When too much accounting knowledge depends on one person.

Accounting Operations · By John W. Halloran CPA, P.C. · Published August 5, 2026

In many privately held companies, one experienced employee becomes the center of the accounting function. That person knows which reports to run, how unusual transactions are handled, which spreadsheets complete the close, where supporting files are stored, and whom to call when a system fails.

That knowledge is an asset. It becomes a risk when the company cannot continue, review, or explain critical work without the person’s immediate involvement. Vacation, illness, turnover, promotion, or a business transaction can expose the dependency suddenly.

Look for operational dependence, not just job-title concentration

A lean team will naturally concentrate responsibilities. The question is whether the company has enough visibility, documentation, access, and review to operate when the primary person is unavailable.

Warning signs include:

• The close stops because no one else knows the sequence or outstanding items.
• Recurring journal entries and reconciliations are understood but not documented.
• Management reports depend on spreadsheets only one person can update.
• Banking, payroll, billing, or accounting-system access is not centrally administered.
• Supporting files sit in personal folders, inboxes, or local drives.
• Questions from tax advisers, lenders, or owners must wait for one employee.

The presence of one or two signs does not mean the employee is doing anything wrong. Often the company added responsibilities faster than it added structure.

Map the responsibilities that cannot stop

Begin with the accounting calendar. Identify the people, systems, approvals, files, and deadlines behind cash monitoring, customer billing, collections, vendor payments, payroll coordination, account reconciliations, the monthly close, management reporting, tax information, and lender requirements.

For each activity, ask:

• Who prepares, reviews, and approves it?
• What source information is required?
• Which system access and credentials are needed?
• Where is the supporting record retained?
• What happens if the deadline is missed?
• Who could continue the work if the primary person were unavailable?

Prioritize activities that could interrupt cash, payroll, customer relationships, compliance, or financial reporting. The first objective is continuity, not documenting every minor task at once.

Document the process at the level another person can use

A checklist that says “complete reconciliation” is not enough if no one knows which report to obtain, which account it supports, what reconciling items are expected, or how review is evidenced. Useful documentation identifies the source, sequence, cutoff, output, exception handling, responsible people, and retained support.

The IRS explains that business records should summarize transactions and support financial statements and tax returns. Its recordkeeping guidance permits a system suited to the business, but the records must clearly show income and expenses. Documentation should therefore connect recurring work with the records it produces and preserves.

Separate continuity from unrestricted access

Backup capacity does not require sharing passwords or giving everyone the same authority. The company should know which accounts exist, who administers access, how permissions are approved, and how access can be changed promptly. Sensitive actions such as vendor setup, payment release, payroll changes, and journal approval may require separation or independent review.

Central administration, role-based permissions, multifactor authentication, banking controls, and retained approval evidence can support both continuity and accountability. Management remains responsible for deciding which access and approval structure fits the company.

Create review that transfers understanding

A reviewer should do more than sign a checklist. Review should help another qualified person understand significant balances, unusual transactions, open items, reporting definitions, and changes from the prior period. Over time, that process reduces dependence because knowledge moves from one person’s memory into the company’s operating rhythm.

Cross-training can follow the same priority. A backup person may first learn how to obtain information, complete a defined portion of the work, or coordinate the process rather than immediately mastering every accounting judgment.

Test the backup before it is needed

Choose one recurring cycle and have the backup person perform it using the documented instructions while the primary employee observes. Record the questions, missing access, unclear steps, and undocumented exceptions. A short planned absence can reveal more than a continuity plan that has never been used.

Add capacity without automatically replacing the team

The right response may be better documentation and cross-training. It may also include controller review, outside close support, or an outsourced team that performs selected responsibilities and creates another point of continuity.

If accounting knowledge has become concentrated but management is unsure where the largest exposure sits, the Accounting Operations Assessment can map responsibilities, close dependencies, reporting, systems, and review points. The result is a prioritized plan for protecting continuity while building on the experience already inside the company.

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