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Should non-Finance department personnel post to the General Ledger?

I currently work as a Finance Director for a $4bn. transportation organitation that has decentralized most of the operational accounting to the various corporate departments (HR, IT, Legal, etc.). There are budget officers and financial analysts that support these departments, but do not report to the CFO. The issue I have is that these people also post to the G/L and are responsible for monthly accruals and reclass entries, but they don't have accounting backgrounds and have varying degrees of competency.

Has anyone ever had success in this type of structure, and would you consider it best practice ? I've always felt that Finance should be done in Finance and only the Accounting department personnel should post to the GL. I don't have a problem with analysts reporting to department heads other than Finance, but have felt that segregation of duties should exist between those trying to hit a budget, and those responsible for reporting on it. Thoughts?

 

 

 

 

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Very tough question. I have seen it both ways successfully. At a big bank, no one touches the gl unless you are an authorized CPA. But at small and medium size companies that responsibility is usually decentralized to office staff. The arguement to decentralize is that the individuals that are closest to the expenses would know the most about them. But one of the greatest arguements against decentralization is consistency in the timing and quality of the postings.

If you are going to decentralize I offer the following best practices - establish security levels/authorization; allow for specific types of postings (accrual is ok, but depreciation is not ok); set a timeline for the month, i.e. when the gl is open and when it is closed to posting. The most important policies - place oversight Responsibility with a senior manager in the group/department; but your Finance department maintains gl Authority over that individual, i.e. control.

Goodluck.

(Agent, JKS Solutions, Inc.) |

No. The reason is simple, there are two many areas of performance results that operations people want to manipulate for their bonus pools. Its hard enough to get them to code AP invoices correctly before sending to AP. Its an issue of internal control. You will also not want operations people to have access to reporting on their peers p/l performance because that can get confrontational over bonuses etc. If you are going to allow them into the GL, you will need to restrict them out of reporting and out of the query capabilities and you will need to inform your accounting team members they are not to have any access but the data entry screen they need.

You would be better off hiring another accountant. A couple years down the road you will need to bring in a consulting team anyway at 10 times the cost to fix what was broken by allowing ops people into accounting.

I've seen, cleaned it, and I don't recommend it.

The only option that would be a good solution:

If they need to book entries, provide them with a JE upload template and have them input the numbers, but send the template to the controller or accounting manager for review, approval and upload.

Kevin Roones
Title: Senior Accounting Professional
Company: In-between
(Senior Accounting Professional, In-between) |

I agree 100% with everything that you have said, Valerie.
From a SOX perspective, I also don't think that non-accounting personnel should be posting to the GL. And nobody should be posting entries that haven't gone through a documented, established review procedure.

Judy Juan
Title: Director of Internal Audit
Company: Northern Westchester Hospital
(Director of Internal Audit, Northern Westchester Hospital) |

Good time for this post. The same is being proposed to have Philanthropy post donors' contributions to the GL, due to timing issues whereby Accounting does not post to the GL until the subsequent month for the last month. If Philanthropy wants to find out donors' balances for the current month, contributions are not posted. Accounting records the amounts on an Excel spreadsheet, then posts the totals to the GL at the beginning of the following month. I am uncomfortable with this as have never seen this as a best practice before.

Topic Expert
Patrick Dunne
Title: Chief Financial Officer
Company: Milk Source
(Chief Financial Officer, Milk Source) |

Don't allow it. It will lead to other issues. Let a finance person support the business and make entries.

dan rowley
Title: VP, Finance
Company: Sendori
(VP, Finance, Sendori) |

Whether a large or small company, I would strongly caution against this. It will likely just lead to more reconciliation work and/or irregularities that you need to explain.

Ken Mason
Title: Controller
Company: Pascua Yaqui Tribe
LinkedIn Profile
(Controller, Pascua Yaqui Tribe) |

Let me suggest a way to support decentralization and help the business segments feel empowered while maintaining control. Allow entry and submittal for approval by designated personnel outside of Finance but retain approval and posting authority in Finance.

Topic Expert
Karoline Mello
Title: Director, FP&A
Company: Apollo Group
(Director, FP&A, Apollo Group) |

I was going to suggest the same thing. Our company has a central accounting person that reviews the submissions from outside department and posts to the GL. The person will request further back up, or can deny submissions if it does not follow GAAP. Submissions are in an excel template that works with Oracle uploading to cut down on the duplication of work.

Joan Mancao
Title: Miss
Company: Trazoo
(Miss, Trazoo) |

I definitely agree with Ken Mason. In that way, the admins always have the control of situation.
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Anonymous User
Title: CFO
Company: Local Government Agency
(CFO, Local Government Agency) |

Would the marketing or sales departments allow finance personnel to participate in any of their projects?

Does your IT department allow non IT personnel access to the administrative functions on your servers?

There is a reason for specialization and controlled access.

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