The planning and design of the opening balance began at the analysis phase of the implementation and extended to the design, development, and deployment phases. It is important to allocate separate workshops to discuss the opening balance plan, execution process, validation points and identification of tasks along with responsibilities:
- The master data that will be loaded to Dynamics 365 for Finance and Operations should be mapped to legacy system data. This will take place if the data structure will be changed between the two systems. That said, this task should be considered mainly in the design phase, but it is recommended that you begin it in the analysis phase by capturing the customer requirements and identifying whether the data structure will be changed. This is required to maintain high levels of coordination between the controllership and consulting team, including finalization of the mapping between the old COA (legacy system) and the new COA, in addition to customers, vendors, banks, fixed assets, and inventory coding structure.
- Customer requirements that include customizations that may involve the opening balance should be considered.
- Customer requirements that include analysis by financial dimension should be considered in the opening balance upload of sub-ledgers and trial balance.
- The master data preparation will involve the COA, banks, fixed assets, financial dimensions, vendors, customers, and inventory items.
- The consulting team should ensure the setup of the required fields in the data collection template they will use to upload the opening balance.
- The accountant who will fill in the opening balance data collection sheet must understand the fields and how they will fill it in.
- Create a separate journal name under the general ledger journal and voucher number sequence for easier tracking.
- Create separate journal names under inventory management (movement journal) and voucher number sequence for easier tracking.
- If adjustments are needed for the opening balance, use the same journal name and voucher.
- Agree with the customer the modules that will be involved in the opening balance.
- Agree with the customer on the opening balance date. This decision, depending on the customer, may be the first of the fiscal year where they finalize and close the fiscal year transactions, report it, and then start a fresh fiscal year based on the closing balances of the previous one. The customer may need to start the opening balance at the beginning of a quarter, which is similar to the fiscal year activities but without closing the profit and loss account. The third scenario is to post the opening balance in the middle of the month, and this is the most challenging scenario, where you identify a cut-off date in middle of month and upload the previous day's balances in addition to open transactions such as purchase orders/sales orders.
It is important during the planning of the opening balance to explain to the customer how the execution will be done. The execution mechanism of the opening balance is based on keeping a high level of integrity between the general ledger and sub-ledgers, in other words, the posting to general ledger should be through the sub-ledger posting profile instrument; avoid separating their uploads as much as you can to avoid audit integrity issues that may pop up after Go-Live. The posting of sub-ledgers' (accounts payable, accounts receivable, banks, fixed assets, and inventory) opening balances should be done through corresponding submodules.
As illustrated in the following diagram, the trial balance accounts are divided into two groups: the first group represents the accounts that are posted through posting profiles (accounts payable, accounts receivable, banks, fixed assets, and inventory), and the second group represents the non-posting profile accounts that we directly post to it:
