Kirk Rice Blog

GP Federation Case StudyWritten on January 21, 2021 by Kirk Rice LLP

How we helped a client build robust accounting controls and procedures and improve efficiency in their accounting systems.

Brief Overview

This company was founded in 2008 as a GP Federation. Their financial management consultant, who had previously worked with Kirk Rice LLP through a different client, asked Kirk Rice LLP for assistance in reviewing the current internal accounting procedures, systems and controls. He also requested for us to advise on improving these to improve the efficiency and quality of the financial information being produced to help the executive team in their decision making.

Background and description of the problem/challenge

There had historically been a focus on the profit and loss side of the accounts and as such there was a lack of visibility over items that made up the balance sheet accounts. This resulted in the company having difficulty in being able to accurately verify what was contributing to a number of their account balances; this included the outstanding receivables balances. This had a negative knock-on effect on the company’s cash position as it made it difficult to know what outstanding debts should be chased up.

In addition to this, there was a long lead time in the production of the month end reports which reduced their usefulness in the decision making processes of the company.

The Solution

Kirk Rice LLP visited the client at their premises and initially talked to the accounts team members to identify the current procedures being followed and identify where any weaknesses may be. This was then followed by an inspection of the accounts system (Sage 50) and the accompanying financial records.

Once this was done, Kirk Rice LLP worked through the balance sheet accounts and put together a working paper file with schedules for each balance sheet account and, using the transaction history within Sage, was able identify what was making up the balances and create a clear summary schedule to backup each balance.

Once the schedules were produced, we met with the financial management consultant to discuss the balances and determine which items were genuine and which items needed to be removed.

Finally, once the accounts were tidied, a plan was put in place to transfer the accounts to a cloud-based accounting package (Xero) at the end of the financial year and streamline the chart of accounts. We then utilised some of the available add-ons to firm up the accounts controls and speed up the month-end reports’ turnaround. This included add-ons to automate the invoice processing and approvals processes and provide a more verifiable audit trail of those approvals. This helped drive improvements in the efficiencies created a greater level of control and improved the record keeping of the company.

The Outcome

As a result of the work completed by Kirk Rice LLP, this GP Federation now has a comprehensive working papers file that explicitly backs up each balance sheet account, giving greater visibility of the balances being held and greater verifiability in the figures being reported. Along with the transfer from Sage to Xero and the use of a number of add-ons the turnaround of the month-end reports has improved significantly. An initial draft of the management accounts can now be produced two working days after the end of the month.

Also, there is greater visibility over the outstanding receivables balances making credit control easier. The balance of the outstanding debtors has greatly reduced, and the cash balance has increased, vastly improving the cash flow of the company.

Client Feedback

Kirk Rice have been very helpful in transforming our financial procedures, and we have built a very close working relationship in the last year or so. Jonathan and the outsourcing team have a great understanding of our business and are always happy to assist when we have a problem or need assistance. We now have much more efficient procedures in all areas of our financial operations, reporting and forecasting and are able to easily see how the company is performing and who owes us money at any point in time. We are very comfortable when dealing Kirk Rice and look forward to an ongoing relationship.