Our success in finding solutions to common business problems
Introduction to the problem
Solutions to business problems.
Last year, we had an interesting project where we assisted a struggling company with their accounting system. The main issue was that there were numerous errors in the data that had been entered into the system. As is typical for many companies, they started to prepare journals at year-end to correct these errors in the general ledger system. However, this did not address the subsystems that fed into the accounting system, such as stores, creditors, and procurement.
Shortcuts don't work
As a result, these subsystems were not updated and did not reconcile with the journals in the accounting system, leading to ongoing adjustments in the accounting system. This had been going on for at least 15 years, resulting in a large number of entries that could not be reconciled. For example, stock that was received but not correctly issued would show as received but not invoiced, creating a multiplication effect of hundreds or thousands of incorrect entries in the stock system. This caused uncertainty in the actual stock balance and made it impossible to reconcile.
Training is often the root of the problem
The root of the problem was that the front-end, or the point where the entry was made, was not properly handled. This was often due to inadequate training for staff or a lack of procedures in place for different types of entries.
Finding solutions
To solve this issue, we at Lighthouse take an objective approach from an audit perspective, making it easier to pinpoint the problems and provide solutions. When fully immersed in a problem, it can be difficult to see the core issue and instead focus on solving surface-level manifestations. This perpetuates the problem and leads to ongoing firefighting rather than addressing the root cause.
Root cause analysis
Our financial business experts at Lighthouse Consultants specialize in conducting root cause analysis and identifying risks to help businesses solve their problems effectively.
We offer a free consultation and assessment to assist businesses in becoming more efficient and addressing the root cause of their issues.
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