Page 311 - Accounting Best Practices

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General Ledger Best Practices
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also be possible either to give these people direct access to the statistics accounts
in the general ledger so that they can make these entries themselves or (best of
all) to construct automated interfaces to whichever local systems are already
accumulating this information.
Thus, the main problem is not having a general ledger that will accommo-
date the data warehousing concept; the other problems are either surmounted dur-
ing the implementation or can be eliminated through automation or bringing in
the assistance of the internal audit department. If these problems can be over-
come, using the general ledger as a data warehouse becomes an effective way to
manage and report on all kinds of key management information.
Cost: Installation time:

14–8 RESTRICT USE OF JOURNAL ENTRIES

Many general ledger accountants spend a large part of their time researching why
journal entries have been made. This is an especially galling problem if journal
entries were made by someone else, because there may be no record of why they
were entered or even of who made the entry. Also, if the computer system has a
‘‘drill-down” capability for researching general ledger information in detail (see
the ‘‘Create General Ledger Drill-Down Capability” section later in this chapter),
an information search may end at the journal entry, with no explanation for why
the entry was made. This is an uncomfortable state of affairs for a general ledger
accountant, who must report back to anyone requesting information from the
general ledger saying that he or she does not know the nature of an account bal-
ance. Besides being embarrassing, it also takes time to research.
An easy best practice to implement is to totally restrict the use of journal
entries to the general ledger accountant. By doing so, this person can research
each request for a journal entry to verify that it is valid, make sure that the correct
accounts are debited and credited, and include a description with the journal
entry. This approach virtually eliminates all stray or undocumented journal
entries from the system. Though it should not cause any problems, it may be dif-
ficult to implement if the computer system does not allow the journal entry fea-
ture to be restricted to one person—this depends on the type of computer security
system included in the software.
Restricting the use of journal entries leads to cleaner and more fully docu-
mented general ledger information that is maintained much more easily.

Cost: Installation time: