of $100,000.  Based on the annual earnings of the company, this was a material event.  In fact, the $100,000 was to pay for a capital investment.  It’s time to have a meeting which includes your purchasing agent/employee and your Accounts Payable Department.   Does your company have a documented Capital Expenditures process?  A good process includes a ‘Faceplate’ that includes the justification for the expenditure, what division the expenditure is for, as well as signature lines for top management/owner(s).  Once the sheet is approved, it should be returned to the Purchasing Manager.  At that time, a P.O. should be written.  If the P.O. is electronically generated, a copy should be marked as the ‘Payment Copy’ (in the absence of a software solution provided for tracking these kind of payments).  In the case of a manual P.O. from a P.O. book, it should be policy as to which copy is attached to the Vendor invoice.  It should be the policy that when the vendor invoice is received it should be routed to the Purchasing Manager who checks it for accuracy against the P.O. and attachs the payment company.  Policy would prevent the creation of additional payment copies which would flag when a duplicate invoice was presented.  As the Controller, it should be your responsibility to insure that invoices of any amount are not paid twice.  It is one thing to pay a $75.00 invoice twice and quite another to pay a $100,000 invoice twice.  It may be necessary to have some different policies in Accounts Payable based on the amount of vendor invoices. Before you develop or change any policy or procedure, you should always get input from the employees in Purchasing and Accounts Payable.  Feedback and input is critical to creating an efficient and streamlined organization.  It doesn’t mean you have to act on every idea or concern however, you need to hear them.

DIAGNOSIS:  Either you had no policy in place, with procedures for handling payments of capital expenditures or they were not followed.

In Scenario II, there were numerous violations of policy and internal control procedures.  However, that said, as the Controller, you need to know that people who want to steal or mishandle assets will always be a part of the equation.  They are the ones that have no respect for rules, policies and management authority.  Therefore, there must be ways to monitor constantly by keeping a close watch on your inventory assets (or your cash).  Scenario II involves missing inventory.  The manager was put on probation and one would hope someone in HR or Management will monitor the employee.  Where do you as controller fit in?  It’s time for a meeting.  You have a problem with your Inventory team.  Not everyone on a count team is trained to conduct inventories so as to reveal cover ups.  In Scenario II, the count team took the word of the manager and essentially aided in falsifying the inventory.  I am not saying they were complicit, which generally they are not.  Simply  uneducated in why, when confronted with a manager asking them to write down a number on the physical inventory count sheet representing product they cannot see, they should call you.  Therefore, the weak link is really the count team.   Meet with all persons that participate in inventory audits and review the event.  Talk about how important it is to report a problem with an inventory count.  Also, emphasize that their notes about any ‘outside the norm’ counts are so important.

DIAGNOSIS:  Your count team had a lack of training to prepare them for handling the events described in Scenario II.



Before you begin developing forms/checklists, you have to begin with a written policy.  If you’re looking for help on how to do this, enter Capital Spending Policy or Capital Expenditures Policy into your favorite search engine (Google, Bing, etc.).  You should find plenty of ideas.  If you need some help with this, just leave a comment.


Your count teams need the following:  Written policy on how they will plan and execute the physical inventory.  A printed worksheet listing the products at a given location.  Sheets to attach notes, drawings, etc.  A Physical Inventory CUTOFF Worksheet.  There should always be a count team leader responsible for collecting all the information.  Please note that the Physical Inventory CUTOFF Worksheet should reflect cutoff numbers of invoices, receiving documents, credit memos, etc.  It should also be signed by the Location manager as well as the Count Team Leader.

Again, you can probably find some of these by using a search engine.

REFERENCEThe Accounting Procedures Guidebook by Steven Bragg covers almost every subject a Controller will be exposed to.  In addition, he has some wonderful forms peppered throughout the guidebook.  You should be able to find everything you need to know in his Chapters on Inventory and Capital spending.  I’ve read every page as a result of purchasing it through CPE Link for a self-study course to earn CPE’s.  It reads like a consultant’s guidebook.

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