A Decision-Tree Approach to the Design and Implementation of Accounting and Information Systems for Small Businesses (1989)

Small business accounting consultants often receive requests to design record keeping systems that owner/ managers can administer themselves. The request often comes in the following form: Would you please help me set up my books? I don't want to hand my books over to someone else until I fully understand what's going on for myself I don't want someone else knowing more about my business than I do. This situation presents a rather unique problem for the consultant: The request being made is oftentimes outside the realm of possibility (or at least the realm of practicality), in that the client has no accounting and/or bookkeeping education or experience. In other situations, the client may have sufficient knowledge, but insufficient time to maintain the necessary records. So how does the accounting consultant intervene on behalf of the client? Is it necessary to design a full-fledged, double-entry accounting system, with a complete set of journals and ledgers, or a simplified get-by system? Does the consultant embark on an educational program, designed to teach the client the principles of accounting or how to apply them, or simply refer the client to an accounting/bookkeeping service? The purpose of this article is to identify the critical issues associated with a request for the design of an accounting system in the small business setting, and to present a model that may be used by consultants in choosing the appropriate level of intervention. BACKGROUND Two limiting assumptions were made in the development of the model: 1 .The time available for consultation with each client is limited. This time limitation may originate from either the consultant or the client. In most consultants-forfee situations, the client's limited resources will impose the most significant limitation on the amount of time available for consultant/client consultation. However, in the cases reported here, consulting services were provided through an SBA-funded Small Business Development Center (SBDC). The consulting services were free to the client; therefore, clients were generally willing to spend as much contact time as possible with the consultant, up to the SBDC-mandated limit of twelve hours. 2 . The client is an entrepreneur owner of a business in the preventure or early-growth stage. (The term pre-venture refers to a business that has not yet been formally opened or started.) The decision setting outlined here precludes the use of these procedures in large and/or mature organizations, as these organizations would not, in all probability, make such requests. MODEL DEVELOPMENT A Systems Approach The model was developed following a systems approach to decision-making. A systems approach is especially useful when the required decision involves the consideration of a number of sequentially ordered factors.2 That is, the appropriate course of action will be selected if and only if the critical factors are considered in a specific sequence. Vroom and Yetton successfully applied such an approach in the development of a model designed to assist managers in the choice of a decision-making style suitable to a particular situation.3 Their model, referred to as the Vroom-Yetton Decision Tree, assists the manager in deciding when to involve subordinates in the decision-making process rather than making the decision on. his own. The user of the model is led through a series of questions that can be answered yes and no. …