chart of account design
TRANSCRIPT
Chart of Accounts Analysis and Design
By Vinnie TangsirikusolwongNovember 14, 2015 9.00 AM to 12.00PM
The general ledger (G/L) is a foundation financial system that ties together the detailed information collected by sub –ledgers (sub modulus) or separate systems for purchasing, payables (what you owe to others), and receivables (what others owe you)
Chart of Accounts (COAs) General Ledger Structure Integration with General Ledger
General Ledger
Fixed Assets
Cash Management
Receivables
Payables
Purchasing Project CostingPurchase Orders Expense and Capital
Projects information
ChequesIssued
ChequesReceived,
Bank Charges,Interest, etc.
DirectPurchased
Assets
CapitalizedAssets
AccountingInformation
(CIP, Expense Projects, etc)
Asset Cost,Depreciation, etc.
Order Management
Inventory
Liability, Bank and
Charge Accountinformation
InventoryItems
Order Information
Inventory Items
Receivable, Bank andRevenue
information
COGS, WIP, Inventory costand Variance
AccrualsA
A
Payroll
PayrollData
Bank
BankStatement
Human Resources
SalesPersons & Collectors
Employees
Employees
B
BBuyers Key Members
BEmployees
Trade Management
Process Flow - General Financial Business (Future)M
anag
emen
t/R
egul
ator
y A
genc
ies
Dep
artm
ent
Man
ager
sB
udge
ting
Gen
eral
A
ccou
ntin
gS
ub-L
edge
rs/
syst
ems
No
Yes
Mngt.Approves
Preliminary Financials?
Regulatory AgenciesReview Reports
Produce Supplemental
Journals
Generate Budgets/Forecasts
Make Accrual Entries?
Produce Preliminary Financial
Statements
ManagementReview
Financial Statements
Review / Reconcilie
Upload Budgets / Forecasts
Post
Create and Update Budgets
Produce Final Financial
Statements
Produce Preliminary
Trial Balance
Management Approval of
Budgets/Forecasts
Payroll Oracle Sub-Ledgers
Spreadsheets Upload
Update Online
Approval
Yes
No Make Adjustments
Yes
No
DistributeOperating
Statements to Business Managers
HRBudgets
Chart of Accounts (COAs) General Ledger Structure
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C o m p a n y
A c c o u n t R e s p o n s i b i l i t y
C u r r e n c y
P r o d u c t C h a n n e l C u s t o m e r
P r o j e c t
T a x
A ffi l i a t e d
R e q u i r e d F i e l d
O p t i o n a l
F i e l d
The Company Code, Account Code, Responsibility or Department Code and Currency Code are mandatory fields. Depending on the required of processing rules, the other fields can be optional.
Chart of Accounts (COAs) General Ledger Structure
General Ledger Entry Transaction
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General Ledger Chart of Accounts
CurrencyCode
ProjectCode Tax CodeAffiliated
CodeChannel
CodeProductCode
ResponsibilityCode
AccountCode
CompanyCode
CustomerGroupCode
Chart of Accounts (COAs) General Ledger StructureThe cornerstone of the general ledger is the chart of accounts. The ledger's chart of accounts is the epitome of an intelligent key because it usually consists of a series of identifiers. For example, the first set of digits may identify the account, account type (for example, asset, liability, equity, income, or expense), and other account rollups. Sometimes intelligence is embedded in the account numbering scheme. For example, account numbers from 1,000 through 1,999 might be asset accounts, whereas account numbers ranging from 2,000 to 2,999 may identify liabilities.
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A field refers to a component of the COA structure. Each field is comprised of a set of numbers and a set of alphabets. The field length of each set is listed in the table below.
Fields Field Length (for Numbers)
Field Length (for Alphabets)
1 Company Code 2 4
2 Account Code 6 6 Or More
3 Responsibility Code 6 6
4 Channel Code 3 3
5 Customer Group Code 2 2
6 Product Code 4 4
7 Project Code 3 3
8 Affiliate Code 2 4
9 Currency Code 3 3
10 Tax Code 1 1
Total 32 36
Noted: All codes will be set up like the block ranges which has a hierarchical relationship from the lowest level to higher level. Digit of each code should be set up to cover any possible codes occurred in the future because once digit of each code is set up, it is hard to modify digit in system.
Chart of Accounts (COAs) General Ledger Structure
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Company Code or Organization Roll Up
A company code refers to anyindependent part of a company thatmaintains its own set of books. Acompany can be determined byindustry, statutory requirements,regulatory demands, or by operatingstructure.
A company groups transactions intological groupings that reflect how acompany operates its business. Everytime a transaction is entered into a GLapplication, a company code must beincluded. No transaction record can besaved without specifying the company.
Chart of Accounts (COAs): Company Code Organization Roll Up Structures
Note: the main objective to design of this structures is to simplified the consolidation processes.
