From the Ask Tom mailbag:
Question:
When you talk about the various roles in the organization, you say that Stratum I roles are typically involved in production. And you also said that in some business models, production roles were calibrated differently? We have a CPA firm.
Response:
Regardless of the business model, regardless of the job title or description of the role, the calibration comes from inspecting the Time Span of the task assignments within the role. In a typical CPA firm, you could see these roles.
- Clerical (word processing, spreadsheet, document assembly)
- Preparer (bookkeeping, tax return)
- In-charge (reviews preparation, coordinates task assignments in the client account)
- Manager (reviews the in-charge’s review, determines which task assignments apply to a client account)
- Partner (reviews the manager’s review, creates and maintains client relationship)
Each of these roles participates in production, yet the Time Span of their tasks is very different.
Preparer – production activities include the direct output from accounting tasks, return preparation. This would typically require Stratum II capability. While the observable mechanical activity for a monthly compilation (financial statement) appears to take less than one month, the impact of the work carries through to the annual financial statement. Stratum II (3 months – 12 months).
In-Charge – reviews the preparer’s work, stage one review, looking for mathematical errors, misapplied calculations, omissions. The In-Charge operates as a supervisor, making sure all work is completed, accurately in a timely manner. This work likely requires high Stratum II capability. Note – the In-Charge role is not a managerial role. The In-Charge is NOT the Preparer’s manager. The relationship between the In-Charge and the Preparer is a Cross-Functional relationship, Prescriber. Stratum II (3 months – 12 months).
Manager – reviews the In-Charge’s work, stage two review, looking for all required components. There is some final stage proofing on reconciliations to ensure accuracy, but the Manager’s review is looking for correct application of accounting methods (depreciation, accruals, reserves). This role is a managerial role, requiring Stratum III capability. The manager is likely the manager of both the Preparer and the In-Charge. Stratum III (1 year – 2 years).
Partner – reviews the Manager’s work, stage three review, looking for conceptual assumptions that fit within a multi-year treatment of the client’s business including loss-carryforwards, statutory interpretations, accelerations. This role requires Stratum IV capability (2 years – 5 years). There may also be direct production work related to bankruptcy, merger, acquisitions.
Regardless of the business model, regardless of the job title or description of the role, the calibration comes from inspecting the Time Span of the task assignments within the role.