20 reasons for data quality in charts of accounts and internal organisation..

16Dec09

I haven’t blogged for a while but thought I would after reading Henrik Liliendahl Sørrensen’s post on 55 reasons for data quality. Henrik focused on customer master data, I’ve focused on key areas in financial and MI data – so charts of accounts and organisational hierarchies. So it’s probably of more interest to your CFO or financial controllers than the operational people.

  1. When you have incompatible or different charts of accounts across the group there may be inefficient accounting treatment of transactions. 
  2. When the management and legal views of the company are inconsistent reconciliations and closes will increase the time taken to close the books.
  3. Incomplete or out of date maps between central accounts and local core platform transaction types may lead to incorrect regulatory, tax or accounting treatment of transactions.
  4. If validation rules are not consistent between countries and business units in consolidation then there may be duplicate or missing summary information supplied for management information.
  5. When you have incompatible or different charts of accounts across the group there may be inefficient tax treatment of transactions. 
  6. When you have incompatible or different charts of accounts across the group then the close cycles may be long compared to your competitors, leading to out of date management information for decision making and long reaction times.
  7. When the management and legal views of the company are inconsistent planning decisions and investments made at various levels may be counterproductive to overall strategy because there isn’t a clear view of the overall strategic numbers. 
  8. When accounts are coded incorrectly in ERPs then there may be transactions booked to incorrect accounts, leading to incorrect tax, regulatory or accounting treatment.
  9. Incomplete or out of date maps between central accounts and local core platform transactions could lead to increased cost of close including reconciliations and review. 
  10. The increased effort to reconcile different charts of accounts across group will lead to increased audit effort and higher audit costs.
  11. When you have incompatible or different charts of accounts across the group then the close cycles may be long, leading to planning phases being shortened or incompatible.
  12. When the management and legal views of the company are inconsistent internal customers may not be treated correctly which may have an effect on transfer pricing.
  13. When the organisation structure is inconistently implemented in line of business systems and ERPs monthly and quarterly closes can be extended due to the number of reconciliations and reviews.
  14. Incomplete or out of date maps between central accounts and local core platform transaction types may lead to regulatory or tax investigation and hence increased costs.
  15. When you have incompatible or different charts of accounts across the group visibility at group level of available working capital and/or regulatory capital could be decreased leading to reduced ROC.
  16. When the management and legal views of the company are inconsistent the finance function may not be able to deliver a strategic service to the business units of the organisation.
  17. When accounts are coded incorrectly in ERPs then there may be transactions booked to incorrect accounts leading to increased audit and tax compliance advisory costs.
  18. When the organisation structure is inconistently implemented in line of business systems and ERPs there may be an effect on investment and planning decisions  that rely on correct information.
  19. Incomplete or out of date business rules on inter-company transactions could lead to increased tax charges or investigations into transfer pricing.
  20. Incomplete or out of date maps between central accounts and local core platform transaction types may lead to duplicate or missing information for decision making and planning.

Comments welcome!

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One Response to “20 reasons for data quality in charts of accounts and internal organisation..”


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