Free up time and energy by decluttering your accounts and get organized for the new budget season.
We all know that wonderful feeling that comes after cleaning out our junk drawers or closets, and putting in new systems to keep our spaces organized. To eliminate the clutter and know where everything belongs lifts a weight off your shoulders, and creates a happier environment to live and flourish in.
Many articles circulate on the health benefits of creating order and harmony in our homes. These benefits include:
Reducing stress
Improving focus
Freeing your time
The same can be said for creating order and harmony in the systems we work with. Finance staff use and interact with accounting systems daily, yet if your chart of accounts is a mess, you and your team are probably experiencing continual confusion and high levels of fatigue.
If you are experiencing delays and stress when building reports or are spending more time interpreting and cleaning up your financial information than analyzing it, it's time to address the root cause.
Steps to Restore Balance in your accounts
1. Use a Standard
Because of the complexity and impact the chart of accounts has on an organization, it is better to look for a design that has already been built and tested. Designing these systems is time consuming and often require years to refine. In addition, if design considerations are missed, you may end up having to create workarounds, leading you back to a disorganized chart of accounts once again.
It is also important to find a standard that meets the following criteria:
It is system agnostic so that your accounts aren’t restricted to one purpose, and frees you up to adopt new technologies.
It has a controlled management system so you can preserve the design integrity with minimal effort.
It is currently in use by other municipalities so that you won’t be at risk of a newly introduced design.
2. Evaluate Level of Detail
It is a good idea to examine the level of detail you wish to record in your GL and establish this as a rule for all departments. For example, will you use one account for each department's materials, or split it out into multiple accounts to capture outdoors supplies, safety materials, cleaning supplies, etc.
As well, you may wish to weigh the benefits of capturing certain items in your COA. For example, disposals of tangible capital assets. While it is possible for this to be created in your GL, many have found it is just as easy to gather this detail when it comes time to put together the Schedule of Tangible Capital Assets, and save the extra step of recording it in your GL.
3. Build for Reporting
The number one challenge experienced from unstructured COA’s is in reporting. Therefore, when you adopt a new design, consider all the deliverables that you need to create (financial statements, provincial reports, council reports, internal reports, and benchmarking). It can be tricky to capture all these needs, but luckily there are shared categories between them.
If you're ready to declutter your GL and put in a system that will save you time and energy, we're here to help. The Municipal 360 Standard Chart of Accounts is a state-of-the-art framework that will give you control and clarity of your financial information so you can focus on the big picture again.
Send us a message here to get started.