Introduction

This document is a supplement to the GL Configuration Checklist and serves to provide more detail regarding setting up Chart of Accounts (COA) in the PwC Approach for Oracle. If you are setting up a new install from scratch or modifying the PwC Approach for Oracle, use this document as a guide and modify it as needed to meet Client requirements. Note that this document only contains the steps that warrant explanation; refer to the GL Configuration Checklist for an explanation of all the setup steps in the recommended order of execution.

1.1.1. Accounting Flexfield structure

In Oracle Applications, the accounting flexfield is the account structure used to classify revenues, expenses, assets, liabilities, and owners’ equity across different business entities. The accounting flexfield can have multiple segments of multiple lengths and is usually represented as strings of numbers separated by a segment separator (e.g. ‘-’). The accounting flexfield is usually less than or equal to twenty-five (25) characters in length due to the fixed length of the accounting flexfield field displayed in Oracle Applications forms.

You can assign segment qualifiers to your accounting flexfield segments. The required segment qualifiers are balancing segment and natural account. The balancing segment is typically the legal entity or company segment. For each value of the balancing segment, the transaction amounts for that segment need to balance. The “natural” account segment is used to classify each transaction amount or balance as an asset, liability, owners’ equity, revenue, or expense. The other segment qualifiers include the following:

• Cost Center Segment – indicate functional areas, such as Accounting, Sales, Shipping, others. Oracle Assets and Oracle Projects require you to qualify a segment as cost center in your account.

• Management Segment – used to perform management reporting and secure read and write access to the segment value. This can be any segment other than the balancing segment, natural segment and cost center segment.

• Intercompany Segment – used to track intercompany transactions within a single ledger and among multiple ledgers. Usually is a mirror of the balancing segment.

• Secondary Tracking Segment – allows tracking of retained earnings, cumulative translation adjustment, and revaluation unrealized gain/loss specific to balancing and secondary segment value pair. This gives you an option of displaying unique combination of both primary and secondary segment as a separate account when querying
t-accounts/activity summaries, and for some standard reports. (Note that this cannot be used with average balances option. Also, once you enable tracking by secondary ledger, you can not disable the same. Refer to the Oracle GL User Guide for more details).

In addition to company, cost center, and account, the most common segment types include:

• Product line – includes services and service lines as well as products; allows for a quick summation of product or service revenue and expense amounts and isolates the account segment from product or service line changes

• Sales channel – usually utilized by consumer products manufacturers who sell material amounts of goods via direct, distributor, and retail channels

• Project – support basic project reporting for management decision-making purposes

• Geographical entity – usually used by firms competing in geographically specific markets (e.g., cellular phone companies may use metropolitan statistical areas to track revenues against a regions’ potential cellular subscribers.

• Fund – A segment that indicates a fiscal and accounting entity with a self-balancing set of accounts for governmental or not-for-profit organizations.

• Program – segment that indicates programs, such as, for a university, scholarship program, and
endowment program.

• Intercompany – segment indicates intercompany entities, which usually mirrors your company segment.

Each segment should only represent a single dimension (e.g., ‘Western,’ a geographical dimension) versus multiple-dimensions (e.g., ‘Western Region Service Revenue,’ incorporates ‘Western,’ a geographical dimension, ‘Service,’ a product line dimension, and ‘Revenue,’ an account dimension). Multiple-dimension values increase maintenance costs and do not fully utilize the system’s capabilities.

1.1.2. Structure maintenance

It is difficult to modify the accounting flexfield once transactions have been entered. However, it is easier to add a segment than to remove one. Similarly, it is easier to expand segment size than to reduce it. The principal difficulty of adding or expanding segments is determining how to convert the data associated with transactions entered before the change. Defaults can be specified, but if historical categorization against the added segment or segment characters is needed, extensive reclassification is required.

Navigation: Setup> Financials> Flexfield> Segments

1.2. Segment values

Segment values can be set to a pre-defined list by specifying an independent or table validated value set for the segment. These value sets can be shared between different Ledgers and different Oracle Applications.

Segment values can be numeric or alphanumeric. However, segment values should preferably be numeric because alphanumeric values prevent effective use of FSG and other reporting tools.

