After completing one of our recent Internal Audit assignments, when we analyzed the time taken, “Waiting for Documents” topped the list! Client’s Record Keeping System was such that no payable voucher could be readily picked up. One had to look at a report in the system, identify Bank Payment Voucher through which it was paid, and flag that voucher, as they filed vouchers Bank-wise.
In business, we all deal with information. Major part of such information could be relating to transactions, stored in files, and to a large extent in manual records. Some organizations are investing in Record Keeping Systems, which enable storing soft copies. Success of such systems, particularly the ease of retrieval by multiple users, who want it, when they want it, at their desk, without any delay, depends on how well the process is visualized and designed.
Please see some examples.
• As a Financial Controller of an Organization, you are reviewing Budget / Actual / Variance for a period, and note that Travel Expenses exceeded the budget. Your ERP may provide a drill-down to reach individual transaction level details. Against a particular transaction, you wish to see the actual vendor invoice. If you have a document scanning, and storage system in place, linked to your ERP, on a suitable key, you would be able to see the vendor invoice as well, at your desk. It is a good record keeping system. But, how many organizations are reaching this level, particularly, the last mile of seeing the document?
• As a Statutory Auditor, or Internal Auditor, reviewing transactions, you have similar needs. How many organizations are able to retrieve and provide documents to you with least elapse of time?
• You may be a Tax Accountant, required to extract details to respond to a query from the Income Tax Office. Your productivity depends on the speed with which you are able to retrieve the records.
One of the important aspects in designing a document retrieval system is visualizing how the user likes to retrieve details, and selecting the transaction key on that basis. For example, when you book expenditure, you have a distinct transaction number. Let us call it “Accounts Payable Voucher Number”. When you pay for the expenditure, another transaction number would be created. We can call it the “Bank Payment Voucher Number”. The former could be in one month and the latter, in the next month. As an auditor, if I am interested in reviewing expenditure booked in a month, I would look for related “Accounts Payable Voucher Number” but if you have chosen “Bank Payment Voucher Number” as your record keeping key, and file all the documents, in that sequence, it could be a long and delayed route for me to reach the original document I want to see on expense booking.
Good Record Keeping and Retrieval Systems involve certain investments in document scanning facilities and storage memory. To conserve online memory requirements, you may move stored documents, beyond a specified period, to a secondary storage, and call them as and when required.
Answer to the following questions will help in deciding any changes required:
1. Are you able to retrieve documents in time and without undue waiting?
2. Can you review all your record keeping requirements to store all records in soft form?
3. Can you visualize how users look for records, and enable easy navigation, may be for multiple users, at the same time? May be through multiple keys like Accounts Payable Voucher Number” or through “Bank Payment Voucher Number”?
Document Scanning and Retrieval Systems are quite relevant in Head Office and multiple plant situations. Where part of a process is performed at the plant, for example, receipt of materials and processing Vendor bills, while payment is centralized at HO, movement of hard copies of documents can be avoided, making transaction processing more cost efficient and faster.
If you deploy such systems, most likely you will realize that the productivity gains significantly outweigh the costs involved in creating such Record Keeping Systems. Maintenance of adequate Accounting Records figures in Directors’ Responsibility statement as well, under the Companies Act 2013, making it obligatory for Directors to pay attention to this aspect now.
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Thank you for your attention
Tulasi S Sastri
FCA, CISA
CAclubindia
