A) 1-2
B) 3-5
C) 5 or more
How many chart(s) of accounts do you manage?
Answers
A) 1-2, Any more than this means you are doing something wrong or you have multiple business units that require some differentiation. Even then, one would question why account numbers don't fall into a range of accounts for creating financial statements.
One master: it can be helpful to use subsets so there is less noise at the department / subsidiary level from extraneous accounts. However assuming you've got one parent entity, it helps to have one account set to consolidate to.
Caveat: if you're international, you may need regional account systems due to legislation on how accounts are set up. So, for my last company, it was 3: one master and two foreign subsidiaries that had a COA legal requirement to meet.
1
Keith,
How are you accomplishing the mapping back to the master?
-Dean
Back when I was an A.T., we made what proved to be a major improvement. We went from posting to potentially 700 G/L accounts from
2
I ran across a similar set-up once, but there were a lot of items that remained opened (thousands!) for long periods of time, since there was no natural owner because so many departments went into the mix.
An alternative sometimes is to use additional analytical coding on the individual P&L accounts.
1 chart of accounts is much easier to manage. There is something to be said for simplicity.
1 chart of accounts that is common to all companies we manage we makes it easy to remember accounts when posting entry and consolidation is a breeze.
Several clients, each of which only has one chart of accounts. Even if I had one with affiliates/foreign entities, etc. I would plan that over time they all converge to a single chart with entity identifier sub-codes.
When I have managed multi-unit companies, each would have their own COA, however:
1. I'd tried to make them as similar in both structure and numbering as possible
2. The consolidation would have an internal map, thus roll-up would be automatic (this was software specific)
Keeping the numbering as close as possible kept mis-postings down to a minimum, and the mapping made consolidated reporting a no-brainer.
C - currently 9 - Chart of accounts is the same but we have different entities we manage that each have their own chart of accounts - but the full account number has a field that allows us to differentiate between the different entities.
1. And even that can get challenging at times.
Its best to get all the enterprises using a single version- this minimizes consolidation issues. set a standard and stick with it. use sub accounts
for divisions that need additional detail.
We use two in order to manage three businesses. Of course, these are mapped to our consolidation system.
In a part of my career I managed the financial and
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Accounting