The Financial Edge General Ledger
Functionality Review and Design Decisions
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Table of Contents
1
2
3
4
ABOUT THIS DOCUMENT ............................................................................................................................................................... 2
1.1
Purpose ................................................................................................................................................................................ 2
DEFINING A CHART OF ACCOUNTS ............................................................................................................................................. 3
2.1
Design Considerations for the Chart of Accounts ................................................................................................................. 3
2.2
Defining Funds ...................................................................................................................................................................... 3
2.3
Defining Account Codes ....................................................................................................................................................... 4
2.4
Defining Additional Segments ............................................................................................................................................... 5
TRANSACTION CHARACTERISTICS ............................................................................................................................................. 7
3.1
Design Considerations for Transaction Characteristics ........................................................................................................ 7
3.2
Class ..................................................................................................................................................................................... 8
3.3
Projects ................................................................................................................................................................................. 8
3.4
Transaction Codes ................................................................................................................................................................ 9
3.5
Grants ................................................................................................................................................................................. 10
DESIGN ACCEPTANCE ................................................................................................................................................................. 11
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1
ABOUT THIS DOCUMENT
1.1
Purpose
This document presents a review of the functionality inherent in the General Ledger design options and
discusses the options that you have when defining a chart of accounts, establishing funds, account codes, and
optional segments, and creating transaction characteristics. This document will also record the choices that
you have made while working with the Blackbaud consultant during the Design phase.
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2
DEFINING A CHART OF ACCOUNTS
2.1
Design Considerations for the Chart of Accounts
Any debit or credit created in The Financial Edge must affect an account. Every account that exists in a given
database will follow the same structure; that is, every account will be the same length, and will utilize the same
segments. When creating a new Financial Edge database, you have significant latitude in determining that
structure.
A Financial Edge account number is comprised of multiple segments. The Financial Edge requires two
segments: Fund and Account Code. The following sections discuss segments in detail. In addition to these two
required segments, you can create as many as eight additional segments, for ten total segments (two required
plus eight additional). The segments that make up the account structure may be in any order; the Fund does
not have to be first. Additionally, each segment can be any length. The maximum number of total characters in
an account is thirty (30), including the separators between segments. Therefore, an account structure of XXXXXX-XX counts as ten characters: eight digits and two separators (hyphens).
Once the segments in your Financial Edge database have been created and their lengths defined, you can
always add more segments or lengthen an existing segment. However, you cannot delete a segment, nor can
you decrease the length of a segment. You can only shorten or delete a segment by undergoing a reimplementation process, using Blackbaud Professional Services.
Remember that while the Financial Edge chart of accounts is very important, it is not the only element that will
affect your transaction entry. The Financial Edge can track additional information on a transaction-bytransaction basis without putting that information into the account structure itself. See Transaction
Characteristics for more information.
2.2
Defining Funds
In The Financial Edge, a Fund is a self-balancing set of accounts. Self-balancing means that if you debit Fund
01 for $100, for example, you must also credit Fund 01 for $100. you have significant flexibility in determining
what the Fund segment will represent. Generally, when you hear the term fund accounting, you probably think
of classifying your journal entries according to their FAS117 classification: Unrestricted, Temporarily
Restricted, or Permanently Restricted. you can set up the Funds in The Financial Edge to help accommodate
this need.
Many customers create three funds: 01-Unrestricted, 02-Temporarily Restricted, and 03-Permanently
Restricted. However, it is important to note that this is not the only option, nor does choosing this option
guarantee that you will necessarily remain FAS-117-compliant. This is because in The Financial Edge, net
asset classification is not determined at the Fund level. Rather, net asset classification is determined at the
transaction level. Each debit and credit that you create in The Financial Edge has its own net asset
classification, regardless of the Fund to which that transaction is posted. So, even if you create a Fund named
“Unrestricted,” that does not necessarily mean that the transactions in that Fund will be unrestricted; because
net asset classification is defined at the transaction level, you could post transactions to the “Unrestricted”
Fund that are temporarily or permanently restricted.
