Accounting Best Practices, Fifth Edition

Chapter 14. General Ledger Best Practices

In most of this book, the primary basis for best practices is simplification in order to achieve an enhanced level of efficiency. Though there are best practices that can streamline the general ledger in a similar manner, this is one of the rare cases where pursuing a higher degree of complexity will sometimes achieve a greater overall benefit for the entire company. The two best practices that follow this approach are restructuring the general ledger to allow for the use of activity-based costing, and using it as a data warehouse. In both cases, there are significant start-up costs and much more work for the accounting staff, but the level of information that this practice provides to the rest of the organization is greatly enhanced. Thus, there are a few situations where greater cost and complexity can be beneficial.

In addition, there are the usual streamlining actions to reduce the work needed to maintain the general ledger. These best practices include restricting the use of journal entries, automating interfaces with subsidiary ledgers, and simplifying the chart of accounts. Though all of these measures will certainly reduce the work of the general ledger accountant, one should strongly consider adding the best practices for activity-based costing and data warehousing, which will increase that person’s work, because it will be so beneficial to the remainder of the company.

This chapter covers best practices for the general ledger ...