Designing an effective chart of accounts structure using oracle applications
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Designing an Effective Chart of Accounts Structure using Oracle Applications. Richard Byrom e-mail : [email protected] Agenda. Presentation assumptions & objectives Why an effective chart of accounts? Some common mistakes Proposed methodology for effective design

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Presentation Transcript

Agenda l.jpg
Agenda Oracle Applications

  • Presentation assumptions & objectives

  • Why an effective chart of accounts?

  • Some common mistakes

  • Proposed methodology for effective design

  • Additional tips and ideas

  • Conclusion


Assumptions l.jpg
Assumptions Oracle Applications

You are either: -

  • Preparing for a new implementation.

  • Presently implementing.

  • Have already implemented but could benefit from enhancements and improvements.

    You have an approved methodology for implementing your system and each of the steps mentioned here will fall within the phases being used in your implementation methodology.


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Objectives Oracle Applications

To emphasise that building an effective chart of accounts is dependant on using the right “mix” of people, processes and technology.

To give you the techniques and methodologies involved in designing a chart of accounts so that you can maximise your return on investment.


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Why the need for an effective Chart of Accounts? Oracle Applications

  • It is the heart of the system into which all modules and interfaces flow

  • Ease of Use

  • Flexibility

  • Provides a good foundation for further expansion as well as appropriate storage of current and historical information

  • Provides the basis for timeous management reports and financial statements

  • To ensure implementation success and continued use of the system


How to empower your organisation l.jpg

Knowledge Oracle Applications

Timely Decisions

Power

Information

How to empower your organisation

Data



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Some common mistakes Oracle Applications

  • Gather existing chart of accounts and modify to incorporate Oracle functionality.

  • ONLY the Finance Department designs and understands the chart of accounts.

  • The implementation partner is made responsible for designing the Chart of Accounts.

  • No consideration of impact of country, industry and organisational factors on reporting requirements and Chart of Accounts Structure.

  • Past, present and future .

  • Inadequate summarisation of data in GL. Replication of same data between sub ledgers or modules.


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The eternal paradigm Oracle Applications


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Proposed Methodology Oracle Applications

  • Generic Design Issues.

  • Issues relating to your country, industry and modular setups.

  • Take into account Oracle Specific functionality that may be useful in the design process.

  • Continuous Improvement


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Begin with the end in mind. Oracle Applications

“To begin with the end in mind means to start with a clear understanding of your destination. It means you know where you are going so that you better understand where you are now and so that the steps you take are always in the right direction” – Stephen Covey.

Generic Design Issues


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Generic Design Issues Cont.d Oracle Applications

  • Gather management reports and financial statements or design new ones. Then work backwards to arrive at your Chart of Accounts Layout.

  • Consider organisational growth and diversification plans –be proactive, not reactive.

  • Start with a basic structure and then enhance. However, ensure there is a match between level of detail and ability to maintain this - KISS

  • Ensure that you work well with your implementation partner.

  • Use all the tools Oracle Provides you with to manage the process – ADI, Workflow,Tutor,Alert.

  • Develop a set of standards and conventions.


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Generic Design Issues Cont.d Oracle Applications

  • Team work within the organisation – particularly important for Multi-site.

  • Hold workshops

    • Ensure users understand the importance of an appropriate design infrastructure.

    • Establish procedures for maintenance and update - Centralised or decentralised approach.

    • Agree on standards and conventions.

    • Ensure that the chart of accounts is signed by all the parties involved – that’s one way to ensure peoples involvement and acceptance.

  • Third party review.


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Country, Industry and Organisation Specific Considerations Oracle Applications

  • Country

  • Type of industry

  • Organisation – multi-org, number of sites,information types

  • Modules implemented

  • 3rd party Interfaces and systems


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Country Considerations Oracle Applications

  • Check whether localisations and/or statutory accounting requirements affect your chart of accounts


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Industry Considerations Oracle Applications

  • Manufacturing/Services

    XX XXX XXXX XXX XXX XXX

    Company Cost Centre Account Product Product Line Sub Account

  • Distribution (News)

    XX XXXXXX XX XXX XXXX

    Division Account Region Story Distribution

  • Projects

    XXX XXXXX XXX XXXX XX

    Company Account Department Project Project Type


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Headquarters Oracle Applications

