Annual GL reclassification - what's the best approach?

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Posted on by Aaron Goudreau

Hi Community - I'm working with a client who has a number of org changes every year. Part of that process is reclassifying budgets and actuals for the current year and also for comparative years to keep financial reporting in line. For example, Department A rolls up to Division 1 currently. Org leadership changes the structure of the org and now Department A rolls up to Division 2. My approach is to manually calculate and post reclass entries for the budget and actuals for the current and comparative years. That way their GL is accurate.

My client uses FR for financial reporting. They have investigated using Org hierarchies and effective dates - pushing the Org hierarchy into FR and using that as the Reporting tree. This is a good solution because no reclass is required if the report is designed properly (the flag "Ignore dimensions on parent level and only sum the child units" on the Report design is a useful feature for this). However the GL is still incorrect. My client would prefer to have accurate (restated) GL transactions. Also another challenge with using Org hierarchies is that it's not possible to batch all changes within one Effective date - these changes happen throughout the year. We're investigating the feasibility of changing the edit function on Org hiearchies, but my sense is this is not practical.

There are always a number of potential solutions: the Volkswagen and the Ferrari I'll call them (nothing wrong with Volkswagen's BTW).

Volkswagen = manually pulling actuals and budgets from D365 to Excel (via DMF or Voucher transactions inquiry), calculating the reclass entries, uploading, verifying, posting, confirming in FR.

Ferrari = a custom page where the following are specified: impacted Org units, dates/periods, reclass types (split, combine, transfer, change, etc.). Logic can then be triggered to calculate and suggest the reclass entries. Accountants could then review/validate the changes and post via General journal and Budget register. Semi-automated, resulting in a great deal of headache avoided.

Anyone know of an ISV or tool to help with this? Thoughts on the above approach/solutions?

Thanks

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Sandeep Chaudhury on at

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RE: Annual GL reclassification - what's the best approach?

Hi Aaron, I suggest not to customize the Org Hierarchy feature to achieve this. Like you said, the Org Hierarchy effective date and FR/MR report is the ideal way of handling this in reporting. However for the GL part, If I were you,

If the org changes are not frequent - I would go with the Volkswagen solution and either use some standard reports out there or build a view/report to make it is easy to put together the re-class entry.

If it is more frequent than expected: A semi automation will help, but needs a ton of custom code. I am just curios to know how frequently these org changes happen in a year ? Do the re-class requirement go beyond the financial year?

I am not aware of any ISV which does specifically this.
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Ludwig Reinhard on at

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RE: Annual GL reclassification - what's the best approach?

Hello Aaron,

If you have a number of org changes a year you will probably need something closer to a Ferrari solution.

The Volkswagen solution might be ok for the beginning but in the long term and provided that you have many org structure changes, a more automated feature is necessary in my opinion.

I am saying this because one thing was not explicitly mentioned above; that is, if you have an org structure change in 2020 you might also need to adjust the 2019 data and map them to the new structure. This is needed if you want to run comparative financial reports such as BS, IS for the current and the previous year, which necessitates the previous year data adjustments. This can of course be done semi-manually using the Volkswagen solution but it includes a lot of work and time doing that.

Unfortunately, I don't know an ISV solution but since you are in D365Fo you might be able building something yourself with the help of the PowerPlatform.

Best regards,

Ludwig
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Rahul Mohta on at

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RE: Annual GL reclassification - what's the best approach?

Your Volkswagen approach seems better suited with human decision involved which helps in validation
Aaron Goudreau on at

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RE: Annual GL reclassification - what's the best approach?

Hi Sandeep -

Their org structure changes are currently 1-15 per year, throughout the year. I'm working to understand if it's possible to change their restructure process and "club" the changes to align with a new fiscal year or budget cycle for example. That would help IMO.

Thanks very much for your thoughts on this!
Aaron Goudreau on at

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RE: Annual GL reclassification - what's the best approach?

Hi Ludwig - I agree with your thoughts around a basic solution for infrequent changes vs. semi-automated for more frequent.

I looked at the question of the comparatives on the financial reports. I determined that adjustment to 2019 is indeed required.

Interesting idea to use PowerPlatform in this solution - I'll investigate that.

Thanks very much!
Sandeep Chaudhury on at

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RE: Annual GL reclassification - what's the best approach?

Great!!

Addressing some of it in the process itself will elevate some pain and cost of the custom solution. Good luck.