Friday, November 18, 2016

Reporting Currency, Secondary Ledger and Multiple Accounting Representations in Oracle R12

Reporting CurrencyIf you want to maintain your ledger transactions in multiple currencies, you can use reporting currencies. Reporting currencies are additional currency representations of primary or secondary ledgers. Reporting currencies can be used for supplementary reporting purposes, such as consolidation or management reporting.

Reporting currencies can be maintained at the following currency conversion levels:
• Balance Level
: The Balance level reporting currency is maintained only for GL account balances by using translation to convert the balances from the ledger currency to the reporting currency. Balance level reporting currencies can be assigned to primary and secondary ledgers using Accounting Setup Manager, or they can be system-generated the first time you run translation using a different currency.

• Journal Level: 
The Journal level reporting currency is maintained for GL journal entries and balances when you post journals in your primary or secondary ledger.
This type of reporting currency is maintained using the General Ledger Posting program.
Each time you post a journal entry in the associated primary or secondary ledger, another journal is created and posted to the Journal level reporting currency within the same journal batch.

• Subledger Level: 
The Subledger level reporting currency is maintained for primary ledgers only. They maintain a currency representation of the primary ledgers' subledger journals, journal entries, and balances. This type of reporting currency is maintained by Oracle Subledger Accounting (SLA) and the GL Posting program.

In 11i:
If it is Balance level then it can be achieved by using Translation process. Generate Trial balance in reporting currency.
If the details level information such as Subledger or Journal then it would be achieved through Multi reporting Currency (MRC).

Reporting Currency Functionality in R12 is combination of both MRC and Reporting currency in 11i.

When to Use Reporting currency:
Out of the Ledger 4C's only Currency would be different from Primary Ledger.

Secondary Ledger (MAR)

Multiple Accounting Representation (MAR), as the name suggests meant for Multiple Account representation for  the various Accounting governing bodies requirements. The governing  bodies could be US GAAP,IASB,IFRS and local authorities. Secondary Ledgers can be unlimited as per the requirement.

In 11i:
In AX Countries there is a concept called Dual posting, where we can enter in Global chart of Accounts and post in Local COA.
Eg: If there is a Business Unit in France, and the reporting Organisation is in UK then we would need two COA's. One COA to meet the local Govt rules and the other COA to maintain the uniformity across the Global Business Unit which inturn would be helpful for the Management reporting.
In this case dual posting is used to enter in a COA and post the same in the other COA. But this is only meant for the following Subledgers:
  • Oracle Inventory
  • Oracle Receivables
  • Oracle Payables

For all other modules in 11i we use consolidation process to transfer the date from entered to Reporting COA.
In R12 this can be achieved through seconday Ledger where we can have different COA than the primary Ledger and with help of SLA we achieve all the statutory required to the organisation.Also  in R12 this is available for almost all modules like AP,AR,FA,GL,etc..

Secondary ledgers can be used to represent your primary ledger's accounting data in another accounting representation that differs in one or more of the following from the primary ledger:
• Chart of accounts
• Accounting calendar/period type combination
• Currency
• Subledger accounting method
• Ledger processing options

When to Use  Secondary Ledger :
  • For example, if a legal entity must perform corporate and statutory reporting, you can use the primary ledger to satisfy corporate reporting requirements and then use a secondary ledger to satisfy statutory reporting requirements.
  • If a legal entity is a subsidiary of a parent company and must produce its financial results according to the parent company's reporting requirements in addition to its own local reporting requirements, then a secondary ledger may be used to satisfy the additional reporting requirement.
Secondary ledgers can be maintained at the following data conversion levels:

• Balance:
The balance level secondary ledger maintains your primary ledger account balances in another accounting representation. This type of secondary ledger requires you to use Oracle General Ledger Consolidation to transfer your primary ledger balances to this secondary ledger.

• Subledger:
The Subledger level secondary ledger maintains subledger journals, general ledger journal entries, and balances in the additional accounting representation. This data conversion level uses both Oracle Subledger Accounting and General Ledger Posting to create the necessary journals in both your primary and secondary ledgers simultaneously.

• Journal:
The journal level secondary ledger maintains your primary ledger journal entries and balances in an additional accounting representation. This type of secondary ledger is maintained using the General Ledger Posting Program. Every time you post a journal in your primary ledger, the same journal can be automatically replicated and maintained in the secondary ledger for those journal sources and categories that are set up for this behavior.

• Adjustments Only:
The Adjustments Only Secondary Ledger is an incomplete accounting representation that only holds adjustments. The adjustments can be manual adjustments or automated adjustments from Oracle Subledger Accounting.
This type of ledger must share the same chart of accounts, accounting calendar/period type combination, and currency as the associated primary ledger. To obtain a complete secondary accounting representation that includes both the transactional data and the adjustments, you must then combine the adjustments-only secondary ledger with the primary ledger when running reports.

Difference between Reporting Currency and Secondary Ledger (MAR)
  • Reporting currency is used only when the Currency of Primary Ledger need to be changed for reporting purpse.This can be used to capture the information in reporting currency at Balance level,Subledger level and Journal level.
  • Secondary Ledger could be used when you need to change the Chart of Aaccounts and Accounting convention method to meet the stattutory and corporate requirements.This is used primarily where the organisation need to report in diffrent autorities like Local authorites,US GAAP,IFRS,IASB etc.

If  the business requirement is  to have diffrent Currency  from Primary Ledger  then we can choose Reporting currency where as if we need to have different COA or SLA ,Calendar Method then use Secondary ledger.

SL and MAR - Secondary Ledgers and Multiple Accounting Representations
Ever since introduction of REL 12, most of them know that Set of Books got replaced by Ledgers. But in REL 12 we have something called Primary Ledger and Secondary Ledger, however we dont have a primary or Secondary Set of Books in earlier release, it is only one set of books.

How to get a knowledge upgrade for people who know only set of books and doesn't have any idea on ledgers.
For them Primary Ledger in REL 12 is equal to the Set of Books in R 11, as simple as that, however Secondary Ledger in Rel 12 is something new, which was not thier in previous release. Even though some may link Reporting Set of Books in REL 11 as Secondary ledgers in REL 12, which is not correct, since we still have the same functionality of Reporting Set of Books as Reporting Ledgers in REL 12.

So what does these Secondary Ledger do in REL 12 is a big question ??
Secondary Ledgers are mainly used for creating Multiple Accounting Representations.

What do you mean by Multiple Accounting Representations?

As we know oracle offers by default 5 sub ledger accounting methods, apart from which a user can create on his own as many sub ledger accounting methods as he wants. One may want to know how the financial position of the company under all five methods of Accounting, in which case you can create Secondary Ledgers and attach different Accounting method to it.

How transactions are created with Multiple Accounting Representations?

By selecting a Data Conversion level while creating a Secondary Ledger. One can select any data conversion level among Balance, Journal, Subledger and Adjustments only. What happens is that, once a Journal entry or a transaction is recorded in Primary Ledger, the same transactions gets transferred to Secondary Ledger, even though the Accounting method of Primary and Secondary ledgers may be different..

This functionality can be useful when the Statutory requirement is to maintain books of accounts in certain accounting method and company policy is to maintain books of accounts in different accounting method, and also many other reasons one can think off..

New Feature - Data Access Sets
One of the new features in General Ledger is Data Access Sets. This feature plays a very important role in having a Secured Data Access to the user or one can called it as RBAC (Role Based Access Control).
In previous versions, access to data by users has been restricted only by excluding the menus and functions of the responsibility and then that responsibility is assigned to the particular users who are eligible. This job is carried out by a system administrator or a consultant having system administrator responsibility. This functionality stays as such in Rel 12 also.

Apart from the above, in Rel 12, General Ledger has also contributed a new feature towards securing data.
A Ledger created in General Ledger Module is accessed by various modules using different responsibilities, if one decided to exclude menus for all such responsibilities it will be a time consuming process, instead one can create a security by creating an Data Access Set for a ledger in General Ledger itself, which will apply to all responsibilities using that particular ledger. However, a setting is required for each such responsibilities, that is you have to attach the respective Data Access Set to the respective Responsibility by using GL: Data Access Set profile option. This setting can be done only from system administrator responsibility.
Note: One Responsibility can have only one data access set assigned.

Now let us see what are the types of security that one can have for a ledger or ledger set.
1) Full Ledger
2) Balancing Segment Value
3) Management Segment Value

1) Full Ledger - Full ledger access means having full read and write access to the ledger and all of its balancing segment values or management segment values.

2) BSV
- If you assign specific balancing segment values to legal entities and ledgers, you will only be able to use those balancing segment values during transaction processing and journal entry.

3) MSV
- When securing management segment values for a ledger, take note of the management segment values you used when you assigned the default accounts to the ledger, such as the retained earnings account and the cumulative translation adjustment account.

The privileges available for all the three Data Access sets are :
Read Only: Allows users to view data in ledgers and balancing or management segment values.
Read and Write: Allows users to view and enter data in ledgers and balancing or management segment values.

If you closely observe the BSV and MSV data access types it is more or less similar to a security rule that is defined in General Ledger module. And one more thing, BSV and MSV type Data Access sets also considers Security Rules.
For Eg: Assume that you have blocked a Segment value 01 for your company segment,
whereas you have included segment value 01 in the Data Access set, in which case, the
user will not have access to the segment value 01.

Its not 3 C's any more.... !
As we all know that in Release 12, "Set of Books" have been Substituted by "Ledgers".
This Substitution is not just a transformation of name alone, the components has also undergone a change, more than a change you can call it as an addition.
In previous versions, set of books consists of,
C = Chart of Accounts
C = Calendar
C = Currency
In Release 12, ledgers Consists of
C = Chart of Accounts
C = Calendar
C = Currency
C = Accounting Method or Convention ( ***** New Component*****)

Lets see more about this new component....

Selection of Accounting method is nothing new for people using earlier versions of Oracle Applications, it is carried out at the Subledger level. The available methods were Accrual and Cash in previous versions.
In Release 12, the selection of Accounting method is done at the ledger creation level itself. And this is the only place where the accounting method is selected and not in any other place !
(Accounting method can be changed any time, it will not affect the existing transactions)

Lets us see what are the available (Seeded) Accounting methods in Release 12,
1) Accrual with Encumbrance Accounting
2) Cash with Encumbrance Accounting
3) Standard Accrual
4) Standard Cash
5) US Federal Accounting

Now lets see basis of Selection of Accounting methods:
All upgraded, non-public-sector ledgers will have a Subledger accounting method assigned called Standard Accrual or Standard Cash ( This is nothing but the same Cash and Accrual which we had in rel 11)

All upgraded public sector ledgers will have a subledger accounting method assigned called
Encumbrance Accrual or Encumbrance Cash. ( This come in to place when we use purchasing modules, and transfer of encumbrance journals becomes necessary)

For Federal customers, all upgraded ledgers will have the US Federal Accounting subledger accounting method assigned.

Note: You cannot delete the Subledger accounting method but you can change the Subledger accounting method and Subledger accounting options at any time. And also you can create a new Subledger method and attach it to your ledger.

Hope this clarifies about the fourth "C" in Release 12 !

New Feature: General Ledger - Ledger Sets
Ledger Sets means its a set of Ledger nothing more... ! What is the purpose of it and how it reduces the work of Functional Consultants ?
As many would aware that in previous versions there are many routine jobs which will be performed individually for every different set of books. For example, Opening a Period - This has to be carried out as an individual step for each and every set of books in the previous version.
In Release 12, we can group all the ledgers in to an Ledger Set and perform actions to that ledger set which will in turn reflect in the individual ledgers.

Another important use of this ledger sets are in Consolidation. Before moving in to its use in consolidation, let us see what was the problem in earlier versions which was faced.
In rel 11, assume that a company wants to have 2 Set of Books even though they share same Currency, Chart of Accounts and Calendar, the consultants stand would always be to AVOID having two set of books, because when the client has more than one set of books it would normally call for Global Consolidation System to be in place, if they had only one set of books the consolidation can be achieved through Financial Statement Generator (FSG) reports.

How this consolidation is solved in Rel 12 is, that assume you have two ledger named as Ledger A and Ledger B, both of them are sharing the same Features. But for consolidation in rel 12, you need not do a GCS for this case, you can create a Ledger set lets name it as Ledger set C which comprises Ledger A and Ledger B. Then assign this Ledger Set to the responsibility, from which you can run reports which can satisfy your requirements.

