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Total Impact of Best Practices on the General Ledger Function
to allow only a preapproved set of journal entries, all with preset accounts to
which changes will be allowed. All other journal entries will require a special
password to enter. Yet another approach is to use a report writer to explore all of
the transactions that have been entered into the general ledger, sort through the
ones that exceed preset boundaries, and issue them in a report. For example, a
report could extract all travel expenses of more than $5,000 dollars, or all fixed
asset additions less than the minimum capitalization limit. A report can also com-
pare all expenses to year-to-date or period-budgeted amounts and only show
those that exceed their budgeted amounts. By running these reports regularly, the
general ledger accountant can quickly spot those transactions that may be wrong
or placed in the wrong account.
The main problem with incorporating automated error-checking into the
general ledger is that many accounting software packages do not have this feature
built into them. If this is the case, the expense of programming the alterations is
probably so great that it will exceed any possible benefit. In this situation, the
best alternative is to use a report writer to create reports showing problems that
have already been entered into the general ledger. This is a much easier alterna-
tive, since most computer systems have a report writer. In other words, if it is not
possible to stop bad information from entering the general ledger, it may still be
possible to spot it once it is there and subsequently make corrections.

Cost: Installation time:

TOTAL IMPACT OF BEST PRACTICES ON THE GENERAL
LEDGER FUNCTION

This section describes how the best practices described earlier in this chapter can
be brought together as a group to achieve a more efficient general ledger function
that also provides better information to management.
The best practices can be clustered into three groups: those that impact the
chart of accounts, those that impact the general ledger, and those that modify the
general ledger to improve the reporting of information. These clusters are shown
in Exhibit 14.2. The first cluster focuses on streamlining the chart of accounts, as
well as various methods for incorporating the charts of accounts of subsidiaries
into those of the parent organization. These best practices focus on improving the
efficiency of the general ledger function. The second cluster uses a number of
techniques not only to improve the ability of the general ledger accountant to
research information in the general ledger (such as with drill-down inquiries or
restricting the use of journal entries), but also to reduce the amount of work
needed to maintain it. In this latter category are such best practices as having sub-
sidiaries load their own financial results into the master general ledger, using
automated error-checking, and automating the interfaces with subsidiary ledgers.
When coupled with the previously noted improvements to the chart of accounts,