HOW TO DEPARTMENTALIZE FINANCIAL STATEMENTS?

With smart break-downs, everyone’s job is easier.

Insight:
Many organizations struggle to gather and process their financial information because they utilize only one system to process every transaction.
The following flawed system represents for example, the usual process utilized by the accounting department in many organizations:
Now, The Accounting Department must repeat each of the four processes for each department. Without doubt, this is an inefficient and time-consuming process that leads to frustration, endless repetitions, and errors.

Solution:
The first three processes could be easily avoided by simply requiring each department to be in charge of their own transactions. They can fix/update financial transactions that apply specifically to their department much more easily and rapidly than a central accounting department.
The proposed strategy here is to create an assembly line of processing information through each department leading to one comprehensive package. In terms of management efficiency, it establishes accountability because each department’s manager will be responsible for converting their unique data into a comprehensive report to submit to the central unit.

Insight:
Business books and theories often outline the many management systems available to implement within an organizational setting. Furthermore, these books often point out the pros/cons when using various management reporting systems without declaring the frontrunner. From a strategic standpoint, departmentalizing the reporting system by each unit is the superlative system to utilize. The other methods force confusion because they often lack basic responsibility, accountability, and systematic execution.