Oracle R12 - General Ledger Setup

1. Define Responsibilities

- Security > Responsibility > Define (System Administration)

Description:  Use the Define Responsibility window to define responsibilities for each operating unit by application. When signing on to Oracle Applications, the responsibility chosen determines the data, forms, menus, reports, and concurrent programs that can be accessed.  Consider using naming conventions for the responsibility names in a Multiple Organization environment. It is a good idea to use abbreviations of the business function and the organization name to uniquely identify the purpose of the responsibility.

2. Chart of Accounts

- Description: Any Accounting transaction in Oracle Applications impacts the Chart of Accounts, which in Oracle Applications parlance is called the Accounting Flexfield Structure. Accounting Flexfield is a combination of Segments, each of which is designed to represent a dimension of business/accounting information.

      2.1 Value Set Definition

Setup > Financials > Flexfield > Validation > Sets

        2.2 Key Flexfield Definition

Setup > Financials > Flexfield > Key > Segments

        2.3 Value Definition

Use this window to define valid values for a key or descriptive flexfield segment or report parameter. You must define at least one valid value for each validated segment before you can use a flexfield.

Setup > Financials > Flexfield > Key > Values

3. Defining Period Type 

Setup > Financials > Calendars > Types

- Description:  Period types are used when defining the accounting calendar for the organization.  Each Ledger has an associated period type.  In case a calendar is assigned to a Ledger, the Ledger only accesses the periods with the appropriate period type.

4. Define Accounting Calendar 

Setup > Financials > Calendar > Accounting

- Description:  Create a calendar to define an accounting year and the periods it contains. You should set up one year at a time, specifying the types of accounting periods to include in each year. Defining one year at a time helps in being more accurate and reduces the amount of period maintenance you must do at the start of each accounting period. You should define your calendar at least one year before your current fiscal year.

5. Define Currencies 

Setup > Currencies > Define

Description:  Use the Currencies window to define non-ISO (International Standards Organization) currencies, and to enable/disable currencies. Oracle Applications has predefined all currencies specified in ISO standard #4217.  To use a currency other than U.S. Dollars (USD), you must enable the currency.  U.S. Dollars (USD) is the only currency that is enabled initially.

6. Setup Jurisdiction Code for Legal Entity

Legal Entity Manager (Responsibility) >Legal Entity Configurator>Jurisdiction 

7. Define Legal Entity

Setup > Account Setup Manager >Accounting Setup

Legal Entity > Legal Entity Configuration > Legal Entities > Create Legal Entity:

Before creating the ledger need to create the Legal Entity.  Legal entity is the place where it holds the legal information about the organization such as the Jurisdiction, Territory, and Registration number of the company & Legal Address of the company.

8. Define Ledger

Setup > Financials > Accounting Setup Manager > Accounting Setups

Defining Ledgers:

A ledger determines the currency, chart of accounts, accounting calendar, ledger processing options and sub-ledger accounting method, if used, for a legal entity, group of legal entities, or some other business purpose that does not involve legal entities.

You define ledgers when you create accounting setups in Accounting Setup Manager. Each accounting setup requires a primary ledger and optionally one or more secondary ledgers and reporting currencies.

Primary Ledger

The primary ledger acts as the main record-keeping ledger. If used for the purpose of maintaining transactions for one or more legal entities, it uses the legal entities' main chart of accounts, accounting calendar, currency, sub-ledger accounting method, and ledger processing options to record and report on all of their financial transactions.

Ledger Prerequisites

The following need to be defined or enabled in Oracle General Ledger before you can create ledgers using Accounting Setup Manager.

• Chart of accounts

• Accounting calendar

• Currencies

• Currency conversion rate types and rates, if you plan to use more than one currency

• Journal Reversal Criteria, if you plan to Automatically Reverse Journals

• Retained Earnings Account

• Suspense account, if you want to enable suspense posting

• Cumulative Translation Adjustment account, if you plan to translate balances

• Rounding Differences account, if you want to use a specific account to track small currency differences during currency conversion

• Non-Post-able Net Income account, if you plan to use average balance processing. This account is used to capture the net activity of all revenue and expense accounts when calculating the average balance for retained earnings.

• Reserve for Encumbrance account, if you plan to use Encumbrance Accounting

• Entered Currency Balancing Account, if you plan to use Oracle Sub-ledgers and want to balance foreign currency sub-ledger journals by the entered currency and balancing segment value.

9. Define and Assign Document Sequence

Setup > Financials > Sequence > Define

Description: Create a document sequence to uniquely number each document generated by an Oracle application. In General Ledger, you can use document sequences to number journal entries, enabling you to account for every journal entry.

Attention:  Once you define a document sequence, you can change the Effective to date and message notification as long as the document sequence is not assigned. You cannot change a document sequence that is assigned.

Note: Profile option “Sequential Numbering” should be set to “Partially Used” at the site level; this will enable users from entering document if no sequence exists.

10. Setup Profile Option

Profile > System (System Administrator)

Description: Profile options specify how your General Ledger application controls access to and processes data. In general, profile options can be set at one or more of the following levels: site, application, responsibility, and user.

