Globalisation of Accounting Systems

Tuesday, 14 October 2008 9:10PM

Globalisation of Accounting Systems

GLOBALISATION OF ACCOUNTING SYSTEMS

The globalisation of any system, offers many challenges to today's law firm. Firms need to recognise that it's not just software that needs to accommodate local culture and legalities. People and process need to adapt and adopt change and become flexible with requirements that suit all jurisdictions. Just because something works at head office doesn’t mean it will work everywhere!

Attempting to conquer the world

The world is full of different people, people that do the same thing but in different ways. Local mannerisms and cultural differences offer the biggest challenge when trying to implement a global accounting system. Typically offices outside of the head office maintain their own compliant systems, which meet the local statutory regulations, run at speed and conform to the general culture of that office. Why should they change? What they have works just fine! However in today’s ever growing competitive market utilisation of one system, practice and process offers many cost savings and benefits. But the standardisation of process and practice is no easy feat and the utopia of one system does all is a challenge of great proportions.

In the beginning there was light

Documentation of policy, process and practice is required to establish whether it’s possible to truly provide one system that fits all in all areas. Weighting up the requirements and providing a gap analysis for each location will allow you to draw boxes around the areas that are compliant and those that are not. This document is then the building block for your system implementation and is the forum of review and ongoing development.

Policies’, agreeing the general accepted accounting practice and policy for each jurisdiction is an area where most effort is needed, once documented you will able to draw your comparison chart identifying areas which fall inside the consolidated group policy and how to approach the ones outside. This is where a level of materiality should be applied. It may be possible to introduce a group policy and adjust just once a year in the local office.

Keep your eye on:

• Capitalisation thresholds

• Depreciation

• Work-in-Progress treatment

• Fee income recognition

• Foreign exchange

• VAT (tax)

• Intercompany transactions

After your policies are agreed you can begin review of the business process around transactional and operational processing. The last thing you want to do is to introduce a system that is long winded to action and causes a high volume of manual input to accomplish simple tasks.

Business process is an area where it’s possible to introduce the 'best practice’ of the head office. By standardising processes it becomes easier for members of the finance team to support other jurisdictions or even to be parachuted in should cover be needed for holiday, absence or paternity/maternity. There will always be small deviations to core best practice, ensure documentation is in place to support and alterations. Any system auditor worth their salt will insist on a system/process manual to support operational processing.