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ase Study: Implementing Accounting Systems for an International Manufacturer Client: A European-based international manufacturing company with a subsidiary in Phuket, Thailand. Industry: Manufacturing & Export Services: Accounting System Setup, Internal Control Implementation.

Client:

Manufacturing & Export

Website:

Phuket, Thailand

Date:

August 12, 2023

Category:

Business Consulting

01. Сhallenge

Our client, a rapidly growing subsidiary of an international manufacturing group, faced significant challenges in aligning their local accounting practices with the stringent requirements of their parent company and ISO standards.

Their existing systems lacked the robust internal controls necessary to manage their expanding operations, leading to several critical issues:

Reporting Delays: The local finance team struggled to meet the parent company's strict 5-day monthly closing deadline, causing reporting inconsistencies.
ULack of Control: Procedures for handling cash, processing payments, and managing assets were informal and inconsistent, creating a high risk of errors and fraud.
Data Inaccuracy: Inventory records often mismatched physical stock, and fixed assets were not properly tracked, leading to inaccurate financial statements.
Compliance Gaps: The absence of a standardized, documented system made it difficult to prepare for and pass internal and external ISO audits.

02. Solutions

We were engaged to design and implement a comprehensive, ISO-compliant accounting system focused on establishing strong internal controls. Our approach was systematic and tailored to the client’s specific manufacturing environment.

Segregation of Duties (SoD) Framework: We began by analyzing workflows and establishing a clear SoD policy to ensure no single individual had control over all aspects of a financial transaction, significantly reducing the risk of fraud.
Procure-to-Pay System Implementation:
- Payment Policy: We developed a formal payment policy that defined authorization limits for expenditures at different management levels.
- Three-Way Matching: We implemented a mandatory three-way matching system, requiring the reconciliation of Purchase Orders, Goods Receipt Notes, and Supplier Invoices before any payment could be processed.
Cash & Asset Management Protocols:
- Petty Cash Control: A new petty cash policy was introduced with standardized reimbursement forms, clear spending limits, and a process for regular, unannounced cash counts.
- Fixed Asset Policy: We created a complete Fixed Asset Register, implemented a physical tagging system for all assets, and established clear procedures for the capitalization, depreciation, and disposal of assets.
Inventory & Costing Accuracy:
- Inventory Control System: We designed a robust cycle counting program to ensure inventory records were continuously updated and accurate. This included improving warehouse documentation and reconciling physical counts with the accounting system weekly.
Streamlined Financial Closing Process:
- Monthly Close Script: We developed a detailed, day-by-day closing checklist that assigned specific tasks and deadlines to each member of the finance team (e.g., Day +1: Bank Reconciliation, Day +2: Sales Invoicing Finalized, Day +3: Accrual Postings). This created a clear roadmap to ensure all tasks were completed efficiently.
- Standardized Reporting Package: We created a standardized financial reporting package that aligned with the parent company’s requirements, automating much of the consolidation process.
Training and Handover: Upon implementation, we conducted comprehensive training sessions with the client’s finance and operations teams to ensure a smooth transition and proper adoption of the new systems.

03. Results

The implementation of the new accounting system and internal controls delivered significant, measurable improvements across the client’s operations:

100% On-Time Reporting: The monthly accounts are now consistently closed and submitted within the 5-day deadline set by the parent company.
Enhanced Operational Efficiency: The new payment policy and three-way matching system reduced invoice processing time by 35% and eliminated payment errors.
Improved Data Accuracy: Inventory record accuracy increased to 99.8%, and all fixed assets are now fully accounted for, providing a true and fair view of the company’s financial position.
Strengthened Security: The risk of fraud was significantly minimized through the successful implementation of Segregation of Duties and stringent cash control policies.
ISO Audit Readiness: The client is now fully prepared for internal and external audits, with documented procedures that meet international standards.

“Siri Audit fundamentally changed our perception of the annual audit. It went from being an obligation to one of the most insightful business reviews of our year. Their implementation was a clear, practical guide to making our company safer and more profitable.”

Financial Controller