Chart of Accounts Conversion | Common Pitfalls (Part 2)

Last week we looked at the fundamental challenges associated with chart conversion projects. This week we thought that it would be useful to identify the common pitfalls that we see repeatedly. These include:

  • Treating accounting policies and practises as an afterthought – Many organisations only consider accounting policy very late in the project cycle, when either looking at standardising month-end processes or like-for-like reporting.  However, even a small accounting policy change can have a fundamental impact on your standard chart of accounts. For instance, a small change to how overhead costs are allocated could impact on the chart design, ERP logic, month-end close process or EPM design. As such accounting policy should be agreed as one of the first tasks of your project rather than one of the last;
  • Defining code logic before understanding reporting requirements – Often we see organisations define their standard chart first, and then define their report requirements. This creates an iterative process as every change to report requirements has to be reflected in the chart. This gradually  invalidates the code logic and creates rework. Reporting requirements should be prioritised so that there is a definite understanding of requirements prior to defining the code logic, therefore ensuring your new chart is fit for purpose. Your report requirements should then be validated by the business, using real data, before creating your chart logic and codes; and
  • Big Bang doesn’t work – As mentioned last week, coping with the impact of change on your budgeting and consolidation systems is one of the major challenges of a SCoA project. A common pitfall is to attempt to change your chart in your ERP and EPM applications at the same time. This greatly increases the complexity of your initiative, puts increased pressure on your project resources and can create a highly iterative chart design process. Changes required to meet planning requirements drive changes to the chart design and vice versa.  This is a difficult cycle to stop and will prove expensive and frustrating.

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