Chapter 7

Chapter 7AccountingTeam 07:Guru Prasad NikkuTed BecksteadManas SharmaKia Naziri

1AgendaAn introduction to AccountingGeneral ledger schemaPeriodic snapshot Transactional schemaBudgeting ProcessLogical flowFact tablesSummary

Accounting Accounting is the information system that measures business activities, processes data into reports, and communicates results to decision makersSource: Wiley publications.General Ledger BookFinancial StatementsBalance sheetIncome statement

Topics to be covered:Ageneral ledger is a book/ERPcontains all the accounts for recording transactions relating to a company's assets, liabilities, owners' equity, revenue, and expenses.

General ledger from 1828Image source: Wikipedia

Primary

Primary Data Warehouse

~ General Ledger

General Ledger SchemasUse two complementary schemasCapture different views of the General Ledger business process.

Periodic SnapshotState of accounts at the end of each fiscal period (month, quarter, year)Aggregated state of accounts. Most used

TransactionDetailed journal entry transactions When details needed. Anomaly and disparity detection

7Accounting Schemas based on the General Ledger and Budgeting business processes.General Ledger Schemas: Two complementary schemas: (1) Periodic Snapshot, (2) Transaction.Periodic Snapshot: picture of each account in the General Ledger at specific timeframes (fiscal period). Aggregated overview, most used by managers who do not need specific transactions.Transaction: Captures every journal entry transaction in the General Ledger. Selectively used when managers need more details. Enable the detection of anomalies and disparities in accounts. 7Periodic SnapshotFact: one row per accounting period per accountMeasures:Period End BalancePeriod Debit AmountPeriod Credit AmountPeriod Net Change Amount

Grain: level of detail available in the chart of accounts.

Notes:Currency: Store fact in multiple currencies (1) local currency, (2) standardized corporate currency8Periodic Snapshot Fact: One row / per accounting period /per account. Accounting Measures: monetary numbers of an account at a specific timeframe (fiscal period).Monetary Numbers: (1) End Balance, (2) Debit Amount, (3) Credit Amount, (4) Net Change Grain: Chart of Accounts is created by the accounting department and an official listing of all accounts and is used referenced by the General Ledger.Note: Monetary facts should be stored twice (1) local currency, (2) standardized corporate currency.8Periodic Snapshot : Dimensional ModelNew Dimensions:Accounting PeriodAccounting period informationAccountSpecific account informationLedgerName of subledgerOrganizationOrganization unit assigned to account

Notes:Date dimension: Role playing dimension with multiple hierarchies (1) standard calendar, (2) corporate calendar, (3) accounting calendar12349Periodic Snapshot Dimensions:Accounting Period: The details of that specific accounting periodAccount: Account informationLedger: Subledger infoOrganizaiton: Who is assigned to the account

9Transaction SchemaFact: one row for every general ledger journal entrya single transaction has at least two entries (double-entry bookkeeping)Measures:Journal entry amount

Notes:Currency: Store fact in multiple currencies (1) local currency, (2) standardized corporate currency10Transaction SchemaFact: one row per General Ledger journal entryDouble-entry bookkeeping: at least two journal entries per transaction. -> more than one row per transaction.Note: Currency values stored twice:(1) local currency, (2) standardized corporate currency10Transaction : Dimensional ModelNew DimensionDebit-Credit IndicatorQuantifies the fact as debit or creditEach transaction will have two rowscredit debit

Notes:Date dimension: Role playing dimension with multiple hierarchies (1) standard calendar, (2) corporate calendar, (3) accounting calendar111Transaction Dimension: One new dimension.Captures (1) Debit or (2) Credit transaction11Budgeting ProcessThe budget process is the way an organization goes about building its budget. Most modern systems include the capability to include budget data into the G/LNeed alternative mechanism if the G/L either lacks this capability or has not been implementedSeries of eventsIs seldom simply a once-per-year eventIs becoming more dynamic12Within most organizations, the budgeting process can be viewed as a series of events. Prior to the start of a fiscal year, each cost center manager typically creates a budget, broken down by budget line items, which is then approved.There are budget adjustments as the year progresses, reflecting changes in business conditions or the realities of actual spending versus the original budget.Managers want to see the current budgets status, as well as how the budget has been altered since the first approved version.12Logical flow13Establishment of budget for each organization and for each accountDuring operational period, commitments are made against the budgetsPayments are made against those commitments*balance sheet* examples13Budget fact tableEach row identifies allowed spending by an organization in the company, for a specific purpose during a particular time frameGrainInstead of status of each line item, is the net change of the budget line item during the monthFact Budget Amount

14Similarly, if the line item reflects an income forecast, which is just another variation of a budget, it would identify what an organization intends to earn from what source during a time frame.14Commitments fact tableMain motive monitor commitments and compare them to the annual budget to manage spendingCommitment document Purchase orderWork order, orContractCommitment PartyFact Commitment Amount

15Payments fact tableRelationship b/w commitments and payments manages the companys cashCommitment fact table dimensions, plus Payment dimensionsType of paymentPayeeFact Payment Amount

16What we learnedA general ledger (G/L) is an account or record used to sort and store balance sheet and income statement transactions.

Accounting

17What we learnedCEOs drill down on detail of financial statements.From Wall street to Silicon Valley!

Schema

Periodic Snapshot (summarized)Transactional Data (similar to OLTP) 18What we learnedBudgeting FlowBudgeting update

Budgeting 19

Establishment of budget for each organization and for each accountDuring operational period, commitments are made against the budgetsPayments are made against those commitments*balance sheet* examples---------------Cascading from top to bottom19Bus Matrix in Accounting Processes

20123Main DimensionsUpdatingSchemasBudgeting21Thank You!Read Ch. 7 of KimbalJust Kidding! Go watch GAME of Thrones new season.