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Account Code
Represents the nature of the accountAn Account Field determines thebreakdown of asset, liability, equity,
incomeand expense.
Account Codes are broken down into natural
ranges to help facilitate maintenance and
reporting.
Defining account types will assist inrecognizing an account if it is an asset,liability, equity, revenue, or expenses.
This definition will also assist incalculating the account balance andretained earnings at mid-year or year-
end.
Account Range Account Range Description
100000-199999 Assets
200000-299999 Liabilities
300000-399999 Equity
400000-499999 Interest Income and Other Income
500000-599999 Interest Expense
600000-699999 General Expenses, Taxes, Licenses and Fees
700000-799999 Contra assets
800000-899999 Contra Liabilities
900000-999999 Memo Accounts
Chart of Accounts (COAs): Account Code Delivered Account
Types
Definition Value Balance Forward
A Asset A Yes
L Liability L Yes
Q Equity Q Yes
R Revenue R No
E Expense E No
C Contra C Yes
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Proposed Account Ranges Common/SAP/ GAAP/TAXNet Income
Assets 100000
Equity 300000Common capital stock 311000-311999Guaranteed Fund 321000-321999Additional Paid in Capital 331000-331999Retained Earnings 341000-341999 Retained Earnings (d) for Lawson closingUndistributed Retained Earnings 351000-351999 Lawson System AccountEquity Adjustments
client x Non-client x Business Commissions 361000-361999GAAP Career Agent Commission Non-client x 365000-365999
Net unrealized gains and lossesNew Agent Commission Non-client xCommon Manager Commission Non-client x 371000-371999GAAP OnlyAgency Manager Override Non-client x 375000-375999
Minimum pension liability 381000-381999Treasury Stock 391000-391999Error Suspense 399000-399999 Lawson System Account
Non-client x Commissions
Chart of Accounts (COAs) : Financial AnalysisChart of Account ( COA) is the coding structure through which financial transactions are handled.
client x
Balance Sheet Summary Accounts
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Proposed Account Ranges Common/SAP/ GAAP/TAXNet Income
Assets 100000Not Used 100000-109999 Available for future expansion
Invested Assets 110000-130999
Not Used 110000-110999 Available for future expansion
Bonds 111000-111199
Common 111000-111499Leave room if invested assets need to be broken out by line of business
SAP only 111500-111799 Non-admitted (adj to mkt value)GAAP only 111800-111999 FASB 115/ Impairment/ GAAP Adjustment
Reserved for Bonds 112000-112999 Reserved to syncronize with investment income
Not Used 113000-113999 Available for future expansion
Stock 114000-114999
Preferred Stock 114000-114499
Common 114000-114299Leave room if invested assets need to be broken out by line of business
SAP only 114300-114399 Non-admitted (adj to mkt value)GAAP only 114400-114499 FASB 115/ Impairment/ GAAP Adjustment
Preferred Stock of Affiliates 114500-114999Common 114500-114799SAP only 114800-114899GAAP only 114900-114999
Common Stock 115000-115499
Common 115000-115299Leave room if invested assets need to be broken out by line of business
SAP only 115300-115399 Non-admitted (adj to mkt value)GAAP only 115400-115499 FASB 115/ Impairment/ GAAP Adjustment
Common Stock of Affiliates 115500-115999Common 115500-115799SAP only 115800-115899GAAP only 115900-115999
Mortgage Loans 116000-116499
Chart of Accounts (COAs) : Financial Analysis
Balance Sheet Summary Accounts
Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Proposed Account Ranges Common/SAP/ GAAP/TAXNet Income
Assets 100000Not Used 100000-109999 Available for future expansion
Invested Assets 110000-130999
Liabilities 200000Not Used 200000-209999 Available for future expansion
Reserves 210000-219999Not Used 210000-210999 Available for future expansion
Life Reserve Liability 211000-211999 Interest-sensitive life contract liab (d)SAP only
Direct 211000-211299Assumed 211300-211399Ceded 211400-211499
GAAP onlyDirect 211500-211799Assumed 211800-211899Ceded 211900-211999
Intercompany Due to/ Due From 271000-273999Reg Intercompany due to/from former company (d)Reg Intercompany due to/from subsidiary 8 (d)Reg Intercompany due to/from educator programs company (d)
Chart of Accounts (COAs) : Financial Analysis
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Responsibility Code or Cost andProfit Center
A Responsibility Code houses the
value of Strategic Business Unitand its Profit and Cost Center.The SBU will make the first partof the values, while theProfit/Cost Center makes thesecond part. They will roll up toaccommodate the StrategicBusiness Units’ needs of reports. All XX companies will use acommon listing of departments.This common listing will bestored in the XX’s Database.
