Managerial Accounting - Functional Specifications
The term analytical accounting is very broad and generally refers to the practice of exploiting accounting information for the purpose of supporting managerial decisions, as opposite as financial, legal or fiscal reporting.
At Openbravo, we prefer to use the term managerial accounting instead of analytical accounting.
Openbravo supports managerial accounting thanks to its embedded multi-dimensional accounting store that allows to analyze accounting information based on a number of pre-defined dimensions.
- Accounting Date
- Natural account
- Business Partner
- Sales Region
- User Defined Dimension 1
- User Defined Dimension 1
Some of these existing dimensions are not fully implemented in openbravo. This project as well aims to fully implement existing dimensions and add new ones as cost centers.
This project will distinguish between operational and analytic dimensions. Both of them will be used for analysis, but just analytic dimensions can be edited/modified after document completion.
Operational dimensions are:
- Organization: Organization is an operational dimension. When used in the header of the document it is interpreted as ownership of the document. On the other hand when it is being used in the lines or breakdown of a document it is interpreted as analytic and that info will just be used to book information in the ledger.
- Business Partner: This is as well an operational dimension when being used in the header of the document while analytic when declared in lines or breakdown.
- Product: Product is a dimension that can be interpreted as operational when being used at line level of a document in some circumstances while as well can be analytic in others. This will depend on the document itself. For example, when being used at Invoice line level it is an operational dimension and can not be modified once the document has been processed, although when being used at G/L Journal line level it can be considered analytic.
- Project: Project behaves in the same way organization does. it behaves as operational when declared at header of the document and analytic when declared at line or breakdown level.
Any of these dimensions when being used at breakdown level will be used just for analytic purposes.
Analytic dimensions are:
- Cost center (New one)
- Asset (New one)
- User 1 (Fully implement)
- User 2 (Fully implement)
- Sales Region (inherited from Business Partner location info)
- Activity ???
The purpose of this project is to enhance the application so that any analysis can be done just by configuring the system without the need of defining additional dimensions.
Both allocation and reporting of
Allocation schemas will not be implemented in Phase I.
Cube base reports will not be delivered within Phase I.
Managerial Accounting Similar to Analytical Accounting. Refers to the capability of reporting accounting crossed by certain analytic dimensions for the purpose of supporting managerial decisions.
User roles & profiles
Business process definition
Openbravo as a company does analysis of their expenses and revenues both by project and by department.
- Openbravo analyzes information as follows:
- Revenue: by product line (product category) and by Customer Geography. GPS activities are analyzed by project as well.
- Expense: by project and by "Units"
How will system be configured?
Organizations will play an operational role (legal entity defintion and the mechanism to define scope/visibility of documents in the system).
The analytic requirements will be addressed with other accounting dimensions
The organization tree will be made by just three nodes: Openbravo Inc (main node), higher level of the hierarchy, and Openbravo Spain and Openbravo US as children of it.
These ones are the legal entities and the former is a consolidation level.
No more organizations at this moment are needed (later, we will apply the same approach for other countries).
Following dimensions will be used to analyze accounting information:
- Organization (legal entities and the consolidated level) and time for all analytics.
- Geographic split (deducted from the business partner location) for revenue.
- Product category (product line) deducted from the product for revenue.
- Project as the finest level of granularity for expenses.
- Unit, deducted from project as a grouping criteria for expenses.
In GPS projects, revenue will be tracked by project as well, to calculate project profitability.
The same criteria will apply to other information not available in the system now (eg. budgeting will be based on those dimensions).
User Story 1:
Oscar, responsible for finance department in OB, is in charge of entering expense invoices in the ERP system.
Whenever an expense invoice is entered in the system, Oscar enters it in the system and allocates each of the lines with its corresponding project and department as follows:
Oscar receives an invoice coming from Paula, who is a free-land that works for Openbravo in several projects.
Oscar enters the invoice in the system bellow organization Spain, for 3000 euros against expense product outsourced-services and then will allocate those expenses to their related projects and departments.
As Oscar acknowledges that Paula has been involved both in Project 1 (50% of her time) ad project 2 (50% of her time), when entering invoice line information he allocates line net amount according to those percentages.
When Oscar posts the invoice to the ledger he checks that expense has been properly allocated to each of the projects.
He now can see that the 3000 euros distribute as follows:
Every month Oscar launches the invoicing process. This process generates all sales invoices coming from booked orders. Orders already contains information on the projects related, so when generating the invoices this info is inherited. Sales Region information is as well retrieved from business partner location.
With all of this info booked in the ledger, Oscar can now run the quarterly revenue report.
Functional requirements based on business processes
The development of this project will require modifications on several functional areas:
- Transactional documents: All transactional documents will include dimensions in header, line and analytic level. This will require creation of new tables tabs and fields to support this new infrastructure.
Dimension field group will display those dimensions which are enabled for any of the general ledger configurations defined. This definition can be done in general ledger configuration window under the Dimension tab.
These dimensions will be carried forward from one document to the next one, when using create from capabilities.
- Accounting: Accounting engine needs to ensure that information in documents is stored in the ledger taking into account new dimensional information
- Reports: Accounting reports will need to support filtering and grouping by these new dimensions. The output will need to be defined accordingly. New reports may be required as well.
- Dimensions: Dimensions will by default be hidden. Just when enabling those in one of the existing general ledger configuration, they will automatically be displayed in transactional windows. A new set of dimensions will need to be defined or re-implemented:
- Campaign: Campaign dimension information will need to be added as analytical information in each of the target documents.
- Asset: Asset dimension information will need to be added as analytical information in each of the target documents.
- Cost Center: Define new entity called Cost Center. This needs to include a master data window to create/edit/delete new cost centers and edit as well its related tree.
- User Defined 1: Create a new entity called User Defined 1. This needs to include a master data window to create/edit/delete new cost centers and edit as well its related tree.
- User Defined 2: Create a new entity called User Defined 2. This needs to include a master data window to create/edit/delete new cost centers and edit as well its related tree.
- Activity: TBD.
- Documents: A new field group will be available in header and lines of each transactional document called Dimensions.
- Invoices (both purchase and sales invoices)
- Orders (both purchase and sales orders)
- Goods shipment and Goods receipt
- G/L Journal
- Generate Invoices
- Create invoices from Orders
- Create Shipments from Orders
- Create From screens:
- Create From Invoice
- Create From Orders
- Create From Shipments/Receipts
- Accounting processes will be revisited to ensure every dimension is retrieved properly and booked in the ledger.