Accounting Best Practices, Fifth Edition

14–9. Avoid General Ledger Posting Bottlenecks

If a company has a number of subsidiaries that forward journal entries to it for posting, this can create a bottleneck in the general ledger area, and can be a particular problem during the monthly closing process, since this could become the prime bottleneck interfering with a timely close.

The potential range of solutions stretches from increasing the corporate general ledger staff to pushing these transactions down onto the accounting staffs of the subsidiaries. Here are some thoughts on how to deal with the issue:

1. Normally, it makes sense to centralize journal entries with the smallest number of general ledger accountants, since they are experts in making such entries, and can therefore minimize journal entry errors and duplications.

2. Since general ledger entries have become a bottleneck operation, there are two choices: beef up the corporate general ledger data entry capacity, or push some or all of it back onto the divisions. Here are the ramifications of each:

   • Adding more corporate general ledger staff requires a greater expense, and since accounting is a cost center, this approach will not go over well with the CFO if there are any viable alternatives that do not increase costs. However, this will result in greater control over the accuracy of the entries being made.

   • If the journal entry volume only somewhat exceeds the capacity of the general ledger staff to handle it, then consider shifting smaller, less consequential entries ...