July 05, 2010

Acctg DB: Backgrounder

You pass the years of schooling, as well as the gruelling board exam. You are accepted in a young company and you realised that you have been tasked to reconstruct the books. The company had Financial Statements that are fairly suspected to be made of scientific estimate and with only a few trace of how the figures were turned out. It's a little consolation that the filing clerk have accounted for all the transaction vouchers. The owner doubts the valuation of the manufactured inventories and with it the income arrived at by the external auditors. Their working papers remained with them and there is not much books to speak of. What do you do then?

Such is the predicament of many companies. They were eager to operate and may have forgotten about the books, busy with their inception activities which morphed the earliest CPA employee into an Executive Secretary. The previous person who was later called in was successful to make himself be pirated by another company. The owners thinks you can reconstruct the books in 3 months and the Executive Secretary (who is more dedicated in hobnobbing with non finance executives) has promised them that you can easily do it. You and the lone filing clerk make up the accounting department of the yet small incubating company.

Now, you realised that the manual intricacies of financial record keeping taught in the schools may be insufficient with your department's manpower. You are reconstructing the books of previous year and processing/tabulating the expectedly growing current transactions. Realistically, you'll be hard-pressed to make it in 5, much less in 3 months. So you wonder whether there's an accounting software to arm yourself with. Luckily there are plenty nowadays. But do you have the time and energy to do the previous 2 and learn this new software at the same time. Perhaps even to suggest its usage and go to the expected bureaucratic process of evaluation onto acquisition of the software will take a month while the vouchers to prepare and tabulate keeps filing up.

This is a scenario I brought up to make a point: - the outdated mode of bookkeeping which we have studied at school. The system we read on books is a fairly manual cross transcription of the entries from the vouchers to the books, ledgers and then summarization into financial statements. Non-accountants, like most owners, think you have computers so 2 people in the accounting will suffice. They had difficulty themselves taking their few Accounting units and they believe you have great ability going thru years of schooling and even passing the board exam.

This is such a large reason why I have to create this series of topics in this blog. The Accountant is pretty much the 'Database' personnel of the financial angle of all business transactions. Whether you use the current Accounting software available or not, whether you come from the programming side or Dbase administration or you are the owner of the business, you will benefit from this series. We will learn the Excel spreadsheet nuances and it's versatility as well as it's inadequacy for such a task.

We'll try to be simple and layman in our approach. We'll use Excel like the Michael Jordan of our tools and later we have to get other Ms Office players involved as well. Perhaps we may later import a high capacity database player like the Shaq in our ranks so that we can be prepared for the possibility of online access by our demanding jet-setting owner.

Stay tuned and subscribe to this blog. We will try to have fun learning a ton!

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