chart of account design

Chart of Accounts Analysis and Design

By Vinnie TangsirikusolwongNovember 14, 2015 9.00 AM to 12.00PM

The general ledger (G/L) is a foundation financial system that ties together the detailed information collected by sub –ledgers (sub modulus) or separate systems for purchasing, payables (what you owe to others), and receivables (what others owe you)

Chart of Accounts (COAs) General Ledger Structure Integration with General Ledger

General Ledger

Fixed Assets

Cash Management

Receivables

Payables

Purchasing Project CostingPurchase Orders Expense and Capital

Projects information

ChequesIssued

ChequesReceived,

Bank Charges,Interest, etc.

DirectPurchased

Assets

CapitalizedAssets

AccountingInformation

(CIP, Expense Projects, etc)

Asset Cost,Depreciation, etc.

Order Management

Inventory

Liability, Bank and

Charge Accountinformation

InventoryItems

Order Information

Inventory Items

Receivable, Bank andRevenue

information

COGS, WIP, Inventory costand Variance

AccrualsA

A

Payroll

PayrollData

Bank

BankStatement

Human Resources

SalesPersons & Collectors

Employees

Employees

B

BBuyers Key Members

BEmployees

Trade Management

Process Flow - General Financial Business (Future)M

anag

emen

t/R

egul

ator

y A

genc

ies

Dep

artm

ent

Man

ager

sB

udge

ting

Gen

eral

A

ccou

ntin

gS

ub-L

edge

rs/

syst

ems

No

Yes

Mngt.Approves

Preliminary Financials?

Regulatory AgenciesReview Reports

Produce Supplemental

Journals

Generate Budgets/Forecasts

Make Accrual Entries?

Produce Preliminary Financial

Statements

ManagementReview

Financial Statements

Review / Reconcilie

Upload Budgets / Forecasts

Post

Create and Update Budgets

Produce Final Financial

Statements

Produce Preliminary

Trial Balance

Management Approval of

Budgets/Forecasts

Payroll Oracle Sub-Ledgers

Spreadsheets Upload

Update Online

Approval

Yes

No Make Adjustments

Yes

No

DistributeOperating

Statements to Business Managers

HRBudgets

Chart of Accounts (COAs) General Ledger Structure

4

C o m p a n y

A c c o u n t R e s p o n s i b i l i t y

C u r r e n c y

P r o d u c t C h a n n e l C u s t o m e r

P r o j e c t

T a x

A ffi l i a t e d

R e q u i r e d F i e l d

O p t i o n a l

F i e l d

The Company Code, Account Code, Responsibility or Department Code and Currency Code are mandatory fields. Depending on the required of processing rules, the other fields can be optional.


General Ledger Entry Transaction

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General Ledger Chart of Accounts

CurrencyCode

ProjectCode Tax CodeAffiliated

CodeChannel

CodeProductCode

ResponsibilityCode

AccountCode

CompanyCode

CustomerGroupCode

Chart of Accounts (COAs) General Ledger StructureThe cornerstone of the general ledger is the chart of accounts. The ledger's chart of accounts is the epitome of an intelligent key because it usually consists of a series of identifiers. For example, the first set of digits may identify the account, account type (for example, asset, liability, equity, income, or expense), and other account rollups. Sometimes intelligence is embedded in the account numbering scheme. For example, account numbers from 1,000 through 1,999 might be asset accounts, whereas account numbers ranging from 2,000 to 2,999 may identify liabilities.

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A field refers to a component of the COA structure. Each field is comprised of a set of numbers and a set of alphabets. The field length of each set is listed in the table below.

Fields Field Length (for Numbers)

Field Length (for Alphabets)

1 Company Code 2 4

2 Account Code 6 6 Or More

3 Responsibility Code 6 6

4 Channel Code 3 3

5 Customer Group Code 2 2

6 Product Code 4 4

7 Project Code 3 3

8 Affiliate Code 2 4

9 Currency Code 3 3

10 Tax Code 1 1

Total 32 36

Noted: All codes will be set up like the block ranges which has a hierarchical relationship from the lowest level to higher level. Digit of each code should be set up to cover any possible codes occurred in the future because once digit of each code is set up, it is hard to modify digit in system.


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Company Code or Organization Roll Up

A company code refers to anyindependent part of a company thatmaintains its own set of books. Acompany can be determined byindustry, statutory requirements,regulatory demands, or by operatingstructure.

A company groups transactions intological groupings that reflect how acompany operates its business. Everytime a transaction is entered into a GLapplication, a company code must beincluded. No transaction record can besaved without specifying the company.

Chart of Accounts (COAs): Company Code Organization Roll Up Structures

Note: the main objective to design of this structures is to simplified the consolidation processes.

