The topics included key information about identifying factors reducing a company’s financial results and finding internal resources to increase business effectiveness. Methods for optimising business processes and an analysis of the effectiveness of internal control and accounting procedures were presented.

1. ON THE ROAD TO COST SAVINGS
AND EFFICIENCY –
analysis and optimization of internal control and
accounting procedures
4/12/14
Olga Mazina
Deputy Director of Accounting Department
Tax Advisor
1

2. 1. Business processes of a company and value of accounting
2. Structure of accounting and kinds of accounting work
3. Risks of inefficient accounting
4. Analysis of accounting department
5. Indicators of efficiency of accounting work
6. Problem areas and factors for analysis
7. 5 questions method
8. Goals and methods of optimization
9. Internal control: requirements of law
10. Procedures of internal control
11. Typical mistakes in organizing internal control
12. Recommendations for organizing internal control
Contents:
4/12/142

3. Business processes of a company
4/12/143
Managing Operational Supporting
Business processes that
manage the company
Business processes
comprise the general
business of a company
Business processes
serve the business
Corporate management
Strategic management
Production
Trade
Purchases
Marketing
Accounting
Recruitment
IT support
Business processes of a company

4. - Any business process - a set of interrelated tasks that define the
organization of a business, its development strategy and its stability
- Well-established business processes give a great competitive advantage!
- Accounting is a management tool which allows us to monitor other
processes effectively
Value of accounting
4/12/144

5. 4/12/145
Structure of accounting
Accounting
according to
RAS
Management
accounting
(IFRS, etc.)
Tax
Accounting

6. + Salary calculation
+ Stock accounting
+ Payments
+ Accounting for fixed assets and investments
+ Accounting for sales
+ Accounting for costs
+ Calculation and declaration of taxes
+ Calculation of financial result
+ Reporting
+ Etc.
Each process consists of several actions. Because of the use of accounting programs
programs many actions are automated.Accountant’s daily routine includes:
includes:
- preparation of primary documents
- data input to accounting program
- analysis and processing of data to produce results
Kinds of accounting work
4/12/146

7. Missed Deadlines
•Reports are not
prepared on time
•Salary is not
calculated and paid
on time
•Failure to fulfill
contractual
obligations
•Taxes are not paid on
time
Additional Costs
•Fines and penalties
for delays
•Costs resulting from
mistakes in
calculations
•Overtime payments
to accounting staff
•Fraud
Management risks
•Lack of timely and
reliable information
•Mistakes in financial
statements
•Etc.
Risks of inefficient
accounting
4/12/147

8. • Study of the activity, organizational
structure, core business processes
Express analysis of
company’s business
• Determination of accounting
procedures, information flows needed
• Determination of problem areas
Analysis of
department
• Setting goals for optimization
• Planning methods for implementationOptimization
Analysis of accounting department
is necessary to eliminate risks, increase efficiency and
allow constant development
4/12/148

9. - Interview key persons
- Study the documents
- Analyze the accounting database
- Interview accounting staff
Methods of analysis:
4/12/149

10. Logical
• Satisfactory
implementation of
tasks
• Number of stages of a
process matches its
complexity
• Sequence of actions
accounting process is
formed logically
• Good organizational
interaction
Economic
• Low functioning costs
of accounting
department (salaries,
outsourcing, recruiting
and training of
accounting staff)
• Optimal workload of
accounting staff
• Absence of errors that
may lead to inefficient
management and
losses
Time
• Minimal time used for
accounting processes
(given the existing
automation)
• Share of time spent
auxiliary work is
minimal
• Flexibility (ability to
carry out urgent tasks
and sometimes work
under time pressure)
Indicators of the efficiency of
accounting work (1)
4/12/1410

11. Space
• Convenient location of
workstations (arranging work
environment with regard to the
employees duties)
•Optimal document flow routes
(internal and external)
•Flexibility (ability to arrange
additional workstations, to adapt
changes)
Personnel
•The required number of
(corresponding to the volume of
work)
•Necessary qualifications
(qualifications of personnel
with the functions they perform)
•Sufficient training (training which
allows staff to adapt to the needs
the company)
•Flexible working hours (the ability
to cover, contribution to employee
loyalty)
Indicators of efficiency of
accounting work (2)
4/12/1411

