Using General Ledger Account Validation Version

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Overview

General Ledger Validation is an ERP capability used to prevent departments from ordering materials that they are not entitled to consume; for example, the Administration department ordering medical/surgical supplies.

Understanding how the system validates account codes -- and why validation may be important to your site -- requires familiarity with accounting principles, your site's general ledger account structure, and the system's capabilities. The following paragraphs are background information.

A general ledger account code contains segments. Each segment has particular meaning in your site's Chart of Accounts. For example, an organization segment and department segment in an account code designate an organization and department, respectively. The expense segment (or group of expense segments) designates an expense, such as salary expense, rent expense, inventory expense, etc. Figure 1 is an example of two account codes for different types of materials expenses: let's say that "520 22" is for nursing supplies and "520 23" is for office supplies for a department. (Of course, your site's account codes may have a different structure, possibly with more segments.)

Figure 1 - Two Example Account Codes

Purchase order (and requisition) lines require an Expense Code. Each expense code is associated with a materials expense segment (or segment group). The system uses the materials expense segment in constructing the complete account code that will be the final destination of a PO line's cost. The system generates the complete account code by combining the department and organization segments with the expense segment.

Account codes generated in this way may not actually exist in a site's General Ledger Chart of Accounts. For example, suppose a department at your site ("Parking" ) does not have an account for medical supplies. Suppose "Parking" tries to requisition medical supplies -- Band Aids, for example -- using an expense code for medical supplies established in the system. The system looks up the expense segment associated with the expense code, and uses the department code and organization code for "Parking" to build the account code for the Band-Aids' cost. However, the constructed account code is invalid because a medical supplies account for the "Parking" department does not actually exist.

Generating account codes for POs and requisitions creates no problems for some sites. For other sites, the generation process can create invalid account codes with costs assigned to them. To avoid such difficulties, you can set up the system to validate general ledger account codes. Validation ensures that generated account codes actually exist in the Chart of Accounts.

This topic outlines the preparatory steps for enabling general ledger account validation, how to enable account validation, and how to create new department accounts.

Security

Enabling account validation requires the user profile Administrator role and the appropriate settings on the Authorities panel. The "Administrator" role object must be set minimally to Modify to edit system values.

Enabling Account Validation

The steps below are recommended to prepare for and enable GL Account Validation.

Steps for Enabling Account Validation

Step 1: Eliminate any existing invalid account codes

  1. Identify invalid accounts.
    You will need to look for invalid accounts for each department and organization that uses the system.

    The system can generate a report of valid and invalid account codes for any department. In creating the report, the system uses the expense code table to identify account expense segments. The system then builds account codes for the department using each expense segment, the department segment, and the organization segment. Finally, the system compares the resulting account codes to the Chart of Accounts to determine if the accounts are valid.
To run a report of Invalid account codes for departments:
- From the Materials Management main Contents, select Reports> Report Definitions. The list of reports appears.
- Locate the Department Invalid GL Segments and Expense Codes report (Figure 2)

Figure 2 - List of Report Definitions with the Invalid Accounts Report

- Next to the report title, select Menu > Print Report. A selection panel appears.
- Enter the Organization and Department that you are running the report for.
If you wish to check invalid account numbers for a particular expense code, enter the Expense Code.
- Click Submit. The system sends you a message that the report is available in My Archived Reports.
You can also click Completed Reports to view the report.

Figure 3 is an example of the report run for department 1951. The red arrow indicates the invalid account codes.

Figure 3 - Sample Report: Department Invalid GL Segments and Expense Codes

You can also view a list of invalid account codes within the system.

To view invalid account codes for a department:
- From the Materials Management main Contents, select Requisitions > Departments. The Quick Click menu appears.
- On the Quick Click menu under "I would like to...", select Expense Codes / Department GL Accounts.
- Enter the Department Number.
- Click Go. The list of GL account codes for the department appears.
- Click Search.
- On the Search panel, next to Valid GL Account, select No.
- Click Submit.
The GL Account Codes list reappears (Figure 4), containing only invalid account codes.

Figure 4 - List of Invalid Account Codes for Department 1951

  1. Make the invalid account codes valid
    Add invalid account codes to the Chart of Accounts.

    To add a new account code to the Chart of Accounts:
    - From the Materials Management main contents, select Tables > GL Accounts. The list of GL account codes appears.
    - Click New. The GL Account edit panel appears.
    - Enter required fields on the Edit panel and tabbed panels. Clicking Help provides information on the fields.
    - When you have finished, click Save.
    - Click Submit. The list of GL account codes is displayed.
    - Click Refresh to view the new account code that you created.
    Detailed instructions for creating a new department and a new account are in To create a General Ledger account for a new department.
  1. Repeat Steps 1 and 2 until you have identified all invalid accounts and handled them accordingly

Step 2: Establish a communication process at your site for handling account validation issues.

  1. Notify key staff of the date when you intend to enable account validation.
    In the announcement, include information about what will happen when account validation is enabled.

    Here is sample message text:

    "On DATE, TIME, the system's account validation feature will be enabled. The system
    will verify General Ledger account codes on all new purchase orders, quick issues, quick credits, and requisitions.

    The effect of this change is the following:

    - Requisitions that contain invalid account codes cannot be approved until a valid account code is entered.
    - Purchase orders with invalid account codes cannot be saved until a valid account code is entered."


  2. Inform the  Solutions Center (ERP Help Desk) of the date when you plan to enable account validation.
    You may need to contact the Help Desk with questions.

