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Quality Is Everything

By Kimberly Howerton Ammon, CMA, CPA
November 1, 2018
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Quality may not be the most exciting topic under discussion these days, but it remains very important for accountants. Quality issues can plague a company at every turn and create giant waste pockets that persist for years until they finally run a company out of business.

 

It’s a sad case when employees don’t value quality, and you can see it in the results that are produced. On the other hand, I’ve personally ­witnessed a company’s loss of $31 million cut down to a loss of $13 million in a matter of two years just by strengthening processes, internal controls, and systems. When quality is first on the agenda, it helps the organization hit its marks.

 

Quality can also be translated into a metaphor comparing a company to either a well-oiled machine or a jalopy barely making it down the road. When you consider the overall health of your company, you can probably answer this question pretty easily given what you see happening on a daily basis.

 

GENERAL LEDGER FIRST

 

To report on quality, you must have your finger on the pulse of the organization. Quality isn’t just about meeting ISO 9000 audit requirements or maintaining operational processes; quality (or performance) audits should be conducted for accounting, too, to ensure the financial results reconcile with activity generated by the plant. If your general ledger (GL) isn’t accounting for all plant activity, then you have a problem. The first step in reporting and analysis done by accounting must be reconciling to the GL. Quality checks in finance processes and methodology are necessary for reliable and consistent results. Making quality the top ­priority of the ac­counting process supports good decision making and helps a business in cultivating a strategic plan that will sustain the organization going forward.

 

PROOF OF CONCEPT

 

Report development can take time, especially if many parameters must be taken into consideration for a successful result. What does success look like? IT helps in the development of the reporting, but you find the report doesn’t reconcile to the GL. Starting over can waste valuable time and resources.

 

This goes back to documenting and understanding the requirements of the reporting and ensuring each requirement is taken care of. Testing the proof of concept as you go is preferable to waiting to test at the end of the process. This is what is called the “Agile approach” when working on system development projects. What if you could’ve prevented resources (time and money) from being wasted by checking progress along the way to ensure milestones are being met and the schedule is going as planned? Those who invest in getting it right are the people who really care about the company.

 

CUSTOMER NEEDS

 

How can you get where you need to be if you don’t take care of the customer’s requirements? For example, consider a company’s processes. If a company doesn’t value setting up processes, its employees must follow this model in order to protect the company’s interests. Then the company may be headed for stormy weather. I once had a manager say he really didn’t value pro­cesses. I urged him not to say this, especially when the company was losing $15 million each quarter. For a company with a billion dollars in annual revenue, losing 1.5% may not sound like a big deal, but it’s a huge deal. You have to ask yourself whether you see your employees and cross-functional business partners taking care of the company each day by strategically planning and following through on getting things done to move your company forward. Or are they just floating through each day checking boxes, not really paying attention to the big picture? Hope isn’t a viable strategy to sustain your company for the future. You must set up a routine to track and check performance throughout the month. Your target is to always come in on budget. You don’t want to end the month and be surprised at the results you’re reporting on. A reconciliation from beginning to end needs to occur to ensure the results are reported correctly.

 

You can’t fix quality issues on the back end. Quality must be designed in at the front of the process if the end result is supposed to come anywhere close to meeting targets and expectations. A person’s life could depend on steps not being skipped. For example, you may have heard about this quality issue in the news over the past few years: Changes to the engineers’ design of guardrails have resulted in fatalities because the product no longer functioned as designed. The guardrails began to perform differently even with the smallest change to design specifications. It may cost your company dearly if you try to deal with your product or service quality issues on the back end.

 

DON’T CUT CORNERS

 

Another example to consider is when people take shortcuts. Is it problematic to cut corners, or is it considered just being creative? A teacher once shared a story with me about being on a design committee for a new building, and they were trying to figure out where to put the sidewalks. They went ahead and put the sidewalks in, but they soon found out that people made their own pathways that made sense to them and ignored the paved sidewalks. Sometimes you should wait to see what solution will work best depending on how the results are generated. If you get the design right the first time, changes aren’t needed. Continuous process improvement will always be required to be as efficient as possible. When it comes to product development, sticking to the specs is very important.

 

Accountants should be leading their organization to follow the processes established and approved by the operations team. Accountants are specifically charged with safeguarding the company’s assets, and setting up internal controls, processes, and reporting supports a well-run organization. Benefits will surely come to those who invest in quality. Understanding what’s really going on in an organization will add value for years to come. Take care of quality, and quality will take care of you.

 

IMA LEADERSHIP ACADEMY

 

The IMA® Leadership Academy provides leadership opportunities for all members. From leadership assessment to leadership courses offered in person as well as through WebEx to participation opportunities in mentoring, be it reverse or traditional, the IMA Leadership Academy can help you meet your leadership goals and improve your leadership skills. For more information, please visit the Leadership Academy website at www.imanet.org/career-resources/leadership-academy.

Kimberly Howerton Ammon, CMA, CPA, is president and CEO of Ammon Consulting in Macon, N.C., and a member of IMA’s North Carolina Triangle Area Chapter. She can be ­contacted at kammon1@yahoo.com.
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