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Chart of Accounts Development

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First Release Version: 12.0

Introduction

Integral to any administrative system’s ability to collect and report financial data is a chart of accounts. The overall goal of the organization is to provide a simple, comprehensive, understandable, flexible, easily maintained, expandable chart of accounts that is compatible to other related systems.

Mission Driven Approach

• Both management and legal reports are necessary to support the mission of an Organization
• The Chart of Accounts Structures are derived from the Legal Reporting Requirements *The Project Accounting Structures are derived from the Internal Management and Reporting Requirements

The primary goal in the design of the Chart of Accounts is to reflect the goals of the organization. Design the Chart of Accounts with respect to how the organization does business.

• What are goals of the Organization?
• What are the reporting and organization requirements that support the goals of the Organization?
• What are the management needs of the Organization?
• What is the financial structure - chart of accounts - underlying the reporting and organization requirements?
• What are the reporting requirements for the Chart of Accounts?
  1. External - Reports (GASB, Audited Statements, etc.)
     
  2. Internal - Management Tools (Projects/Grants Accounting )
     
  3. Chart Structure - Framework for reports
     
  4. Project Accounting - Framework for Management Information System and Tools

Oracle Financial Consolidation Hub The highest level financial reporting entity in Oracle Applications is the Oracle Financial Consolidation Hub which brings together financial data from various sources to create a single view of financial information across the entire enterprise. Financial Consolidation Hub creates this view by integrating multiple subsidiaries and investments from a variety of countries with disparate accounting systems, ownership structures, charts of accounts, and currencies. The Oracle Financial Consolidation Hub is comprised of several 'FACT" tables containing dimensions. The dimensions are used to model the entities business and are analogous to the segments of an Oracle General Ledger chart of accounts. (FinancialConsolidationHUB)

Elements required for a Set of Books

• Calendar - The Accounting Calendar defines the accounting periods and fiscal years in Oracle General Ledger.
• Currency - The Functional Currency is the principal currency used to record transactions and maintain accounting balances. This is the currency in which most business transactions are performed.
• Chart of Accounts - The account structure an organization uses to record transactions and maintain accounting balances. The chart of accounts is represented in the Oracle Applications by the Accounting Key Flexfield.

General Ledger Chart of Accounts

The General Ledger Chart of Accounts is the reporting entity in Oracle Applications that partitions and secures General Ledger, Sub Ledger, and Accounting information such as journal entries, account balances, determines the functional currency, account structure, and accounting calendar for each entity or a group of companies or organizations.

Questions for organizing a chart of accounts:

• What Segments will you need?
• Which Segment will be your balancing segment?
• Which Segment will be your cost center segment?
• What size and type will segments be?
• How will you assign numbers or codes to the Chart of Accounts?
• What default values will you have?
• What validation rules will you have?
• Will you set up security?
• Will you use shorthand aliases?
• How Will You Convert to Your New Chart of Accounts?
• How Will You Maintain Your New Chart of Accounts?

What is a Flexfield?

A Flexfield is an Oracle Applications field made up of one or more sub-fields or segments. The field appears on Oracle forms as a pop-up window that contains a prompt for each segment (sub-field). Flexfields are used for intelligent keys like Accounting Codes, Part Numbers, Items, Categories and other similar keys within Oracle Applications.

Components of a Flexfield

• Value Set
• Flexfield Segment
• Segment Separator
• Flexfield Structure
• Segment Qualifiers
• Segment Values
• Code Combinations
• Natural Account Qualifiers

Accounting Key Flexfield

The Accounting Key Flexfield is the code you use to identify a general ledger account in an Oracle Financials Application and represents the account structure an organization uses to record accounting transactions, balances, and perform financial reporting. The structure of the Flexfield may be defined to meet the specific needs of any organization. Each set of books may use its own accounting key Flexfield structure. The Accounting Key Flexfield supports a multi-segment structure up to 30 individual segments.

Subledger Accounting

Subledger Accounting is a new feature which enhances the functionality in Oracle General Ledger Applications by defining how journal entries are generated from Subledger transactions at the Subledger Accounting application level. The options are set up for the Primary and Secondary Ledgers only and are entered through the General Ledger's Accounting Setup Manager. A Set of Books in Release 11 is now a Ledger with its own Ledger Set in Release 12. Subledger Accounting creates the accounting like the earlier Release 11i Oracle Accounting Engine created the accounting. (SubLedgerAccounting)

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Links

• Related: GeneralLedger, FinancialConsolidationHUB, SubLedgerAccounting

This Topic Is Referenced By These Topics:
Related Links: AccountingSetup, AuditAbility, DataSecurity, FederalFinancials, FinancialImplementationGuide, GeneralLedger, GeneralLedgerImplementationGuide, GLFinancialReporting, GlobalIntercompany, InternalControl, JournalEntry, MultiOrganization, OtherMinorGLFeatures, PortfolioAnalysis, ProjectAccounting, ProjectContracts, ProjectCosting, ProjectFoundation, ProjectManagement, ProjectResourceManagement, ProjectsWorkflow, PublicSectorFinancials, PublishDocControlReport

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Collaborating Authors and Reviewers: BillDaley - 20 Mar 2007