In a world where electronic data transfer is becoming the accepted norm, the definitions of such terms as “books of original entry” and “data set” are constantly changing. Check ledgers are being replaced by backup files and seven-column pads by accounting software. Some remote accounting and data storage systems, often referred to as cloud accounting, are virtual in nature.
Smart Business spoke with Todd Jolicoeur, tax senior at Cendrowski Corporate Advisors LLC, to learn more about how technology has affected age-old accounting tools.
What are books of original entry?
When it comes to accounting that still utilizes column paper and a 10-key calculator, the accounting journals kept manually where any financial transaction are recorded for the first time, or originally, are the books of original entry that compile all of the information.
How has this changed with the use of accounting software?
Software has increased the efficiency of most accounting and tax services. Electronic books of entry are different because most data is entered only once. There is no longer the need to make sure each transaction is manually posted to each applicable journal. Because of the nature of software, this procedure is systematically performed and entries are automatically reflected in different accounting ledgers as pre-established by the software.
What is a data set when applied to accounting records?
The data set is essentially all of the information that supports an accounting statement, whether it is a balance sheet, bank reconciliation or general ledger. It is also the documentation that is often used by accountants to prepare other financial statements such as a Statement of Financial Condition or by tax professionals who perform tax services for individuals, fiduciaries and business entities.
One important note related to data sets is that the information contained within the data set is subject to subpoena when legal action is brought under suspicion of wrongdoing regarding finance and financial records.
How is the information stored for these data sets?
The oldest method is paper format. This includes things like checkbooks, receipts and other documentation. The prevailing new method is maintaining the records electronically. Firms are often digitizing and electronically storing any original documents required to perform accounting and tax services. Regarding electronic books of entry, firms have been transitioning for years to accounting software. The use of software not only expedites the work flow by requiring single entry of information, which flows to all appropriate journals and reports, but also when corrections are required you only need to make one correction, as opposed to making that same correction on several ledgers. Accounting records that are kept utilizing software are also easier to backup and create a copy of the data set for transfer to any parties that are authorized to receive such records.
What is cloud accounting?
The term simply refers to the remote storage of this information, as if it were stored in a cloud in the sky that can always be accessed. This is a relatively new concept that it is becoming more popular with the proliferation of technological gadgets. The use of electronic devices such as smartphones and tablets in business has increased the need for information to be stored on servers that allow for remote use. Whether this means using apps and remote connection to financial reports or accessing archived data and documentation, the need to use the Internet and these cloud resources is growing.
How can these changes in the process help my business?
You may want to speak with an accounting professional to determine the most advantageous way to perform your accounting function and store information as it relates to your needs for information recall and use.
Todd Jolicoeur is a tax senior at Cendrowski Corporate Advisors LLC. Reach him at (248) 540-5760 or firstname.lastname@example.org.
Cendrowski Corporate Advisors blog: Learn more from the experts on business accounting topics.
Insights Accounting is brought to you by Cendrowski Corporate Advisors LLC
Recently a number of corporate tax and accounting professionals were surveyed to gain insight into their tax provision process. They identified three major issues with their provision process:
- Data collection — the provision model does not contain all of the required financial information.
- Resource constraints — the tax provision process is very labor intensive.
- Timing — more than half the companies surveyed reported that they have less than one week to prepare their consolidated tax provision.
The survey clearly demonstrates the need for automation. Corporate tax executives understand an automated system provides the standardized platform to consolidate data, eliminate many of their manual processes and be more time effective.
Tom DeMetrovich, director at Crowe Horwath LLP, says the survey results are indicative of the challenges faced by most corporate tax departments.
“Responsibilities are increasing and staffing trends generally are flat,” he says. “Implementing a Web-based software tool, such as the Thompson Reuters ONESOURCE Tax Provision, can be the solution that most corporate tax departments are seeking.”