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Account Code

Represents the nature of the accountAn Account Field determines thebreakdown of asset, liability, equity,

incomeand expense.

Account Codes are broken down into natural

ranges to help facilitate maintenance and

reporting.

Defining account types will assist inrecognizing an account if it is an asset,liability, equity, revenue, or expenses.

This definition will also assist incalculating the account balance andretained earnings at mid-year or year-

end.

Account Range Account Range Description

100000-199999 Assets

200000-299999 Liabilities

300000-399999 Equity

400000-499999 Interest Income and Other Income

500000-599999 Interest Expense

600000-699999 General Expenses, Taxes, Licenses and Fees

700000-799999 Contra assets

800000-899999 Contra Liabilities

900000-999999 Memo Accounts

Chart of Accounts (COAs): Account Code Delivered Account

Types

Definition Value Balance Forward

A Asset A Yes

L Liability L Yes

Q Equity Q Yes

R Revenue R No

E Expense E No

C Contra C Yes

Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Proposed Account Ranges Common/SAP/ GAAP/TAXNet Income

Assets 100000

Equity 300000Common capital stock 311000-311999Guaranteed Fund 321000-321999Additional Paid in Capital 331000-331999Retained Earnings 341000-341999 Retained Earnings (d) for Lawson closingUndistributed Retained Earnings 351000-351999 Lawson System AccountEquity Adjustments

client x Non-client x Business Commissions 361000-361999GAAP Career Agent Commission Non-client x 365000-365999

Net unrealized gains and lossesNew Agent Commission Non-client xCommon Manager Commission Non-client x 371000-371999GAAP OnlyAgency Manager Override Non-client x 375000-375999

Minimum pension liability 381000-381999Treasury Stock 391000-391999Error Suspense 399000-399999 Lawson System Account

Non-client x Commissions

Chart of Accounts (COAs) : Financial AnalysisChart of Account ( COA) is the coding structure through which financial transactions are handled.

client x

Balance Sheet Summary Accounts


Assets 100000Not Used 100000-109999 Available for future expansion

Invested Assets 110000-130999

Not Used 110000-110999 Available for future expansion

Bonds 111000-111199

Common 111000-111499Leave room if invested assets need to be broken out by line of business

SAP only 111500-111799 Non-admitted (adj to mkt value)GAAP only 111800-111999 FASB 115/ Impairment/ GAAP Adjustment

Reserved for Bonds 112000-112999 Reserved to syncronize with investment income

Not Used 113000-113999 Available for future expansion

Stock 114000-114999

Preferred Stock 114000-114499



Preferred Stock of Affiliates 114500-114999Common 114500-114799SAP only 114800-114899GAAP only 114900-114999

Common Stock 115000-115499



Common Stock of Affiliates 115500-115999Common 115500-115799SAP only 115800-115899GAAP only 115900-115999

Mortgage Loans 116000-116499

Chart of Accounts (COAs) : Financial Analysis

Balance Sheet Summary Accounts


Assets 100000Not Used 100000-109999 Available for future expansion

Invested Assets 110000-130999

Liabilities 200000Not Used 200000-209999 Available for future expansion

Reserves 210000-219999Not Used 210000-210999 Available for future expansion

Life Reserve Liability 211000-211999 Interest-sensitive life contract liab (d)SAP only

Direct 211000-211299Assumed 211300-211399Ceded 211400-211499

GAAP onlyDirect 211500-211799Assumed 211800-211899Ceded 211900-211999

Intercompany Due to/ Due From 271000-273999Reg Intercompany due to/from former company (d)Reg Intercompany due to/from subsidiary 8 (d)Reg Intercompany due to/from educator programs company (d)

Chart of Accounts (COAs) : Financial Analysis

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Responsibility Code or Cost andProfit Center

A Responsibility Code houses the

value of Strategic Business Unitand its Profit and Cost Center.The SBU will make the first partof the values, while theProfit/Cost Center makes thesecond part. They will roll up toaccommodate the StrategicBusiness Units’ needs of reports. All XX companies will use acommon listing of departments.This common listing will bestored in the XX’s Database.

XXXXXX - Cost/Profit Center

Responsibility Code

XXXXXX - XXXXXX

XXXXXX - XXXXXX

XXXXXX - XXXXXX

SBU 1

XXXXXX - XXXXXX

XXXXXX - XXXXXX

SBU 3

XXXXXX - XXXXXX

XXXXXX - XXXXXX

SBU 2

XXXXXX - XXXXXX

XXXXXX - XXXXXX

SBU 4

Chart of Accounts (COAs) : Responsibility Code

Example Structure

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Product Code

Indicates products and serviceswhich make up the main

businessactivities

The Product Codes can be used to

measure the performance of each

product/service, as well as to plan

for new product/service to belaunched in the future.