Segment values should be grouped by ranges to facilitate reporting (e.g., all checking accounts are five digits, beginning with 100 and ending with two digits used to distinguish accounts - 10002 (corporate checking account at Bank of America) and 10003 (corporate checking account at Wells Fargo)).

System-wide default values can be assigned to each account segment, although the system frequently defaults to the last value entered. Specify an account type of asset, liability, owners’ equity, revenue, expense, budgetary (DR) or budgetary (CR) when entering segment values for the account segment.

1.2.1 Navigation: Setup> Financials> Flexfields> Validation> Sets

1.2.2. Define Company Segment Value Set

1.2.3. Define Account Segment Value Set

1.2.4 Define Accounting Unit Segment Value Set

1.2.5. Define Subaccounting Segment Value Set

1.2.6. Define Future Segment Value Set

1.3. Define accounting Flexfield structure

1.3.1. Navigation: Setup > Financials > Flexfields > Key > Segments

1.3.2. Accounting Key Flexfield Segments summary screen

1.3.3. Company segment Accounting Flexfield

Company Flexfield Qualifiers

1.3.4. Account segment Accounting Flexfield

Account Segments Qualifiers:

1.3.5. Accounting Unit Segments Accounting Flexfield

Accounting Unit Segment Qualifiers:

1.3.6. Subaccounting Segments Accounting Flexfield

1.3.7. Future Segments Accounting Flexfield

1.4. Define segment default values

Define values that will be assigned as default values for segments in the accounting flexfield. Typically, the Company segment is not assigned a default value because unless the client has only one Company code, it is preferable to control the Company segment default value using security rules. You can optionally assign default values of 0s to your Product, Project, and Intercompany Segments.

1.4.1 Navigation

Navigate to:

Setup > Financials > Flexfields > Key > Segments

1.4.2. Define Company Segment default values

1.4.3. Accounting Unit Segment default value

1.4.4. Subaccount Segment default value

1.4.5. Future Segment default value

2.1. Freeze Flexfield definition:

Navigation: Setup> Financials> Flexfield> Key> Segments

2.1.2. Key Flexfield segment screen

2.1.3. Find key flexfield segment screen print

2.1.4. Navigation: Navigation: Setup> Financials> Flexfield> Key> Values

2.1.5. Segment Values screen print

2.1.6. Define Accounting Flexfield segment values

2.1.7. Account Segment values:

Navigation: Setup> Financials> Flexfield> Key> Values

2.1.8.Find Key Flexfield Segment screen details

Field/button name	Description	R/O/C	User action and values	Comments
Find Values By	Defaults to Key Flexfield.	R
Application	Application Name		General Ledger
Title	Accounting Flexfield	R	Accounting Flexfield
Structure	Accounting Flexfield Structure Name	R	Indicate your structure name

Calendar

1.5. Define accounting period types

General Ledger has predefined calendar period types that support the accounting calendar: Month, Quarter, and Year. This is a pre-requisite to the Accounting Setup Manager, but may not need any updates as these period types are typically sufficient, even when even when a fiscal accounting calendar (i.e., April to March) is required.

You can define your own period types to use in addition to the General Ledger standard period types Month, Quarter and Year. You use these period types when you define the accounting calendar for your organization.

Note: Do not change the number of accounting periods per year for a period type. Doing so will cause data corruption.

1.5.1. Navigation: (General ledger responsibility)

Navigate to:

Setup > Financials > Calendars > Types

1.5.2. Period types screen print

1.5.3. Period types screen print fields

Field name	Description	R/O/C/D/E	User action and values	Comments
Period Type	Unique name for accounting period type	R
Periods Per Year	Number of periods per year. You can define a ‘Week’ period type and specify 52 periods per year. You can assign up to 366 accounting periods per year.	R		Budgets can only use the first 60 periods
Year Type	Fiscal or Calendar Year	R
Description	Description of year type	O

1.6. Define accounting calendar

The accounting calendar periods for each year must be defined on an ongoing basis as part of the year-end procedures. When defining the accounting calendar for a new year always include JAN of the following year to ensure that DEC of the new year can be closed without error. To close the last period of a year, the first period of the next year must exist and be set to Future Entry before expense and revenue account balances can be written off to
retained earnings.

You can define multiple calendars and assign a different calendar to each ledger. For example, you can use a quarterly calendar for ledger, and a monthly calendar for another.