Note: Ledger Sets can be used to link ledgers which are sharing different Currencies also, but it does not perform conversion or translation. In order to achieve Conversion and translation benefits one need to perform Global Consolidation System which remains the same as of the previous version... !

New Feature - Multiple Organization Access Control ( MOAC )
The buzz word ever since the introduction of Release 12 is MOAC feature... ! We will just see what it is all about...

MOAC is a new feature which facilitates the user to Access more than one operating unit without switching responsibilities.... !
How is it achieved ?
It is achieved by defining a security profile using HRMS forms and then attaching that security profile to the respective responsibility using MO: Security Profile Option...

The other notable feature in MOAC is that one can create a normal security profile as well as global security profile. The advantage of having a Global Security Profile is that an user can access operating units which are not under one roof or one Business Group, whereas in case of normal security profile, the operating units are within the Business Group !

Many related documentations have been published in explaining this concept to the audiences.... one such resource is ERPSTUFF.COM where detailed explanation on performing setups with screen shots has been provided to members of the site ..... and ofcourse its written by me !

New Feature: General Ledger - Accounting Set up Manager
Who ever had a hands on experience on release 12 version of Oracle Applications, will certainly know something about Accounting Setup Manager. Lets speak about what it really is.....
As many know that the term Set of Books has been replaced by Ledgers in release 12.... same way the replacement of the Set of Books form is Accounting setup Manager .
Accounting Set up Manager is used for:
Creating Ledgers ( Primary and Secondary)
Create Operating Unit
Create Sequences
Create Legal Enitity
Define Intercompany Accounts and Rules
Enabling Budgetary Control
Define Subledger Accounting Options

What is so special about this Accounting Setup manager is that it is not form based it is an html page... !! Which means that it comes with all advantages as well as DISADVANTAGES !!
( I would say that the biggest disadvantage of all is that you got to use your mouse predominantly for most of your operations and every screen takes time to refresh which tests everyones patience )

Primary Ledger Vs Secondary Ledger Vs Reporting Currency
Primary Ledger Vs Secondary Ledger
Use secondary ledgers for supplementary purposes, such as consolidation, statutory reporting, or adjustments for one or more legal entities within the same accounting setup. For example, use a primary ledger for corporate accounting purposes that use the corporate chart of accounts and subledger accounting method, and use a secondary ledger for statutory reporting purposes that use the statutory chart of accounts and subledger accounting method. This allows you to maintain both a corporate and statutory representation of the same legal entity's transactions in parallel. 

Reporting Currency Vs Secondary Ledger

Reporting Currencies are not the same as secondary ledgers. Looking at the 4 C's that define a ledger, we have a chart of accounts, calendar, accounting method, and currency. If you only need multiple currencies to support your reporting requirements, use reporting currencies. If you need to account for your data using different calendars, charts of accounts, accounting methods in addition to currency, use a secondary ledger.

What are all different Journal Entry Types available in GL?
Within Oracle General Ledger, you can work with the following types of journal entries:
Manual Journal Entries: The basic journal entry type is used for most accounting transactions. Examples include adjustments and reclassifications.

Reversing Journal Entries: Reversing journal entries are created by reversing an existing journal entry. You can reverse any journal entry and post it to the current or any future open accounting period.

Recurring Journal Entries: Recurring journal entries are defined once, then are repeated for each subsequent accounting period you generate. You can use recurring journal entries to define automatic consolidating and eliminating entries. Examples include intercompany debt, bad debt expense, and periodic accruals.

MassAllocations are journal entries that utilize a single journal entry formula to allocate balances across a group of cost centers, departments, divisions or other segments. Examples include rent expense allocated by headcount or administrative costs allocated by machine labor hours.

What is Budgetary Control? 
A method of systematically enforcing spending limits by ensuring availability of budgeted funds before approval of transactions, including pre-expenditures.

What is Encumbrance?

A method of tracking and controlling an organization’s spending from the very early stage of initial documented evidence showing intention to buy to the final stage of actual expenditure. It is a management tool used to reflect commitments in the accounting system and attempt to prevent overspending. Mostly Used by Government and Non-Profit Firms

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