Winning Sequels—How to Expand the Role of Flowcharts Throughout Your Enterprise
When an author submits a draft of their novel to an editor, the expectation is that edits and improvements will be made where necessary—and the hope is that those revisions will help it eventually become a best-seller.
Flowcharting a business process is similar in that there will be many iterations before all information is captured correctly. Once a flowchart is created and everyone agrees it is accurate, it is nothing more than a first draft of the business process story. The flowchart should then be scrutinized to ensure that each process step includes strong controls where needed. Once strong controls are created, you (as the process owner) can update the flowchart to include those controls. At that point, you now have an excellent flowchart. But better yet, you have a stronger business—your version of a best-seller.
In previous blogs, I have written about my love for flowcharts because, unlike narratives, people actually will read them to verify that they are accurate. All companies need to have documented processes and identifiable controls; yet, there is life beyond the flowchart.
But what do you do after you complete your flowcharts? Should you place them on a bookshelf with books you may never read again? Absolutely not. Instead, you should use each flowchart as a tool to strengthen your business. Flowcharts can help identify areas of weakness (e.g., segregation of duties issues, lack of review, inefficiencies). The real question is: what do you do with that information? The answer is simple: You should address each issue and resolve each one of them.
Even if you have a small company with one accountant and obvious segregation of duties conflicts, you can implement compensating controls to alleviate those issues. For example, it’s an obvious segregation of duties violation if one person has the ability to create new vendors and to also disburse vendor payments. In this case, an effective compensating control would be to implement an independent review of all vendor changes or vendor payments.
You can also strengthen controls that appear weak. If the flowchart documents that an accounting manager signs off on a reconciliation, is that a control? No—a sign-off is never a control. The real control is what the accounting manager does to review the reconciliation before they sign their name. The fact that they signed their name indicates that they performed the specified steps. A strong control would describe the reviewer’s process before they sign their name—examples include tying the reconciliation to the general ledger and the supporting documentation; checking the reconciliation for mathematical accuracy, and verifying that the reconciliation was performed in a timely manner (with timely being defined by that company’s reconciliation policy).
There’s more. Flowcharts can assist you in identifying your pain points or inefficiencies throughout a given process—and that, in turn, can help you determine how to best deploy resources to improve the process. For example, I recently worked with a client who managed their customer leads and sales via offline spreadsheet. I helped them implement a system to automate the process, increasing accuracy and efficiency.
Once you determine which new controls to add to your process or how you will improve your current controls, you need to develop a go-forward plan. Ideally, you should create a remediation plan with specific people identified as control owners, along with details of the remediation process and the expected remediation date. Once the new controls have been implemented and control gaps have been remediated or installed, you can then test them to make sure they are operating as intended. Once the process is solid, you can then update the flowchart to include the new or updated steps. Keep in mind, however, that it’s important to periodically review your processes and update your documentation as your processes and risk universe evolves.
You will now have a stronger company because you put in the necessary work. This exercise to create stronger controls will position your company for success when it seeks to grow, change or adapt to risks. While a flowchart by itself tells a straightforward story, its prominence within your organizational DNA will make your business the strong and resilient best-seller you desire.
Do you have questions about flowcharts, or ways in which Marcum can help you in your quest to strengthen your business? Contact your Marcum representative.