Subsidiary A

Subsidiary B

Subsidiary C

Organisation Type

  • A single company with all offices in one country

  • An international company with offices overseas but a single reporting structure

  • A multinational company with subsidiary companies, each with its own reporting and management structures


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Manufacturing subledgers Oracle Applications

Financial subledgers

Modular considerations

  • Which modules are being implemented and how do they impact the Chart of Accounts

Payroll &Human Resources

OracleGeneral Ledger


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Third Party System Oracle Applications

Manufacturing subledgers

Financial subledgers

Third party interfaces and systems

  • Ensure your Chart of Accounts design considers the impact of third party interfaces and systems

Payroll &Human Resources

OracleGeneral Ledger


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Consider Oracle Capability to meet your requirements Oracle Applications

  • Set of Books infrastructure

  • Segments and Value Sets

  • Cross Validation and security rules

  • Aliases

  • Statistical Accounts


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Set of Books Infrastructure Oracle Applications

Set of Books consists of your Chart of Accounts, Calendar and Functional Currency

Set of

books

Functional

currency

Chart of accounts

structure

Accounting

calendar


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Segments Oracle Applications

  • Definition – an area of analysis within your business.

  • Recommend using 5-7 segments with a spare segment for future growth.

  • Define each segment name and the order in which it appears in such a way that data capture is facilitated.


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Value Sets Oracle Applications

  • Length

  • Numeric and alphanumeric

  • Security


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Chart of Accounts Values Oracle Applications

  • Attach a list of valid values to each segment.

    • Child Values identify the specific components of a segment.

    • Parent Values define a hierarchy or summarisation of child values.

    • Ensure each a/c has appropriate categorisation Asset accounts, liability accounts, revenue, expense, owners equity

Build a Hierarchical Structure


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Cross Validation Oracle Applications

  • Cross-validation rules let you control the combinations of accounts entered for particular segments

  • Example 1 – ensuring that for all income statement accounts a department is specified whilst for balance sheet no department is specified

  • Example 2 - Ensuring that for all revenue accounts a product is captured

  • The advantage is that posting errors can be reduced, however if they are two restrictive then posting errors will not be reduced.


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Security Rules Oracle Applications

  • Allows you to create specific views for certain people

ACCOUNT TYPE value set

Value Description

1000 Total Assets

1110 Cash

1120 International Cash

1200 Accounts Receivable

1220 Other Receivables

1310 Interest Receivable

CASH ACCOUNTS ONLY security rule

Include 1101 to 1199


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Aliases Oracle Applications

  • Allows you to develop names that are familiar to your organisation


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Statistical Accounts Oracle Applications

  • Dedicated Statistical Accounts.

  • Shared accounts which contain statistical and monetary information.


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Constant Renewal Oracle Applications

“There will come a time when believe everything is finished. That will be the beginning”

Louis L’amour – Bestselling Author

  • Although certain designs are permanent never be happy with your chart of accounts. Always look for improvements but maintain a balance.

  • This applies particularly to large organisations where improvements can be made on cross validation, security rules and aliases.

  • Make sure any changes are validated in test and then copied to production.


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Significant? Oracle Applications

Obtain

Authorisation

Low

High

Test Changes in test system

Notify Users

Notify Users

Make changes

on production system

Document

Changes

Chart of Accounts – suggested maintenance procedure

Identify Required

Change


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Additional Tips Oracle Applications

  • Spreadsheet template (demo)

  • Data Loader for loading your data into Oracle. Available at http://www.comstar.co.uk (Also see presentation)

  • Coding tips

    • Ranges and coding

    • Make sure you provide for growth.

    • Create meaningful patterns within the coding structure


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Additional Tips Oracle Applications

  • Use the Oracle ADI Account Hierarchy editor for mass edits and Big Picture View


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Additional tips Oracle Applications

  • Use auditing tools to establish whether your setup is correct

    • CRM analysis tool (note 167000.1 Metalink)

    • Demonstration


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Conclusions Oracle Applications

  • Oracle E-business suite provides a highly effective mechanism for enabling a powerful chart of accounts design.

  • Processes outside the system as well as the people aspects are equally important in ensuring an appropriate COA infrastructure.


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Speaker Information Oracle Applications

Name : Richard Byrom

e-mail : [email protected]

Company : RPC Data Ltd

Web Site : http://www.rpcdata.com


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