Featured Article - QuickBooks Data Analysis

By Bonnie J Nagayama, CPA

Intuit has built their business on ease of use with the QuickBooks family of products. As a result it is quite easy for business owners and bookkeepers to get the software up and running. The challenge is usually two-fold:

• The ease of use "hides" the accounting which can result in errors in set up or application of accounting principles.
• Because the bank account balance and bottom line profitability are the primary focus, the wealth of information for business decisions included in the accounting data is usually overlooked.

Resources, including time and money, are invested in using QuickBooks and capturing the business and accounting data. In this article we will discuss how to expand from a focus of compliance to an expanded perspective of business management information. While QuickBooks and related integrated applications are definitely my focus, the concepts discussed here can be applied to any accounting system.

Analytical Review

Analytical review procedures are the first step towards a shift to a more proactive way of working with the accounting data to improve the business. This different way of thinking about accounting data should be encouraged at all levels: bookkeepers, Accountants, owners, etc.

Analytical procedures are a first step in discovering what is changing in the businesses, and potentially, areas that need to be addressed to reduce risk, increase growth or improve cash flow. To help better understand this suggestion, review the following chart. Accountants have traditionally had a historical perspective; that is that they make sure that the accounting records are accurate. While this is an important and noble pursuit, it is primarily useful from a compliance perspective. This approach is not sufficient to really make a significant impact in the future of the business. The forward looking perspective is where there is real power. By looking at the historical information, it provides a starting point, but a pro-active, team approach towards the business as a whole, including serving as a mentor for various levels within the organization so everyone understands how their role contributes (or detracts) to the success of the business is quite powerful.

Historical Perspective		Forward Looking Perspective
Reports Results (Compliance)		Plan for Better Results (Budgets, Projections)
Controls the Process		Empowerment of the Front Line
Reduces Costs		Improve Results
Knows Numbers		Understand Why Numbers Are What They Are
Independent		Can Facilitate Teams/Leadership
Knows Accounting & Finance		Understands Business & People
Accounting Stands Alone		Works With Entire Company (Project Management)
Doesn’t Look Outside the Organization		Continuously Benchmarks Other Businesses/Industries

How Accurate Is The Historical Information?

The first step to making this switch is to confirm that the historical information is, in fact accurate. Our recommendation is that someone with accounting and software knowledge perform a data analysis project. This includes:

• Accounting System Health
  • Does the data have integrity;
  • Is the file/list size within reasonable limits;
  • Are backups made on a regular basis;
  • Etc.


• Accounting Data Health
  • Have the bank reconciliation procedures been completed timely;
  • Do Balance Sheet balances look accurate (including Accounts Receivable and Accounts Payable aging);
  • Do the detail reports agree to the financial statements (for QuickBooks especially as it relates to inventory and payroll, if those features are used);
  • Etc.


• Business Health
  • Is there sufficient insurance;
  • Has an exit strategy been discussed;
  • Is there a business plan and operational budget;
  • Etc.

This base line will clearly illuminate where the focus needs to be going forward. It also provides a snap shot in time so that as changes are made it is easy to see the progress that is being made. This is not a quick fix but rather the first step on the journey towards improved profitability and cash flow.

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About the Author

Bonnie J Nagayama, CPA has been focused on supporting other professionals and their QuickBooks® Accounting Software clients with practical solutions for financial and day-to-day operational issues since 1992. Her Controller background and CPA experience are a perfect blend to bridge the gap between what the client wants and what the Accountant needs. She understands both sides and can effectively use QuickBooks to provide a solution that works for each party: Improving operations processes and efficiency with a keen eye towards the integrity of the accounting data. Bonnie has been a member of the QuickBooks Professional Advisor Program and an Intuit Solutions Provider since each program began. Since 1997 she has provided the QuickBooks courses for the CA CPA Education Foundation. She is also a member of the Intuit Trainers & Writers Network and The Sleeter Developer Advisory Panel. Sign up for her free QuickBooks tips and tricks newsletter at http://www.4luvofbiz.com.