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Speed Up Financial Statement Completion By Eliminating Multiple Approvals



A typical problem when financial statements are produced is to have employees wait for approvals before they are allowed to complete their tasks, or to pass along work to other employees, who cannot begin until the approvals are given. When there are many approvals to obtain, especially in areas where the approvals are holding up key work products, there can be a substantial impact on the speed of financial statement completion

Typical spots in the financial statement process that include approvals are journal entries, footnotes, the final version of the statements, and the final results from all of the major accounting modules: accounts payable, accounts receivable, payroll, and fixed assets. Given the number of approvals in some companies, it is a wonder that the financial statements are ever produced in less than a month.


There are several solutions that bypass the approvals problem. When reviewing them, one must consider the underlying reason for using approvals, which is to ensure that information is correctly processed. Without an approval, there must be a countervailing system in place to ensure that accurate information is still transmitted to the financial statements. Some solutions are as follows:

  • Designate a back-up approver. If there is a continuing problem with finding the person who is allowed to issue approvals, then there should be a back-up approver available. This should still be a person who has a sufficient level of technical expertise, and so this solution is only a viable option for those companies with some extra employees on hand who are sufficiently qualified.
  • Increase training levels. An excellent way to avoid approvals is to train the accounting staff in the closing procedures so that they all become experts in their jobs. After heavy and repeated training, it is quite common to find that the staff is more technically proficient in their tasks than their bosses, with little need for any approval. Also, newcomers to the accounting department must receive similarly high levels of indoctrination.
  • Issue ranges within which approvals are not required. The best way to handle the approval problem is not to require approvals at all. To do so, determine the comfort level of the controller in regard to how much an accountant is allowed to do without any supervisory review. For example, one can establish a limit of $2,500 for any journal entry, above which approvals are still required. This approach usually eliminates the bulk of the approvals, while still reserving the oversight privilege for those transactions large enough to truly warrant a review. This method usually requires a periodic review of all transactions to ensure that the preset ranges are being observed.
  • Reduce to one approver. In cases where there is more than one approver, there is rarely a need for it. For example, if a journal entry for more than $5,000 must be approved by an assistant controller, but anything over $25,000 requires the approval of the controller, it is usually sufficient to give the assistant controller a much higher signoff authority, reserving only the most unusual situations for the involvement of the extra person. If a controller still insists on requiring a secondary review of all approvals, then either the controller is a certifiable micromanager (which may require counseling) or else the person issuing the first approval is not sufficiently qualified to give it (in which case he or she should have no approval authority at all).
  • Shift the approver to an available person. A common occurrence is that a high-ranking person is the only one allowed to approve certain transactions. If that person frequently travels or is in meetings, then a process cannot be completed until the person becomes available to give an approval. Consequently, the best approach is to reassign the approval to a different person who is always on-site, usually an assistant controller or accounting manager.

All of these approaches are targeted at reducing the processing time required to track down a designated approver. Given a company’s individual circumstances, especially involving the risks of not approving a processing step, the ultimate solution to this problem will be a mix of these options. The key issue to remember is that some situations do indeed require some kind of supervisory control, so there is always some approval requirement for at least a few key deliverables.