Calendars you create are validated online. Full calendar validation is launched whenever you exit the Accounting Calendar window. Carefully consider the type of calendar you need for your organization, as it can be difficult to change your calendar (e.g., from a fiscal year to a calendar year) once you've used it to enter accounting data.

This is a pre-requisite to the Accounting Setup Manager.

1.6.1. Navigation: (General ledger responsibility)

Navigate to:

Setup > Financials > Calendars > Accounting

Accounting Calendar Screen:

1.6.2. Accounting calendars screen print fields

Field name	Description	R/O/C/D/E	User action and values	Comments
Calendar	Accounting Calendar Name	R
Description	Accounting Calendar Description	O
Enable Security	Enable Security check box to apply definition access set security to the Calendar definition. If you do not enable security, all users who have access to this calendar definition will be able to view and modify the calendar definition.	O
Periods Prefix	Period Prefix Name	O
Type	Calendar Type	O

Full calendar validation is launched when you exit the Accounting Calendar window. Validate the calendar by viewing or printing the Calendar Validation Report. This report helps you identify any errors in your calendar that might interfere with the proper operation of General Ledger.

1.7. Define transaction calendar

If you enable average balance processing enabled, you must assign a transaction calendar, which is used to control transaction posting in Oracle General Ledger and Oracle Sub ledger accounting. When you define the transaction calendar, you choose which days of the week will be business days. You can also specify other non-business days, such as holidays, by maintaining the transaction calendar.

Transaction calendars ensure that journals created in Oracle General Ledger and Oracle Sub ledger Accounting are only posted on valid business days.

1.7.1. Transaction Calendar

Currencies:

2.1.1. Navigation: Setup> Currencies> Define

2.1.2. Rate Type

2.1.3. Rate Conversion.

Accounting Setup Manager:

Oracle General Ledger R12 uses the Accounting Setup Manager to define accounting setups. The Accounting Setup Manager centralizes the setup steps for common setup components that are shared across the Oracle Financial Applications.

This includes the following:

• Legal Entities

• Ledgers (primary and secondary ledgers)

• Reporting Currencies

• Oracle Sub ledger Accounting (SLA)

• Intercompany Accounts

• Intercompany balancing rules

• Sequencing Options

The basic accounting setup process consists of the following:

1. Create an Accounting Setup Structure – creates the framework of the accounting setup and identifies legal entities, if any, the type of accounting setup, and ledgers.

2. Complete Accounting Options – complete different accounting options to specify how to perform accounting and process transactions. These include the following:

• Ledger Options

• Reporting Currency Options

• Sub ledger Accounting Options

• Intercompany Accounts

• Intercompany balancing rules

• Sequencing Options

3. Complete Accounting Setup – Completing the accounting setup marks the accounting setup complete and launches the General Ledger Accounting Setup program. The GL Accounting Setup program performs the necessary validations to make the setup components of an accounting setup ready for transaction processing and journal entry

To create accounting setups, complete General Ledger prerequisites used to create ledgers and other setup components in Accounting Setup Manager.

Accounting Setup Manager

Value	Details
Application:	General Ledger/Oracle HRMS/System Administrator
Configuration Task:	Accounting Setup Manager
Configuration Step(s):
Prerequisite(s):	Define Accounting Flexfield (for your Chart of Accounts)
	Define Accounting Calendar
	Define or Assign Currencies

The following setup steps are presumed to occur using the General Ledger Responsibility unless otherwise noted.

1.7.2. Navigation: (General Ledger responsibility)

Navigate to:

Setup > Financials > Accounting Manager Setup > Accounting Setups

1.8. Define primary ledger

Define Accounting Representations screen is where you define your primary and secondary ledgers. Ledgers determine the currency, chart of accounts, accounting calendars, ledger processing option and Subledger accounting method.

Each accounting setup requires a primary ledger and optionally one or more secondary ledgers and reporting currencies.

Note that the definition of the primary ledger can only be completed after you complete attributes (including ledger options) you enable for the primary ledger. For example, during the initial definition of the primary ledger, you chose to add reporting currency and add a secondary ledger. For ledger options, you also choose to assign balancing segment values. You then need to complete these attributes before you can complete definition of the primary ledger. The ‘Complete’ button used to create and validate your ledger will only be available once all attributes for your primary ledger are completed. Alternatively, you can choose not to add a reporting currency and a secondary ledger during initial definition of the primary ledger, and tag all ledger options as complete. This would facilitate completion of the primary ledger. You can then add the reporting currency, secondary ledger and other ledger options at a later point
in time.

