Chart of Accounts sharing
A chart of accounts was created on a company by company basis, for any organization that had centralized their accounting structure (or wanted to), each change would have to be repeated in every legal entity using the system – a time-consuming and error-laden task. For large companies with complex charts of accounts, this could quickly become unmanageable.
With Microsoft Dynamics 365, finance users can set up shared charts of accounts, and when new companies are created they can be assigned one of these rather than a local chart of accounts.
As you can imagine, this is of huge benefit to multiple parties, including:
- Financial decision makers wanting a consistent accounting approach
- Reporting functions needing reliable data frameworks for easy BI strategies and quick management decision through Management reporter.
- Centralized day-to-day roles, where legal entity has no impact on business processes
Example: we have USMF and DEMF Legal entity. In this legal entity I have share the (COA) global chart of account which is name as “Shared”.
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Chart of Account
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Legal Entity
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Decision Points:
- A handy new feature (which appears throughout Microsoft D365) is the Translations Form, where users setting up a shared chart of accounts can give multi-language values for account descriptions. This way, D365 just looks at a user’s language settings and provides the shared chart of accounts in the appropriate local language.
In System:
- Let’s example Shared Chart of account having, start from 110110 up to 999999.
How it works, if Global chart of accounts with 80% global and 20% local for company-specific needs?
This we can accommodate easily using shared chart of accounts, and the company-specific flag Suspended.
Example:
“112000, Safe drop” an account has suspended for legal entity DEMF.
Then, In the DEMF legal entity, user cannot view the account “112000”. As it has suspended for this legal entity.
- Along with shared charts of accounts, organizations now can share fiscal calendars: like the sharing of charts of accounts discussed above, this allows the consolidation of business processes to ensure that month-end and year-end processes are aligned across every business unit. It also ensures that legal entities also comply with the organizational framework for frequency-dependent functions, such as budgeting and fixed asset depreciation. Legal entities can still open and close periods individually, however, so one entity’s efficiency doesn’t impact any others.
- Last but not least, financial dimensions are now also shared across organizations. This obviously brings the level of maintenance required right down, and makes comprehensive and detailed dimensioning of financial transactions on an enterprise level a lot more realistic.
We can suspend a dimension for a legal entity specific. Then it will not display and will not valid for that particular legal entity.
Account Structure
A relational chart of accounts uses an account structure that requires that you set up valid accounts and financial dimension values, and then set up rules to specify how the accounts and dimensions will come together to create account structures. Setting up valid combinations helps make sure that data entry is accurate.
You can use the Configure account structures form to create one or more account structures. Account structures consist of main accounts and can include financial dimension segments. The account structures are used to define the valid combinations which, together with the main accounts, form a chart of accounts.
Let’s have a look in the System:
USMF company, lets we have define two accounting structure.
- Manufacturing B/S (Balance sheet accounts)
- Manufacturing P/L (Profit and Loss Accounts)
Scenario 1: Manufacturing B/S (Balance sheet accounts)
In structure number “1” (Manufacturing B/S) , we defined that when account number in between 100000..399999 select then, system should allow me to update two dimension.
One is Department
Second One is Business Unit
System:
And more over that, we are again defining that when I am selecting my Department “022” system should show me the valid combination “001” for posting. Rest other dimension should not display during the transaction entry time.
Scenario 2: Manufacturing P/L (Profit and Loss Accounts)
In the second scenario we have defined the accounting structure and telling that if user selecting “400000> ..999999” , then they can see Department, Business Unit, Cost Center and Item Group.
As you can see, the new dimension functionality in Microsoft Dynamics 365 really eases the maintenance burden on getting quick and detailed financial information across an entire organization.