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Knowing that Funds are not required to reflect net asset classification, you can create Funds to represent any
aspect of your business that must be self-balancing. It is fine if you determine that the best use of Funds for
your database is to follow the “Unrestricted/Temporarily Restricted/Permanently Restricted” model. If you
integrate The Financial Edge with The Raiser’s Edge, it is likely that you will need to use this structure,
because The Raiser’s Edge does not consider the “Class” field. However, it is important to remember that you
have options. Your Blackbaud consultant will work with you to consider your requirements, and determine the
best structure for your Funds.
2.2.1
Your Funds
What Funds will you utilize?
What led to this decision?
Were any other Fund setup options discussed and rejected? If so, why?
2.2.2
Fund Configuration Choices
Insert additional rows for each fund.
Fund ID
Element
Class
Retain equity?
Yes
Require to balance?
Yes
Require on accounts?
All Accounts
Additional Comments
2.3
Defining Account Codes
In The Financial Edge, the Account Code defines the actual purpose of an account (you may refer to it as the
“natural account”). The Account Code is the second required segment in your chart of accounts. The Account
Code can be any length (as long as it does not push the total number of characters over 30), and can display
in any position in the account string. Every Account Code must fall within a range of numbers, which you will
define. The ranges must be sequential and cannot overlap. The standard ranges (assuming a four-digit
segment) are:
 Assets
1000-1999
 Liabilities 2000-2999
 Net Assets 3000-3999
 Revenues 4000-4999
 Expenses 5000-5999
 Gifts
6000-6999
 Transfers 7000-7999
 Gains
8000-8999
 Losses
9000-9999
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The Account Codes listed in blue are optional categories that The Financial Edge offers. You may choose to
use or ignore any of these segments, as needed. The ranges listed are standard, but you may choose to adjust
them; for example, you may choose not to use the Gifts category, and let your expenses use a 5000-6999
range. However, you must create your ranges in the order listed; you cannot give assets the 4000-4999 range,
and expenses the 2000-2999 range, for example.
It is necessary to define Account Codes in General Ledger Configuration before you can use them to create
an actual Account. When you create an Account Code, you will specify both a number and a description; for
example, Account Code “5000” may have a description of “Salaries,” and represent your salary expenses.
Each Account will also have a description. It is important to use Account Codes for consistent purposes,
regardless of the Fund or any other segments to which the Account Code is attached in the actual Account
record. Therefore, the description on any Account should match, or closely match, the description of the
Account Code used in that Account.
When you create Account Codes, you must specify both a Working Capital and a Cash Flow designation for all
assets, liabilities, and net assets. You will not specify Working Capital or Cash Flow for account codes that
appear on the income statement.
2.3.1
Your Account Codes
Will you use any optional categories?
If you choose not to use Transfer accounts, how will you create balancing inter-fund entries?
What are the Account Code ranges?
2.4
Defining Additional Segments
After defining Funds and Account Codes in The Financial Edge, you can create up to eight additional
segments in the account string. An optional segment will reflect whatever you choose; common uses for an
additional segment are Department, Location, or Cost Center. Like Fund and Account Code, each additional
segment can display in any position in the account string and may be any length. Once an additional segment
is named and the length defined, you will create the needed values in that segment. Each value will consist of
a number and a description. An additional segment should reflect your permanent entities; to track an entity
that will need to close down at some point; you will probably use a transaction characteristic, rather than an
additional segment in the account string.
2.4.1
Your Additional Segments
Will you use any additional segments in the account string?
Did you decide to use a transaction characteristic to track information, after considering an additional
segment? If so, what led to that decision?
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Did you decide to use an additional segment to track information, after considering a transaction
characteristic? If so, what led to that decision?
If you is using one or more additional segments, are there any instances of inconsistent values within
a segment? For example, are you using a segment named “Cost Center” that contains both cost
centers and revenue sources? If so, what led to that decision?
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3
TRANSACTION CHARACTERISTICS
3.1
Design Considerations for Transaction Characteristics
In The Financial Edge, three elements allow you to track accounting information separately from the
information found in the account string. These elements are Class, Projects, and Transaction Codes, which are
collectively known as “transaction characteristics.” The use of each transaction characteristic is optional in any
Financial Edge database. These characteristics “flow” across all Accounts in The Financial Edge; that is, any
characteristic may be used on any transaction, regardless of the Account which that transaction impacts.