1.8.1. Define accounting representations screen

1.8.2. Define accounting representations screen print fields

Field name	Description	R/O/C/D/E	User action and values	Comments
Name	Primary Ledger Name	R
Chart of Accounts	Accounting Flexfield Name	R		Pre-defined in GL. See GL COA Setup document
Accounting Calendar	Accounting Calendar	R		*
Currency	Functional Currency	R		Pre-defined in GL. See GL Reporting Currencies Setup document
Sub ledger Accounting Method	Integrates data from Oracle Financial Subledger and non-Oracle systems with Oracle General Ledger. Two seeded methods are available. Standard Accrual and Standard Cash.	O

1.8.3. Complete accounting structure

1.8.4. Save accounting structure screen

Defined Ledgers (Primary and Secondary) and Reporting Currencies are displayed once you’ve completed defining the same. Review the accounting structure, and make changes if necessary. Once you’ve saved the form, you cannot modify major attributes of the Primary Ledger (such as COA, Calendar, and Currency).

1.8.5. Update ledger options

When you assign a Subledger accounting method to the ledger, this option displays with a complete status. If you did not assign a Subledger accounting method to your ledger, then this step will not be displayed. Update this at anytime from the Accounting Option stage.

1.8.6. Define accounting options screen

The Define Ledger Options screen enables updates and revisions to the available options for your Legal Entity, Primary Ledger and Secondary Ledger.

1.8.7. Update ledger: Ledger definition screen

1.8.8. Update ledger: Ledger definition screen print fields

Field name	Description	R/O/C/D/E	User action and values	Comments
Standard Information Region Ledger	Primary Ledger Name. Defaults from previous entry.	R
Short Name	Ledger short name; appears in the title bar of windows and in some lists of values	R		Can be changed anytime
Description	Primary Ledger Description	O
Currency	Main transaction currency for the ledger	O		Cannot be changed
Chart of Accounts	Accounting Flexfield Previously defined.	D		Cannot be changed
Accounting Calendar Region Accounting Calendar	Accounting Calendar Previously defined.	D		Cannot be changed

Period Month	Defaults from the accounting calendar	D	Cannot be changed
First Ever Opened Period	First period that can be opened for this ledger.	R	This cannot be changed after you open the first period.
Number of Future Enterable Periods	Number of future periods to allow for journal entry within this ledger	R
Sub ledger Accounting Region Sub ledger Accounting Method	Defaults from Sub ledger Accounting Method Previously defined	R
Sub ledger Accounting Method Owner	If owner is Oracle, definition of this method cannot be updated.	D
Journal Entry Language	Journal Entry Language	R
Entered Currency Balancing Account	Posts differences from out-of-balance foreign currency journals in subledgers.	O
Use Cash Basis Accounting	Used by Oracle Payables for its Mass Additions Create program for determining expense account information.	O
Balance Sub ledger Entries by Ledger Currency	Enables balancing of Subledger journal entries by ledger currency and balancing segment value.	O

1.8.9. Update ledger: Ledger options screen

1.8.10. Update ledger: Ledger options screen print values

Field name	Description	R/O/C/D/E	User action and values	Comments
Year End Processing Region Retained Earnings Account	Prior Year’s net balance of all income and expense accounts are posted against the retained earnings account when the first period of a fiscal year is opened in General Ledger.	R
Journal Processing Region Suspense Account	Allows suspense posting of out-of-balance journal entries. If you have multiple companies or balancing entities within a ledger, General Ledger automatically creates a suspense account for each balancing entity. You can also define additional suspense accounts to balance journal entries from specific sources and categories using the Suspense Accounts window. Only balanced entries can be posted if you do not enter a suspense account.	O

Allows suspense posting of out-of-balance journal entries. If you have multiple companies or balancing entities within a ledger, General Ledger automatically creates a suspense account for each balancing entity. You can also define additional suspense accounts to balance journal entries from specific sources and categories using the Suspense Accounts window. Only balanced entries can be posted if you do not enter a suspense account.	O
Tracks rounding differences during currency conversions. If you do not enter an account, General Ledger will post rounding differences to the journal line with the largest amount. In Sub ledger Accounting, this account tracks currency conversion rounding differences that cause unbalanced journal entries. Sub ledger Accounting will issue an error if it encounters a Subledger journal entry that is unbalanced because of rounding differences and an account is not specified.	O
Posts out-of-balance intracompany journals (debits do not equal credits for a particular company or balancing segment value within the same ledger). If you enable this option, you must define Intracompany Balancing Rules when you complete your Accounting Options to provide instructions on how to automatically balance intracompany journals against balancing accounts you specify. If you do not choose to enable intracompany balancing, you can only post intracompany journals that balance by balancing segment	O
Requires journal to be approved by the appropriate level of management before any further action can be taken, such as posting, when enabled for the journal source. If Journal Approval is not enabled, approval is not required, even if the journal source requires approval	O

Requires journal to be approved by the appropriate level of management before any further action can be taken, such as posting, when enabled for the journal source. If Journal Approval is not enabled, approval is not required, even if the journal source requires approval	O
Used to calculate tax if Oracle Payables or Oracle Receivables is not implemented.	O
Automatically reverses this ledger's journals based on the Journal Reversal Criteria Set assigned.	O
Used to translate actual account balances. You can override the default rate types for each balance level reporting currency	O
Used to translate actual account balances. You can override the default rate types for each balance level reporting currency	O
This account is needed to translate the ledger's currency balances into a balance level reporting currency. For journal level reporting currencies, this account is used when revaluing foreign currency denominated balances. General Ledger automatically posts any net adjustments resulting from currency translation to this account, in accordance with FAS 52 (U.S.) and IAS 21. If you have multiple companies or balancing entities within a ledger, General Ledger automatically creates a translation adjustment account for each company or balancing entity. The difference in revaluation adjustments between the ledger and its journal level reporting currencies are recorded to the cumulative translation adjustment account.	O

1.8.11. Update ledger: Advanced options screen

1.8.12. Update ledger: Advanced options screen print fields

Field name	Description	R/O/C/D/E	User action and values	Comments
Journal Reconciliation Region Enable Journal Reconciliation	Allows you to reconcile transactions in accounts that should balance to zero.	O
Budgetary Control Region Enable Budgetary Control	Requires you to create budget journals for funding budget.	O

Requires you to create budget journals for funding budget.	O
Allows you to require budget journals for all budgets when budgetary control is enabled.	O
In an average balances ledger, your standard and average balances are tightly linked. Each time you post a journal entry, Oracle General Ledger updates both the standard (period-based) balances and corresponding average balances for your balance sheet accounts. Note: You can only enable average balance processing for those ledgers that require it. This ensures that you incur no additional overhead unless you need average balance processing enabled. Note: You can only enable average balances for a secondary ledger if its primary ledger has average balances or average balance consolidation enabled. Note: You cannot enable average balances if your ledger is enabled for secondary segment tracking.	O

1.8.13. Update ledger: Review ledger screen

Cont.

Review your Ledger Definition. If you need to make any changes, click on the Back button and go to the appropriate screens.

Once your review is completed, click on the Finish button.

1.8.14. Accounting options screen

After completing initial setup of the Primary Ledger, the Accounting Options screen is displayed. Aside from updating your Primary Ledger as previously discussed, you can also update the following:

Entity/Ledger	Setup Step
Legal Entity	Update Balancing Segment Values
Primary Ledger	Update Primary Ledger – Ledger Options
Primary Ledger	Reporting Currencies
Primary Ledger	Balancing Segment Value Assignments
Primary Ledger	Operating Units
Primary Ledger	Intercompany Accounts Sequencing
Secondary Ledger	(same as Primary Ledger except Operating Units)

1.9. Update balancing segment values

Assigning Balancing Segment Values to Legal Entities enable you to readily identify transactions and balances for a specific legal entity. This also enables certain Oracle Applications Legal Entity Features, such as Intercompany Accounting, and granting access to specific ledger/balancing segment value combinations. Note that Balancing Segments can be removed from Ledgers before completing accounting setup. Once complete, you can only disable balancing segment by entering an end date.

