Wednesday, October 15, 2014

Oracle Secondary Ledger Accounting Setups and Usage



Please Like and Share our FaceBook page to get more details on Oracle Application
https://www.facebook.com/OracleApplications-712588392100243/


Overview

The purpose of this document is to familiarize the users of Secondary Ledger (R12) with different levels of Secondary Ledger conversions feature. This document provides details on the Usage and Setup of Secondary Ledgers.


Secondary Ledger is an optional, additional ledger that is associated with the Primary Ledger.
A Secondary Ledger can be used to represent the Primary Ledger's data in another accounting representation, which differs from the primary in one or more of the following:
  • Chart of accounts (COA)
  • Accounting calendar/period type combination
  • Currency
  • Sub-ledger accounting method(SLA)

Introduction
In release 12, Secondary Ledgers can be created based on the legal requirements and are mainly used for creating Multiple Accounting Representations (MAR).
One may want to know the financial position of the company under different methods of Accounting, in which case we can create Secondary Ledgers and attach different Accounting methods to it.

For example, your Primary Ledger may be according to French Accounting principles and your Secondary Ledger may be according to US Accounting Principles. Using the concept of Secondary Ledgers, whenever any financial transaction occurs, it can be represented in both French Accounting and US Accounting Principles at the same time.

Difference between Reporting Currency and Secondary Ledger (MAR)
If the business requirement is to report every balance in a different currency then we can choose Reporting currency where as if we need to have different COA or SLA, Calendar Method then we can use Secondary Ledger. 
Reporting currency can be used to capture the information in a reporting currency at Balance level, Sub-ledger level and Journal level.

Secondary Ledger could be used when you need to change the Chart of Accounts and Accounting convention method to meet the statutory and corporate requirements. This is used primarily where the organization need to report in different authorities like Local authorities, US GAAP,IFRS,IASB etc.

Reporting Currency Ledger and Secondary Ledger
 

Conversion Rules:
As Secondary Ledger can be used to represent the Primary Ledger's data in another accounting representation, the accounting representations depend on the following conversion rules:
  • Chart of Accounts Conversion
  • Calendar Conversion
  • Currency Conversion
  • Journal Conversion (Used by General Ledger Posting only)

Chart of Accounts Conversion:
The chart of accounts conversion rule is used when the chart of accounts are different between the Primary and the Secondary Ledger. In this scenario, a chart of accounts mapping is defined to provide instructions for mapping the accounts or the entire account segments from the Primary Ledger to the Secondary Ledger.

Calendar Conversion:
The calendar conversion rule is used when the Primary and Secondary Ledgers have different calendars. In this scenario, the journal effective date determines the corresponding non-adjusting period in the Secondary Ledger.

Currency Conversion:
The currency conversion rule is used when the Secondary Ledger currency is different from the Primary Ledger currency.
In this scenario, the system converts the data from the currency of the Primary Ledger to the currency of the Secondary Ledger using these conversion rules.

Journal Conversion (Used by GL Posting only):
Journal conversion is used to select the journals for transfer to the Secondary Ledger based on journal source and category combinations.
In this scenario, the GL Posting program uses these source and category conversion rules to determine which journals to automatically transfer to the Secondary Ledger during posting.

Data Conversion Levels:
Secondary Ledgers can be maintained at one of the following data conversion levels:
  • Balance Level Secondary Ledgers
  • Sub ledger Level Secondary Ledgers
  • Journal Level Secondary Ledgers
  • Adjustments Only Secondary Ledgers

Balance level Secondary Ledger:
The balance level Secondary Ledger only maintains the Primary Ledger balances in another accounting representation. To maintain balances in this type of Secondary Ledger, use General Ledger Consolidation to transfer the Primary Ledger balances to the Secondary Ledger.
If the balance level Secondary Ledger uses a different currency from the Primary Ledger, system automatically generates and assigns a balance level reporting currency ledger to the Primary Ledger.

General Ledger Consolidation is used to transfer balances from the Primary Ledger's balance level reporting currency to the balance level Secondary Ledger. This balance level reporting currency uses the same currency as the Secondary Ledger and represents the translated balances of the Primary Ledger.

Scenario: 1-Adding and Using a Balance Level Secondary Ledger
The balance level Secondary Ledger discussed in the below scenario uses a different currency and chart of accounts as shown below.
Primary Ledger Secondary Ledger
Chart of Accounts SOracle_Coa (5 Segments) SOracle_Secondary_Coa (3 Segments)
Currency INR USD
Calendar Soracle_Cal Soracle_Cal
Sub-ledger Accounting Method Encumbrance Accrual Optional (not used in this case)

Step 1:
Navigation: General Ledger responsibility: Setup: Financials: Accounting Setup Manager: Accounting Setups: Query the Primary Ledger. Select Add Secondary Ledger button.

