Reporting Useful Costing Data
Oct 08, 2014
I was having lunch a couple days ago with a controller from a manufacturing company. He was talking about the new ERP software system that was implemented and how well it had been working. He explained that several variances are broken-out which are useful, however he is not able to get actual results. He said his boss, the president of the company, wants actual results.
The more we delved into the topic, the more apparent it was that the president did not understand the variances. It appeared the standards seemed to be reasonable, and for the most part, they were able to calculate variances based on the differences for the categories they needed, but he still did not understand.
Sometimes users of various reports become accustom to viewing a report one way, in this particular case, actual. This sort of routine can hinder your team from seeing a new perspective, especially when the new information could be deemed even more valuable than the prior information reported.
Take the time to talk with those employees who review report results to confirm they are getting the information they need. Also make sure they recognize that different information is not wrong, it may even be more correct. It is your job to educate them on what they are seeing and how and why it is useful to them.
The main issue in this situation is that since the president is wanting to see actual results and the controller is not able to explain to the president the variances and the information he does have, he is doing what almost everyone I come in contact with does: works outside the system. In the end, he has created an Excel spreadsheet that helps him determine the actual results!
Do not work outside your system! Remember 88% of all Excel spreadsheets have errors! Use the software you have to create meaningful reports and educate your staff on how to read those results to get the maximum benefit.
Categories: Cost Accounting