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10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 1/6
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ENTREPRENEURS 9/05/2015 @ 9:20AM 854 views
For Financial Challenges: Get GoodData And Know That Your CredibilityMatters More Than Your TitleIn previous posts you met Bob Geis, who in 1991,was the newly elected auditorcontroller of theCounty of Santa Barbara, California.
His entrepreneurial spirit had caused him tomake promises about getting the county’sfinancial reporting structure in line withGenerally Accepted Accounting Principles[GAAP] so that taxpayers and county leaderswould have the information they needed to makegood decisions.
Promises, Promises
Geis recalls, “When I discovered just how poorthe processes were, I realized I had overpromised what I could deliver in a fairly shorttime frame. But I was determined to make goodon those promises.”
Kelly Allan Contributor
I help entrepreneurs and bring you their stories.
Opinions expressed by Forbes Contributors are their own.
10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 2/6
Theo Fallati and Bob Geis of the Office of the AuditorController of theCounty of Santa Barbara. “Credibility comes from constancy of purposeand consistency of effort. Authority comes from your title,” Bob Geis.[Photo by Lael Wageneck]
Geis describes four key areas that had to beaddressed, areas that many small businessesoverlook, because they either don’t know howimportant they are, or there just isn’t enoughtime to pay attention to them. “It is dangerous tooverlook them because things could be gettingworse without you even knowing it,” Geiscautions.
The four key areas on which he focusedand that are often overlooked include:
1. Figure out how to receive timelyfinancial information. In his caseevery county department had toinput their numbers. In your case,the key inputs are probably payables,receivables, sales pipeline, etc.
2. Make sure the numbers are solid.Guesstimates don’t provide lastingconfidence, and in his case wereworse than meaningless – they weredangerous because they hid therealities.
3. Reconcile those accounts to assurethey balance. With clarity comesknowledge.
4. Train the appropriate people in theentire organization on consistentaccounting theory and practices. “It’snot enough that the numbers can bereconciled. If people aren’t using thesame shared theory of accountingthroughout your organization, thenyou are getting apples mixed withoranges mixed with pears,” Geis says.
Are you guessing your “checkbook” isaccurate?
Geis is adamant –and has the data and success toprove it—that if you can’t accomplish the fourelements, then you are just guessing that your“checkbook” is accurate.
As Geis tackled the turnaround he recognizedthat credibility really matters. “I needed to dotwo things: find an example of a county similar toours that was doing it right –or close to right—soI could show people where we were headed withall this, and build credibility by helping peopleunderstand our predicament.
10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 3/6
Authority vs. Credibility
“The alternative is that you can try to commandthat changes get made, but when you do that youare merely trying to legislate compliance. Thereis use of authority when you take that route, butno credibility. What I learned from W.Edwards Deming was that gettingunderstanding will take you a lot further, a lotfaster, and at a lower cost. And yourresponsibility is to lead people to it.”
It is not just the other county departments [suchas the Sheriff’s Office, Parks, Public Works,General Services, Public Health and others] thatGeis needed to lead to a better system; it was alsothe people in his own department. “We hadfiefdoms. To overcome those, I took Deming toheart: break down barriers betweendepartments.
“We did two simple but important things –whichwe continue to do to this day to make sure theauditorcontroller’s office is a system, not acollection of our own silos. The first thing we didwas to have a picnic! We wanted people to havesome fun with one another, and to see they werea part of a larger group –and that we all shouldbe working towards the same aim. The secondthing we did was to establish an Auditor RotationProgram.”
Betsy Schaffer and Theo Fallati of the Office of the AuditorController ofthe County of Santa Barbara, California. [Photo by Lael Wageneck]
Theo Fallati, assistant auditorcontroller, who isinstrumental in the auditor rotation programpoints out that, “The rotation program looksexpensive on the surface because it involves somuch training, but everyone agrees that in realityit is really effective and efficient because of theexpertise gained by learning how the entiresystem works.”
Looking for a model solution
10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 4/6
In terms of finding a credible financial reportingmodel, the newly elected Geis looked to SanBernardino County, “They were light years aheadof everyone else in timely financial reporting. Toget speed and credibility I decided to follow theirmodel.
“I’m now very much aware of Deming’s warningabout benchmarking and copying, and he wasabsolutely right. At the time, though, evencopying any flaws in their model would haveelevated us!”Now vs. Then
Fallati points out, “It’s ironic that today peoplepoint to us as the county that others look to fortheir model. Yet, some people might claim thatour task and our reports are not as sophisticatedas private industry –and that is what makes itpossible for us to achieve faster reporting. Butthat is not the case. The document is online,people can look for themselves.
Betsy Schaffer, financial reporting, budget & costdivision chief, adds with a laugh, “The joke is thatif we have a typographical error in one of ourcounty fiscal reports, then the counties that copyour format will have the same typo in theirreport.”
Fallati continues, “Consider that most countiesclose their books in six months. Even thoughaccounting and auditing standards continued tochange and add complexity, we close our bookswithin 10 days and issue our financial statementswithin 60 days and have received the GFOAaward for excellence for our ComprehensiveAnnual Financial Report (CAFR) for the last 24years.”
Schaffer explains that the GFOA award is theCertificate of Achievement in FinancialReporting Program. “A GFOA award on thecounty’s CAFR is a highly coveted designationthat is awarded by the Government FinanceOfficers Association (GFOA)
10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 5/6
Santa Barbara County receives the GFOA Certificate of Achievement inFinancial Reporting Award for its Comprehensive Annual FinancialReports.
“A GFOA award means the comprehensiveannual financial reports go well beyond theminimum requirements of generally acceptedaccounting principles, and are transparent,provide full disclosure, and help to ensure thatusers of the financial statements can assess thefinancial health of the government body.”
Future posts will detail how Geis and hiscolleagues tackled the turnaround to address thefinancial issues, and how they transformedfinancial processes, which resulted in achievingthe GFOA award every year since their 1991Comprehensive Financial Report.
The author donates the honorarium paid for thisblog to The W. Edwards Deming Institute®, anonprofit helping businesses and organizationsachieve success through Deming’s philosophies.@KellyAllan6
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10/23/2015 For Financial Challenges: Get Good Data And Know That Your Credibility Matters More Than Your Title Forbes
http://www.forbes.com/sites/kellyallan/2015/09/05/withfinancialchallengesgetgooddataalsoknowyourcredibilitymattersmorethanyourtitle/print/ 6/6
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