The General Ledger System contains only a few functions, but they are critical to the successful use of the entire system. Since the purpose of an accounting system, manual or computerized, is to record all transactions and prepare financial reports, the transactions processed in the modules accomplishes the bulk of what needs to be done. However, the work of the General Ledger System provides the final step, the preparation of the financial reports, which reflect to your clients your careful, effective and professional management of their financial data throughout the month.
The General Ledger System is easy enough an inexperienced user could work their way through the steps of the checklist, but, an inexperienced user will not know how to correct mistakes made during the end-of-month processes or be able to spot the small flaws in the financial statements be visible to your clients. We recommend someone familiar with ongoing operations and financial transactions be involved in at least the month-end review process for the General Ledger System.
The main tasks to be performed in the General Ledger System are discussed at length below, from the stand-point of bringing an operator to a satisfactory performance level:
Initialize G/L System
When you add a new Client, one of the first tasks to perform, before any transactions can be processed, is to create a complete chart of accounts for the Client. This process is performed during the 'Create a New Client' checklist. Once a complete chart of accounts is created you can then add, delete, or change any individual account for the Client. Note: during this process the chart of accounts selected are based on the 'ChartType' value in the Client's Client Maintenance file (menu# 6.1.1).
Create & Maintain Chart of Accounts
Once a client has been added to the system, which is done through the Client Maintenance Program found under Special Data Bases, and the chart of accounts have been initialized, then additional accounts can be added in the General Ledger System. The Operator can fine-tune any individual account they wish. However, deleting any account is a dangerous proposition and should only be done by a System Administrator.
In adding an account, the Operator must be able to select an account number in the proper range, select a name of less than 15 characters, and know the class and subclass needed to place the account in the proper section of the financial statement.
To add or change budget amounts, the operator will simply need to add this amount to the proper field. If you are completing an entire budget for all accounts, these amount can be compiled in the spread sheet program, then using the G/L System utility, transferred in the account record.
Post Manual Journal Entries
In order to post a manual journal entry, the Operator can use the Post Manual Journal Entry program in the General Ledger System. Up to fourteen entries can be done (7 double entry transactions) for each input date. The program will keep a running total of debits and credits, allowing the Operator to balance all input before filing and exiting the program. In addition, when posting to a cash account# used by a bank account, a prompt appears requesting the Operator select the appropriate bank account number and allows access to lists of bank accounts for review if the number is not known.
It is recommended a log be kept where journal entries are recorded, indicating the initials of the originators. It is also recommended posting ability be limited to the supervisory level or senior employees. While you can allow everyone to record a journal entry in the log book, in order to control this critical function posting access should be limited. An user assigned to post entries must be aware of critical accounts, like Cash, Accounts Receivable, Accounts Payable, etc., affected by the journal entry. They should be experienced enough in accounting to understand the effects of debits or credit on various classes of accounts in order to double check the entries in the log.
A System Administrator has the ability to enter an unbalanced journal entry, should something unusual happen to your general ledger data. This is a useful feature should hardware problems or an transaction error occurs.
Manage Budget Information
The budget information is used to prepare a budget for printout and to compare actual transaction values to projected (budgeted) values. The process to create this budget is simple and easy to use. You first have to load data into a budget spreadsheet (menu# 22.214.171.124).
The data loaded could be last years budget data, if it still exists, or current financial data, which is the most used method. If you load budget data this will load 12 months of budget data beginning with the Month/Year entered. However, if you choose to load data from financial transaction data then 12 months of actual financial data will be loaded beginning with the Month/Year entered less one year. In the actual data load scenario, if any of the monthly data exceeds the current G/L processing period then the budget data will be loaded. e.g. if the current G/L processing month is Sep 98 and you with to load actual data beginning with Jan 99 then Jan 98 - Aug 98 actual data will be loaded while Sep 98 - Dec 98 budget data will be loaded.
Prepare Financial Statements
During the month-end process, as indicated on the checklist, a process is run consolidating all the postings from the modules into financial transaction totals. If there are any accounts for any client not balancing, for example, the Cash Totals in A/P do not equal the Cash Totals in G/L, a report will be sent to the spooler. The Operator assigned to the General Ledger month-end (or the System Administrator) must know enough to review the 'Consolidation Error Report' report, and find and correct any problems reflected. This can usually be done by reviewing the module reports and finding the error. These corrections are critical to the accuracy of your financial statements!
Once corrections are made, the consolidation can be run again. Keep correcting and rerunning until no report is sent to the spooler. Later in the process, after reviewing the printed reports, it may be necessary to make corrections to the financial statements for other reasons. Postings will need to be consolidated at this time, too. Note: the 'Consolidation Error Report' only reflects errors for those Clients who had posting records consolidated. Therefore, if a Client had an error situation and no correcting postings occured then they would not appear on the subsequent 'Consolidation Error Report' even though the error condition still exists.
Financial statements are prepared during the G/L System end-of-month process. Whatever combination of reports are selected to be prepared for distribution to your clients and to your management, the Operator should print them and hold them for review. Again, someone with some experience should review the reports, testing for "reasonableness." It is still possible at this stage to make journal entries to clean up financial reports, provided the consolidation process is also redone.
The Operator's task in printing the reports has been simplified by imbedding the font and cpi codes into the various reports, so they can be printed without manually changing the printer selections. This saves an enormous amount of time for the Operator.