Accounting Endocrine System
I am sure you have felt hungry, tired, not in the mood to entertain or feeling like your sleep cycle is off. Our endocrine system function operates similarly to a business’ standard operating procedures. It is of vital importance, regardless of its size.
Standard Operating Procedures and Directives (SOP/D) is your endocrine system. Without it, the system will repeatedly fail and can cause death. “Why so serious, Rebecca?” I’m so glad you asked! Have you ever assumed that the SOP/D was being followed with extreme diligence only to find out that another player was following their own SOP/D? What was the result? Immediate damage control? Loss of relationship, trust, cohesion, internal controls meltdown, or even a negative financial impact?
The endocrine system takes direct orders from the nervous system. As previously explained in the Accounting Nervous System blog regarding its function, even the smallest interference influences the nervous system and a headache ensues. Well, wouldn’t you know, the three main endocrine organs are located in your head!
Four Main Endocrine System Behaviors
Creation of Standard Operating Procedures / Directives Hypothalamus
Hard coded into the system and is directly influenced by the chart of accounts, transactions and authority overall. Remember, without these functions, the system is a pile of mush.
Example: An agreement established by senior executives and professionals that provide direct instructions to all parties involved to ensure all systems function timely and effectively.
Execution of Standard Operating Procedures / Directives Pituitary
An SOP/D is semi-useless if some departments or individuals are not doing as instructed. The second smallest gland with the biggest impact over the system, including the regulation of growth, can be greatly disabled when there is little to no communication on how the SOP/D needs to be followed, or some parts are simply left out because it does not fit well into the individual’s program. If there is a continued failure of this gland, the entity cannot grow and the system will discontinue to function.
Example: Too many hands in the cookie jar resulting in miscommunication of task assignment, manual accounting transactions that do not translate into the system accurately, creating ineffective processes.
Passive Accounting Transactions Pineal
Regulates the accounting functionality and transactions while not being monitored. In other words, accounting automation. Ensuring that ledgers are set up accurately, systems are created for work flow and resulting in accurate reported information seamlessly.
Example: Additional Fees that are charged to the tenant that produce management income when payment is received.
Chart of Accounts & Reporting Maintenance Thyroid
Too many or not enough general ledger codes will impact the reporting outcome. Digestion and regulation of such accounting transactions even while not being monitored consciously.
Example: Anorexic chart of accounts can be misleading to actual transaction of events and an obese chart of accounts creates miscommunication within the accounting department for appropriate allocation of transactions, and creates confusion for the owner and tax preparer.
Conditions & Disorders
Please note that the conditions and disorders listed below are being used as a metaphor to accounting health, not the health of a person. We understand there are outliers that are potentially out of one’s control, therefore, we are making reference to the top three disorders regarding the endocrine system and how it relates to the accounting function.
When the accounting system can no longer utilize the information recorded and produces misinformation, similar to how diabetes stunts our body’s ability to process insulin, resulting in audit red flags and potential fines.
When the internal controls system can no longer regulate the metabolism which could exert too much information, or not enough. The system could result in a thyroid disorder, slowing the process or causing severe lethargy.
Aside from journal entries, the day-to-day transactions are recognized as accounts payable and receivable functions. Reproductive disorders can impact both sides simultaneously which will decrease or inhibit the possibility of growth.
Endocrine System Structural Health
As the system grows, the SOP/D evolves with it, maintaining the core functionality. With the ability to interpret information received and translate it to the accounting function effectively, this process will safeguard the system overall. We encourage a business to fine tune and adjust their SOP/D as they grow or trim. Delegating responsibilities and authority to responsible professionals is a great pathway to success. However, if the organization lacks in following its own SOP/D, every entity involved will be impacted.
Some treatments can only help in the short term but can greatly impact the long term. For example, hormone treatments can assist with symptoms the system is currently having, but can negatively impact the system in the long-term. We call this short-sighted or quick fixes because the user was not provided all information before the new system was put into place.
Understanding that simply adding a new GL account into the database does not equate to solving the primary issue. This is a temporary fix with multiple negative outcomes. It is like adding a vertebra to your spine and wondering why you’re unable to move properly.
When I was going through US Air Force Boot Camp, I was quickly made one of four Element Leaders, responsible for 15 females in my flight. I believe this was due to the fact that I was one of the oldest, because it surely wasn’t because I had any experience in leadership. In my third week of training, I was called out by my TI in front of our entire squadron because one of my fellow trainees was caught with unauthorized food. We were both recycled back two weeks, entering a flight that was just formed off the bus. I was not allowed to be an Element Leader or Dorm Chief, but I did provide them with third-week skills and experience. Due to an injury I received while in training I was transferred to another same-week flight. Upon graduation, my second flight TI approached me and thanked me personally. He said, “With your advice, encouragement, training and patience, my flight was named Honor Flight in our squadron.” Honor Flights are elected with the following qualifications: displays extreme discipline, fortitude, and exemplifies the Air Force Core Values, a highly recognized award within military training.
SFL K.I.S.S. Protocols
Just as your body requires an SOP/D to function properly, so does your business. Faced with the ability to grow or to remain stagnant is derivative from your SOP/D. SFL sees the broad scope of accounting throughout all of your systems. We listen to your need for a new function to integrate into your operations, and inform you of any potential outcomes that are positive and negative. With the expansive experience we have over multiple databases and clear understanding of how operations work or don’t work provides us with the advantage to advise you towards success faster.
Do you have an SOP/D in place? Do you know where to start? Do you have a team that is following it, or is creating one of their own as they go? Or simply, do you need to create a new one with new goals in mind?
SFL is here to help with the structure and building of your Accounting SOP/D that will integrate with your business strategy.
“Your imagination is your preview of life’s coming attractions” -Albert Einstein