Step 2:
Enter the name of the Secondary Ledger, chart of accounts, currency, and calendar and the data conversion level as shown below. Select Apply.
     
     Please make a note of the information that system generated reporting currency has been assigned to your Primary Ledger as the Secondary Ledger currency is different. Select Apply.
            

Step 3:
Complete the ledger processing options for the Secondary Ledger

Now select the update icon for primary to Secondary Ledger mapping
 

Step 4:
Select Create mapping button and create the mapping in the applications. Note that the rate types are not populated

Create a Chart of accounts mapping using the steps below.
  • Give the name and description.
  • Enter the target as Secondary Ledger and source as Primary Ledger.
  • Select segment rules button and enter the segment rules for the system to transfer the transactions/balances from the Primary Ledger to Secondary Ledger.

Assign the chart of accounts mapping that was created in the previous step
This has to be assigned in the page Update primary to Secondary Ledger Mapping

Step 5:
Now select the update icon for Reporting Currencies under the Setup step of the Primary Ledger

Observe that the reporting currency USD is already added by the system to the Primary Ledger
      
          Enter the required information for reporting currency and complete the setup

Now check the Primary to Secondary Ledger mapping, the period rates are populated. 
S

Step 6:
Navigation: Primary Ledger Responsibility: Journals: Enter
Place a manual journal and post the same.

Step 7:
Navigation: Currencies: Translation
Run the translation program from INR to USD

Check the translated trial balance.

Please note the lines in the above report as the same would be transferred to the Secondary Ledger after consolidation.    
       
          Step 8:
Navigation: Consolidation: Define: Consolidation
Define consolidation.
In the consolidation attributes, the parent is the Secondary Ledger and the subsidiary is the Primary Ledger.

Once the consolidation is defined, select transfer button.
Ensure Consolidation Transfer Program completes normal

Step 9:
Navigation: Secondary Ledger responsibility : Journals : Enter
Check the journal that has got generated and post the same

Only the first three segments of the Primary Ledger are mapped with the Secondary Ledger. That is why the account in the journal has only three segments.

Journal Level Secondary Ledgers
The journal level Secondary Ledger is an additional accounting representation of the Primary Ledger journal entries and balances.
This type of Secondary Ledger is maintained using the General Ledger Posting Program. Every time you post a journal in the Primary Ledger, the same journal is automatically replicated and maintained in the Secondary Ledger, depending on the journal conversion rules specified for the Secondary Ledger.

Scenario: 2-Adding and Using a Journal Level Secondary Ledger
The journal level Secondary Ledger in the below scenario uses currency as USD, which is different from the Primary Ledger currency.
Primary Ledger Secondary Ledger
Chart of Accounts SOracle_Coa SOracle_Coa
Currency INR USD
Calendar SOracle_Cal SOracle_Cal
Sub-ledger Accounting Method Encumbrance Accrual Optional (not used in this case)

Step1:
Navigation: General Ledger Super user: Setup: Financials: Accounting Setup Manager: Accounting Setups: Query Ledger: Update Accounting setup: Add Secondary Ledger

Step2:
Complete the Ledger Setups for the Journal Level Secondary Ledger

Step 3:
Primary to Secondary Ledger mapping – Select Create mapping button and create chart of accounts mapping

Step 4:
Define chart of accounts mapping: As per the mapping, all Primary Ledger balancing segment values would be transferred into single balancing segment value 1000 in Secondary Ledger.

Step 5:
See the Journal conversion rules defined as below.

Journal conversion rules:
These rules can be used to specify if the journals have to get posted automatically in the Secondary Ledger and if the journal creator has to be retained.
The Journal source and category conversion can be used to restrict the transactions of few sources and categories from getting transferred to the Secondary Ledger.

Step 6:
Define conversion rates between primary to Secondary Ledger
Navigation: Setup: Currencies: Rates: Daily

Step 7:
Enter and post a manual journal in Primary Ledger
Navigation: Journal : Enter
Note: We have entered 1000 & 2000 as BSV in Primary Ledger and we have mapped to single value 1000 in Secondary Ledger.
Posting the below journal replicates the journal in Secondary Ledger.

Step 8:
Check the Secondary Ledger for the journal created.
Please note the BSV is 1000 for all the lines based on the chart of accounts mapping.

Sub-ledger Level Secondary Ledgers
The sub ledger level Secondary Ledger maintains an additional accounting representation of the sub-ledger journals, journal entries, and balances.
The sub ledger level Secondary Ledger is maintained using both Sub-ledger accounting and the General Ledger Posting program.

Scenario: 3-Adding and Using a Sub ledger Level Secondary Ledger
In the below scenario, sub-ledger level Secondary Ledger uses a different currency and sub-ledger accounting method as shown below.
Primary Ledger Secondary Ledger
Chart of Accounts SOracle_Coa SOracle_Coa
Currency INR USD
Calendar SOracle_Cal SOracle_Cal
Sub-ledger Accounting Method Encumbrance Accrual Standard Accrual

Step 1:
Navigation: General Ledger Super user: Setup: Financials: Accounting Setup Manager: Accounting Setups
Query Ledger: Update Accounting setup: Add Secondary Ledger
        
          Step 2:
            Complete the Ledger processing options for the Secondary Ledger


           Primary to Secondary Ledger mapping:


Step 3:
Define the journal conversion rules as below.


For sub-ledger level Secondary Ledgers, the journal sources that use Sub-ledger Accounting must be set to No in the Transfer Journals to this Secondary Ledger field.
Any journal source that uses Sub-ledger Accounting to generate its accounting entries must not be converted to the Secondary Ledger using General Ledger Posting because Sub-ledger Accounting automatically performs the conversion for these sub-ledger journals.
If the option is set to yes, duplicate journals will be created in the Secondary Ledger.

Step 4:
Navigation: AP responsibility : Invoices : Entry : Invoices to create an invoice.


Perform create accounting for the invoice created


Step 5:
Note there are two journal import requests triggered, one for primary and other one for Secondary Ledger


Posting requests for Primary and Secondary Ledgers


Step 6:
Journal created in Primary Ledger


           Journal created in Secondary Ledger


Adjustments Only Secondary Ledgers
The adjustments only Secondary Ledger is an incomplete accounting representation that only holds manual adjustments created from general ledger.
Adjustments only Secondary Ledgers must share the same chart of accounts, accounting calendar/period type combination, and currency as the associated Primary Ledger.
Automated adjustments from sub-ledger accounting are not possible.

           Scenario: 3-Adding and Using a Adjustments Only Secondary Ledger
The adjustments only Secondary Ledger shares the same chart of accounts, calendar and currency as that of the Primary Ledger as shown below.
Primary Ledger Secondary Ledger
Chart of Accounts SOracle_Coa SOracle_Coa
Currency INR INR
Calendar SOracle_Cal SOracle_Cal
Sub-ledger Accounting Method Encumbrance Accrual Not used in this case

Step 1:
Navigation: General Ledger Super user: Setup: Financials: Accounting Setup Manager: Accounting Setups: Query Ledger: Update Accounting setup: Add Secondary Ledger


Step 2:
Complete the ledger processing options for the Adjustment only Secondary ledger


Step 3:
Create a ledger set to check the combined balances
Navigation: Setup: Financials: Ledger Set


Navigation: Inquiry: Account
If user wants to reduce 100 from 190, the rectification entry can be passed in the Adjustments only Secondary Ledger


Step 4:
Create the rectification / adjustment entry in the adjustment only secondary ledger and post the journal
Navigation: Journals: Enter


Step 5:
Define and run a FSG report for the ledger set created to fetch combined balances.
Navigation: Reports: Define: Report


Step 6:
FSG output
Note the balance is reduced from 190 to 90 because of the entry posted in the adjustments only Secondary Ledger


Upgrade of Historical Data for Secondary Ledger
A new concurrent program:”SLA Secondary/ALC Ledger Historic Upgrade” is introduced to create the accounting for the Secondary Ledger for the historic transactions in SLA based on the corresponding Primary Ledger. This is based on the principle that the balances of Secondary Ledger are initialized based on Primary Ledger’s balances.

Following are the list of the validations performed in the concurrent program before any data can be processed:
1) The relation between Secondary Ledgers with the Primary Ledger should be at sub-ledger level
2)      In the case of historical upgrade of Secondary Ledger, the application accounting definition of secondary and Primary Ledgers should be same.
3)      All the final accounted journals in SLA for the Primary Ledger should be transferred to GL.
4)      If the earlier run of the program is incomplete / failed, then the present run should be in Recovery mode, with the same parameters of the prior run.
5)      For the conversion information provided, currency conversion rates between Primary Ledger’s entered / accounted currency to Secondary Ledger’s functional currency should be defined.
6)      If the Secondary Ledger is of a different chart of accounts, the chart of account mappings should be defined.


Frequently Asked Questions (FAQ):
1How to Disable a Secondary Ledger Already Created?
Once you disable the conversion of Secondary Ledgers, it immediately prevents the propagation of journals from the Primary Ledger to the Secondary Ledger.
The disabled Secondary Ledger is still available for historical reporting and manual journal entries.
Note: Balance level Secondary Ledgers cannot be disabled. To stop transferring balances from the source representation (Primary Ledger or balance level reporting currency) to the balances level Secondary Ledger, stop running consolidations.
Note: Adjustments only Secondary Ledgers cannot be disabled because journals are not automatically transferred to this Secondary Ledger.

To disable the conversion of Secondary Ledgers:
•       Navigate to the Accounting Options page.
•       In the Secondary Ledgers region, select the Disable Conversion icon for the Secondary Ledger to be disabled.
Note: Once the conversion of a Secondary Ledger is disabled, the status of the Secondary Ledger is changed to Disabled.

2. Even after a Secondary Ledger is disabled, it still appears in the Accounting Setup Manager (ASM), in a disabled status. Is it possible to remove this from appearing from ASM at all?
No, it is not possible to completely stop this assignment from appearing in Accounting Setup Manager.

3. Can a Secondary Ledger be associated with more than one Primary Ledger?
No, a Secondary Ledger can only be associated with a single Primary Ledger.

4. Can Primary Ledger Be Changed To Secondary and Secondary To Primary After Few Years Of Operations?
Changing ledger types is not recommended.

5. How to delete a Secondary Ledger?
You can only delete Secondary Ledgers before the accounting setup is complete. After the accounting setup is complete, you can disable the conversion of Secondary Ledgers. This prevents any journals that are entered in the Primary Ledger or source representation from being transferred to the Secondary Ledger.
Deleting a Secondary Ledger removes the ledger and all of its setup steps.
To delete Secondary Ledgers:
•       Navigate to the Accounting Options page.
•       Find the Secondary Ledger to delete and select the Remove Secondary Ledger icon.

6. Can we map a non balancing segment in the primary ledger to a balancing segment in the secondary ledger?
You cannot map a non balancing segment in the primary ledger to a balancing segment in the secondary ledger. If you attempt to do this, the posting program is likely to fail.

7. The posting of a Reversal Journal in Primary Ledger does not create the corresponding Reversal in the Secondary Ledger. Why?
Enhancement Request/Bug 5686912 GL POSTING DIDN’T CREATE a REVERSED MANUAL JOURNAL IN SECONDARY LEGER was logged and it is implemented now.
Issue is fixed in the following files.
For R12.0: forms/US/GLXJEENT.fmb 120.81.12000000.36
For R12.1: forms/US/GLXJEENT.fmb 120.83.12010000.22

8. What is the Naming Convention of R12 Secondary Ledger Journal Batches?
When the posting runs it creates secondary ledger journals and while creating journal batches from primary ledger journal batches it follows below naming convention.
Secondary Ledger batch name = Secondary Ledger Short Name || Primary Ledger Journal Batch name || Primary ledger Journal Batch Id.

9. How to Transfer Historical Balances to a New Journal Level Secondary Ledger?
There is no program provided by Oracle to upgrade historical data for Journal Level Secondary and Reporting ledgers.
The "SLA Secondary/ALC Ledger Historic Upgrade" concurrent program is not for Journal level secondary ledgers. For Journal level secondary ledgers, this program should not be run. 
The Secondary ledger balances in General Ledger need to be initialized.
Use the General Ledger Consolidation functionality to initialize the balances in GL for the Journal level secondary ledger.

10. What are the differences in behavior, between a Primary Ledger and a Secondary Ledger?
·         Journal Reconciliation will have to be done separately for Secondary Ledger.
·         Revaluation has to be done manually for Secondary Ledger.
·         You can only enable average balances or average balance consolidation for your secondary ledger if average balances or average balance consolidation is also enabled for its primary ledger.
·         By default, journals that use the following journal sources are
   not transferred to the journal level secondary ledger:
          * Move/Merge
          * Move/Merge Reversal
          * Revaluation

11. Is it possible to create automated adjustments using Sub ledger accounting?
It is not possible to create automated adjustments using Sub ledger Accounting. An internal bug has been raised with development for correcting this in the documentation.

Technical Details:
Tables that can be used to get the Secondary Ledger details:
·         GL_LEDGER_CONFIG_DETAILS and GL_LEDGER_RELATIONSHIPS - To find the Secondary Ledgers associated with a Primary Ledger
·         GL_JE_INCLUSION_RULES - To find the source and category conversion levels
·         GL_DAILY_RATES - To find the source and category conversion levels
·         GL_CONS_SEGMENT_MAP - To find the mapping rules


3 comments:

aruni said...

Revaluation Journals of Primary Ledger Can Now be Replicated in Secondary Ledger (Doc ID 1558172.1

Vamshi G said...

is it possible to post primary ledger Old transactions / journals to new secondary ledger ?

Kishore Kumar said...

Good document..

Post a Comment

Best Blogger TipsGet Flower Effect