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Accounts Design
Darius Bikulcius
PwC
Session ID# 4089
IN THIS SESSION
Examine critical success factors for more effectively
designing and maintaining your chart of accounts
Hear how to tailor the SAP chart of accounts design to
meet the challenges of multiple financial reporting
regulations
Learn how to design your chart of accounts to manage
bank accounts, tax and regulatory reporting,
globalization, SAP system requirements, and
management reporting
Get tips on using standard SAP functionality to meet
your chart of accounts requirements
(Illustrative)
Business insight
Current view
Aspirational
Business insight
Integrating financial and operational modelling, planning, reporting,
and analysis
Improving business decision making
Simplifying flows of data, information, analysis, and insight
Integrating Tax and Treasury fully in business planning
Linking strategy with execution
Efficiency
Delivery of cost savings, releasing time for value add activities
Scalable service delivery models to support future business growth
Access leading edge technology and processes
Compliance and control
Greater transparency and accountability
Embedded culture of controls awareness
Better management of risk
Efficiency
Dimension 2
Dimension 3
Unit A
Unit B
Activity 1
Activity 2
Dimension 1
Dimension
3
Dimension
4
Dimension 5
Better Insight
Better analysis
and decision
making
Controls and
governance
around chart of
accounts changes
Data is quicker to
assimilate and
analyze
Efficiency
Based on leading
practices, resulting in
faster processing of
transactions and
easier production of
reports
Contain intercompany
rules, allowing faster
financial
consolidation
Better Control
Controls in place,
making
information more
reliable and
accurate
Cross-validation
rules
Governance
around changes
in the chart of
accounts
Implementation Challenges
What are the technology components affected by chart of
accounts?
How do I manage governance around chart of accounts
changes in a project environment?
How do I ensure the design is implemented as intended?
8
Mapping Challenges
Leading practice of
mapping old to new COA
Handling changes to the
new COA and mapping
back to the old
Validating mapping and
migration of financial data
Maintaining version control
on the COA with multiple
teams working on the COA
>4
2-4
1
0%
20%
40%
60%
80%
Benchmark Group
Source: PwC Global Practices Benchmark
11
0%
20%
40%
60%
< 1,000
1,000 - 10,000
10,001 - 100,000
> 100,000
Benchmark
Source: PwC Global Practices Benchmark
12
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Min
57.63%
0.00%
Media
n
36.03%
62.47%
Max
83.33%
100.00%
0%
13
Reporting Considerations
Comprehensive Coverage of Reporting Requirements
Statutory/Financial Reporting
Management Reporting
Group
Regulatory Reporting
Transactional Reporting
Tax Reporting
IFRS
US GA A P
Loca l GA A P
1 5 2 0 1 - Un ea r n ed Pr em iu m Reser v e
2 3 1 3 4 - Ceded A DW Pr em iu m
2 5 4 1 2 - Mem ber Qu ot a Sh a r e
A ccou n t s
16
17
Cost Centers
Profit Centers
Geographies
Legal Entities
Divisions
Projects
Industry
Requirements
Industry-specific
requirements
Emerging trends
Growth Vision
New products
New businesses
New territory
Organization
restructure
18
Consolidation Considerations
Use of a group chart of accounts
representing the summarized
account level required in
Consolidation systems
A group account is then
assigned to each operating
account ensuring account
master data synchronization
and streamlined reconciliation
between the SAP ERP and
Consolidation system
Reduces the need for mapping
layers in the Consolidation
system
Improved system performance
19
Control Accounts
Access to Accounts
Assign legal entity-specific accounts to a
single company code so the accounts are
only available to a specific set of users or a
group of users
20
Source Systems
MDM
Enterprise
Performance
Management System
Data Warehouse
21
22
Implementation:
1. Affected technology
components
2. COA project governance
3. COA design meets the
requirements
Design:
1. Legal and Management
Reporting Requirements
2. Leading practices
3. Standard templates
4. Controls
Mapping:
1. Mapping old chart to new
chart
2. Change Control
3. Validation
4. Version Control
24
Tools and
Deliverables
Phases and
Activities
Design
Construct
Implement
COA structure
Reporting requirements
(GAAP and Management)
Regulatory requirements
Organization
requirements
COA configuration
and build
Business governance
processes
Chart of accounts
templates
COA Training
Materials and Account
definitions
User acceptance
testing
Data Conversion
CoA Governance
Framework
25
Lessons learned
Project closure
Note: For this session, we will focus on SAP ECC Chart of Account
standardization; however, approach can be applied to
consolidation and non-SAP systems
26
27
29
Caution Country-specific
COAs may require
alternate COAs and
alternative accounts to be
considered
30
Generally, length of GL
accounts will need to be
determined for your
organization. SAP maximum is
10; however, common practice
is 6-8 digits.
31
33
ACCOUNT GROUPS
GL account groups
Define GL account range
Each account group
controls:
Account Control
Account Management
Document Entry
Bank/Financial Detail
Interest Calculation
34
36
37
38
_ _ _ _ _ _ _
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(1)
(2)
(3)
(4)-(7)
Major Class/Leading
Indicator
Sub Class
Sequentially assigned
as required to support
reporting requirements/
further breakdown of costs
Example
1 Assets
2 Liabilities
3 Equity
4 Revenue
5 COGS
6 Operating Expenses
7 Other Gains/Losses
39
Group
GCofA - WW01
Group
Company
100000 Assets
200000 Liabilities
300000 Equity
U.S.
France
CofA WW01
Legal
Entity
CofA WW01
Account
Group
Account
Group
Account
Group
Account
Group
100000
Assets
100000
200000
Liabilities
200000
6000
Assets
100000
75000
Liabilities
200000
300000
Equity
300000
90000
Equity
300000
40
41
42
Operating Account
Profit Center
Revenue
Product Line 1
Product Line 2
43
DESIGN PHASE
Critical decisions need to be made to maintain
a clean COA
Have clear goals and objectives to shape key
decisions; for example, one single, global
operating COA and group COA
Consistent naming and abbreviations
General ledger short- and long-text names have
character limits that must be considered
Consistent usage of abbreviations with an abbreviation
dictionary is critical; it improves readability and allows
for filtering (i.e., Excel or other tools)
45
50
51
CONSTRUCT PHASE
The Construct phase is similar to Realization Build
The tasks included in this phase are intended to build the
chart in the system
Perform necessary configuration to support the COA
Perform mock load of the COA in the Quality system
Prepare test scripts to validate the design/functionality
Perform tests and document results
Perform corrective remediation and break-fix activities
Develop training materials
52
IMPLEMENT PHASE
The Implement phase is similar to Final
Preparation
54
CLOSING
Thank You
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