XXXXXX - Cost/Profit Center
Responsibility Code
XXXXXX - XXXXXX
XXXXXX - XXXXXX
XXXXXX - XXXXXX
SBU 1
XXXXXX - XXXXXX
XXXXXX - XXXXXX
SBU 3
XXXXXX - XXXXXX
XXXXXX - XXXXXX
SBU 2
XXXXXX - XXXXXX
XXXXXX - XXXXXX
SBU 4
Chart of Accounts (COAs) : Responsibility Code
Example Structure
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Product Code
Indicates products and serviceswhich make up the main
businessactivities
The Product Codes can be used to
measure the performance of each
product/service, as well as to plan
for new product/service to belaunched in the future.
Product Code
XXXX - Current
XXXX - XXXXXXXXX
XXXX - Saving
Deposit
XXXX - Fire
XXXX - Motor
Non-Life Insurance
XXXX - Ordinary
XXXX - Group Life
Life Insurance
XXXX - XXXXXXXXX
XXXX - XXXXXXXXX
Chart of Accounts (COAs) : Product CodeExample Structure
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Channel Code
A Channel Code is used to record
which service point or tool atransaction occurred.
The information can be used to
measure the productivity and
profitability of each channel.
Channel Code
xxx - Teller
xxx - Direct Sales
xxx - Exchange Booth
xxx - Agents
xxx - Self Service
xxx - Electronic Channel
Chart of Accounts (COAs) :Channel CodeExample Structure
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General Ledger Structure - Customer Group CodeCustomer Group Code Codifies XX Customer Groups.
Cutomer Group
xx - High Net-worth
xx - Retail
xx - SMEs
xx - Corporate
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Affiliated Code
An Affiliated Code is used forInter Unit Accounting activitiesbetween companies. The usage ofAffiliate Codes will assist XXcompanies in reconciling Inter Unittransactions and will reduce thenumber of Inter Company accountsthat must be created.
Affiliate Codes is the same asCompany Codes.
Chart of Accounts (COAs) :Affiliated Code
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Project Code
Captures income and expenses of specific
events over a short period. Can be used to
monitor actual expense compared with the
budget.
Tax CodeFeature of the codes that help the
users tokeep their tax information such as VAT,SBT, and Add Back.
Project Code
xxx - Project 1
xxx - Project 2
xxx - Project 3
xxx - Project 4
Tax Code
X - VAT
X - SBT
X - Add Back
Chart of Accounts (COAs) :Project/Tax Codes
Example Structure
Example Structure
Chart of Accounts (COAs) Design Process
Dimensional modeling is an iterative design process requiring the cooperative effort of people with a diverse set of skills, including business representatives. The design effort begins with an initial graphical model pulled from the bus matrix and presented at the entity level. The detailed modeling process drills down into the definitions, sources, relationships, data quality problems, and required transformations for each table. The primary goals are to create a model that meets the business requirements.
Dimensional modeling
Dimensional Modeling เป็นชื่อเรยีกของเทคนิคในการทาให้ฐานขอ้มูลง่ายต่อการทาความเขา้ใจ โดยการมองภาพ ของฐานขอ้มูลเป็นลกูบาศก์ท่ีมี 3,4,5 มติิ หรอืมากกวา่นัน้ ทาให้สามารถจตินาการการ หันหรอืแบง่ สามารถตัดขอ้มูลมา
วเิคราะห์ดใูนชว่งใดก็ได้ และหมุนขอ้มูลดไูด้จากทกุๆมุม
Company code
Responsibility code
Account Code
Customer Group codeProduct Code
Channel Code
Affiliat
ed co
de
Projec
t cod
e
Tax co
deCurrency code
Additional Information
Chart of Accounts (COAs) : Design Process
Dimensional modeling is an iterative design process requiring the cooperative effort of people with a diverse set of skills, including business representatives. The design effort begins with an initial graphical model pulled from the bus matrix and presented at the entity level. The detailed modeling process drills down into the definitions, sources, relationships, data quality problems, and required transformations for each table. The primary goals are to create a model that meets the business requirements.
The task of determining column and table names is interwoven into the design process. The organization as a whole must agree on the names, definitions, and derivations of every column and table in the dimensional model. This is more of a political process than a technical one, which requires the full attention of the most diplomatic team member. The resulting column names exposed through the BI tool must make sense to the business community.
Dimensional modeling
Note: Dimensional Modeling เป็นชื่อเรยีกของเทคนิคในการทาใหฐ้านขอ้มูลง่ายต่อการทาความเขา้ใจ โดยการมองภาพของฐานขอ้มูลเป็นลกูบาศก์ที่มี 3,4,5 มติิ หรอืมากกวา่นัน้ ทาใหส้ามารถ จตินาการการ หนัหรอืแบง่ สามารถตัดขอ้มูลมาวเิคราะหด์ใูนชว่งใดก็ได้ และหมุนขอ้มูลดไูด้จากทกุๆมุม
Tools to Design Business Process Reengineer (BPR)