Process Points

Christopher McKittrick Christopher T. McKittrick is the owner of Perspective Business Advisors LLC. He has...more

“Zero Tolerance” vs. “Materiality”

Accountants have wrestled with the question of materiality forever and often have used a “5 percent rule” when it comes to determining materiality. In short, the theory behind this “5 percent rule” is that investors would not be unduly influenced by variances in net income or income statement line items that are under 5 percent. Most would agree that determining materiality it not a cut-and-dried deal.


This “5 percent rule” of materiality most often is applied to financial statement representations and disclosures. But there are plenty of business events where materiality matters. And when it relates to fraud, “what does it really mean?” more

Watching Out for Grant Compliance

Business process problems happen in all sorts of environments. While most of my career has been spent working in industrial companies, I have recently started to take a look at what goes on in not-for-profits and the academic world. Financial and executive management in all worlds share many of the same challenges and in the vast majority of circumstances are working diligently to do a good job. Unfortunately, I also have learned that just as in the industrial world, there is some bad news about academic business processes to be shared. more

Simple Is Beautiful!

Recently, I started doing some work with an already successful company in the throes of reinvigorating itself for the future. I hold them out as a good example of an organization that despite today’s economic climate remains forward-looking.


The principle they are using to guide their transformation efforts is embodied in a book entitled The 80/20 Principle: The Secret to Achieving More with Less, authored by Richard Koch. The headline for this blog post is the title of Chapter 5 in the book and captures the essence of the idea.


Yes, The 80/20 Principle is based on the patterns discovered by Vilfredo Pareto in the 1890s that many of us know as the Pareto Principle. But the book brings that principle alive and relevant to today. I recently completed reading Koch’s updated treatise and found it to be a good reminder to us all … in all things. While not quoted or referred to in the book, for me it comes down to this: Always keep in mind the “KISS” principle. more

What’s Happening in Lean Accounting?

Several years ago, there was a lot of interest in going “lean.” Much of the interest was being generated in manufacturing companies who were finding that implementing lean philosophies and practices was helping them to increase productivity, reduce cycle times, reduce inventory carrying costs, and control other costs through greater productivity.


While there was talk about lean principles moving into the service industry, I have not seen many reports on the experiences of service companies who have made the transformation. So what is the status of lean moving beyond manufacturing? more

Watchful Eye

Recently I have had opportunities to visit with various organizations and speak with controllers, auditors, and fraud examiners about some of the challenges they see in the area of assuring compliance with prescribed business processes. With many organizations facing reduced resources assigned to “maintaining control” the case is strong for finding ways to use technology to be on guard 24/7 in order to keep a “watchful eye.” more

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