COA Redesign – Using Segment 3 as Subaccounts + Projects for Departments (Is this valid?)

Sebastian Grajales

Hi everyone,

I’m redesigning our Chart of Accounts in FE NXT and would love your advice.

Current issue

Our COA uses:
Fund – Account Code – Division – Department
This creates 1,000+ GL accounts, mostly duplicated for each department.

Goal

We want to simplify our COA to ~300 accounts by:

• Tracking Department/Division/Program entirely through Projects.
• Using Segment 1 = Fund
• Segment 2 = Natural Account (e.g., 61000 Payroll, 62000 Supplies, etc.)
• Segment 3 = simple subaccounts (01, 02, 03…)
• Segment 4 = unused (000)

Segment 3

We want Segment 3 to work like this:

Segment 3 values (global):

• 00 = Parent (no posting)
• 01 = Subaccount 1
• 02 = Subaccount 2
• 03 = Subaccount 3

But the meaning changes depending on the natural account.
Examples:

61000 = Payroll Expenses

01-61000-01-000 → Salaries


01-61000-02-000 → FICA

62000 = Supplies
01-62000-01-000 → School Supplies


01-62000-02-000 → Food

63000 = Business Insurance
01-63000-01-000 → Liability

01-63000-01-000 → WC

01-63000-01-000 → Property

All reporting is done using Projects, not segments.

My questions

1. Is it acceptable in FE NXT to use Segment 3 as a general subaccount (01, 02, 03) whose meaning depends on the parent account?
2. If all departmental reporting is through Projects, is there any downside to letting Segment 3 be flexible like this?
3. Have any of you redesigned your COA to reduce duplication and used Projects instead of segment-based departments? Any lessons learned?

Thanks in advance!
Sebastian

Roberta A. Gilbert

It's funny because I've been thinking about doing the opposite. We have separate budgets for each of our school classrooms, which we've been tracking in Projects forever. The account for Classroom expenses and the Department code are part of the account string, and teachers are supposed to code their expenses with their respective classroom project numbers. The problem has always been that FE doesn't check to see if the correct Project is used with a particular code, or even if any Project is used. So we are contantly making corrections when we reconcile the Classroom expenses. My thought was that if the Classroom designations were another account string segment, then we wouldn't have to do all this matching up, because FE would reject an account string that doesn't exist. I also could eliminate the individual Project budgets I upload every year. My hesitation is due to, as you said, ending up with many more accounts than we have currently. I haven't decided if it's the timesaver it seems it would be, since I would also have to re-design the VCOs to accomodate the new structure - as will you.