How to Build an Accounting Succession Plan

What will it look like when your accountant leaves? Will it cause a sudden upheaval?
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Hopefully, when your accountant leaves they will go about it the right away – respectfully communicating their intentions clearly, giving sufficient notice, handing off responsibilities smoothly, and leaving on good terms. 

Corporate succession planning concept.

However, you can’t guarantee that the process will go this well. Sure, you can communicate that you expect employees to bring this kind of tact to the transition, but you cannot control their timing or actions during the process (and sometimes neither can they depending on the circumstances involved!). Instead, you need to have a formal succession plan in place to safeguard the business against the kind of disruption that can happen when an accountant leaves unexpectedly. 

The time to get ready is now!

Plan for your accountant’s departure before you need to do it so you can be properly prepared.​

​As you review the recommendations around preparing an accounting succession plan, you may notice that they sound familiar. That’s because these are all tips for mitigating fraud risk as well! So, even if you aren’t convinced that you need to get ready for your accountant leaving because you assume that they will be in the role for years to come, these practices are going to be helpful nonetheless! For that reason, succession planning is a win-win scenario – a win now in the form of reduced organizational risk and a win later in the form of continuity when key financial personnel eventually do leave someday.

Policies & Procedures
While your accountant is still in their role, get formal policies and procedures in place that outline which activities need to be undertaken, by whom, and when. Creating an accounting policy and procedures manual to address the organization’s internal needs is a helpful way to standardize daily as well as periodic accounting activities that keep the business running smoothly.
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A policies and procedures document should cover topics related to recurring tasks, workflows, accounting methods, internal controls, personnel, software, and financial disclosures. Not only will an accounting manual detail activities around closing procedures and reporting, but it will also contain details related to staff responsibilities and outsourced provider information. This living document should be updated regularly as personnel changes occur and activities evolve.

Internal Controls
To ensure that the reins are handed off effectively when your accountant leaves internal controls should be followed by not only accounting staff, but all employees involved in the organization’s finances. The internal accounting controls that are most important during times of transition are:

• Separation of Duties
• Digital Access Controls
• Required Expense Approvals
• Financial Document Templates
• Data Backups

Without establishing and adhering to internal controls a departing accountant can take vital information with them. Whether this is an intentional or unintentional act, it can cost the organization greatly.

Transfer of Knowledge
While it is certainly important to guarantee that your accountant is not the only one who knows the login to your accounting system or has access to the PO template, your planning should not end there. You also need to ensure that all learned knowledge about the role is documented somewhere as well. As Jason McGill says when discussing what to do when your bookkeeper leaves, 

It is difficult to train new employees on how to initiate, approve, and record transactions. Learning by trial and error is a costly path for growing or maintaining a business. When an employee leaves, employers lose the experience, data, best practices, and other information employees developed on the job. Since this knowledge is often held independently it’s critical to capture it and make it accessible to others. You can do this through documenting workflows, policies, best practices, and reporting deadlines.

​Ask your accountant to create a training manual-style knowledge document that walks another person through their responsibilities, sharing key information about each activity that someone else may need to know if they are out for an extended period (like on disability or family leave) or resign. This can be as formal or informal as you would like, depending on the nuances of the role and the accountant’s personality. Remember that this is not simply part of a succession plan, it is also a key training tool that can be used when the company is growing and hiring new staff. Ideally, this type of information will also be communicated verbally as a new bookkeeping and accounting staff is hired and your existing accountant acts in a mentorship role.
 
Training
A key part of every succession plan (as well as risk management strategy) is cross-training other staff in bookkeeping and accounting activities to create redundancy. Utilizing your accounting policies manual and stressing the importance of transferring knowledge from more senior employees to newer accounting staff is a crucial component of training employees to make a transition go more smoothly.   

Systems
If you have been putting it off year after year, it’s time to finally modernize your systems! As our team explains when discussing what to do when your accountant is leaving, 

Unfortunately, many small and mid-market companies are not as progressive when it comes to their accounting processes and technology as they are with other areas of their business. We frequently work with clients that have no POS (Point of Sales) system, are processing AP (Accounts Payable) manually, and are paper heavy with their day-to-day processes… With the wide array of places where technology can be used to augment your accounting functions, knowing where to be more progressive can be tricky. Focus on your biggest pain points across general bookkeeping activities, reporting, payroll, and benefits administration to get the best return for your time and money investment.

​One such area is cloud accounting. If you are not already using a cloud-based accounting platform, you should consider switching to one to allow greater access for other users. This will ensure that others in your organization will still have access to your financial data if your accountant suddenly announces their retirement or departure for a new opportunity. In the meantime, having multiple users with access to real-time financial information lends accountability and increases oversight, which is a great way to minimize fraud risk and promote collaboration.

Clean Books
Regardless of when you think your accountant might leave you should keep your books in good order. Having clean, well-organized books will help with the day-to-day financial management of any company. And when your accountant does decide to leave, it will make finding a replacement easier because very few accountants are going to want to take on a role where they need to fix numerous problems and ongoing errors as soon as they walk in the door so that they can get down to doing the work they were hired to do.  

Finding a Replacement
Before there is any hint of your accountant even thinking about leaving, start doing your research. Know where you will go to look for a replacement and which service provider you will use to fill the gap until a new accountant can be hired. Ask colleagues who they’ve used in the past with good results and start making connections so that when the time comes you already have a place to turn.

When your accountant is leaving or has already left, please reach out to us. We can provide an interim accountant while you look for a new one, accounting recruiting to help you find your next accountant, and even ongoing outsourced accounting services if you decide not to backfill the role. Our team brings extensive experience across all levels of accounting from staff to senior accounting and accounting manager to controller-level roles. Contact us today to find out how we can help your company or nonprofit navigate this kind of change! Don’t wait to join the ranks of organizations that have experienced the benefits of working with us to oversee and improve their day-to-day accounting functions!