Smart Business spoke with DeMetrovich about automating the tax provision process and the capabilities provided by a software solution to address the three major concerns expressed in the survey.
How can an automated solution assist with data collection?
An automated solution allows a company to consolidate the majority of its data into one platform. The software can interface with the existing accounting or financial reporting system and upload the required financial information. The software also is able to roll data forward from period to period. There’s no need to manually update and reconcile multiple Excel schedules for the new year or roll forward Excel workbooks. This functionality significantly reduces time spent gathering data and eliminates many of the errors in the current process.
How can an automated solution assist with resource constraints and timing?
Reducing the need for manual processes frees up corporate resources to handle more strategic, higher value tasks, leading to increased review time and increased time for analysis and forecasting.
An efficient, automated solution also reduces the time needed for processing the provision. The system allows multiple users to access and update the provision calculation in a controlled, secure environment. Therefore, the provision calculation is done more timely and accurately, which allows additional time for analysis, adjustments and reporting.
Can the software be implemented in-house?
Companies rarely implement a provision system in-house. The project generally is undertaken in conjunction with an outside provider, whether an accounting firm or the software provider. Tax departments have knowledge of their current provision process but lack the depth of knowledge necessary to select, install, configure and train their personnel on the new software.
The benefit of using an accounting firm for implementation is that the firm provides in-depth knowledge of the software and has broad-based knowledge of tax and the provision process. The company also has access to the accounting firm’s knowledge of its industry. The firm can:
- Align software to the company’s current processes.
- Make sure processes are correct from a technical tax standpoint.
- Use industry knowledge to provide best practices that can be incorporated into the new automated process.
Once implemented, can tax departments manage the software without assistance?
Once the software has been properly installed, configured, tested and training has been completed, the tax department staff should be able to maintain the software. One of the biggest benefits to a Web-based solution is that the company’s internal IT group rarely has to be involved. Software updates are handled directly by the software provider. And, the tax department will be able to handle updates for changes in general ledger accounts, the addition of new entities and other enterprise-wide changes.
Tom DeMetrovich is a director at Crowe Horwath LLP. Reach him at (214) 777-5272 or Tom.DeMetrovich@crowehorwath.com.
More information on tax provision automation.
Insights Accounting is brought to you by Crowe Horwath LLP
The federal government provided $600 billion in grants in 2011 for more than 1,000 programs. It takes considerable time and paperwork to apply for and monitor these grants, which is where a grants management system can help keep everything organized and on track.
“Automation really allows grant-giving organizations to focus more on the actual content and performance of the grant rather than get bogged down in the administrative and manual tasks of the grant process,” says Joseph Rodrigues, director, projects - Electronic Grants Management and Administration System at HTC Global Services.
Smart Business spoke with Rodrigues and James Joseph, vice president, government services, at HTC Global Services, about grant management systems and the advantages of automating the grant process.
What are the benefits of automated grants management?
Among the benefits of automation, the most important is that the grant administration staff can provide quality services to their grantees and focus their efforts on the core aspects of grants performance and monitoring as opposed to spending considerable time on administrative tasks, such as paper management, manual verification and validation. The second most important benefit is timely completion of the various steps in the grant life cycle process. Other benefits include consolidated repository of grants data that enables timely and effective information retrieval, analysis and reports.
Automated review process enables accuracy and consistency of reviews across reviewers. Automation of post award processes and notification ensure compliance and timeliness.
What are the challenges faced by grantors in automation of grants?
The biggest challenge is to find a truly configurable grants management software that can be configured to automate all the grant programs in an agency. Most grant giving agencies give out multiple grant programs that have varied requirements in terms of regulations and business rules. Most grant automation products available may address a specific grant program or a specific kind of business rule set. The most cost effective and efficient solution is configurable software that can automate all the programs that an organization has to offer through configuration rather than expensive and time consuming customization.
How does automation benefit grant applicants?
