Is Accounting a Core process?

[Marc]

But, I don't know anyone who audits accounting, outside of maybe doc and record control, metrics, training.

That has been my experience.

 

[E Wall]

Accouting/Finance as others have mentioned are touched on in the purchasing process. While limited the finance folks are involved and I do include those for review as they are directly related to whatever audit trail I am following.

I've argued the need for inclusion of some sub-processes within finance/accounting realm for years but usually get no helpful response. There is not always a good communication and parterning between purchasing group and accounting/finance. This is where an organization tends to have gaps that IMHO will directely impact the business system. The reasons finance/accounting is avoided in ISO are fairly obvious but I tend to dissagree on a number of these myself and feel at least the processing side for vendor selection/retention and payment processing do indeed affect an organziations ability to meet requirements in ISO/TS. Just as I don't overstep the lines on Environmental 'compliance' regulatory etc...in audits we also would never perform a financial $ audit under the ISO/TS umbrella.

Example: In efforts to streamline and minimize the number of vendors our organization has at times been affected when one site hasn't paid a shared vendor on open invoices (for whatever reason - typically matching errors on PO and Invoicing causing delays) and the vendor then locks orders to any site until that previous bill is paid. When this is the only approved vendor for a product/part/equipment you are then stuck until bills are paid up and the issued cleared which in turn compromises your scheduling, JIT inventory, open projects, etc...

 

[somerqc]

Although I wouldn't say that Accounting is core, it sure is a strong candidate as the #1 support system!

What about errors in invoicing that annoys your customers? Or accounting keeps trying to take discounts that they are not qualified for (re: early payment) and annoys vendors? Or Accounting likes to stretch payments for as long as possible before they get in trouble (try getting good prices from that vendor - or better yet - establish a good vendor/client relationship!)?

I have been there - you learn quickly when the good system is not there just how much accounting control is important in keeping prices down and customer satisfaction high.

John

 

[howste]

Did anyone check how many times the word finance or accounting comes up in ISO9001? I did, 0!

You didn't search for the terms "financial" or "financial management" in ISO 9001. As Sidney shows above, these terms do exist.

Well-managed companies tend to integrate their QMS with all aspects of their business. If the company chooses to identify finance or accounting processes as part of their QMS, then as an auditor I'm obligated to audit some aspects of those processes. I don't need to audit the regulatory aspects of the processes, but I should audit the parts defined in their QMS - particularly the results.

If there was no relationship, why would this reference be included in the bibliography?

ISO 10014:2006, Quality management — Guidelines for realizing financial and economic benefits

 

[george caplan]

Re: Is Accounting a Core Quality process?

Hi! This is my first posting and I hope my point of view is useful to others.
I'm a Quality Manager with over 10 years experience.

First, I wouldn't exlude the finance / accounting dept from the Quality Managment System (QMS) even if they have their own regulations and documented procedures to follow.

To me, the QMS includes the entire organization even finance. For some reason, many financial managers fear QMS procedures because they feel these documents would and could be a source of nonconformance in any external financial audit. I believe their concerns are unfounded because QMS procedures pertain to operating procedues ... not financial procedures. If anything, QMS procedures might provide some insights to several financial processes and thus be beneficial to the financial auditor. Plus... for my approach, I rely on flowcharts so they don't get into lots of detail for the auditors to question.

Second. The finance dept. is involved in the top (quality) "management process" and the "sales process" through policies on product return and customer credit, to name a few. Also, sales budgets are a key part of all organizations annual operating budgets. Who has the most to say about budgets.... the finance and accounting people.
The sales department can not operate without the finance dept. and the finance department relies on sales dollars and customers. Bottom line.... if you include your sales dept in your QMS, then finance should also be included.
This is covered more fully in the attached flowcharts.

Third. Management plays a key role in defining the "training process". Since training crosses all departments, it should also include the finance / accounting dept.

Forth. My former employer was bound by SOX regulations. A key component in SOX is document control and at first, finance had their very own "doc control process" and "doc change process". How can a QMS registered company have two document control processes - one for finance and another for the rest of the company? The sensible answer is having one doc change process for the entire organization. This was the end result. Many of you might wonder about who has access to SOX change requests? The answer is up to the organization to define but for sure, the review, approval and distribution list is different than the list for QMS documents.


