Page 313 - Accounting Best Practices

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General Ledger Best Practices
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14–10 CONSTRUCT AUTOMATED INTERFACES TO SOFTWARE
THAT SUMMARIZES INTO THE GENERAL LEDGER
A large number of transactions must be moved from subsidiary ledgers to the
general ledger at the end of each accounting period. In most cases, there is some
reasonable degree of integration so that this transfer of information occurs auto-
matically. However, the majority of organizations have a few outlying ledgers
that are not directly connected to the general ledger; for example, the fixed assets
register or payroll. In these instances, the general ledger accountant must wade
through a considerable pile of information to determine the correct amounts to
shift into the general ledger. This is a time-consuming process and one that is
subject to error.
It may be possible to construct an automated interface between these outlying
ledgers and the general ledger. By doing so, there is a considerable advantage in
eliminating the time required to move data to the general ledger manually, partic-
ularly important if an accounting department is committed to reducing the time
needed to issue financial statements. Unfortunately, because of the programming
required, this can be both a difficult and expensive best practice to implement.
The company’s programming staff must analyze the interface requirements,
design the interface, program it, and test it, all of which can add up to a cost that
greatly exceeds the benefit of having the automation. The best cases in which this
is still a viable option are for a large company that can afford the cost, an organi-
zation that faces a very difficult manual transfer of information, or (best of all)
where a third-party interface is already on the market, which can be quickly lay-
ered on top of the existing software to make the interface a reality. If any of these
cases are present, then the automated interface best practice should be completed.
Cost: Installation time:

14–11 CREATE GENERAL LEDGER DRILL-DOWN CAPABILITY

A common problem for the general ledger accountant is the relative degree of
effort required to extract information from the general ledger. For example, if
someone makes an inquiry regarding the exact nature of the expenses recorded in
the office supplies expense account, the accountant reviews the information listed
in the general ledger, which probably shows no more than the total amount of
accounts payable posted on a given day attributable to the office supplies account,
then goes to the accounts payable register to obtain information about the exact
invoices that were charged to office supplies, and then pulls the invoices from the
filing cabinet in which they reside—all this to answer the simple request, ‘‘Give me
the detail for the office supplies account.” Given the number of steps involved, it
is obvious that a number of information requests of this kind (which are espe-