1.9.1. Update balancing segment value assignments screen

You assign a balancing segment value to your legal entity in this screen. (Note that this screen is very similar to the balancing segment value assignments update screen available for both Primary and Secondary Ledgers). Optionally enter a Start date for the balancing segment.

1.9.2. Balancing segment is assigned to the LE in the Accounting Options screen

1.9.3. Update operating units

Operating Units partition subledger transaction data when multiple operating units perform accounting in the context of one or more legal entities. You can update the operating units at anytime from the Accounting Options screen. You do not have to complete this step in order to complete your accounting step (though you need to tag it as completed for your Primary Ledger). You can alternatively create the Operating Unit by going to the HR Responsibility. See OA Multiple Organizations Setup for more details.

Note: The HR User Type Profile option should be assigned to the Responsibility you are using to access the Organization Form.

Click on the Update icon for Operating Units from the Accounting Options Screen (See Step 2.69).

1.9.4. Operating units screen print

Operating Unit is displayed.

Open Organization Form is an alternate way to create Operating Units, Business Groups, and other organizations. This is similar to accessing the Organizations from HR Responsibility (Work Structures > Organization > Description). Please refer to the OA Multiple Organizations Setup document for details on entering/creating organizations using
this form.

Click on Return to Accounting Options button.

1.9.5. Update intercompany accounts

If you have legal entities assigned, and balancing segment values have been assigned to the legal entities, the Intercompany accounts steps are available for update. Update Intercompany Accounts step to account for transactions across legal entities.

You do not have to complete this step in order to complete your accounting setup (although you have to tag this as complete for your Primary Ledger). You can update this step at any time from the Accounting Options page.

Click on the Update icon for Intercompany Accounts from the Accounting Options Screen

To complete accounting setup without updating this form, change the status to Complete, then click on the
Done button.

1.9.6. Complete accounting setup

Review the Accounting Setup. Check the status of Setup Steps for your Primary Ledger. These should all be with a complete status (Check Mark). Likewise, Legal Entity should be updated, and Setup Step for Secondary Ledger, if applicable, should be complete. The Complete button for your Accounting setups will only be available if you have completed the required setups. If you do not see the Complete button, review setup steps that are in progress. Complete these to be able to access the Complete button.

1.9.7. Accounting setup screen print

The Complete button is available when all required setup steps are complete.

A warning message is displayed. You will not be able to delete some of the components of your Accounting setups, including legal entities, balancing segment values, and reporting currencies, once you complete the accounting setup.

Click on the Yes button.

Message confirms completion of the Accounting Setup.

Completing the accounting setup marks the accounting setup complete and launches the General Ledger Accounting Setup program. This program performs the necessary validations to make the setup components of an accounting setup ready for processing of transaction processing and journal entry.

You can likewise return to Accounting Setup and update and/or complete other setup steps for your Primary Ledger and your Secondary Ledger.

2.1.1. Create Legal Entity

Define Legal Entity (Entities) if you plan to record accounting transactions against legal entities (requires legal entity context for transaction processing). Legal Entities are likewise required for using legal entity specific features, such as intercompany accounting. Also, to enable multiple organizations, define an accounting setup with at least one legal entity, a primary ledger that will record the accounting for the legal entity, and an operating unit that is assigned to the primary ledger and a default legal context.

Legal Entities are setup in Accounting Setup Manager or, alternatively, using Oracle Legal Entity Configurator.

2.1.2. Create Legal Entity – Identification information region screen print fields

Field name	Description		R/O/C/D/E		User action and values	Comments
Territory	The territory where the legal entity is registered, displayed at the country level, and shows only territories for which the identifying jurisdiction has been defined.		R
Legal Entity Name	Legal Entity Name		R
Organization Name	Organization Name		R
Legal Entity Identifier	The identification number used to uniquely identify the legal entity. It is displayed only when the LE: Generate Legal Entity Identifier profile option set to No and you must enter it manually. If this option is set to Yes, the legal entity identifier is generated automatically based on the International Organization for Standardization (ISO) code of the country of registration, plus the registration number of the identifying jurisdiction, which qualifies an entity to be a legal entity in that particular territory		R

EIN/TIN		EIN/TIN Number		R
Transaction Entity		Yes or No		R