Written by Helene Abrams Sunday, March 16 2008
Designing an accounting flexfield is one of the most difficult processes in an Oracle implementation. A “good” chart of accounts has the following criteria:
- The segments support important aspects of the business.
- You are able to report on critical business components with standard reports without resorting to spreadsheets.
- There is enough room to expand within each segment.
- FSGs and other reports are easy to create.
- Summary accounts and rollup groups fall naturally within ranges.
- Information in the chart of accounts is not repeated from other modules.
- There is only one type of information in each segment.
Answering the 4 questions “Who?”, “What?”, “Where”, “Why”, and possibly “How” helps identify segments that will give your accounting flexfield the ability to classify each transaction. When transactions are classified, then it is easy to report on the relevant aspects of that transaction, to group that transaction with other similar types of transactions, and to differentiate the parameters of the transaction. “Who” can be represented by a legal entity and intercompany segments and a cost center, a department or business unit segment. An Activity segment can answer the “What” question. “Where” is represented by a Location or Region segment. “Why” is answered by the natural account segment (e.g. a lease expense, revenue from sales). “How” is often used in government or fund accounting to identify the fund from which the money is coming.
If your segments are designed to answer the who, what, where, why, and how questions, and within each segment you have designed different levels of roll-up groups, then you will easily be able to analyze the transactions in different ways and in as much detail as you want without using spreadsheets. The most detail is in the lowest level of rollup groups. If you want to analyze the big picture, report on the parent values. When designing the values be sure to allow enough room to grow within each rollup group. I usually suggest incrementing by at least 5 within each group, and by 10 if the group is likely to be a high growth area. For example, if you have a location segment, allow enough room to add ten additional values between each of your lowest levels. Your location hierarchy might look like this:
10000 US11000 Midwest
11100 Detroit Metropolitan Area
11110 Ann Arbor
11120 Canton
11130 Plymouth
20000 Canada
When you are creating reports, you can report on the parent values (Detroit Metropolitan Area, Midwest, or the entire US) to track the right information for your analytical needs. When creating rules cross validation and security rules and FSG reports, you can include a whole range of values in your rule or create a master report for the entire range and then exclude specific values if needed. Many of our customers have reduced thousands of cross-validation rules to under 50 rules by re-ranging their values.When designing your segments, you should have information in one place. If you are implementing Oracle Projects modules, there is no need to have a project segment in your accounting flexfield. You will get all the information that you need from reports in the Projects modules. If you are implementing Receivables, then there is no need for a customer segment. If your cost center has the same type of information as a business unit segment, there is no need to implement both. Thinking about the category of information and putting only one type of information in one place reduces the maintenance of keeping information accurate in two places, and it reduces the possibility of introducing errors into your accounting. Introducing a “Future” or “TBD” segment increases the probability that multiple types of information will be held in a single segment. For some, the future segment might mean a sub-account or local account, while for others, that same future segment might represent a particular tax code.
When you first implemented your e-Business Suite, you may not have thought about all of these things in the design of your accounting flexfield. The good news is that now, with FlexField® software, you can redesign your chart to meet your current business needs, and allow for growth to meet your future needs.
So, where do I start? Learn more about FlexField software.
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January Puzzle
A traveler gets lost on a deserted island and finds himself surrounded by a group of n cannibals.
Each cannibal wants to eat the traveler but, as each knows, there is a risk. A cannibal that attacks and eats the traveler would become tired and defenseless. After he eats, he would become an easy target for another cannibal (who would also become tired and defenseless after eating).
The cannibals are all hungry, but they cannot trust each other to cooperate. The cannibals happen to be well versed in game theory, so they will think before making a move.
Does the nearest cannibal, or any cannibal in the group, devour the lost traveler?
Solution
The short answer is the traveler’s fate depends on the parity of the group. If there is an odd number of canibals, the traveler will be eaten, but if there is an even number, the traveler will survive.
To prove this, we will consider small groups and use mathematical induction to explain the solution for larger groups.
Case n = 1: this is an obvious case. If there is one cannibal, the traveler will be eaten. It doesn’t matter that the cannibal will get tired because there are no other cannibals around as a threat.
Case n = 2: this is a more interesting case. Each cannibal wishes to each the traveler, but each knows he cannot. If either cannibal eats the traveler, then he will become defenseless and the other one will eat him. So each cannibal uses backwards induction to realize that the only strategy is to not eat the traveler. The hapless traveler finds a bit of luck, therefore, and actually survives.
Case n = 3: this is where the problem gets interesting. The best strategy is for the closest cannibal to make a move and eat the traveler. The cannibal will be defenseless after eating, but ultimately he will be safe. Why is that? The reasoning is due to induction: once the cannibal eats the traveler, the resulting situation has 2 unfed cannibals and the 1 defenseless cannibal. But as we just showed above, when there are 2 unfed cannibals, neither will make a move for fear of being eaten by the other! Thus the first cannibal to make a move will be safe as the remaining 2 cannibals block each other.
We can prove the higher cases using mathematical induction. If the number n is odd, then the closest cannibal can safely eat the traveler because the remaining number of unfed cannibals is even (and by induction, with an even number of unfed cannibals no one makes a move). If the number n is even, then no cannibal will eat the traveler, for if he did, the remaining number of cannibals would be odd, meaning he will get eaten by the induction hypothesis.
Success Tips for Oracle Project Management
- Create a standard for documentation at the beginning of your project, and hold team members accountable for completing documentation requirements as well as keeping them at and above the standards required.
- Before promulgating user documentation or training, it’s also a good idea to choose a representative from the among the business users base to review materials first.
- If you are not sure about the resources and budget required, obtain several estimates from people that have experience with the same size and scope of your project.
- Be explicit, before beginning the project, what internal resources are required for execution. This includes people, infrastructure, hardware, and software.
- Help the project champion understand the impact your project will have on the organization and how its successful completion will make him or her an internal hero or heroine for supporting it.
- Break up your project into smaller projects (try for projects that can be completed in 4-6 months, especially early on) to get success and demonstrate momentum.
- Make sure that your testing includes reports, upstream and downstream interfaces, customizations, enhancements, and workflows.
- Ensure that comprehensive transition reports and meetings between departing and incoming personnel are completed.
- Instead of spending time and resources implementing third-party reporting, consider consolidating multiple instances, moving to a global chart of accounts (CoA), and/or standardizing on a consistent calendar.
- Include governance, risk, and compliance management as part of the project plan.
- Finally, celebrate the successes. Too many projects focus on defects, failures, or small cost over-runs without looking at the big picture and what was accomplished.
The Analyst Corner
John Van Decker, Research VP of Gartner, states:
"A single chart of accounts allows consistency in financial reporting across the enterprise by standardizing on common metrics and reporting structures, reduces dependencies on a separate financial consolidation system, and significantly reduces the costs incurred with ongoing, complex conversions and translations."
