Accounting For Departments As If They Were Businesses
Business Advisory Services Updates
Benchmarking is a great tool for accountants to utilise to analyse a business so that information on the business’ performance can be conveyed to the directors, owners, leadership team.
To enable credible figures to be produced, it is very desirable that the individual departments within a business are segregated so that separate Profit & Loss Accounts, Key Performance Indicator Reports, Budgets and Comparisons to Budgets are produced for the leadership team to be better informed of the individual “department’s” performance.
A key component of this concept is to ensure that commercial rents are charged by the “property owning business” to each individual operating business to assist with the benchmarking comparisons and to ensure that realistic charge out rates or mark-ups are used in the pricing calculations.
It is also desirable that commercial salaries are utilised for shareholders, owners and family members so that realistic comparisons are available when the benchmarking reviews are undertaken.