The biggest challenge that grantees face is submission of a complete and error-free grant application by the submission deadline. This is enabled through an online application that is intuitive, has context-sensitive help and validation features with recommended corrective actions.
An automated system assists grantees in identifying potential grant opportunities, based on eligibility. The application process enables multiple grantee staff to work on the same application, thus facilitating collaboration. In addition, it also provides transparency of status, online progress reporting and improved communication and responsiveness.
Good automation software is user friendly, does not require any third party software or plugins and caters to all levels of computer proficiency.
How does a grant management system cut down on inappropriate payments?
The reduction and eventual elimination of inaccurate and inappropriate payments is one of the major goals of the federal grantors. Automation has been identified as the primary strategy to ensure that payments made are accurate, appropriate and verifiable.
Automation verifies that payments are spent in the approved expense categories. When payments are made, they are normally made against the budget specified in the application. If an award of $100,000 is made, the award may be spread across several expense categories such as salary and wages, fringes, supplies, etc. When expenses are booked, they can be submitted only against the approved expense categories and/or within any deviation limits, if applicable. In the absence of an automated system, the grantor would have to manually match these expense categories and ensure that the expenses do not exceed what has been requested in the budget, which may lead to errors. With an automated system, all the validation and cross-verification is done by the system, thereby saving a lot of time, avoiding errors, overpayments and payments misapplied to the wrong categories.
What is the future of grant management systems?
The federal government has been trying to mandate transparency in grants. With the paper process through which the grants are given out, it’s very difficult to maintain transparency because it’s lost in the paper. If you have a system, it is possible to make the grant process transparent and minimize inappropriate payments. This is possible only through automation. The expectation is that the federal government will start insisting that a higher degree of automation is utilized in the grant management process.
With the proliferation of tools such as tablets and smartphones, grantees will demand that they can apply for a grant using these devices. Enabling mobile devices for grant management will be a trend in the future.
State governments will increasingly use software to automate the grant-giving process, submit their reports and help get all the grant money they can. Some already have. In addition, Software as a Service would be the preferred acquisition model.
JAMES JOSEPH is vice president, government services, at HTC Global Services. Reach him at (248) 530-2528 or email@example.com.
JOSEPH RODRIGUES is director, projects at HTC Global Services. Reach him at (248) 530-2554 or firstname.lastname@example.org.
Insights Technology is brought to you by HTC Global Services.
Medical Mutual 2011 Pillar Award
for Community Service — Columbus
If employees at Blytheco LLC have an idea how to help the American Cancer Society and the Relay for Life, they really don’t even need to ask for permission from Stephen P. Blythe. Rest assured, permission will be granted, and Blythe’s enthusiastic and passionate support will be offered toward making it a complete success.
It’s a spirit of giving that the CEO regularly promotes at the company.
Among the ideas, a snack basket containing a variety of healthy snacks that employees can purchase in the company kitchen. There are pizza lunches, ice cream socials, build-your-own salad bars and partnership with local restaurants that add to the contribution Blytheco, a business software company, can make to the effort to fight cancer.
Even the coin jar that sits at the front desk at Blytheco and collects loose change that employees may have in their pockets or in their purse is a little bit more that can be contributed to a great cause.
Blythe himself encourages employees to be passionate about their efforts by living his passion for piloting aircraft and making it a part of the reward for employee contributions.
“Charitable flights are a terrific way to contribute to the community while doing something you love,” Blythe says.
Blythe is a part of LIGA International, which helps those in need in Mexico by delivering goods through the air.
“Through LIGA, I get to contribute the skills I developed in my business life ? accounting and business background, website development, business systems ? while at the same time engaging in areas that provide a personal reward for my contribution, my passion for travel and flying.”
The spirit of giving is something that Blythe encourages and enthusiastically supports at each day at Blytheco. The result is a team that is always ready to do more to help those in need.
How to reach: Blytheco LLC, (404) 841-6240 or www.blytheco.com