Monday, November 22, 2010

Nothing Hidden!
What I Learned from Journal Entries...

"For God will bring every deed into judgment, including every hidden thing,whether it is good or evil." Ecclesiastes 12:14

In 1989, when I assumed the reins at the loss prevention training department of the insurance company where I ultimately worked for 30 years, I became responsible for a rather large budget. On the second day of my assignment, the morning mail delivered a tall stack of mainframe computer printout that contained my department's budget reconciliation report for the previous month.

As I began to make my way through nearly 70 pages of material, I kept seeing the words "Journal Entry" in the Expense column with various amounts deducted from quite a few specific accounts. I counted them. There were 27 Journal Entries in all. Not knowing what a Journal Entry was, I picked up the telephone and dialed the number for the Accounting Department.

"Hi. This is Dean Wilson calling from the Training Department. I just received my budget reconciliation report for April and I note that I have 27 Journal Entries scattered throughout the pages. Just what is a Journal Entry?"

"You don't have to worry about that," the accountant who answered the phone replied. "A Journal Entry is a device we use in accounting to allocate expenses and balance the books. You don't need to concern yourself about them."

This hardly gave me a satisfactory answer. I decided to total the amounts of the Journal Entries. I was startled to learn they totaled over $7,000. "Wow!" I thought to myself. "That's a lot of money!"

In a short while I went downstairs to my boss' office for a regular weekly meeting. I thought that surely he, as the Senior Vice President of Loss Prevention, would be able to give me a better explanation for the Journal Entries.

"I just reviewed the budget reconciliation report for April and I found 27 Journal Entries totaling over $7,000. I called Accounting, but they couldn't really give me a satisfactory explanation. Just what is a Journal Entry?"

"I don't have any idea," my boss replied. "Let me look at my report and see if I have any. Yep. I have one-two-three-four...seventeen Journal Entries."

With that, he picked up the telephone and dialed the Vice President of Finance.

"Bill," my boss spoke into the phone. "Dean Wilson is in my office and we're reviewing our budget reconciliation reports. We both have a number of Journal Entries totaling a significant amount of money. What the heck is a Journal Entry?"

A rather long silence ensued. I could hear the faint voice of the VP of Finance coming from the telephone.

"Well, that's not a very good explanation," my boss intoned.

More silence as the VP of Finance talked further.

"Well, I'm not happy with that explanation. I think we'll have to talk about this some more later."

As my boss hung up, he turned to me. "Bill says that a Journal Entry is a device they use in accounting to allocate expenses and balance the books. He insists that we don't need to concern ourselves about them."

Somewhat mystified, I went about the many other tasks on my plate. When the calendar pages turned and I received the next month's budget reconciliation report, I begin scanning for Journal Entries. I could not find a single one. I called my boss and reported this phenomenon. He quickly scanned his report and found that he, too, had no Journal Entries.

And, so it was from that day until the very day that I left my job at the insurance company some ten years later. Never again did any of the budget reconciliation reports that I received have any Journal Entries. But, there's more to the story.

Four years later, one of the accountants joined his local volunteer fire department. When his fire chief learned where he worked, the chief asked him if he knew several of us in the loss prevention training department. The chief had met each of us at various times when we had served as instructors at fire training seminars. Knowing that we operated the largest fire protection teaching laboratory in the United States, the chief asked the accountant if he could arrange for the fire department to take a tour of our lab.

Suddenly, we had a new lunch companion. The accountant began to sit at our table in the cafeteria. He was an amiable fellow and soon became a welcomed lunch buddy.

Several months after he began to sit with us at lunch time, he mentioned that the accounting department had special rules for the loss prevention department and for the loss prevention training department.

"Special rules?" I replied.

He went on to explain that the accounting staff had all been instructed that under no circumstances were they to record any Journal Entries against any of the accounts managed by either my boss or me.

"Exactly what is a Journal Entry," I asked our new friend.

"A Journal Entry is a device we use in accounting to allocate expenses and balance the books," he replied.

"Yeah. But, what is it?" I insisted.

"A Journal Entry allows an accountant to make legitimate corrections to the current financial records for mistakes in previous records, especially once the previous records have been closed for a particular accounting period. But, we also use them in another way. Journal Entries allow us to allocate various expenses and spread them across as many accounts as possible, so that no one can easily determine the exact amount of money we're spending on certain items.

"For example, the country club memberships for management and some other perks they receive are expensed as Journal Entries across hundreds of accounts. Since your budget was one of the larger budgets in the company, and since you have so many accounts, your department was an ideal place to put Journal Entries. That's why you had so many. Most managers only get one or two a month, so they never even ask what the Journal Entries are for. I guess all those years of you managing fire protection engineers/inspectors, and your years in the research department, made you skeptical enough that you wouldn't let it go."

Once again, I learned a valuable lesson: "Everything hidden will eventually be revealed." So, don't hide what you're doing. Operate with absolute transparency. Don’t plot, plan, or scheme how to get your ideas adopted by your team members or the members of management. If you try to operate in secrecy, your secrets will always come to light.

On the contrary, when you have come to a decision on how to move forward with some major matter, present your thoughts openly to your team members. After you have presented your ideas in a fully transparent manner, lead your team members in a careful, thoughtful, and respectful analysis.

Don’t withhold any information from them whatsoever. Share openly how you have examined the problem, what alternative solutions you have considered, and how you have arrived at the solution you have chosen. Let your own, personal thought process become fully open and transparent. After all, what do you have to hide? Are you ashamed of how your mind works? Do you have so much self-doubt that you do not trust the scrutiny of others?

Likewise, insist that the members of your team follow your example and fully disclose their own thought processes regarding the matter. Let them share what they have discovered. When you reach a final decision—supervisor and team members together—share that decision in full transparency with management. Tell management how, as a team, you have arrived at your decision. Allow your collective thought process to have full transparency.

At all times maintain strict transparency, particularly when you deal with matters of finance. Do not hide anything from anybody.

As a believer in the Lord Jesus Christ, maintaining a strict transparency will aid the Holy Spirit in teaching you how to keep your insecurity and arrogance at bay. It will help build trust with your team members and with management. It will force you to focus on major issues and leave the nit-picking details of your department to other team members.

I can summarize in a sentence what I am trying to share as follows: “A supervisor does well who keeps his or her decision-making process fully transparent.”

Copyright © 2010 by Dean K. Wilson. All Rights Reserved.
More info at www.DeanKWilson.com

 

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