Company out of balance

[maroofk]

Hi,

We are in the process of splitting a company. I want to clarify.
1. How serious is it if the company is out of balance? What manipulation is possible?
2. We are creating summarised JE using balance file, is balance file entries suppose to balance out?

Thanks in advance

 

[peterban]

Hi!

Without knowing more of the detail....

1) Yes this can be pretty serious - even a penny difference in the TB (Trial
balance - balance sheet + profit and loss accounts)could be 100,000,000.01
wrong on one account and 100,000,000.00- on another. Any differences should
be investigated. That's the purest in me talking, practically is the
results of the investigation show this is small and limited impact for any
data take on or company split I'd ignore it until after. Generally there
are some reasonable reconciliation reports/updates to sort out most
problems.

2) Specifically if this is the TB YES - generally NO as there can be more
summary accounts than there are accounts, due to ledger type e.g.
AA=Actuals, BA=Budget, CA=Currency and so on.

Hope this helps.

Peter

Peter Bannister : [email protected]
1st Consulting Ltd : www.1stconsulting.biz
Mobile : +44-(0)7711-649358
Fax : +44-(0)7739-256227
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Product Specialist

 

[Robert Robinson]

It is VERY serious if your company is out of balance. The system is designe=
d to where the sum of all account balances (debits and credits) nets to 0.

The important question is how you are going to split the two companies. The=
re are two primary methods, each with its pros and cons:

Method 1 - journal entries. In this method, you would create a (series of) =
journal entries to move account balances from, say, company 1 to company 2.=
This method would ensure that companies 1 and 2 remain in balance, as your=
entry will be in balance (as long as you do not turn of the system's self =
balancing checks). The downside is that the history of company two (up to t=
he split off point) remains in company one.

Method 2 - Behind the scenes tweaking of accounts - One of the primary base=
s of the JD Edwards system is that there is a relationship between business=
units (cost centers) and companies; that is, a business unit can be associ=
ated with only one company. You can go behind the scenes and change the ass=
ociation of, say business unit 2 from company 1 to company 2. The benefit i=
s that all of the account activity (detail transactions) of business unit t=
wo are now within company two. PLEASE NOTE THIS NEXT SECTION VERY, VERY CAR=
EFULLY... IN THIS METHOD, YOU ARE PLAYING WITH THE "STRUCTURAL INTEGRITY" O=
F JD EDWARDS. FAILURE TO DO ALL THAT IS NECESSARY WITHIN THE SYSTEM PRIOR T=
O THE SPLIT OFF (BALANCE THE BUSINESS UNITS TO BE TRANSFERRED SO THAT THE S=
UM OF THOSE BEING TRANSFERRED NET TO ZERO, CREATE NEW EQUITY ACCOUNTS SO TH=
AT EACH COMPANY NOW HAS A SET, CHANGE ALL OF THE RELATED AAIs TO REFLECT TH=
ESE NEW COMPANIES, ETC) WILL CAUSE FAULTS IN THE SYSTEM THAT CAN TAKE MONTH=
S TO CORRECT.

I have been at companies that have used both approaches, and unless you hav=
e > 5 years of data prior to split off, I would advocate the former method =
(Journal Entries). If however, you have mountains of transactions that user=
s MUST see in the new company, AND you have a technical person who knows th=
e inner workings of JD Edwards AND knows accounting and its structure in JD=
E, go ahead and use the latter method (if you do use this method, get a pre=
scription for a STRONG sedative...I did).

Good luck. =20

Robert Robinson, CPA/CITP, CNE
Senior Business Systems Analyst
D=FCrr Industries, Inc.
734.459.6800 ext. 311
fax # 734.459.5837
e-mail address: [email protected] <mailto:[email protected]>=20





RRobinson CPA/CITP,CNE
OW Xe, SP21_C1, HTML Client
AS/400 V5 R1, Websphere 3.5
Big Ten JD Edwards Users Group
Michigan USA

 

[Robert Robinson]

It is VERY serious if your company is out of balance. The system is designed to where the sum of all account balances (debits and credits) nets to 0.

The important question is how you are going to split the two companies. There are two primary methods, each with its pros and cons:

Method 1 - journal entries. In this method, you would create a (series of) journal entries to move account balances from, say, company 1 to company 2. This method would ensure that companies 1 and 2 remain in balance, as your entry will be in balance (as long as you do not turn of the system's self balancing checks). The downside is that the history of company two (up to the split off point) remains in company one.

Method 2 - Behind the scenes tweaking of accounts - One of the primary bases of the JD Edwards system is that there is a relationship between business units (cost centers) and companies; that is, a business unit can be associated with only one company. You can go behind the scenes and change the association of, say business unit 2 from company 1 to company 2. The benefit is that all of the account activity (detail transactions) of business unit two are now within company two. PLEASE READ THIS NEXT SECTION VERY, VERY CAREFULLY... IN THIS METHOD, YOU ARE PLAYING WITH THE "STRUCTURAL INTEGRITY" OF JD EDWARDS. FAILURE TO DO ALL THAT IS NECESSARY WITHIN THE SYSTEM PRIOR TO THE SPLIT OFF (BALANCE THE BUSINESS UNITS TO BE TRANSFERRED SO THAT THE SUM OF THOSE BEING TRANSFERRED NET TO ZERO, CREATE NEW EQUITY ACCOUNTS SO THAT EACH COMPANY NOW HAS A SET, CHANGE ALL OF THE RELATED AAIs TO REFLECT THESE NEW COMPANIES, ETC) WILL CAUSE FAULTS IN THE SYSTEM THAT CAN TAKE MONTHS TO CORRECT.

I have been at companies that have used both approaches, and unless you have > 5 years of data prior to split off, I would advocate the former method (Journal Entries). If however, you have mountains of transactions that users MUST see in the new company, AND you have a technical person who knows the inner workings of JD Edwards AND knows accounting and its structure in JDE, go ahead and use the latter method (if you do use this method, get a prescription for a STRONG sedative...I did).

Good luck.

Robert Robinson, CPA/CITP, CNE
Senior Business Systems Analyst
Dürr Industries, Inc.
734.459.6800 ext. 311
fax # 734.459.5837
e-mail address: [email protected] <mailto:[email protected]>