Is your organization facing challenges of managing numerous financial records or ensuring GAAP compliance within your NetSuite environment? Fortunately, NetSuite offers a powerful solution known as Multi-Book Accounting that can only be effectively implemented by a certified NetSuite Partner or the experts at NetSuite Professional Services.
What is Multi-Book or Adjustment-Only Books?
Multi-Book Accounting empowers your organization to maintain multiple sets of accounting records derived from a single real-time financial transaction dataset. With Adjustment-Only Books, you can make book-specific adjustments in a secondary, adjustment-only book during the closing process. With the Multi-Book feature, you can utilize up to five active accounting books, including the primary one, essentially supporting four additional accounting books alongside the primary.
Please be aware that the Multi-Book and Adjustment-Only Books features are exclusive to NetSuite OneWorld accounts. It is important to note that these features are bundled within your NetSuite OneWorld account at no extra cost, and you have the flexibility to activate Adjustment-Only Books without requiring the assistance of NetSuite Partners or NetSuite Professional Services. While the features are free, you are required to use a certified NetSuite Partner or NetSuite Professional Services to implement Full Multi-Book.
Enablement of these features are only visible to administrators, and you can access them by navigating to Setup > Company > Enable Features > Accounting > Multi-Book Accounting.
What are the key differences between the two?
Full Multi-Book is enabled by NetSuite Professional Services and Certified NetSuite Partners. It’s worth noting that not all partners possess the necessary qualifications, as they must hold a special multi-Book certification to execute these tasks. Furthermore, in addition to engaging NetSuite PS or a NetSuite Partner, you must also initiate a formal request and submit a multi-Book questionnaire to NetSuite. This questionnaire serves to outline the imperative need and rationale behind adopting the multi-Book feature.
The Full Multi-Book feature empowers users to establish unique revenue handling methods for each accounting book, thereby ensuring comprehensive revenue compliance. It’s essential to note that Fixed Assets inherently demand an additional or Alternate Depreciation Schedule to accurately reflect asset depreciation in supplementary accounting books. Similarly, if your organization wishes to include Amortization schedules in other books, the same principle applies.
Adjustment-Only Books offer a streamlined variant of multi-book accounting, and the key advantage is that you don’t require the Full Multi-Book Accounting feature to utilize them. What sets Adjustment-Only Books apart from typical secondary books is that they do not replicate the data found in the primary book.
Limitations of Adjustment-Only Books
In NetSuite OneWorld accounts, Adjustment-Only Books are a built-in feature that comes at no extra cost. However, it’s important to note that enablement of these books are only visible to administrators, and you can access them by navigating to Setup > Company > Enable Features > Accounting > Multi-Book Accounting.
Here are some key considerations for Adjustment-Only Books:
- Currency Compatibility: Adjustment-Only Books must use the same currency as their base book.
- Effective Period: The effective period for Adjustment-Only Books mirrors that of the base books.
- No Foreign Currency Support: Adjustment-Only Books do not provide support for foreign currency management.
- Fixed Chart of Accounts: Adjustment-Only Books inherit the exact Chart of Accounts from the base book, rendering it unchangeable.
These points should help you understand the essential aspects of working with Adjustment-Only Books in your NetSuite OneWorld account.
Setting Up Multi-Book
- Go to Setup > Accounting > Multi-Book Accounting > Accounting Books > New to open an accounting book record.
- Complete the required and optional fields as necessary.
- Name “Required” – Enter a unique and identifiable name for the accounting book. This name will appear in fields and lists when given a choice of accounting book.
- Is Primary – This is a checkbox field that is for display purposes only. This field cannot be checked for secondary accounting books or cleared for the primary book.
- Subsidiary “Required” – You are responsible for selecting one or more subsidiaries to associate with this accounting book.
- Include Children – If this box is checked, any child subsidiaries of a subsidiary that you select are automatically associated with this accounting book including newly created subsidiaries. This box is checked by default on the primary accounting book and cannot be cleared.
- Effective Period “Required” – Select the existing historical base period for this secondary accounting book. All periods available for selection are periods that are available to primary book. This field can be changed only while the status of the book is pending.
- Enable Consolidate – Check this box to enable this secondary accounting book for consolidation. Secondary books enabled for consolidation have access to all NetSuite OneWorld consolidation including all tasks on the period close check list, consolidated reporting, auto-elimination, and book-specific consolidated exchange rates. Primary accounting books are enabled for consolidation by default.
