Change Your Chart of Accounts Structure
A utility company has been live on Oracle E-Business Suite for approximately 10 years. They moved to EBS, but the accountants were adamant that the chart of accounts remain the same as the legacy system. They set up four segments: Company (2), Cost Center (2), Account (4), and Future (3). All values were numeric. Cost centers became the catch all for projects, departments, and locations. The company was running out of values for both the cost center segment and the account segment and did not want to reuse values. The company needed to retain all history.
The company used FlexField software to:
- Expand their Cost Center segment to 3 digits
- Expand their Account segment to 6 digits
- Add a Project Segment
- Add a Department Segment
- Add a Location Segment
As a result, the company was able to track by departments, locations, and projects. There was plenty of room to put their natural account values in ranges so that reporting and analysis was easier.
Consolidation Requires a New COA Structure
An international financial services company had three instances of their Oracle E-Business Suites. One instance was for the European countries and the UK, another instance was for the US, and the third instance was for the Asia-Pacific region. In all, the three instances had approximately 30 modules of E-Business Suites. There were three different charts of accounts – one for each instance. They realized that the consolidation process would be much easier if the new instance had a common chart of accounts. With a common chart of accounts, all of the transactions from the sub ledgers would be able to be merged without writing translation scripts for each instance. They would also be able to write consistent interfaces to third-party systems from their single new instance. Finally, the performance for their new data warehouse would be significantly improved by not having to perform translation every time data was extracted from their E-Business Suite and loaded into the data warehouse.
The company designed a new global chart of accounts. They used ranges of values within the natural account segment to accommodate local statutory requirements. They finalized on the mappings from each of the three charts during their first test run. Before they went into production with their new chart of accounts, they used eprentise Consolidation software to merge their instances with the three separate charts of accounts. Then, in their target, consolidated instance, they changed each of the charts of accounts to the new global chart of accounts using FlexField software. They only had to create one set of interfaces to their third-party systems and greatly enhanced the performance on their OBIEE data warehouse.
Move to a Single Global Chart of Accounts
A pharmaceutical company is upgrading to R12 in their Oracle E-Business Suite because of the capability to have multiple ledgers. Their current set up had a separate set of books for each of the European countries because they implemented before the Euro was the European standard currency. Since they originally implemented with seven separate sets of books for each of the countries where they did business in Europe, they didn’t see a need to standardize on a single chart of accounts. Now, in R 12, they can record all transactions in a single ledger because the currency is the same. However, in order to use a single primary ledger, they need to have a single chart of accounts.
The company created their new chart of accounts, and mapped each of the seven charts of accounts to the new chart of accounts. Using FlexField software, they completed the conversion process to their new chart of accounts with three test runs in 5 months. In two of the segments, they made the segments large enough to allow each country to have its own range of values. Using security and cross validation rules, they were able to restrict access to those values, giving each country some freedom in the way they controlled operations without limiting the company’s ability to operate globally with consistent data. As a side, they are able to close their books each month in 3 days instead of the 12 days that it took before the chart of accounts change. They estimate that they have reduced operating costs for their accounting team by approximately 35%.
Add Additional Segments to Your Chart of Accounts
A hardware company that implemented Oracle E-Business Suite in 2001 acquired a services business in 2004. As a result, they wanted to track activity in each region so they could determine what the staffing requirements were in different locations and minimize travel time for their consultants. The chart of accounts they designed in 2001 gave them no way of accounting for different locations. No third-party reporting tools were able to solve the problem — there was not enough flexibility at the source, the accounting flexfield. The company needed a way to change the underlying structure of the accounting flexfield itself, but did not have the resources to go through a lengthy re-implementation.
The company used FlexField software to make rapid changes to the structure of their accounting flexfield. Their outdated chart lacked a location segment, so they had been forced to attach location attributes to other segments in the flexfield. Using FlexField, they were able to add a location segment. Along with a line of business segment, the company also gained the ability to track profitability by location and were able to determine where to recruit and hire for different skill sets to be more competitive in different markets.
Eliminate Thousands of Cross-validation Rules
A financial services company had over 2000 cross validation rules to enforce which departments could use which cost centers and accounts. In their current chart of accounts, they had run out of digits in the ranges that were defined, so the structure that was supposed to have Revenue starting from 1000 to 1999, Liabilities from 2000 to 2999, Expenses from 3000 to 3999, Assets from 4000 to 4999, and owner’s equity from 6000 to 6999 now looked like this:
|1000 – 1999||Revenue|
|5000 – 5499||Revenue|
|5700 – 5999||Revenue|
|2000 – 2999||Liability|
|5500 – 5699||Assets|
|7000 – 7199||Liability|
|7200 – 7250||Expenses|
|7251 – 7269||Assets|
|7270 – 7999||Expenses|
|8000 – 8399||Assets|
|8400 – 8499||Liability|
|8500 – 8999||Expenses|
|9000 – 9010||Owner’s Equity|
|9011 – 9198||Revenue|
|9199 – 9399||Expenses|
|9399 – 9999||Randomly assigned to different account types|
It was almost impossible to remember what account went with which cost centers for each department. Every time the company wanted to add a new value, they had to rearrange all their cross validation rules. Maintenance on the chart of accounts was taking days each year end when they added new tax accounts.
