How Do You Evaluate Accounting Performance?

Whether your accounting department runs like a well-oiled machine or you have already observed potential areas for improvement, routinely auditing your company’s systems for vulnerabilities or inefficiencies is a wise business decision. 

Maintaining lean, productive departments is crucial for your bottom line—but if you have never conducted a departmental performance audit before, you may not know where to start. 

This guide will teach you how to evaluate accounting performance specifically, but the strategy detailed below could help you fine-tune other departments, too. Using the six-step plan below, you can identify potential shortcomings or opportunities for growth before making a plan to right the ship. 

#1 Determine Your Goals

Before you announce any performance audits or start collecting information, consider the specific insights you want to gain from the evaluation process. 

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, like:
    • How accounts payable check runs impact your cash flow
    • Whether your accounting staff, software, and other tools are a good investment
    • How your accounts receivable schedule impacts your interest gains

Essentially, you must know what you are looking to understand before you start searching for answers. Develop a list of ideal goals for your performance audit before you begin monitoring employees, collecting data, or hypothesizing about potential roadblocks. 

#2 Create an Evaluation Schedule

To collect data and information in a standardized manner, you should establish timing parameters for your accounting evaluation. Your scheduling efforts should take two forms:

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

To prepare for your first audit, determine:

  • The volume of data you think you need
  • The amount of time it will take to collect that data
  • A period of time for report compiling and analysis
  • A schedule for team and individual employee check-ins after producing evaluation results

Once you have established a timeline, consider how often you want to repeat the experiment. Depending on the size of your team, your goals for the evaluation, and the number of weaknesses you plan to identify and correct, you may only have the time to complete an audit quarterly or annually. 

However, remember that these schedules are just drafts. You will be much more equipped to plan for future audits once you have the first one under your belt. 

#3 Leverage Your Resources

Once you create a schedule, determine which tools you will use to collect and analyze data. Some potential resources that may come in handy 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 support your efforts to evaluate accounting performance, providing their software expertise, productivity optimization insights, and considerations about the effectiveness of any hypothetical fixes. 

#4 Collect Data and Prepare Preliminary Analyses

You have determined your goals, built a preliminary schedule, and gathered the tools you will need for the job—data collection is the next step. 

As you run reports, gather transaction information, and track your accounting staff’s time and tasks, make sure to:

  • Store the data in a secure location, limiting access as needed
  • Leverage automation tools to save time in the data collection stage
  • Avoid the temptation to start analyzing before the collection process is complete

You should do your best to avoid analysis until you have collected all of the data. Analyzing the data twice is not only efficient, but conclusions gathered from incomplete data could simply be incorrect.

#5 Discuss Results with Your Team

After completing your preliminary data analysis, discuss the results with your team, company stakeholders, and any other relevant parties. 

When you hold a team meeting to discuss the audit’s findings, you should make sure to:

  1. Explain why you collected the data
  2. Display what you saw and interpret the information in your own words
  3. Allow the team to offer initial responses to the process and your conclusions
  4. Brainstorm potential solutions for identified shortcomings
  5. Set dates for continued progress check-ins for the suggested changes

Whether you are an accounting department head or a business owner, do not underestimate your team’s role in the debriefing phase. The staff who actively complete accounting work daily will be able to gain greater context for some of the data points, explain what system changes would look like in real-time, and help you identify additional benchmarks for future audits. 

#6 Tweak Your Evaluation Process As Needed

After you have discussed the results and made a game plan for correcting shortcomings, review the audit process as a whole. Ask yourself a few questions to determine how you should tweak future evaluations to your benefit:

  • Did the data I collected help me reach my original goals?
  • What additional metrics should I examine next time?
  • How will we track the effectiveness of the changes we made after the first audit?
  • Was the process efficient enough to warrant more frequent auditing?

You will likely be able to identify some potential weaknesses as soon as your first audit is complete. But, remember our note about incomplete data—the effectiveness of your audits audits is better tracked over time with larger sample sizes. Consider a few questions about the process as a whole:

  • How long do audits take on average?
  • Have audits improved efficiency or produced other tangible benefits?
  • Do my staff receive valuable, actionable feedback from the audit process?

Your answers to the questions above will help you fine-tune your audit process for maximum efficiency and usefulness.

CFO Hub: Professional Financial Services at Your Fingertips

To evaluate accounting performance, you must create a systematic approach that will warrant helpful data to guide critical modifications to your department. The steps above can provide a framework for your next internal audit, but don’t forget the value of expert advice.

If you’re preparing for an internal audit, or you want to brainstorm potential solutions to pressing financial issues, CFO Hub can help. Our team of expert accountants, auditors, bookkeepers, and CFOs can bolster your efforts to build a streamlined, efficient financial plan that will help you reach your long-term goals. 

Plus, you can reach out to us whenever you need us—whether it’s time for a regular internal performance evaluation or you need part-time bookkeeping help, the CFO Hub team can tackle any of your brand’s accounting needs.

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