R12: GL: Case Study on Creating a Ledger in Oracle

General Ledger
Product: Oracle General Ledger Product Version: 12.X.X

This document was authored by an Oracle customer and has not been subject to an independent technical
review.

Abstract

Recently we made presentations to a client about the R12 features in Oracle

General Ledger. The client was interested in knowing various new features in
R12 for their financial modules. We started with the General Ledger
Application’s Ledger feature.

This document details the steps we performed as part of our Demo to create
a Ledger in R12 of Oracle General Ledger. We also noted down the
observations of the new features for ease of implementation and
requirement gathering.

We illustrated the Ledger definition cycle by tying the following 4 C’s:

1 Calendar
2 Currency
3 Chart of Accounts
4 Convention (Accounting Convention also known as Subledger Accounting
Method)

Observation: There is no set of books in R12, instead a Ledger had to be

created. In addition to the 3 C’s of Calendar, Chart of Accounts and Currency
which were the components of Set of Books in R11i, R12 introduced a 4th C,
Convention. The Convention represents the accounting method used at
subledger level like Accrual basis of accounting or Cash basis of accounting

The following are the major steps we performed during our demo of a
Ledger creation and usage:
1. Defining Accounting Flexfield
2. Defining Legal Entity
3. Defining Ledger
4. Completing mandatory Accounting Options
5. Assigning a Ledger to a Responsibility
6. Using the Ledger
1. Defining Accounting Flexfield

We all know that the accounting flexfield indicates the accounting

representation of a company’s financial data. The client wanted the financial
information to be represented in the structure: Company. Cost Center.
Account. Intercompany which we used for our Demo.

Navigations ->

• Value Set: GLSuperuser>Setup>Financials>Flexfields>Validation>Sets

• Values: Superuser>Setup>Financials>Flexfields>Key>Values>Choose
Application as General Ledger, Title as Accounting Flexfield, Structure
as <User Define>,Segment<user defined>

Observations: Before we assigned segments, WE HAD to enable “Allow

Dynamic Inserts” Option for the Accounting Flexfield until the Accounting
Setups were done (this can be later disabled if required), otherwise, we
faced issues when assigning the Retained Earnings account in Step 4 to be
discussed later
The following are the further attributes for the above segments
Segment Length Format Validation Flexfield Qualifier
Type
Company 2 Char Independent Balancing
Cost Center 3 Char Independent Cost and Secondary
Tracking
Account 4 Char Independent Natural
Intercompany 2 Char Independent Intercompany

Ensured the following:

a) Minimum of one value for each segment had been defined

b) A value in the Natural Account with Type as ‘Ownership/Stockholder's
Equity’ was used for Retained Earnings
c) If Dynamic Insert was not to be enabled, the proposed retained
earnings account was to be created manually in the Setup > Financials
> Combinations form.
 2. Defining Legal Entity

Legal Entity had to be defined to store the legal and statutory

information for the client’s business. Though it was not a mandatory
step in defining a Ledger and or completing the setup options, from
the client’s reporting and legal obligations, Legal Entity was required
for our demo.

Observations:
• In prior releases Set of Books definition a.k.a Ledger definition
did not link with that of legal entity, but in this release we could
define all the important organizations at the time of defining
ledger only
• Legal Entity has the same meaning as in prior releases

Navigation

GL Superuser>Setup>Financials>Accounting Set up Manager>Accounting

Setups

Unlike the prior application releases’ majority set up screens being form
based, the Accounting set up manager is a user friendly HTML based
interface guiding the user in performing all the steps. The first screen is a
multi screen use screen which allowed users create/update both legal
entities and Accounting setups.
Since we started from the scratch, we navigated to click on Create
Accounting Setup, and then the Assign Legal Entities screen opened up as
shown below:

The above screen was also a multi use screen that allowed us to query the
predefined Legal Entities as well as create new legal entities. Then we
clicked on Create Legal Entities button to open the Create Legal Entities
screen which appeared as below:
Observations
• A completed legal entity is required for assigning balancing
segment values as part of completing the Accounting Set up
Options
• A Legal Entity is required for associating an Operating Unit where
Oracle Subledgers are used in the Organization
• For usage / definition of Ledger, usage of Legal Entity is not a pre-
requisite, so we can have ledgers which are not associated to any
Legal Entity.
3. Defining a Ledger

Once we defined the legal entity, the next step was the creation of a ledger.
As mentioned earlier we found Ledger in R12 is effectively the substitution
for Set of Books in prior releases.

