We redesigned the Chart of Accounts when we implemented JDE 3 years ago. We
had an outside consultant lead this effort. It was money very well spent
since none of us here were expert on Chart of Accounts design. It took
about a month to do it, because the consultants were not here full-time and
we needed to check things with different groups in our company plus
coordinate with outside reporting needs to make sure the Chart met as many
needs as possible. Generally the consultants (one lead & one gopher) came
in for 2-3 days, left, we digested their work, they came back, tweaked their
old work some and then went on.
Basically the approach was to visually design the business units and object
accounts (using Org Plus) by creating LARGE org charts showing the
heirarchical breakdown of:
1. Business unit structure for each Company (we have 5 companies so we have
5 org charts). This included:
a. Having a single balance sheet business unit for each company.
b. Identifying a product line breakdown to determine the Gross Profit
business units.
c. Building a heirarchy of production business units for each company
(split into Production & Overhead business units).
d. Building a heirarchy of selling, administrative and operations
business units for each company.
e. Identifying special business units for holding non-operating expenses
& taxes.
2. Asset object accounts (1000s) (applied to B/S business units only).
3. Liabilities/equity object accounts (2000s) (applied to B/S business
units only).
4. Sales, cost of sales, direct charges & variances (3000s) (applied to
Gross Profit business units only).
5. Operating expense object accounts (4000s, 5000s & 6000s) (applied to all
expense business units--Production/Selling/Admin/Operations although not all
accounts were set up in all business units) divided into:
a. Variable expenses (4000s) (Production business units)
b. Non-variable expenses (5000s & 6000s)
(Production/Selling/Admin/Operations business units)
c. Note that an alternative approach is to identify variable &
non-variable business units (I would have preferred this and it was
recommended by our consultants but was vetoed by others in the company).
6. Non-operating object accounts (7000s) (applied to Non-Operating & Taxes
business units only).
7. After all boxes were in place then came up with a numbering scheme for
business units that were consistent within ranges across companies; the
number scheme for object accounts was absolutely consistent across
companies.
8. Designed allocations from production business units back to gross profit
business units in order to compute variances by product line and as a result
show a somewhat meaningful Product Line statement.
Creating the Chart visually using Org Plus was brilliant. We plastered
these large charts (printed them out on a HP plotter/printer that
engineering had) all over a training room and had people come in and walk up
to them, point at business units or accounts, discuss a problem or an
omission and be able to "see" the design. It was very effective, but a lot
of work.
The consultants we used, GL Associates, had a Chart of Accounts design
methodology that worked very well for us (plus the lead consultant took us
out to really good restaurants....something very important when picking
consultants). If interested in learning more about GL Associates contact
Bill Glasofer,
[email protected]. I think they have a web site too but
I've never looked at it so I don't know how informative it might be.
....Gerry Munchel
7.3, Cum 10