The dark side of automated bookkeeping processes in contemporary accounting systems

Magdalena ZARZEKA
Accounting Manager at RSM Poland

Automated bookkeeping processes are inevitable; however, as it is usually the case with progress, there is more to it than just advantages. It can be clearly seen when Clients ask us to keep their accounting books on their own system or when we support accountants working in Shared Services Centres.

Theory vs. practice

Theoretically, things should be faster and easier with automated processes; yet, the practice shows that our influence on how documents are recognised in the books is pretty limited.

Purchase invoices are entered into the system on the basis of the number of purchase orders made by the Client, to which a document’s book entry is assigned. The role of the person who does the posting boils down to entering the PO number to the accounting system and pressing the Enter key. In some cases, we cannot even assign VAT to a relevant period, because the underlying assumption is that it is accounted for in the month in which the invoice is posted in the system. Employees settle their advance payments themselves in dedicated software, from where these payments are automatically transferred to the accounting software. Thus, the way a document is posted in the books depends on the judgement of the employee who is making the settlement, and he is probably guided by corporate guidelines, but it is not being verified by the accounting department. Clients are sometimes surprised when we ask them to supply documents being the basis for the settlement that was made; in their opinion, the point is that the settlement is there in the system. Bank statements are automatically taken from the bank and accounted for on accounts.

By definition, all these improvements are supposed make the accountant’s work easier and faster. We could say that everything gets posted “by itself”. After all, nobody enjoys the laborious work of entering business trips or bank statements to the system. A problem emerges when, upon data analysis, it turns out that the purchase invoice posted on the basis of a PO number has indeed been entered to the system, but it cannot be found in the cost accounts. This is because a relevant option was not ticked when the order was created, and thus the invoice is “stuck” somewhere in the accounting system and nobody knows where to find it. And people from the Accounts Payable department from a distant country say that this problem does not fall within their competence. It is often the case that the account balance on the bank statement is different from the account balance in the system, and if you look at the postings, there is a series of automatic postings that makes it difficult to verify the data. It is hard to check if all costs are there, if a given entry is not linked with the invoice number and the contractor in postings on cost accounts. As a result, at the end of the day it turns out that the time saved on the automatic entering of documents to the system is later devoted to the arduous effort of explaining the reasons behind the discrepancies. What is more, if the responsibility for posting different types of operations is divided between departments from different parts of the world, problematic issues, in particular those that arise where the competences of two different departments overlap, remain unanswered for a long time, generating e-mails between many people, none of whom feel responsible for solving the problem.

Foreign accounting programme vs. Polish regulations

The problem with automated corporate processes is the unawareness of both the specific nature of the Polish market and the approach of tax authorities to tax settlements, as we have earlier discussed on our blog. Many accountants have learned that Poland is the worst country to do business due to the intricate tax regulations and formal requirements. Admittedly, it is a common practice for corporations to post documents primarily according to their own in-house guidelines, as the correctness of group reports is treated as priority. Adjustments aimed at reconciling the books with Polish regulations are being introduced only at the end of the year, when annual financial statements are prepared. In addition, we often have to struggle with accounting systems that are not adjusted to the Polish requirements, such as keeping the books of account in Polish or generating SAFT-Ts.

What is next?

Summing up, we should benefit from the technological progress and look for further improvements to make the work of the accounting departments more effective. However, it is a good idea to ask yourself a question about the role of an accountant in the future. In the light of highly automated accounting processes, will the burden of responsibility shift to financial controllers, whose task will be to check and analyse these automatic postings?