We ensured the following prerequisites before defining a ledger

• Chart of Accounts has been defined – Done above

• Functional Currency has been enabled or defined and enabled – used
the seeded USD currency
• Accounting Calendar has been defined – Used the seeded
Accounting/Month combination
• Convention – Used the seeded Accrual basis of accounting convention
• Retained Earnings code combination has been defined

Since it was the first ledger, it became a Primary ledger. The following is the
Define Accounting Representations screen

Here, we defined the ledger attributes like

• Chose a name for the Primary Ledger
• Associated
o Chart of Accounts
o Accounting Calendar
o Currency
o Subledger Accounting Method(User defined or Seeded) if using
Oracle subledgers
Clicked on Finish once the information we entered Correct
 4 Define Accounting Options

In the Accounting Options we did the following

In the Ledger options, we did the following:

Once we completed the Required ( those marked with *) and the optional
steps depending on what features we intended to use, the last step showed
all the information for review before we Finished the setups
Once we clicked on Finish, we were back to the Accounting Options screen

We noticed that the name of the Ledger Options changes to the Ledger
Name we defined and that all other set up steps are enabled for Update (this
will not be the case before the completion of the Ledger Options)

The Reporting Currencies Option

Reporting currencies are additional currency representations of 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. This is same as Translation in
earlier versions of Oracle General Ledger

• 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. This is same as the Thin MRC in 11i
Version of General Ledger

• 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
is maintained by Oracle Subledger Accounting (SLA) and the GL Posting
program. This is the Multiple Reporting Currencies Feature in earlier releases
of Oracle General Ledger

(From R12 Oracle General Ledger User Guide for reference purposes)
We specified for this option, the
• Reporting Currency - INR
• Currency Conversion Level - Balance and
• Currency Translation Options – Corporate for Period Rates
Once we clicked on Finish, we were back to the Accounting Options screen

The above screen reflects the updated status for the Reporting Currencies
Option.

The Balancing Segment Values Assignments Option was found to be a

new feature in R12. This was used to tie the Legal Entity/Ledger to the
balancing segment values.
We observed the following:

a) What was assigned at LE level automatically flowed to the Ledger level

b) The one assigned at the Ledger level stayed at Ledger level
c) Whatever was assigned to the legal Entity were the only VALID subledger
values.
d) Some forms still displayed all the balancing segment values (but at some
stage or the other validation was done to ensure that only those attached to
an LE/Ledger are used in the system) - Journal entry form displayed all the
segment values, but on completion threw up a message that “The particular
BSV is not valid for that ledger”
e) If nothing was assigned to the LE/Ledger, all the values of the balancing
segment were valid

When we clicked on the update icon for this option and clicked on add
balancing segment values button, the system showed all the values for the
segment which is qualified as the Balancing Segment in our chart of
accounts, we chose one of the value(s) and click on complete.
Once we clicked on Finished, we are back to the Accounting Options screen

The above screen reflects the updated status for Balancing Segment Values
Assignments Option.

The Operating Units Options is relevant if Oracle Subledgers are used in

the Organization. By using this option, we defined a new operating Unit and
associated with a Legal Entity and Ledger. This form gave us the option to
access the Define Organizations form and complete the other information
related to an operating Unit.
Once we clicked on Finish, we were back to the Accounting Options screen

The above screen reflects the updated status for Operating Units Option.

The next option Intercompany Accounts is used if there are transactions

across legal entities which have balancing segment values associated to
them. Since we had defined only one Legal Entity this option was not
applicable to us

The next option Sequence is used to generate numbers for Journal

entries. We were not using sequences, so this optional step was ignored.
5. Assigning the Ledger to a Responsibility

The above steps prepared the ledger for transaction processing. The next
step was to associate the ledger to a responsibility. We found a new
profile option that has been introduced for this. We associated the ledger
to a responsibility using the system administrator responsibility via the
“GL Data Access Set” profile option. This is a system generated value
(basically the ledger name) which was to be established at the
appropriate level (Site, Application, Responsibility or User) for access to
the appropriate responsibility. The GL Data Access Set Profile option is a
new option introduced in R12. This profile option determined what ledgers
a user of a responsibility has an access to.

Observations:

Unlike R11i, where each responsibility can have access to only one set of
books, in R12, users can have access to multiple ledgers via a ledger set.
This feature long with other new features like Data Definition set, Multi
Org Access Control (MOAC) have taken the access, security and usage
features to a new dimension.

6. Using the Ledger

Once the profile option had been established tying the Ledger and the
responsibility, the ledger was operational. User could choose the
responsibility which will give access to the ledger. The very first time the
user accessed the ledger, he had to open the First ever open period via
GL Responsibility>Setup >Open/Close, the system prompted the user to
confirm the very first open period specified while filling the Ledger
options, once confirmed, a concurrent request spawned setting that
period as the very first period for the ledger. Then the transactions and
other feature usage of Oracle General Ledger could be executed.
Document History
Author: Kulasekhar Sribhashyam
Title: Oracle Financials Certified Professional
Date Created: 11-Sep-07

References
R12: Financials Implementation Guide
R12: Oracle General Ledger User Guide

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