The role of a part time CFO covers a lot of territory, from accounting program setups to due diligence reviews, even company sales/exits.  The one common denominator, however, is the need for an initial review.  An in-depth look at current and past financial statements, KPIs, tax returns, policies and procedures, business plans, and related details.  It is the rare company that doesn’t require some form of accounting clean-up.

What do I mean?  Here are some examples:  Policies and procedures are unwritten.  Accounts have not been reconciled.  Depreciation has not been tracked. Year end adjustments remain un-booked.  More common still is a cluttered or deficient Chart of Accounts (COA). 

Charts of Accounts become ineffective for many reasons, including: 

Too Many Users with Administrative Privileges 
I work with many companies that allow 3 or more users to edit/modify their chart of accounts.  When the COA is complex, with hundreds of accounts, I’ve seen users create new accounts simply because it’s quicker than finding the appropriate ones.

Duplicate Accounts
A classic example of this problem is the use of numerous, catch-all accounts like:  Uncategorized Expenses, Miscellaneous Expenses, Other Expenses, Ask My Accountant, and others. To misquote the movie, Field of Dreams, if these accounts are created, they will be used.     

Lack of Departmentalization, Classes, Categories 
Companies sometimes attempt to expand their COAs without adding Classes or Categories, leading to ineffective reporting and problems. Tasking bookkeepers with consistently choosing between, lengthy written account names, (Travel Expense, Hotels & Lodging: Sales; or Travel Expense, Hotels & Lodging: Marketing; or, Travel Expense, Hotels & Lodging: Admin . . .) is a losing proposition. 

Inconsistent or Lack of Account Numbering 
After many years operating, companies can have inconsistent account numbering.  Three-digit account numbering becomes mixed with Four-digit numbers, for example.  I once encountered a company with six different account numbering protocols on its COA.   

Wrong Initial Setup or Template 
I frequently work with companies that lack critical accounts in their charts.  No Inventory, no Credit Cards Payable . . ..   Why?  Often because they chose a simplified initial COA template when they installed their system.     

My first step in an accounting clean-up:  Reviewing the chart of accounts in order to better understand current and historic financial reports.  Adjustments/changes, like those suggested above, are almost always required.  My immediate goal is to create a sound foundation for later actions, like account reconciliations.  More on those in an upcoming blog.   

WWLC and I work on-site and/or remotely to help clients with their accounting clean-ups so that they can (really) control and grow their businesses.  Contact me below to learn more.   


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