Common Profile Options

Profile Value		Value	Site	Application	Responsibility	User
Flexfields:Open Descr Window		Optional	Yes
FND: Indicator Colors		Optional	Yes
Indicate Attachments		Optional	Yes
Currency: Mixed Currency Precision		Optional	3
Currency: Negative Format		Optional	-XXX
Currency: Positive Format		Optional	XXX
Currency: Thousands Separator		Optional	Yes
Flexfields: Autoskip		Optional
Flexfields: Shorthand Entry		Optional	Always
Sequential Numbering		Optional	Always Used
Flexfields:Open Key Window		Optional	No

General Ledger Profile Options

Profile Value		Value	Site	Application	Responsibility	User
Budgetary Control Group		Optional	Standard
Daily Rates Window: Enforce Inverse Relationship During Entry		Optional	No
FSG: Accounting Flexfield		Optional	Accounting Flexfield
FSG: Allow Portrait Print Style		Optional	Yes
FSG: Enable Search Optimization		Optional	Yes
FSG: Enforce Segment Value Security		Optional	No
FSG: Expand Parent Value		Optional
FSG: Message Detail		Optional	Normal
FSG: String Comparison Mode		Optional
GL: Auto Allocation Rollback Allowed		Optional	Yes
GL: Debug Mode		Optional	Yes
GL: Income Statement Accounts Revaluation Rule		Optional	YTD
GL: Number of Purge Workers		Optional	1
GL: Journal Review Required		Optional	No
GL: Launch AutoReverse After Open Period		Optional	No
GL: Owner's Equity Translation Rule		Optional	PTD
GL Account Analysis Report: Enable Segment Value Security on Beginning/Ending Balances		Optional
GL AHM: Allow Users to Modify Hierarchy		Optional	Yes
GL Consolidation: Exclude Journal Category During Transfer		Optional
GL Consolidation: Preserve Journal Batching		Optional
GL/MRC: Inherit the creation user for the reporting currency's journal from the primary ledger's journal		Optional	Yes
GL Ledger ID		System Defaults	YYYY		YYYY
GL Ledger Name		Required	ADEC Ledger
HR: Security Profile		Optional			XXXX
HR: Business Group		Optional			XXXX
GL Summarization: Number of Delete Workers		Optional	3
GL Summarization: Accounts Processed at a time per Delete Worker		Optional	5000
GL Summarization: Rows Deleted Per Commit		Optional	5000
Journals: Allow Multiple Exchange Rates		Optional	No
Journals: Allow Non-Business Day Transactions		Optional	Yes
Journals: Allow Preparer Approval		Optional	No
Journals: Default Category		Optional	Adjustment
Journals: Display Inverse Rate		Optional	No
Journals: Enable Prior Period Notification		Optional	Yes
Journals: Find Approver Method		Optional	Go Up Management Chain
Journals: Mix Statistical and Monetary		Optional	No
Journals: Override Reversal Method		Optional	No
Use Performance Module		Optional	Yes

11. Open an Accounting Period

Setup > Open/Close

Description: Open and close accounting periods to control journal entry and journal posting, as well as to compute period–end and year–end actual and budget account balances for reporting. 

12. Setup Budgets

Budgets > Define > Budget

Description: The budgeting process can be used to enter estimated account balances for a specified range of periods. These estimated amounts can be used to compare actual balances with projected results, or to control actual and anticipated expenditures.  Define a budget to represent specific estimated cost and revenue amounts for a range of accounting periods. You can create as many budget versions as you need for a Ledger.

Attention: With Multiple Reporting Currencies, budget amounts and budget journals are not converted to reporting currencies. If you need budget amounts in a reporting Ledger, you must log in to General Ledger using the reporting Ledger’ responsibility, defines the budget in the reporting Ledger, and then enters budget amounts in the reporting currency. Alternatively, you can import budget amounts in your functional currency, and then translate the amounts to your reporting currency.

13. Define Budgetary Control Groups

Budgets > Define > Controls

Description: A budgetary control group can be created by specifying funds check level (absolute, advisory, or none) by journal entry source and category, together with tolerance percent and tolerance amount, and an override amount allowed for insufficient funds transactions.  At least one budgetary control group must be defined to assign to a site through a profile option.  You might also create additional budgetary control groups to give people different budgetary control tolerances and abilities to override insufficient funds transactions.

Attention: To use budgetary control, encumbrance accounting, budgetary accounts, and funds checking; Payables, Purchasing and General Ledger must be fully installed.

14. Security Rule

Description: Define security rule to restrict user access to certain account segment values.

15. Cross Validation Rules Rule

Setup > Financials > Flexfields > Key>  Rules

Description: Define Cross validation rules  to prohibit invalid account combinations being created thus they are applicable to a combination of segment values. Cross validation rule once created would immediately take affect with all the responsibilities that are using the accounting structure(chart of accounts) for which the rule is defined.

Note:- While setting up Cross Validation  Rule we need to enable Cross Validate Segments at Accounting Flexfield Structure Level.