Account analysis can happen at the account, group of accounts, or even across an entire category of accounts. The purpose of an analysis of accounts is to make sure everything in the account is correct and complies with the appropriate accounting principles, be that GAAP (Generally Accepted Accounting Principles) or IFRS (International Financial Reporting Standards) during month end close.
The first challenge with account analysis is that accounts are analyzed differently depending on the account type, which includes asset, liability, equity, income, expense, etc. There’s a risk of accuracy associated with the account, and the account analysis methods used.
The overriding need for account analysis is the flexibility to analyze the account in the appropriate method, as required by the accounting transactions supporting the account balance. Because of this required flexibility, spreadsheets are the current tool of choice for month end close analysis, but the tool also comes with many challenges.
The advantage: Spreadsheets are flexible and can apply the appropriate analysis required for each account, including bringing in a million rows of detail if it is needed. It can sort and filter the information as required to focus on the correct information and then apply formulas to the data. Technically, there are row formulas, column formulas, and cell formulas to analyze the information and create the appropriate journal entries needed to adjust the books at month end.
The disadvantage: Spreadsheets create a disconnected and informal close process, which results in workpapers stored electronically across multiple desktops and servers. There is no “official” monthly close binder.
The need for real-time data is one of the key challenges impacting the monthly close process. To summarize, the ultimate need is that the data, listings of information, and general business information flow like water through the close process, effortlessly and incrementally. And the next challenge includes the too many steps involved in the close process.
These two challenges, combined with the need for analytic flexibility [enabled by spreadsheets], highlight the need for a system that combines the ease of accessing real-time data with a system for managing the process through workflow and collaboration that supports the execution of tasks performed in spreadsheets.
We call this solution Connected Workspace. Interestingly, there are a lot of low code/no code solutions in the market, but none manage and formalize informal spreadsheet processes.
Connected Workspaces – the solution provides a listing of monthly close tasks where each task contains the necessary task level information that includes:
With each task you launch a system stored and maintained spreadsheet, which provides the same flexibility as Excel with additional system controls:
The finance teams need to take a few steps to ensure a closed system. These steps included having a monthly close checklist converted to an automated and collaborative system and a catalog of the different spreadsheets used in the financial close process. Here we will are some of the other crucial steps, which include taking the listings of spreadsheets and:
You now have system-maintained spreadsheets attached to both data and workflow under security control.
HighRadius Autonomous Accounting Application consists of End-to-end Financial Close Automation, AI-powered Anomaly Detection and Account Reconciliation, and Connected Workspaces. Delivered as SaaS, our solutions seamlessly integrate bi-directionally with multiple systems including ERPs, HR, CRM, Payroll, and banks. Autonomous Accounting proactively identifies errors as they happen, provides the project management specifically designed for month end close to manage, monitor, and document the successful completion of tasks, including posting adjusting journal entries, and provides a document repository to support each month’s close process and support the financial audit.