Home > Business Unit Accounting

FUNDamentals 2008

Adding Business Unit Accounting functionality to Microsoft Dynamics^TM AX

Click here to download a PDF of this article.

FUNDamentals 2008 is a business unit (inter-unit) accounting system that is built on the Microsoft Dynamics^TM AX platform. It enables a company to process transactions across divisions or business units within a single parent company. In addition to handling inter-unit transactions, FUNDamentals 2008 provides both individual business unit and consolidated financials.

Leverages Microsoft Dynamics^TM AX
FUNDamentals 2008 is the only business unit accounting solution that is built on Microsoft Dynamics^TM AX. It marries the capabilities of robust business unit accounting software with the full ERP capabilities of Microsoft Dynamics^TM AX. Unlike standalone accounting software, or "bolt-on" products, FUNDamentals 2008 makes Microsoft Dynamics^TM AX "business unitaware". This tight integration enables FUNDamentals to create transactions in real time from sub ledgers into general ledger transactions.

Business Units are Self Balancing
FUNDamentals 2008 business unit integrity management feature ensures a business unit is always balancing. To properly report financial transactions, each business unit must remain "in balance" at all times. A business unit is "in balance" when debits within that business unit equal credits within that business unit. The inter-unit journal entry keeps each business unit “in balance" when a financial transaction is done across multiple business units.

When a user creates a journal entry that contains more than one business unit, total debits equal total credits when they are summed for all business units involved. However, total debits do not equal total credits within each business unit. Therefore, each business unit is not “in balance." FUNDamentals 2008 immediately recognizes the out of balance condition and AUTOMATICALLY generates "due to" and "due from" transactions on that journal entry to balance the debits and credits within each business unit.

You never need to enter a balancing account directly - you just enter the offsetting entry. When the journal is edited, the system will automatically balance for you. Posting the journal will adjust the accounts and clear the balancing accounts. FUNDamentals 2008 eliminates the challenges that come with transferring balances across accounts, including the increased chance of error and the staff time spent juggling manual entry and reconciliation processes.

Segmented Chart of Accounts
The expandable, multi-dimensional ledger includes a user definable chart of accounts. A segmented chart of accounts provides an organization with added structure and better visibility. It will allow for the tracking of several different layers within a multi business unit organization. FUNDamentals 2008 supports an unlimited number of segments in the chart of accounts.

Budgetary Control
The budgetary control function includes a process where obligations can be checked against budget total by line item. This process will verify that there is sufficient budget to fund an obligation being entered. FUNDamentals 2008 enables an organization to roll up the budget by any segment or combination of segments.

As obligations are entered at the purchase order or invoice level the system will validate against a budgetary table. Based upon user defined parameters, an insufficient budget condition will initiate a warning or a transaction stop. Warning levels can be set as a percentage of the budget. For example a user can be warned when a line item gets within a specified percent of the budget limit. Security can be established so that authorized personnel can override a transaction stop.

Cash AND Accrual Based Accounting
FUNDamentals 2008 supports both cash-based and accrual-based accounting and reporting. It also provides a reconciliation between these accounting methods, which is particularly helpful for organizations moving from a cash to an accrual basis or an accrual to a cash basis.

Strong Audit Trails
Maintaining a clear audit trail will make it easy for auditors to verify the accuracy of financial statements. FUNDamentals 2008 enables drill down functionality to move from summary to base transactions. It provides a clear audit trail from commitment to final check and from billing record to final receipt.

Year-End Processing
FUNDamentals 2008 performs an end of year close for each business unit. Closing functions include rolling revenue and expenses into retained earnings for each individual business unit and re-establishing assets and liabilities in the new fiscal year. FUNDamentals 2008 also provides a closing sheet in which audit adjustments can be posted to a closing period.

Individual Business Unit and Consolidated Financial Reporting
FUNDamentals 2008 includes standard operations reporting. Reports can be based on any one business unit or combination of business units. Reporting includes, but is not limited to, statement of financial position, statement of revenue and expenses, departmental budgetary reporting, and transaction based ledgers.

Issues with using the Dimension functionality within Microsoft Dynamics^TM AX
Your first reaction may be to use the dimension functionality within Microsoft Dynamics^TM AX. Speaking from experience, this is not the answer.

• Dimensions can only be deployed at the transaction level not at the chart level.
• A ramification of not being chart based is that one cannot close out business units. With dimensions you are forced to manually prepare closes.
• The use of Dimensions results in the need to create considerably more journal entries.
• Budgetary control is only available at the account number level (simple budgetary control).
• Reporting is much easier with FUNDamentals versus using Dimensions.

Issues with using the inter-company accounting functionality within Microsoft Dynamics^TM AX
If you are considering the purchase of the inter-company accounting functionality that is provided with Microsoft Dynamics^TM AX you should consider the following:

• In order to obtain a complete view of the financials an organization must run a company consolidation every time it wants a view across multiple business units.
• Inventory management is very cumbersome when using the multi-company capabilities in Microsoft Dynamics^TM AX. In a multi company scenario, business units cannot share inventory and consolidated inventory information is not available. To address the inventory sharing limitation in native Microsoft Dynamics^TM AX, inter-company inventory transfers would be required. With FUNDamentals 2008 inventory is shared negating the need to perform inter-company inventory transfers.

FUNDamentals 2008 is superior to Microsoft Dynamics^TM AX's inter-company capability because it facilitates day-to-day operations and maintains financial separation between the business units.

Metaphor Software
Metaphor Software is a Microsoft Gold Certified Partner. We focus on the Microsoft Business Solutions Platforms of Microsoft Dynamics^TM AX and Microsoft Dynamics^TM CRM. In addition to implementing these Microsoft technologies we build vertical solutions on top of these products. The specific vertical solutions are; Business Unit/Fund Accounting, Fundraising and Student Information.