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Chapter 14
General Ledger

Best Practices

In most of this book, the primary basis for best practices is simplification in
order to achieve an enhanced level of efficiency. Though there are best prac-
tices that can streamline the general ledger in a similar manner, this is one of
the rare cases where pursuing a higher degree of complexity will achieve a
greater overall benefit for the entire company. The two best practices that follow
this approach are restructuring the general ledger to allow for the use of activity-
based costing, and using it as a data warehouse. In both cases, there are significant
start-up costs and much more work for the accounting staff, but the level of infor-
mation that this practice provides to the rest of the organization is greatly
enhanced. Thus, there are a few situations where greater cost and complexity
can be beneficial.
In addition, there are the usual streamlining actions to reduce the work
needed to maintain the general ledger. These best practices include restricting the
use of journal entries, automating interfaces with subsidiary ledgers, and simpli-
fying the chart of accounts. Though all of these measures will certainly reduce
the work of the general ledger accountant, one should strongly consider adding
the best practices for activity-based costing and data warehousing, which will
increase that person’s work, because it will be so beneficial to the remainder of
the company.
This chapter covers best practices for the general ledger function, as well as
a series of implementation issues for each best practice, which are discussed in
the next section.

IMPLEMENTATION ISSUES FOR GENERAL LEDGER
BEST PRACTICES

This section describes the general level of implementation difficulty for all of the
best practices discussed in this chapter. Two levels of implementation difficulty
are covered in Exhibit 14.1, which shows the general level cost and duration to
implement each best practice.
In general, the level of implementation difficulty is higher for general ledger
best practices than for other functional areas because changes in this area either

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