Product Code

XXXX - Current

XXXX - XXXXXXXXX

XXXX - Saving

Deposit

XXXX - Fire

XXXX - Motor

Non-Life Insurance

XXXX - Ordinary

XXXX - Group Life

Life Insurance

XXXX - XXXXXXXXX

XXXX - XXXXXXXXX

Chart of Accounts (COAs) : Product CodeExample Structure

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Channel Code

A Channel Code is used to record

which service point or tool atransaction occurred.

The information can be used to

measure the productivity and

profitability of each channel.

Channel Code

xxx - Teller

xxx - Direct Sales

xxx - Exchange Booth

xxx - Agents

xxx - Self Service

xxx - Electronic Channel

Chart of Accounts (COAs) :Channel CodeExample Structure

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General Ledger Structure - Customer Group CodeCustomer Group Code Codifies XX Customer Groups.

Cutomer Group

xx - High Net-worth

xx - Retail

xx - SMEs

xx - Corporate

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Affiliated Code

An Affiliated Code is used forInter Unit Accounting activitiesbetween companies. The usage ofAffiliate Codes will assist XXcompanies in reconciling Inter Unittransactions and will reduce thenumber of Inter Company accountsthat must be created.

Affiliate Codes is the same asCompany Codes.

Chart of Accounts (COAs) :Affiliated Code

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Project Code

Captures income and expenses of specific

events over a short period. Can be used to

monitor actual expense compared with the

budget.

Tax CodeFeature of the codes that help the

users tokeep their tax information such as VAT,SBT, and Add Back.

Project Code

xxx - Project 1

xxx - Project 2

xxx - Project 3

xxx - Project 4

Tax Code

X - VAT

X - SBT

X - Add Back

Chart of Accounts (COAs) :Project/Tax Codes

Example Structure

Example Structure

Chart of Accounts (COAs) Design Process

Dimensional modeling is an iterative design process requiring the cooperative effort of people with a diverse set of skills, including business representatives. The design effort begins with an initial graphical model pulled from the bus matrix and presented at the entity level. The detailed modeling process drills down into the definitions, sources, relationships, data quality problems, and required transformations for each table. The primary goals are to create a model that meets the business requirements.

Dimensional modeling

Dimensional Modeling เป็นชื่อเรยีกของเทคนิคในการทาให้ฐานขอ้มูลง่ายต่อการทาความเขา้ใจ โดยการมองภาพ ของฐานขอ้มูลเป็นลกูบาศก์ท่ีมี 3,4,5 มติิ หรอืมากกวา่นัน้ ทาให้สามารถจตินาการการ หันหรอืแบง่ สามารถตัดขอ้มูลมา

วเิคราะห์ดใูนชว่งใดก็ได้ และหมุนขอ้มูลดไูด้จากทกุๆมุม

Company code

Responsibility code

Account Code

Customer Group codeProduct Code

Channel Code

Affiliat

ed co

de

Projec

t cod

e

Tax co

deCurrency code

Additional Information

Chart of Accounts (COAs) : Design Process

Dimensional modeling is an iterative design process requiring the cooperative effort of people with a diverse set of skills, including business representatives. The design effort begins with an initial graphical model pulled from the bus matrix and presented at the entity level. The detailed modeling process drills down into the definitions, sources, relationships, data quality problems, and required transformations for each table. The primary goals are to create a model that meets the business requirements.

The task of determining column and table names is interwoven into the design process. The organization as a whole must agree on the names, definitions, and derivations of every column and table in the dimensional model. This is more of a political process than a technical one, which requires the full attention of the most diplomatic team member. The resulting column names exposed through the BI tool must make sense to the business community.

Dimensional modeling

Note: Dimensional Modeling เป็นชื่อเรยีกของเทคนิคในการทาใหฐ้านขอ้มูลง่ายต่อการทาความเขา้ใจ โดยการมองภาพของฐานขอ้มูลเป็นลกูบาศก์ที่มี 3,4,5 มติิ หรอืมากกวา่นัน้ ทาใหส้ามารถ จตินาการการ หนัหรอืแบง่ สามารถตัดขอ้มูลมาวเิคราะหด์ใูนชว่งใดก็ได้ และหมุนขอ้มูลดไูด้จากทกุๆมุม

Tools to Design Business Process Reengineer (BPR)

Thank You

Miss Voravannee TangsirikusolwongEmail: [email protected]

Telephone: +6694-236-1559

mailto:[email protected]

chart of account design

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