Redundancy: Preparing for the Unexpected in Accounting

In the dangerous and exciting world of accounting, it’s important to remember the importance of preparing for emergencies. There’s an old metaphor: “What if I get hit by a bus?” that is meant to spark a conversation about a world where one team member is no longer with the organization with little or no notice for everyone else. In these scenarios, most also stipulate that the person cannot be contacted for any information. Is your accounting department prepared for such an event? In many cases, the answer is no. Today, we are going to examine some of the key areas where redundancy should be established in an organization to support smooth operations in the event of an emergency.

Systems

Have you ever thought about who is the administrator of the cloud accounting  system in your organization? What about the bank account? Did you consider the system used to process payments and manage AP? In many organizations, the someone in the accounting department is the administrator to these key systems and if they leave for any reason, it can be a major issue for continuity. To address this risk, companies need to properly administer systems so that there are multiple logins (ideally, including one from the IT department as the administrator) so that access can be maintained in the event of an emergency. 

Processes

One of my golden rules in accounting is that if something is important, it deserves a second set of eyes before going out to one of my clients. This idea is true in both public and private accounting, where processes should be established to ensure important items are reviewed by the right people. The key to a process like this one is making sure that there are enough people around that can serve as those second set of eyes in case of an emergency, vacation, or other conflict. In addition to review being a best practice, it can also be a requirement when combined with certain systems such as banking and AP. If there’s only one person who can approve money going out the door, the organization will come to a screeching halt in their absence. For this reason, building redundancy in key processes is critical.

Knowledge

In every organization there are nerds. They could be accounting nerds, spreadsheet nerds, or financial modeling nerds. Regardless of the flavor, these people contribute their own unique blend of knowledge to the organization. If this knowledge is too concentrated, the organization will be very disrupted when the wrong person takes leave. To prevent an extreme concentration of knowledge, companies should aim to cross train and educate their people so that no single person has all the knowledge of a key area. This doesn’t mean that everyone needs to know everything, but at least 2 people should be familiar with every key subject area!

If you want your career or organization to grow, build some redundancy! Redundancy will not only help in case of an emergency, but it will also allow for your people to be more flexible with their role and develop new knowledge!