Step 3: Set up an internal process for resolving problems once validation is enabled.

  1. Assign one person at your site responsibility for enabling and disabling account validation.
    Confusion and unpleasant consequences can result when several people are able to enable/disable the feature at will.

  2. Set up an internal process for resolving problems once validation is enabled.
    - Identify staff responsible for resolving invalid account codes that the system identifies.
    - Identify staff responsible for handling account code problems on imported requisitions (e.g., from Pyxis).
    - Establish a chain-of-command for handling invalid account code problems.

Step 4: Activate the account validation feature.

The enable procedure is below in this topic.

Step 5: Conduct ongoing review of account code problems and issues.

To turn on account validation:

  1. From the Work in Administration main Contents, select System Values.
    The System Values panel appears.
  2. Click the edit icon or select Menu > Edit.
    Several tabbed panels appear.
  3. Select the Other tab.
    The Other panel appears (Figure 5)

Figure 5 - Account Validation Enable Field

  1. Select the box next to GL Account Validation.
  2. Click Save.
    You receive a message asking you to verify that you want to turn on account validation.
  3. Click Submit.
    GL account validation is turned on for your site.

Creating a New Charge-To Department

If the department you are creating is a charge-to department, the first step is to create a GL charge-to account for the department. The system will automatically generate an expense code that corresponds to the expense segment of the account. The system will also create the department itself. You can provide details in the department's record as needed.

If you are creating a ship-to department that points its charges elsewhere, you can create the department using the method summarized in To create a new department in the system.

To create a general ledger account for a new department:

  1. From the Materials Management main Contents, select Tables > GL Accounts.
    - You can also select Accounts Management > GL Accounts from the General Ledger main Contents.
    The list of GL account codes appears, ordered by account code.
  2. Click New.
    The GL Account edit panel appears (Figure 6).

Figure 6 - GL Account Edit Panel

  1. At the top of the panel, enter the Account Code.
  2. Complete fields on the General tab as follows:
Account Class   Profit and Loss
Account Type   Expense
Normal Balance   Debit

Figure 7 - GL Account Edit Panel for an Account: General Tab

  1. Click the Department tab.
  2. Enter a Department number and a Department Name (Figure 8) or leave the Department field blank.
    - If you leave the Department field blank, the system will default the Department number to the account's department segment.
    - The Priority defaults to 5, but you can enter a different value.

Figure 8 - GL Account Edit Panel: Department Tab

  1. Click the Expense tab (Figure 9). Enter a value in the Expense Code field or leave the field blank. If you leave the field blank, the system will default the Expense Code to the account's expense segment.
    Note: When you enter a GL materials expense account for a department, the system displays a warning if the expense code already exists for the department, or if the expense code belongs to another department.
  2. Enter a Description.

Figure 9 - GL Account Edit Panel: Expense Tab

  1. Click Save.
    You will receive a message that the department and its associated materials expense account code have been created (Figure 10).

Figure 10 - Warning Message for New Department and Expense Code

  1. Click Submit.
    You are returned to the list of GL Account codes.
  2. Click Refresh to view the new account.

If you wish, you can go to the department record to enter more information about the department.

You can also view the new expense code on the Expense Codes list.

Using Requisitions with Account Validation

Each file item in the Item Inventory has an associated expense code in its item record. For non-file items, you enter an expense code when you requisition or order an item. For requisitions and purchase orders, the system uses the expense segment associated with the Expense Code, adding the organization and department segments, to construct the account code for the item's charges.

Figure 11 is an item inventory record for item 000112. The item has a chargeable and non-chargeable Expense Code of 5200.

Figure 11 - Item Inventory Record for a File Item Showing Expense Codes

On the Expense Code table, 5200 is associated with the GL account segment 520 – 00 (Figure 12).

Figure 12 - Expense Code List

Suppose the Parking Department (Department Code 1922) requisitions a box of Band-Aids, Item 000112. Assuming an account code structure similar to Figure 1, the system constructs the account code -- the destination for the cost of the Band-Aids -- as (Figure 13):

Figure 13 - System-Generated Bad Account Code

Since the Parking Department was set up with the account code 001-520-23-1922 (Figure 7), the account code generated by the system is invalid. It does not exist in the chart of accounts. When the requisition is saved, the system sends an error message (Figure 14):

Figure 15 - Invalid Account Warning for a Requisition

Keep in mind the following when you have account validation enabled:

For item inventories: When you assign an item to an asset location with GL Account Validation turned on, the default billable expense code for the item must have a valid GL expense segment. That is, the expense segment associated with the code must map to an account. Otherwise, the item inventory record is incomplete, and you will not be able to order the item.

For requisitions: If an invalid materials expense account code is generated for a file item line, the system will let you create the requisition, but the requisition cannot be approved until the invalid account problem is solved. If the invalid account code is for a non-file item, the system will not let you create the line.

Note: For a requisition line with an invalid account code, if an Override Charge Department can be assigned to the requisition line, and the override charge department's account code is valid, the system will process the requisition. The Overrides tab for a requisition line contains the Override Charge Department field.

For non-file purchase order lines, quick issues, and quick credits: If the generated account code is invalid, the system will not let you create the PO line, quick credit line, or quick issue line. The system can generate purchase order lines directly from requisitions, so if the account code on the requisition is invalid, the PO is affected. One PO line with an invalid account code will stop the processing of the entire PO.