Step by Step Accounting Performance Evaluation Guide | Jordensky

This guide will teach you specifically how to evaluate accounting performance, by using the six-step plan outlined in the blog.

Whether your accounting department runs like a well-oiled machine or you've already identified potential areas for improvement, auditing your company's systems for vulnerabilities or inefficiencies on a regular basis is a wise business decision.

Maintaining lean, productive departments is critical for your bottom line—but if you've never conducted a departmental performance audit before, you might be stumped.

This detailed blog will explain you how to evaluate accounting performance measures and ways to design accounting performance, but the strategy outlined below may also help you fine-tune other departments. Using the six-step plan outlined below, you can identify potential flaws or opportunities for growth before devising a strategy to right the ship.

Accounting performance evaluation steps — 6 Step Accounting Performance Evaluation

1. Determine your Goals

Define the output you want to gain from the evaluation process before announcing any performance audits or beginning data collection.

Some potential goals for your accounting department audit could include:

Evaluating employee productivity
Charting employees’ skills growth or professional development
Identifying efficiency shortcomings or trends
Exploring how your system impacts your company’s overall financial health
How accounts payable check runs impact your cash flow
‍Whether your accounting staff, software, and other tools area good investment
How your accounts receivable schedule impacts your interest gains

Essentially, you must know what you want to understand before you begin looking for answers. Before you start monitoring employees, collecting data, or speculating about potential roadblocks, make a list of ideal goals for your performance audit.

2. Create an Evaluation Schedule

You should establish timing parameters for your accounting evaluation in order to collect data and information in a standardized manner. Your scheduling efforts should be divided into two categories:

Creating a timeline for information collection and processing for your first evaluation
Brainstorming a schedule for regular, repeat evaluations in the future

To prepare for your first audit, determine:

The amount of data you believe you require
The amount of time required to collect that data
A time frame for compiling and analyzing reports.
After producing evaluation results, create a schedule for team and individual employee check-ins.

After you've established a timeline, think about how frequently you want to repeat the experiment. Depending on the size of your team, your evaluation goals, and the number of flaws you intend to identify and correct, you may only be able to complete an audit quarterly or annually.

3. Leverage your Resources

Determine which tools you will use to collect and analyze data after you have created a schedule. Some resources that may be useful during your accounting performance audit include:

Your time tracking software (and its reporting functions)
The software your accounting department uses to complete tasks and keep records
Financial forecast documents (and their accompanying analyses)
Your accounting department personnel’s input

Remember that you do not have to complete an audit alone—finance team members can assist you in evaluating accounting performance by providing software expertise, insights into productivity optimization, and considerations about the effectiveness of any hypothetical fixes.

4. Collect Data and Prepare Preliminary Analyses

You've determined your objectives, created a preliminary schedule, and gathered the tools you'll need for the job—the next step is data collection.

When running reports, gathering transaction information, and tracking the time and tasks of your accounting staff, make sure to:

Keep the data in a safe place and restrict access as needed
Use automation tools to save time during the data collection process
Avoid the temptation to begin analyzing before all of the data has been collected
You should try to avoid analysis until you have gathered all of the data. Not only is it more efficient to analyze the data twice, but conclusions drawn from incomplete data may be incorrect

5. Discuss Results with your Team

After you've finished your preliminary data analysis, share your findings with your team, company stakeholders, and any other parties who may be interested.

When holding a team meeting to discuss the audit's findings, make sure to:

Explain why you gathered the data
Show what you saw and interpret the data in your own words
Allow the team to provide preliminary reactions to the process and your conclusions
Consider potential solutions to identified flaws
Set dates for regular progress checks on the suggested changes

Do not underestimate the importance of your team's role in the debriefing phase, whether you are the head of an accounting department or a business owner. Employees who actively perform accounting work on a daily basis will be able to provide more context for some of the data points, explain what system changes would look like in real time, and assist you in identifying additional benchmarks for future audits.

6. Tweak your Evaluation Process

After you've discussed the findings and devised a strategy for correcting flaws, go over the audit process as a whole. To determine how to improve future evaluations, ask yourself the following questions:

Did the information I gathered assist me in achieving my initial objectives?
What other metrics should I look at the next time?
How will we assess the effectiveness of the changes we implemented following the first audit?
Was the process effective enough to justify more frequent auditing?

As soon as your first audit is completed, you should be able to identify some potential flaws. However, keep in mind our warning about incomplete data—the effectiveness of your audits is better tracked over time with larger sample sizes. Consider the following questions about the overall process: