What Happened to My “General” Ledger?

• Date: 01 October 2016
• DOI: http://doi.org/10.1002/jcaf.22203
• Published date: 01 October 2016

81

© 2016 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22203

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What Happened to My “General”

Ledger?

Mark Wright, Toby Hatch, and Doug Orsagh

What does being a Jour-

nal Entry Jockey have

to do with a thick gen-

eral ledger? The need for more

detailed decision-support infor-

mation has driven accountants

to make their trusted tools of

the trade do things they were

never intended to do—and

they are still not getting the

information their executives

need and can’t provide it in a

timely manner. Because of this,

the financial close process is

bloated, slow, and costly. What

can turn this situation around?

Performance ledgers and per-

formance reporting.

When executives want

information in different stra-

tegic or decision-making

categories, guess what the

accountants do? That’s right,

they become Journal Entry

Jockeys (Exhibit1) using the

double-entry system—specifi-

cally designed to meet statutory

requirements, not management

or performance needs—to try

to dig out the information their

executives desire.

Accountants add more and

more accounts and operational

dimensions to the general

ledger (GL) to move dollars

into different reporting formats

using this familiar process; they

use what they know and feel

comfortable with—more jour-

nal entries. Every time a differ-

ent or more detailed analysis is

requested, an opportunity for

another journal entry presents

itself; but even with all the

new accounts and segments,

revenues and expenses are

not always recorded in man-

agement-desirable categories,

so allocations are addition-

ally needed to further reclas-

sify. Before you know it, the

general ledger close process

becomes just “too”… too long,

too inefficient, too costly, too

untimely—and, in many cases,

too unsustainable.

Slowly, one change at a

time, the GL evolves until even-

tually it becomes so bloated

and unrecognizable that one

day you just have to ask your-

self, “What happened to my

general ledger?”

THICK VERSUS THIN LEDGER

The definition of general

is to not be specific or definite.

For decades, accountants

havereferred to their book of

record as the general ledger.

Based on this generic defini-

tion, you might assume the GL

would be a high level summary

of records, right? Today, not

somuch.

As executives demand

more and more performance

information, and as technol-

ogy continues to advance, the

GL has exploded into what

many consultants call a “thick

ledger” (see Exhibit 2). More

and more accounts and seg-

ments are continuously added

to meet reporting requests.

Traditional accounting

designs contain cost centers,

departments, accounts, subac-

counts, and the like, but deci-

sion makers need even more

granular details to understand

performance. Not only do they

want more detail, but they

want it in completely different

performance formats such as

by customer, by product, by

channel, and so on. Over time,

the number of accounts and

segments in a chart of accounts

(COA) grows exponentially,

thus driving unnecessary

Commissioned