12. • The following situations require analysis:
- Downtimes or stoppages in activities
- Unused capacities / resources
- Duplication of work tasks
- Errors in transmission of information
- Losses of information
- Mistakes in documents
- Branched structure of management, including several levels
• The following situations are factors for analysis:
- Technology changes
- Changes of working systems
- Opening of new branches or kinds of business
Problem areas and factors of analysis
4/12/1412

13. Goal
• What is the purpose of this work?
People
• Who does this work?Why this person?
• Who else could do this work?Who could do this work better?
Place
• Where is this work being done?Why?
• Where else can it be done?Where can it be done better?
Method
• How is this work done?Why is this work done like this?
• What other methods can be used?Which method is better?
Time
• When is this work done?Why it is done at that time?
• What are the alternatives?Which alternative is better?
5 question method
4/12/1413

14. Eliminate time gaps
Minimize oral information
Set control points
Goals of optimization
4/12/1414

15. • Eliminate manual/routine work
• Liquidate obstacles to smooth work
• Reduce document flow routes
• Limit excessive control
“Delete”
Method
• Decrease complexity of processes
• Simplify formats of documents and reports
• Division of labor
“Simplify”
Method
• Use accounting, management, office programs
• Standardize methods, development of
instructions for personnel
• Unify communications, methods of collection
and transfer of information
“Standardize”
Method
Methods of optimization
4/12/1415

16. + Federal Law of 06.12.11 No 402-FZ “On Accounting” (Article
1. The economic entity is obliged to organize and implement internal
control of the facts of economic life.
2. The economic entity financial statements of which are subject to
statutory audit shall organize and carry out internal control of
accounting and preparation of financial statements (except cases
when General Director is in charge of accounting).
+ Recommendations for organization and implementation of
internal control are given in Information No PZ-11/2013 issued
Ministry of Finance of RF
Internal control:
requirements of law
4/12/1416

17. Procedures of internal control
4/12/1417
Documentation of operations
Verification of documents for compliance with requirements, conformity
between documents
Authorization of deals and operations
Reconciliation of payables / receivables
Division of powers, rotation of duties
Control of the actual availability and condition of assets, security, restricted
access, inventory
Internal audit
Procedures connected with the use of computer programs (control of access
to databases, automatic validation of data input, reports on errors)

18. • Electronic key (signature) is kept by the
employee preparing payment orders
• Authorization stamps on invoices are
not completed
Ignoring the
authorization
procedure
• Disorganized warehouses
• No accounting for value of assets
below 40 t. RUR
• No inventories of assets or improper
inventories
Improper storage
of assets
• No permanent committee
• Improper inventory registers
• No recounting of assets in the case of
deviations between registers
Violation of
procedures of
inventory
Typical mistakes in organizing internal
control (1)
4/12/1418

19. Typical mistakes in organizing internal
control (2)
4/12/1419
• One and the same person makes payments
and records of accounts payable
• One and the same person takes part in
inventory of assets and records its results
Insufficient
separation of
powers and
responsibilities
• Total control of all operations regardless of
their amounts
• Departments check each other’s work and
actually perform duplicated work
Excessive control
• No reconciliation on reporting dates
• Ignoring of differences (e.g. interests per
loans)
• Expiry of limitation periods for returning of
tax overpayments or other receivables
No reconciliation of
accounts payable
and accounts
receivable

20. Annual assessment of the internal control system
Notification to personnel about the risks related to their area of
responsibility and control procedures
Documentation of order of organization and implementation of internal
control
Selection and description of internal control procedures
Identification of risks of company's activity
Description of business processes in a company
Recommendations for
organizing internal control
4/12/1420

21. THANK YOU!
Olga Mazina
Deputy Director of Accounting Department,
Tax Advisor
Accountor
+7 812 325 82 94 /+7 921 189 88 34
olga.mazina@accountor.ru
www.accountor.ru
4/12/1421

22. PASSION FOR
RESULTS
4/12/1422