In my wonderings I was lucky enough to meet up with a cum laude PhD* in structural engineering (which is about as far away as you can get from basic accountancy).
Being a really clever guy, he thought in a structured matrix like all brilliant people.
He astounded me with his knowledge of business I.T. configurations. Somehow he was able to throw light on a subject that for me was complex and mind-boggling.
One of the important aspects that I latched onto was this – the reason why computer systems cannot give the correct information was not about software or hardware obsolescence. It was more about the configuration of the system and specifically about how the chart of accounts was set up. This, according to the esteemed Doctor, was one of the major reasons why IT systems fail to deliver effective reporting.
Is it that simple?
Well . . . . . yes.
And the reason is so basic that you have to blush!
In the past, every time I ever set up a chart of accounts I kept it simple – I spent very little time thinking it through.
And, if you think about it logically, a system cannot put information in a report if the information is unavailable.
From an IT perspective, data bases and master files are the places where information is stored and accessed. But from an accounting perspective the best and easiest way to extract information is via the ledger.
Accordingly a cleverly designed chart of accounts can be a powerful source of information
gathering and reporting.
A common example is repairs and maintenance. For a number of reasons it is valuable to split out these costs in as much detail as possible. You might want tax deductible and non-tax deductible. Or you might want different categories like building repairs and machine repairs, office equipment repairs and vehicle repairs the only way you can access the information is to get accountants to manually analyze the information.
The more detailed your chart of accounts, the more effective your reporting,
* Dr James Robertson
About the author:
Clive a CA(SA) with over 20 years’ experience as an executive director in both listed and unlisted companies.
Clive brings some interesting perspectives to the field of management. Having been involved at Director/Board level, he offers a wealth of wisdom on both the people and business front.
Clive is the CEO of GREEN MIND CAPITAL (Pty) Ltd. The company focuses on assisting executives, especially emerging young CA’s, in maximizing their potential and fast-tracking their careers.
Clive has been involved with coaching and self-development since 1994. He has a particular interest in Cognitive Awareness Technology (CAT) and has completed a number of advanced courses on the topic including The More To Life Training, Way of The Warrior, The Power of Self Esteem, The Power of Purpose, The Power of Connection, The A & B Phase Mentor Training, The I Am Training, Joy Spring, and is in the process of completing the world-renowned ORSC Corporate Coaching Course.
Clive’s mix of years of practical executive experience coupled with his own personal self-development journey brings together a unique method of Transformation Coaching. He has hundreds of hours of one-on-one coaching to his credit.
Clive Kaplan is a prolific writer on LinkedIn PULSE. He has written over 45 articles on various topics from financial management and operations to job search and confidence building. He is also the author of the winQs series (pronounced ‘winks’) which appears regularly on the LinkedIn network.
Clive is also a ORT Jet mentor and works closely with the More To Life Program, both on a voluntary basis.
In his personal life, Clive is an avid walker and swimmer both of which he does most days throughout the year.
He has a passion for SA history, specifically around the Anglo-Boer War era and collects books relating to this period. He also has a tongue-in-cheek fascination with the President Paul Kruger’s hidden treasure (commonly known as the Kruger Millions) and is somewhat of an authority on the subject.
Clive spends a lot of his spare time in the bush and has a special interest in photography.
Clive is married to Adrienne and has two young children – Bianca aged 14 and Daniel aged 10. He lives with his family in Johannesburg, South Africa.