A Picture is Worth A Thousand Words
"A picture is worth a thousand words" is an English language-idiom. It refers to the notion that a complex idea can be conveyed with just a single still image or that an image of a subject conveys its meaning or essence more effectively than a description does. Is your Sarbanes Oxley program continuing to maintain detailed narratives in lieu of or in addition to process flows? Are you looking to become more documentation-efficient in 2018? In this article, we explore the process narrative and the process flowchart – an area ripe for increased efficiency – and we offer tools and recommendations to help.
If you are a Controller or CFO, you are well aware that today’s public companies are managing an enormous amount of finance and accounting documentation to serve management, employees, and auditors – policies, SOPs, process narratives and/or process flow charts, risk and control matrices, accounting treatment memos, etc. The effort and cost to create, and timely update these documents can be significant; because, as we all know, things are constantly changing. New systems are implemented, companies merge, acquire or reorganize, new accounting guidance is issued, etc. Stakeholders, such as the external auditors, may prefer all forms of documentation be maintained in precise detail and software companies tout their products that can help you manage it all. How do you cut through all the clutter and use limited resources to build an organized and efficient documentation infrastructure to satisfy multiple stakeholders?
We combed the internet to see if we could cull out “public” opinion and we asked a few locals. We found some that advocated for flows over narratives; many advocated for both flows with supplemental (not redundant) narratives and no one seemed to advocate for narratives instead of flows.
Obviously, Management and their Internal Auditors and/or Sarbanes Oxley Compliance Program should take the time to evaluate the Company’s overall documentation approach ensuring that it responds to the organization’s needs and requirements and discuss their approach with the external auditors to accommodate any “must-haves”.
Not all processes lend themselves to a full narrative but can be satisfied with a flow chart and some supplemental background documentation. On the other hand, there may be some limited processes that are more likely best accommodated by narrative-style documentation rather than flow charts. In chart below, we evaluate the process narrative versus the process flow chart:
So, the old saying is right and “a picture is worth a thousand words”, and a thousand plus word narrative is certainly not as pretty as a picture. However, both the picture and the words (when well organized and appropriately tailored based on the specific processes) can work together to provide management, employees and the auditors an efficient understanding of processes and controls.
Consider the nature of the process being documented and start with a flow chart. For areas that require a more detailed description of the process, expand on those areas with a targeted supplemental documentation. Most public companies are using technology to help facilitate and house documentation. If you are not currently doing so, or are looking for a more effective solution, look for a system that features the following:
Connects all the dots – seamlessly connects from financial statements, to risk assessment, to process and control, to control testing
Efficiently accommodates process and control documentation – houses flow charts while facilitating the more detailed narrative-style documentation, where warranted, along with standard and customizable reportable fields
Engages process owners – provides customizable access to process and control owners for documentation updates and proactive approval of any key control changes
Drives accountability through transparency – delivers clear management dashboards and reporting to enable appropriate management questions and follow up
So, whether you’re just starting to build your documentation infrastructure or you’re looking for more efficiency in your documentation, seek a flexible, scalable solution that can accommodate these features and comes with an experienced, knowledgeable team of accounting and audit leaders.
For more information or advice on maximizing the value and efficiency of your financial process and control documentation, please reach out to us at info@bullpenfinancial.com
And for a helpful guide to documentation via process flow charts, refer to KPMG’s “Better Understanding the Process through Flowcharting - An Implementation Guide.” http://www.execed.kpmg.com/content/PDF/Flowcharting-Implementation-Guide.pdf