General accounting: what to automate, what to keep with people, and what the data needs

Software can now post recurring journals, run allocations, match intercompany balances, reconcile high volume accounts and assemble the trial balance. People need to own judgement entries, chart of accounts design and consolidation scope. None of it works until account and entity codes agree everywhere and subledgers tie to the ledger.

Steps a system can run without supervision

The mechanical end of the close is ready for automation. Recurring and standard journal entries, such as depreciation, prepaid amortisation and fixed accruals, follow rules that rarely change. A scheduler can post them on the right day and route only the exceptions for approval.

Allocations fit the same pattern. Once the drivers are agreed, whether headcount, floor space or revenue share, the calculation is arithmetic. The engine applies the driver table and posts the result. What it cannot do is decide whether last quarter's driver still reflects how the business uses the shared cost.

Reconciliation matching is where most teams see the first real relief. Bank lines, subledger totals and clearing accounts can be matched by amount, date and reference. Tie points between the ledger and the receivables or payables subledger can be checked automatically every day. The accountant then works the unmatched items and leaves the rest alone.

Intercompany matching belongs here too, provided both sides record the counterparty consistently. The system pairs the receivable in one entity with the payable in another and flags the gaps. Eliminations on consolidation can then be generated from the matched pairs. Building the trial balance itself is a report, not a task, and should never involve copying figures between files.

Where AI helps and a person still signs

AI tools are useful as a first reviewer. They can suggest the likely match for an unidentified receipt, draft an explanation for a reconciling item, or flag a journal that looks unusual against the account's history. They can propose an accrual estimate from open purchase orders and past invoices.

Each of these is a suggestion. The preparer should accept or reject it, and the record should show who did. Auditors will ask how an estimate was reached, and "the model produced it" is not an answer anyone wants to give.

Work that needs an accountant

Some steps are judgement by nature. Period end adjustments for provisions, impairments, revenue cut-off and bonus accruals depend on knowledge that sits outside the ledger: a contract dispute, a customer in trouble, a change in a sales plan. Management adjustments are the same, and often more sensitive, because they move results that people are measured on.

Changes to the chart of accounts need an owner with authority. A new account looks harmless, but it alters every report, mapping and allocation that touches it. Deciding which entities are in scope for consolidation, and how a part year acquisition is treated, is a decision for the controller.

Resolving intercompany disputes is a conversation between two finance teams, sometimes with tax involved. Software finds the difference. Someone has to agree whose figure is right.

What the data must look like before anything is switched on

The chart of accounts needs a single maintained version, with clear account types and no duplicates doing the same job. Every account should have an owner and a known reconciliation method.

Entity and counterparty codes have to be identical across every ledger. If one entity books to "Sub B" and another to the legal name, matching fails and the team falls back to spreadsheets.

Subledgers must reconcile to their control accounts before reconciliation is automated. Automating a broken tie point simply produces broken results faster. Each ledger balance should trace back to transactions and each transaction to a source document. When that chain is missing, an automated entry cannot be defended.

Allocation drivers need a home and a refresh owner. A driver table held in someone's personal file is a risk whether the posting is manual or not.

Period controls matter as well. The system should close a period, reopen it only with approval and stop late postings from landing in the wrong month.

Questions to ask the people who run the close

• Which journals are posted by hand every month even though the amount barely changes?
• Where do the allocation percentages come from, and when were they last checked against reality?
• Which reconciliations carry the same old reconciling items forward period after period?
• When intercompany balances disagree, who decides which side corrects, and how long does that usually take to settle?
• Are there accounts that only one person understands?
• What adjustments get made after the trial balance is "final", and who asks for them?
• Which reports are rebuilt outside the ledger because the system output is not trusted?
• Are any entries posted to a closed period through a back door, such as a different entity or a suspense account?

The answers usually reveal a second, unofficial process running beside the documented one. That unofficial process is what automation will collide with first, so map it before configuring anything.

APQC's Process Classification Framework® (PCF) is an open standard developed by APQC, a nonprofit that promotes benchmarking and best practices worldwide. To download the full PCF or to view definitions and measures, please visit www.apqc.org/pcf.