Each characteristic requires that you make three choices, which will determine how that characteristic
behaves. The choices are whether to preserve details by that characteristic, whether to require that
characteristic to balance, and whether to require that characteristic on transactions. These decisions are made
independently on each Fund; or example, Fund 01 may be set to require Projects on all Income Statement
transactions, while Fund 03 is set to require Projects on all transactions.
If you decide to preserve details for a characteristic, the net surplus or deficit for that characteristic’s income
statement activity will be maintained when the income statement is closed to net assets (“preserve details” is
another term for “retaining equity”). For example, Project A had a net surplus of $600, Project B had a net
surplus of $500, and Project C had a net surplus of $200 (and this represents all the activity for our
organization). If we do choose to preserve details, The Financial Edge will report that our net assets equal
$1,300, with Project A responsible for $600 of that $1,300, and so on. If we do not choose to preserve details,
The Financial Edge will still report that our net assets equal $1,300, but will not break that $1,300 down any
further to tell us which Project is responsible for what portion.
The debits and credits entered into The Financial Edge must balance in total and by Fund. If you select
“Require to Balance” for a transaction characteristic, that will increase the balancing requirements the system
enforces. If Projects are required to balance, then when you debit Project A for $100, for example, you must
also credit Project A for $100. This is a significant requirement; Blackbaud recommends that you select
“Require to Balance” only if you need to generate complete Balance Sheets for each value of the characteristic
in question. (“Complete Balance Sheet” means that all Balance Sheet activity, including cash and accounts
receivable, will be broken out by Project.)
While any debit or credit entered into The Financial Edge must be posted to an Account, you have three
options when deciding whether to require transaction characteristics on transactions. Each characteristic may
be “Required on all transactions,” “Required on Income Statement transactions,” or “Not required.” If a
characteristic is required, you cannot save a transaction until a value for that characteristic is defined. This
includes records in any sub ledger. For example, an Invoice entered in Accounts Payable includes General
Ledger Account and characteristic information, so any required characteristics must be defined before that
Invoice can be saved. If you have elected to balance by a characteristic, you should also choose to require that
characteristic on all transactions.
Once you have made these choices and beginning balances have been locked, the rules can be changed, but
this is risky. You can make a rule less restrictive (for example, change “Require Projects on all transactions” to
“Do not require Projects”) without causing problems, but if you make a rule more restrictive (for example,
change “Do not require Projects” to “Require Projects on income statement transactions”), The Financial
Edge will overwrite all historical Project entries with one “default” Project, and that detail will be lost. Therefore,
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it is important that you understand the ramifications of the decisions made during the Design phase of this
engagement, so that the selections do not have to be changed later. To change the selections after the fact will
require more time and expense, in the form of a Blackbaud data service.
3.2
Class
The transaction characteristic called “Class” is used, by default, to keep The Financial Edge FAS117compliant. Class is a drop-down menu containing three choices: Unrestricted, Temporarily Restricted, and
Permanently Restricted. Class is required on all transactions and is required to balance. The Financial Edge
will also retain equity (or “preserve details”) by Class. Blackbaud recommends that you do not change these
settings; if they are changed, you will no longer be FAS117-compliant. If you choose to set up your Funds to
reflect Unrestricted, Temporarily Restricted, and Permanently Restricted, each Fund (and, technically, each
Account within a Fund) will default the appropriate Class entry onto each transaction, so you will not have to
key data into this field. Be aware, however, that the value in the Class field can be manually changed on any
transaction, so if you create a Fund called “Unrestricted,” you can still enter temporarily restricted or
permanently restricted transactions to that Fund.
3.2.1
Your Classes
Have any changes been made to the default use of Class? If so, why?
If you is not tracking FAS-117 restrictions via the Class field, how will the organization track that
information?
