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Why Is Forensic Accounting Knowledge Important - Apr 5, 2011

Posted by: Jim Ethell in Articles

One of the disciplines of accounting that can be very important to organizations is forensic accounting.  There are entire firms built around this specialty, certifications and professional organizations.  Forensic accounting is more than just accounting and combines those talents with detective work to determine the root cause of a situation that brought about a certain accounting result.  In one assignment I was brought into an organization because they knew something was wrong, but couldn't figure out what.  Using the abilities to read financial statements, in-depth knowledge of how systems interact and accounting skills we were able to pinpoint the accounting and operational issues error that were the root cause and identify the true financial impact.  The company's audit firm had missed it and filed the necessary returns and reports with the error included.

What was the error and how did it come to light.  When we dug into the historical records it was discovered that inventory balances were not reconciled and were, in fact, over stated by over a million dollars.  Needless to say this had a major impact on the organization and it's profitability.  The inventories were overstated because the bills of materials of this organization were inaccurate.  The organization had failed in their accounting basics and weren't doing their necessary account reconciliations on a regular basis.  The organization's accounting professional assumed that this basic practice was being performed and didn't ask about it as part of their quarterly and annual reviews.

This issue could have been avoided and discovered early on if the organization had stuck to accounting basics and performed this reconciliations.  Instead they went through a costly forensic accounting project.

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Testimonials - Adam Vali - Apr 4, 2011

Posted by: Jim Ethell in Testimonials

“I served on the Board of Directors with Jim for three years. During that time Jim headed up the Finance Committee and participated in the Audit Committee. Jim's expertise in these areas is obvious and his integrity is beyond reproach. Jim remains an integral part of this board and is truly an asset.” March 29, 2011

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What Is Erp Phase 2 And Why Do I Need It - Mar 28, 2011

Posted by: Jim Ethell in Articles

In my past experience with companies as a part time CFO and implementation consultant, I've run across an interesting anomaly.  When you talk to ERP vendors and partners they will talk about Phase 1 and Phase 2.  What the customer usually hears is that their implementation is going to cost X.  The problem here is an ERP vendor or partner that wants your business and they are breaking the project into two projects and what the customer is buying is an all inclusive project.  This communication issue leads to many dissatisfied customers and a great deal of stress for the vendor or partner.

The ERP vendor or partner isn't doing this maliciously.  They just know that most ERP implementation go through multiple phases.  The first is to get the customer live on whatever ERP system they have purchased and then further phases bring out all of the features of the product and enhancements that were probably the reason the customer purchased the product in the first place.  Where this strategy breaks down is in the communication of cost to the customer.  The phase 1 implementation will be what is included in the proposal provided by the ERP vendor or partner.   They will, usually, not include the costs associated with the subsequent phases.  When the customer purchases the system they are anticipating that the project will cost X and upon completion they will have all of those features and can move on with their business.  The truth is that a great implementation of any ERP product should never be considered complete.

The customer needs to budget a certain level of support from the ERP vendor or partner for continuous improvement.  This should not be confused with maintenance.  Maintenance and support are two separate and distinct services available from your ERP vendor or partner.  Maintenance refers to annual software maintenance and allows the customer to stay current with the product as it goes through changes and improvements.  Support is the consulting side of the equation.  It is usually offered on an hourly basis and involves the further training of the customer's personnel in mastering the ERP system and using features that were not part of the original phase 1 implementation.  When you, the customer, sets up your budget for the project be sure to:

1. Get a firm bid from the ERP Vendor or partner on the implementation.
2. Ask the ERP vendor or partner for a not to exceed quote.  This will help to validate the initial quote and demonstrate the vendor or partner's confidence in their abilities.
3. Get an estimate of the anticipated support budget needed after "go-live."
4. Get a statement of work from the vendor or partner showing what is included in the project and what features, if any, are not included.
5. Find out if the vendor or partner is proposing a single or multiple phased approach to your implementation.
6. If it's a multiple phased approach get a full budget for all phases.  You will be told that the phase 2 is very difficult to obtain, but don't sign any documents until you have this.

By following the above steps you, the customer, will have a better ERP implementation experience and the ERP vendor or partner will avoid the stress involved in a dissatisfied customer.  The goal for both the vendor and the customer should be a mutually beneficial, long term relationship.

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Erp System Selection - Jan 31, 2011

Posted by: Jim Ethell in Articles

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