Chart of Accounts – Best Practices
Chart of Accounts – Best Practices
The General Ledger (GL) account numbers set up in Adaptive Planning (AP) as the Chart of Accounts (COA) not only define the level at which you can model financial activity, but also the level at which you can import actual data from your accounting system. So spending the time up front to think through your needs and build your Chart of Accounts accordingly, is certainly worth the time and effort.
So here are some tips…
First of all, be sure to use a “clean” copy of your Accounting System COA. Don’t include GL Accounts that aren’t used by your accounting system or ones that you don’t intent to use for budgeting or forecasting in Adaptive Planning. And remember, if you need to add or delete accounts later (next month or next year), it is very easy to do in Adaptive Planning so you don’t have to have a “perfect” COA to get started. Also, keep in mind which accounts you will need for importing actual data from your accounting system for Budget/Forecast to Actual reporting purposes – these should all be included. Actual data is mapped from your accounting system into AP on an account level basis – this can be one to one or many to one.
The next thing to consider is the GL account naming convention. To some degree this depends on the primary users of the system. Each GL account in AP has two primary attributes – a “Name” and a “Code”. The “Name” is what you will see on sheets and reports. The “Code” is what the system uses behind the scenes – it is easily seen too, but not automatically presented to the user. Typically each GL account has a number that indicates the type of account within the hierarchy (i.e. an expense would be in the 6000 range) and a name that indicates the use of the account (i.e. Office Supplies). So if the primary users are Accountants that are very familiar with the numbers you might include the account number and name in both the AP “Name” and “Code”. On the other hand (and I think this is the best practice) if the system will be used by a variety of users, include only the account name in the AP “Name” attribute and include both the account name and number in the AP “Code” attribute. Then you have the best of both worlds – if you are looking at a sheet it is less cluttered because it doesn’t have all of the account numbers, but if you want to know the number of an account, simply hover the cursor over the account name on a sheet and the number will be revealed in a pop-up.
Another important aspect of the GL structure is the use of the Parent Child relationship within the hierarchy. A best practice is to use Parent accounts to facilitate reporting. In other words, since a Parent Account is a built in roll-up account, used these where you would want to be able to expand or collapse the level of detail on a report or on a sheet. Another tip to remember about Parent accounts is that they cannot contain formulas or input data – they are simply rollups. So if you periodically need an account to hold “miscellaneous” or “other” charges, simply create a child account with this distinction (i.e. Other Office Supplies), since you cannot just add data to the Parent account. Also, to remind us that the Parent accounts cannot hold unique data or be used to import data into, it is best not to assign a GL account number to Parent accounts in the AP “Code”. This way, at a glance it is easy to tell which accounts are Parents and therefore are not available for input or import data.
Finally, be sure to take advantage of the ability to import your GL structure into AP. Simply use the system generated import template as a tool to create your GL structure in Excel and then with the push of a button, you can import it.