The COVID-19 pandemic has made technology more important more quickly than anyone could have foreseen. A popular refrain in accounting circles is that the sudden, massive shift to remote work necessitated by stay-at-home orders has advanced tech adoption across all industries forward five years.
That’s good, because corporate accountants play a key role in helping businesses make decisions on technology investments that can determine the fate of the organizations they serve. Certified corporate accountants (e.g. CPAs, CMAs, and CGMAs) should be involved with all tech implementations because they are responsible for protecting the company’s financial well-being and maintaining proper internal controls over financial reporting.
Specifically, corporate accountants are needed to take the following four steps:
1. Advise on the investment decision;
2. Develop an appropriate budget;
3. Oversee the implementation; and,
4. Supervise post-implementation activities.
Let’s dive into each of those steps and the role corporate accountants can play.
Step 1: Advise on the investment decision
Any tech implementation should receive a thorough cost-benefit analysis prior to investment. Without proper consideration of this critical first step, problems will almost certainly follow. Corporate accountants have the expertise to lead the assessment of three key areas.
- Financial impacts. Deploying a new technology resource can have a material impact on a company’s financial position. Some important considerations may include implementation, training, and recurring costs. Although in some cases such costs may qualify for capitalization, it is essential to ensure that the investment doesn’t exhaust working capital. Additional financial impact considerations may include efficiency and scalability gains, along with the timing of such events to generate return on investment.
- Cybersecurity risk exposure and mitigation. As companies become increasingly digital, so does their cybersecurity risk exposure. Without overlooking the magnitude of the tech investment, it’s important to assess the complementary needs of the organization to protect its data integrity and financial well-being.
- Internal controls. While the upside of efficiency and scalability gains is enticing, it’s imperative to remain mindful of the potential effects on internal controls. In addition to security risks, implementing new tech will often require dedicated change management to minimize human error and ensure efficient implementation; meticulous financial reporting with thorough documentation; and careful reevaluation of employee role modifications. However, the corporate accountant’s involvement does not end with advising on the investment decision. The responsible professional should also be an active supervisor throughout the implementation, beginning with a set budget.
Step 2: Develop an appropriate budget
Typically, once stakeholder approval is obtained, the corporate accountant would assemble a detailed budget with clearly defined milestones. This next step is important for establishing accountability and setting expectations throughout the implementation process.
Depending upon the scope of the project, budget and milestone materiality may be a factor. Some resources can be quick plug-and-play solutions with minimal organizational impact, while others can involve a complete overhaul of the business information system.
In all situations, the corporate accountant must remain mindful of the pertinent transactions and how they’re recognized within the new resource. For the more sophisticated solutions, like those that automate a series of interrelated tasks, it’s important to clearly identify which tasks are financially relevant triggers. There may be a need for custom programming, depending upon the implementation’s complexity, which can easily be overlooked and put the project over budget.
After the budget is set and approved, it’s time to roll it out.
Step 3: Oversee the implementation
Process modifications create opportunities to disrupt internal controls. The following are two key interrelated considerations when overseeing the implementation.
To start, for large-scale implementations, the project may need to be phased-in with strategic user acceptance and stress testing.
A well-planned project with phases should be able to fulfill a minimum viable product at each phase. Such planning proves especially significant if the project runs over budget.
Specifically, phasing in a large-scale tech implementation can have the following significant benefits:
- Protect working capital;
- Deliver immediate efficiency gains; and,
- Capitalize costs.
When such development checkpoints present themselves, the corporate accountant should use the opportunities to evaluate the project budget, communicate its progress to key stakeholders, and obtain user feedback to ensure successful implementation has occurred.
Then, prior to deployment, whether it be a phase or the entire resource, it might be appropriate to operate in parallel environments for a short period. Doing this can allow for:
- Employee training;
- Additional user acceptance testing;
- Observation and testing of new internal controls;
- Delivery of new resource documents; and,
- Legacy data migration.
Many fear change. Understanding this barrier is important as it may require additional patience and care to ensure an efficient transition to the new resource. Prioritize and listen to user feedback while in this stage -- it’s an opportunity for them to contribute to the initiative, which leads to greater acceptance.
Lastly, a smooth implementation depends on announcing expected changes to the working environment. Communication is key. The organization must be informed of the new protocol and it is critical that all obsolete procedures, documents, and resources are retired. This will prevent retreat to old processes and enable maximum commitment to the newly established resource.
Step 4: Supervise post-implementation activities
After going live, the corporate accountant needs to closely monitor post-implementation activity. This final step is critical because it will ensure successful company adoption, expose unforeseen process modifications that could violate internal controls, and allow for accurate analysis of return on investment.
During this stage, it may be beneficial to revisit the purpose of the implementation so clearly defined key performance indicators can be set and measured against. By doing so, the organization can remain in-sync on any unexpected process adjustments or programming requirements.
Taking responsibility
The COVID-19 pandemic served as an eye-opener for many businesses that were reluctant to invest in tech solutions. For some, hesitation could stem from their leadership mentality, while for others, perhaps a lack of proper investment analysis.
Regardless, technology continues to grow and improve, creating new opportunities for businesses to operate more efficiently, and it’s the corporate accountant’s duty to help these businesses successfully innovate. COVID-19 will not be the last major stress test we face as a global economy. Understanding the business’ needs and matching them with the right technologies can lead to sustained competitive advantages.