The company expanded their account segment to 6 digits using FlexField software, put everything in ranges, and went down to a total of 17 cross-validation rules. There was no longer any maintenance to add new accounts or new departments. As an aside, they were also able to streamline their reporting so new reports were generated quickly.
Take Advantage of Oracle’s Subsidiary Ledgers
A multinational manufacturing company wanted to upgrade to E-Business Suite R12 from 11.5.9 in order to take advantage of its subledger accounting functionality. With locations across the globe, secondary ledgers that use accounting methods and currencies specific to the location of the business – while all still using the same primary ledger for headquarters in the UK – was an attractive feature for the company. However, the company’s business had changed since it first implemented E-Business Suite, and much of the data in the current chart of accounts was obsolete (location, product line, and cost center values all needed a thorough overhaul). They also carried customer information in the CoA since they did not have receivables when they first implemented. Since it did not make sense to carry over the junk during an R12 upgrade, the company needed a way to clean up their chart of accounts before upgrading so that they could have a fresh start in R12 and use subsidiary ledgers with only the information they needed.
The company used FlexField software to clean up their chart of accounts in 11.5.9. They decided to use the FlexField software prior to the upgrade process since 11.5.9 was a known stable environment and an environment that the users were familiar with. They designed their new chart of accounts without a customer segment and, using FlexField software, cleaned up the values in the other segments by mapping the obsolete values to a single new value for each segment. After they made the change using FlexField software they upgraded to R12. There were no issues with upgrading, adding new modules in R12, and implementing the customer master in their Oracle E-Business Suite. The integrity of the database was maintained, and they were able to use the features of R12 effectively. They now consider using FlexField software a part of their routine maintenance to continuously change the chart of accounts to reflect changes in their business.
Change Your Chart of Accounts for IFRS
An international brokerage firm was in the planning stages of preparing its financial systems for compatibility with IFRS. Management had a good grasp on what needed to change for compliance, but they were unsure of how to actually make the changes. They had been told a reimplementation of their entire E-Business Suite was the only option, but their business was changing so rapidly that they didn’t know if they could afford the downtime that would be required. They needed a fast method of changing their current chart of accounts without being invasive to their users.
The company used FlexField software to make the necessary IFRS-compliant changes to their existing chart of accounts over a weekend. They used the software not only to make the chart IFRS-compliant, but made enough changes to the chart that allowed them to decommission a third-party reporting tool that was costing them thousands of dollars a year in license fees – they could now get the reports they needed straight from the GL.
Comply with CGAC or SFIS Federal Standards
The National Business Center of the Department of the Interior operates as a shared services center. The Federal Government has mandated that each federal agency must change its chart of accounts structure to comply with the Common Government-wide Accounting Classification (CGAC) structure. One of the National Business Center’s customers, MCC, needed to change their chart of accounts to comply with CGAC. They needed to add two additional segments and change the length of two other segments.
Team members from the National Business Center worked with the MCC users to design a new chart of accounts and used FlexField software to make the change. Because the federal budget tables use segment values rather than code combinations, eprentise developed a new Federal Budget Allocation module for federal agencies that aligned values in the federal budget tables to the new CGAC-compliant Chart of Accounts. The customer was able to optimize their accounting flexfield structure to comply with CGAC as well as support the current state and future growth of the organization.
Shorten Month-end Close Process
A financial services company had 27,000 cost centers in their chart of accounts. Reconciliation from their subledgers was a nightmare because the users didn’t have consistent posting processes. Values in that cost center included project values, department values, location values, and product line values. They had to break up every transaction to reflect the different segments that they wanted to track. For example if a transaction was for $1000 credit and was a project in New York for a security product, they created 3 credit accounting entries to each of the three cost centers representing the project number cost center, the cost center for New York, and the cost center for the security product. Of course, they created 3 or more debit entries for the offsetting entries. Anyone was allowed to create new cost centers for any reason. The cost centers were not in any logical ranges so creating reports was hard, budgeting was hard, and the maintenance on any accounting reclassifications was overwhelming.
They used FlexField software to map many of their cost centers to one new cost center value. They also created a separate segment for locations, and a separate segment for product lines. They reduced the number of cost centers to approximately 1100 and reduced their close cycle to 2 days.
Simplify FSGs and Other Reports
A large manufacturing company implemented Oracle E-Business Suite eight years ago, and the chart of accounts has grown dramatically since the implementation. The company did not initially design the chart of accounts to accommodate the addition of numerous accounts in specific ranges, so new accounts were added haphazardly in random places in the chart wherever room could be found. Over time, reports became much more difficult to create because accounts that should have been grouped were dispersed throughout the accounting flexfield – they became unable to use logical ranges to simplify report writing, and the cost in employee time and wages of creating reports rose to extremely high levels. The company needed a way to reduce the dispersion of the accounts and return to writing reports based on logical ranges.
The company used FlexField software to restructure and expand their accounting flexfield to match the current and future needs of the company. They also created a master row set in FSG for their reports. Though the new master report set took 2 weeks to develop, now they are able to create new reports on demand in just an hour. Using FlexField software, they lengthened the current segments to accommodate more values and mapped the dispersed accounts to new values to create new logical ranges for all their segments. After the change, they significantly simplified report writing and reduced the cost of reporting by 60%.
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