- Enable Contingent Revenue Handling – Check this box to add fields to item records and revenue elements for contingent revenue. “Stipulates that the allocated revenue for delivered items cannot be contingent on the delivery of additional items or other specified purposes.”
- Enable Two Step Revenue Allocation – This box is checked by default but can be cleared on a book-by-book basis. When checked, two-step allocation is used only when the Allocation Type is Software. When the conditions are met that trigger the residual method, the second step of allocation takes place. Two-step allocation cannot be turned off unless Multi-Book Accounting is enabled.
- Arrangement Level Unbilled Receivable Reclassification Journal – Check this box to use the deferred revenue reclassification journal entries process to adjust deferred revenue after you post month-end revenue recognition journal entries.
- Configuring Adjustment-Only Books
Complete the following fields to setup Adjustment-Only Books.
- Adjustment Only – Check this box to make the secondary book an adjustment-only book.
- Base Book – “Appears when Adjustment-Only is selected” Select the accounting book in which will be the base book for adjustments. Base books can be either the primary or Full Multi-Books, however, cannot be another adjustment-only book.
- Setting-up Foreign Currency Management
If your organization is using foreign currency management, on the subsidiary’s subtab, ensure you set the base currency for each entity.
- Multi-Book will provide for the base currency for the primary book. You should note that this field is editable, unless the base currency of the selected primary book and the base currency of the secondary book are the same. This field will also not be editable if the effective period is equal to that of the first period of your NetSuite environment.
- Status of the subsidiary
- Finally, you are ready to “Complete your first Book.”
- Click “Save”
Historical Transaction Processing
The process of distributing the accounting impact of historical transactions involves retroactively allocating these impacts across all accounting books. It’s important to note that if this historical transaction processing is not fully executed, all transactions remain exclusively in the primary book, with no corresponding general ledger impact on secondary accounting books.
Due to its complexity, the task of processing historical transactions is exclusively handled by NetSuite Professional Services or a Certified NetSuite Partner. These experts have access to comprehensive documentation to aid them in the process. If you’re considering moving forward with this task, we recommend reaching out to TAC Solutions Group or NetSuite Professional Services for further guidance and support.
General Rules for Full Multi-Books
Establishing a Multi-Book financials can be a complex endeavor, particularly if you lack the requisite training. Here are some crucial guidelines to navigate the process:
- Active Primary Book: Every subsidiary should maintain an active primary book, denominated in the base currency of that subsidiary. The primary book is inherent and cannot be deactivated.
- Parent Subsidiary Selection: When you designate a parent subsidiary for an accounting book and save the record, all child subsidiaries linked to that parent are also automatically selected.
- Foreign Currency Management: If you intend to utilize the foreign currency management feature within the Multi-Book system, it’s imperative to define the base currency for each subsidiary.
- Inactive Subsidiaries: To include subsidiaries in active accounting books, they must be marked as inactive. When the Full Multi-Book feature is enabled, new subsidiaries are set as inactive by default.
- Transaction Constraints: Subsidiaries with existing transactions cannot be added, even if they are marked as inactive, to an active accounting book.
These rules should serve as a valuable reference as you navigate the intricate process of setting up your Multi-Book accounting system.
Expected User Interface Changes
Enabling Multi-Book Accounting doesn’t alter the user interface for records that are generic across all accounting books, unless those records possess book-specific attributes. The attributes of primary book records remain in their existing positions to preserve backward compatibility. Examples of book specific records are Amortization, Revenue Recognition, and Fixed Assets.
What You Should Know
Before embarking on the Multi-Book implementation process, it’s wise to consider these essential questions:
- Identifying Business Needs:
- What specific business challenges are you aiming to address through Multi-Book?
- For instance, are you dealing with scenarios like differing functional currencies across subsidiaries for financial or statutory reporting, functional currency variations from required local currency reporting, or the necessity for local statutory books?
- Statutory Reporting Timeline:
- How urgent is your requirement for statutory reporting? This is not something you want to rush, ensure your timeline allows for it.
How TAC Can Help
If you’re considering the adoption of NetSuite Multi-Book functionality and feel it’s a necessary addition for your organization, remember that TAC Solutions Group, a NetSuite Alliance Partner, holds certification in Multi-Book and possesses a track record of successfully implementing Multi-Book solutions for our clients. In such a significant endeavor, seeking experienced assistance is strongly recommended to ensure a smooth and effective implementation. TAC is committed to understanding your complex business processes, a crucial aspect of securing a successful outcome.