In closing, I hope my comments are useful to you. I know I threw out alot of ideas and maybe, I'll learn something from your feedback too!
I'm having too much fun with the "smilies"

Thanks
George

 

[Stijloor]

Re: Is Accounting a Core Quality process?

Hi! This is my first posting and I hope my point of view is useful to others.
I'm a Quality Manager with over 10 years experience.

First, I wouldn't exlude the finance / accounting dept from the Quality Managment System (QMS) even if they have their own regulations and documented procedures to follow.

To me, the QMS includes the entire organization even finance. For some reason, many financial managers fear QMS procedures because they feel these documents would and could be a source of nonconformance in any external financial audit. I believe their concerns are unfounded because QMS procedures pertain to operating procedues ... not financial procedures. If anything, QMS procedures might provide some insights to several financial processes and thus be beneficial to the financial auditor. Plus... for my approach, I rely on flowcharts so they don't get into lots of detail for the auditors to question.

Second. The finance dept. is involved in the top (quality) "management process" and the "sales process" through policies on product return and customer credit, to name a few. Also, sales budgets are a key part of all organizations annual operating budgets. Who has the most to say about budgets.... the finance and accounting people.
The sales department can not operate without the finance dept. and the finance department relies on sales dollars and customers. Bottom line.... if you include your sales dept in your QMS, then finance should also be included.
This is covered more fully in the attached flowcharts.

Third. Management plays a key role in defining the "training process". Since training crosses all departments, it should also include the finance / accounting dept.

Forth. My former employer was bound by SOX regulations. A key component in SOX is document control and at first, finance had their very own "doc control process" and "doc change process". How can a QMS registered company have two document control processes - one for finance and another for the rest of the company? The sensible answer is having one doc change process for the entire organization. This was the end result. Many of you might wonder about who has access to SOX change requests? The answer is up to the organization to define but for sure, the review, approval and distribution list is different than the list for QMS documents.


In closing, I hope my comments are useful to you. I know I threw out alot of ideas and maybe, I'll learn something from your feedback too!
I'm having too much fun with the "smilies"

Thanks
George

Welcome George to The Cove Forums!

An excellent first post! Please keep them coming!

Stijloor.

 

[w_grunfeld]

You didn't search for the terms "financial" or "financial management" in ISO 9001. As Sidney shows above, these terms do exist.

Well-managed companies tend to integrate their QMS with all aspects of their business. If the company chooses to identify finance or accounting processes as part of their QMS, then as an auditor I'm obligated to audit some aspects of those processes. I don't need to audit the regulatory aspects of the processes, but I should audit the parts defined in their QMS - particularly the results.

If there was no relationship, why would this reference be included in the bibliography?

Howste,
Yes I did search for "financial" through the pdf's serach function but somehow I missed it. I did a renewed search and found one mention of it, and guess what it says? That financial management IS NOT WITHIN THE SCOPE OF IS09001
Quote:

"0.4 Compatibility with other management systems
This International Standard has been aligned with ISO 14001:1996 in order to....
This International Standard does not include requirements specific to other management systems, such as those particular to environmental management, occupational health and safety management, financial management or risk
management. However, this International Standard enables an organization to align or integrate its own quality management system with related management system requirements. It is possible for an organization to adapt its existing management system(s) in order to establish a quality management system that complies with the​

requirements of this International Standard."

Too often people mix up between what some companies do or what they THINK should do and what the ISO 9001 STANDRD REQUIRES.
Standards as the name implies are generated so that people don't use their own opinions and judgement, whether it's good or bad, but follow a commonly agreed (by the reps of 140 or so countries) set of rules.

 

[Stijloor]

Willy,

What if an organization considers "accounting" its core business? An actual accounting firm for example...

Stijloor.

 

[w_grunfeld]

An accounting firm's core business is to provide accounting services to others- that's their core business, not their internal accounting department.
The quality of accounting is not QMS's concern- that's taken care of by following widely accepted accounting standards!
The QMS would be concerned with how good their service is, how to continuosly improve it and so on.

 

[Stijloor]

An accounting firm's core business is to provide accounting services to others- that's their core business, not their internal accounting department.

Agreed.

The quality of accounting is not QMS's concern- that's taken care of by following widely accepted accounting standards!

Could be, but an accounting organization may decide to obtain ISO 9001:2008 certification and then the standard requirements apply.

The QMS would be concerned with how good their service is, how to continuously improve it and so on.

Agreed!

Stijloor.