January 2003

Documenting Manual Systems

By Allan M. Rabinowitz

In every business, undocumented manual systems coexist and interact with superbly documented electronic systems because people do not tell others precisely what they are doing, what they plan to do, or what they expect others to do.

Employees cannot be counted on to think in the context of an organization’s objectives without structure and at least some initial guidance. Employee turnover poses additional problems to continuity of systems and procedures, and underscores the need for documentation. Such guidance should be accessible at all times, to minimize situations where employees are unproductive or have faulty information.

Because people who need and expect to be told specifically what to do may go no further than following instructions to the letter when exceptions arise, instructions must be as complete as possible, including where to go for help or assistance.

Over time, employees tend to forget oral instructions, with deterioration increasing unless the training process is active and proficient and the trainers and supervisors are receptive to questions in a range of situations, including language problems and misunderstandings.

Employees and supervisors that follow prescribed procedures are key to the process of documenting them. Management can designate qualified employees or outside parties to produce or coordinate the written documentation. Employees are also essential to the documentation process because they respond and work more positively when they participate.

Employees and supervisors must address everything they do, however slight, and recognize and overcome the tendency to disregard steps considered minor, obvious, or commonsense. They should also consider problems that arise in their job functions and conditions that need to be changed; these matters must be resolved or the documentation must recognize how to cope with them.

Documentation must be understandable by all intended users, with straightforward language and reasons given for each step. Although excess verbiage is unwise, saying a bit more than necessary can provide more comprehensive guidance.

The physical appearance of documentation is instrumental in impressing the reader with its importance and in holding the reader’s attention. High-quality paper and binding, a well-organized table of contents and index for ease in locating specific instructions or procedures, and attractive, easy-to-read type are starting points for effective communication of systems documentation. Broad margins facilitate users’ handwritten notes. Wide spacing between lines, and short sentences and paragraphs can also enhance the documentation’s appearance and productive use.

A review-worthy draft of the documentation should be submitted to all concerned, for thoughts and suggestions. It should be stressed that the final draft will reflect a community effort that aggregates all that is known about a procedure, to make it easily understood by everyone. Employees that have not been directly involved in the project should review the documentation to test its readability and clarity before it is finalized.

Management must inform supervisors that they bear responsibility for signing off on documentation that actually reflects the procedures involved. Supervisors must be fully familiar with procedures and bear the burden for lapses identified during documentation. Signing off also indicates that a supervisor who might not have been completely aware of a procedure beforehand is now well informed.

Supervisors and employees must be told that changes will be required after the documentation is placed in use. Omissions or changes may have occurred in actual procedures for valid reasons; systems and procedures must remain dynamic in order to survive.

The organization should conduct periodic post-reviews of documentation to assess whether documentation adequately mirrors reality, whether performance complies with approved procedure, and whether both remain sound. Supervisors and employees frequently bear responsibility for initiating procedural and documentation changes in this ongoing process. Supervisors should make frequent basic reviews, in addition to dealing with exceptions or problems brought to their attention. Systems appraisers, higher management, or internal and external auditors will need to make additional reviews. One way to use documentation to train employees would be to have trainees read a portion at a time, then immediately reinforce each segment through an actual demonstration. Trainers should notice what parts new employees find difficult to understand, indicating where changes may be warranted. To reinforce training and the use of documentation, the company should periodically hold brief refresher sessions.

Financial and operating managers play a large role in the documentation process and should consider this an integral responsibility. Although documenting manual procedures from scratch can be costly, not documenting them can be even more so. A sensible approach is to determine areas that will benefit most from documentation, implement the process there, then expand to other areas as resources allow.

The aid of top executives and audit committees should be enlisted to cope with resistance from managers who claim to be too busy, understaffed, or lacking qualified personnel for documenting procedures. A solution might be to designate qualified employees or consultants with systems or operational audit experience to expedite the process by working with managers. Reasonable timetables should be set, and the persons designated or retained should monitor the progress.

Small segments of large organizations that have lesser activity volume, fewer personnel, remote locations, or unique activities should not be overlooked. Undocumented areas prone to problems often interface with well-documented processes, which may cause problems for the latter. If an area remains undocumented, the reasons and consequences behind that decision must be understood and agreed upon by responsible parties that have considered cost–benefit relationships.

Allan M. Rabinowitz, CPA, is a professor of accounting at the Lubin School of Business, Pace University, New York City, and former president of the Scribner Book Companies.

Thomas W. Morris
The CPA Journal

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