3.3
Projects
Unlike Class, which is a drop-down menu, a Project represents a complete database record. This means that a
Project has multiple tabs and multiple fields to store information, in addition to acting as a characteristic that
will further define a transaction. Projects can represent any entity that you need to track; programs,
endowments, membership types, and donor designations, for example. Often, Projects are used in place of
one or more optional segments in the account string, which would otherwise be necessary. you can also
distribute budget information to Projects.
3.3.1
Your Projects
What will Projects represent?
Did you consider using Projects for a different purpose? If so, what purpose? What led you to decide
against using Projects for that purpose?
3.3.2
Data Entry Standards
In the following table, please document any data entry standards associated with Projects.
Tab
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Data requirements
Required?
(Y/N)
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Tab
Project
3.4
Field
Data requirements
Required?
(Y/N)
Project ID
Description
Type
Status
Start Date
End Date
Division
Department
Location
Active/Inactive
Transaction Codes
Transaction Codes collectively represent the third transaction characteristic available in The Financial Edge,
after Class and Projects. Much like Projects, a Transaction Code can represent any aspect of your business.
However, whereas a Project represents a complete record in the database, a Transaction Code is a simple
drop-down table that contains various entries, much like the Class field. The Financial Edge allows the use of
up to five (5) Transaction Codes, and each code (that is, each drop-down menu) can contain as many entries
as you wish. For example, you could create one Transaction Code called “Mission,” and in that table could be
entries for “Elder Care,” “Youth Services,” “Career Placement,” and so on. Then, when entering a debit or a
credit that affected services you have rendered to young people, you would select the entry for “Youth
Services,” and therefore define that debit or credit as it relates to one of your various missions.
Unlike Accounts and Projects, a Transaction Code does not have an ID and a description; each entry in the
table is one simple field. For example, you can create an entry labeled “Youth Services,” or you could create
an entry called “YS2010,” but you cannot have both on one entry.
By default, you cannot distribute a budget to a Transaction Code. However, you can utilize one Transaction
Code table in conjunction with Grant records. Each entry in the chosen table can be linked to a corresponding
Grant record in General Ledger, and budgets can be distributed to Grants. This will allow you to budget by
one Transaction Code. The remaining four Transaction Codes cannot maintain budget information, unless you
use the Advanced Budget Management module.
3.4.1
Your Transaction Codes
Will you utilize Transaction Codes?
If Transaction Codes are in use, what will they represent? Why?
If Transaction Codes are not in use, were they discussed during the Design phase? What factors led to
the decision not to use Transaction Codes?
Will a Transaction Code be used in conjunction with Grants?
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Will a Transaction Code be used in conjunction with The Raiser’s Edge?
3.5
Grants
Grant records in The Financial Edge give you the ability to record budget information and actual transactions
that relate to your grants. Additionally, if you receive reimbursable grants, the Grant functionality in The
Raiser’s Edge can automate the process of requesting reimbursement from the granting agency as expenses
are incurred.
You cannot journal directly to a Grant record; the records are not available to affect a debit or a credit. Instead,
one of the five available Transaction Codes will be enabled for use with Grants. Then, each entry in that
Transaction Code table will be linked with a corresponding Grant record. Theoretically, if you have ten Grants,
you will also have ten entries in the Transaction Code table. Two aspects of The Financial Edge are working
together to fulfill your needs for grant tracking; the Grant record, which contains multiple fields and tabs where
information is entered, and the Transaction Code table entry, which can receive debits and credits.
3.5.1
Your Grants
Do you receive grant funding? If not, please disregard this section.
Will you utilize the combination of Grant records and Transaction Codes to track grant activity? If not,
how will you track grant activity?
Will you use the Accounts Receivable module to request reimbursement from granting agencies? If
not, what reimbursement process will you use?
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4
DESIGN ACCEPTANCE
This section records the names and roles of the various decision-makers who were involved in the Design
phase of this engagement, as well as the Blackbaud consultant who led the Design phase. Completion of this
section will constitute your acceptance of the recorded design decisions.
Please add additional rows as necessary.
Name
Role
Date of Sign-off
Blackbaud Financial Edge Consultant
Additional Comments
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