By Cora Mayo, Senior Consultant, Navigator Management Partners
During an implementation, there are times when scope and timeline come into conflict with one another and scope is reduced for the sake of hitting the go-live date. While working on Workday post-production support projects, I have seen this occur repeatedly with the Business Assets functionality due to its non-critical nature; however, this decision to partially configure this functional area comes with serious repercussions to data integrity. In the cases I have encountered, the customer decided to wait multiple fiscal years to complete the configuration; thus, causing multiple years of complex data cleansing to be required. The goal of this article is to assist with the decision “to asset or not to asset”. This decision can help avoid spending additional time and money on a Business Asset re-implementation.
UNDERSTANDING HOW ASSET CONFIGURATIONS FUNCTION
There are three components of configuration that play a pivotal role in how the Workday “engine” handles asset-related transactions. It is imperative these components are setup correctly based on the customer’s requirements before conversion and transacting begins in a Workday tenant. These components are:
These components must be configured in a comprehensive manner and understood thoroughly by the Business Asset Accountant prior to go-live; otherwise, the Operational and General Ledger balances could easily become out of sync. In most implementations of Business Assets, only about 90% of use cases can be captured in the configuration; thus, there is the need for human intervention for exception use cases.
UNDERSTANDING HOW ASSETS ARE CREATED
This is directly related to how the components discussed in the previous section are configured. These configurations allow for Workday’s “engine” to identify transactions that should be tracked as a business asset and whether or not the business asset should be capitalized (posted to a fixed asset/balance sheet ledger account). The engine has three sources for business asset creation:
Without accurate configuration, the Workday engine would not only fail at registering assets but would also fail at properly posting accounting entries to the General Ledger for asset-related transactions.
UNDERSTANDING THE RELATIONSHIP BETWEEN BUDGETING AND SPENDING
Workday’s primary asset setup will post asset-related transactions that exceed a designated amount threshold directly to a balance sheet ledger account. However, for most Higher Education and Government customers, budgeting for asset spend is performed at the expense ledger account level; thus, the transaction cannot be posted directly to the balance sheet without losing the ability to perform budget checking. For this particular use case, Multibook Asset Accounting functionality will need to be enabled and an extra Account Posting Rule (Business Asset Multibook Settlement) will need to be configured in order for the budget check to be successful. It’s important to note that this setup will then cause accounting entries to occur when assets are registered to eliminate the expense entries and capitalize the spend to the balance sheet based on the Asset Book Rules setup.
UNDERSTANDING THE RELATIONSHIP BETWEEN OPERATIONAL AND GENERAL LEDGER BALANCES
With the assumption that configurations discussed in previous sections have taken place, the creation of a business asset via the Workday engine and the registration process is completed, the operational (asset registry) and general ledger balances should always be in sync. However, if a journal reclassification occurs without performing an update to the related asset on the operational ledger (asset sub-ledger) or if an asset is manually created without a correlating manual journal entry, it is easy for the balances to be become out of sync. Fortunately, Workday has a delivered report called Asset to Ledger Reconciliation, which was created for the exact purpose of keeping the asset registry in sync with the general ledger. Understanding the relationship between the operational and general ledger balances is commonly misunderstood by customers. It is best practice to review the Asset to Ledger Reconciliation report on a regular basis. At a bare minimum, it should be recommended to customers to add this review as a to-do step in their period close business processes. This review allows the customer to validate that all configuration is functioning accurately per their requirements and if needed, timely manual intervention can take place to maintain synchronization.
UNDERSTANDING LEGACY ASSET CONVERSION
All of the information above is important to understand before assets are converted in Workday from a legacy system. The configurations will help identify possible data cleansing and mapping required prior to the conversion. Asset conversion typically occurs by loading asset data via an EIB* using the Register Asset web service. This is essentially manually registering legacy assets into the Workday asset registry. All manual registrations do not generate accounting entries; thus, it is important the General Ledger Balance conversion for the fixed asset ledger account(s) matches the total cost and accumulated depreciation amounts for converted assets. Once again, the Asset to Ledger Reconciliation report can be used to verify the balances are in sync.
Overall, if the customer is not ready to execute all five sections listed above prior to go-live, the recommendation would be “To Not Asset” and shoot for a rolling adoption model or Phase X implementation.