In this artcle, you will learn why GL Chart of Accounts is so important and is backbone of any organization, and how you can configure the same in Fusion Financials Accounting Hub. In the Oracle EBS article for Key Flexfield, you learnt why a Key Flexfield is required. That article can be read from here. In this article, we will continue with our implementation steps for configuration of Fusion Financial Accounting Hub. In the previous article linked here we created the value sets that will be used by the GL Key Flexfield in Fusion Financials. In this article, we will configure the GL Chart of Accounts itself in Fusion.
Firstly why is GL Chart of Accounts required?
The senior management can know what is strategically happening in the company just by looking at the GL Balances. These GL Balances are tracked against the GL Chart of Account Segments. For example, if you have an account segment in GL and a cost centre. Lets assume following
GL Cost Centre Values Are
C001 - IT Cost Centre
C002 - Human Resource Cost Centre
GL Account Values Are
2323490 - Hardware Expense
2323491 - Software Expense
5412000 - Travel Expense
5453291 - Flight Travel Expense
5453293 - Train Travel Expense
The accounting entries will be transferred into GL from various modules such as Procurement, iExpense, Receivables, Projects, Assets etc.
Now. if a person in Human Resource department travels via flights, their expenses will be booked to “C001 - IT Cost Centre” & “5453291 - Flight Travel Expense”.
Likewise. if a person in Human Resource department travels via flights, their expenses will be booked to “C002 - Human Resource Cost Centre” & “5453291 - Flight Travel Expense”.
These accounting entries will be transferred from iExpense to GL. Thus allowing the management to know how much is IT deparment spending on flights every month and how much is HR department.
As evident from above example, you can literally track any strategic activity just from GL. This is why all the modules in Oracle EBS and Fusion post into the general ledger.
The level of activity that you can track from GL Balances depends on the level of values[known as granularity] you put into the values of the GL Accounting Segment Value Sets. Of course the other modules must also create accounting entries at the desired level.
For example, if your client’s iExpense allows creation of accounting entry for “5412000 - Travel Expense” then GL will not be able to tell how much spend was for train and how much for flights. For this reason, we create roll up groups, so that even though accounting transactions are captured at granular level, those can still be reported at the desired levels. You can go from Train n Flight to Travel, but not the other way around.
If you wish to track balances i.e. expenses, revenue, asset & liabilities for segments that do not exist in GL then you have various other options such as extended charts in FAH, operational dimensions in your warehouse or Essbase cube or any other planning & modelling tool. Contact http://fusionpractices.com for any consulting advise that your organization requires. A typical example would be that a bank will track balances at investments product & activity levels, whereas an insurance company will track balances at insurance policy level.
Anyways, let us see the steps involved in creating a GL Chart of Account Segments in Fusion Financials Accounting Hub. You will notice that we can have upto three segments in Fusion Financials at which the journals can be balanced.
For my example, I will be enforcing that the journals are balanced at Legal Entity, Line Of Business Level & Cost Centre Level. This is not very usual for most organizations, but a very large enterprise that is global across the world with billions in revenue should consider this level of 3 tier balancing. Again, this is a case by case approach, and get in touch with me for scenario discussions.
Are all the steps the same in GL Accounting Flexfield config in Fusion as compared to EBS?
Not really, on the contrary, very different. For example, in Fusion Financials, you have a concept of Key Flexfield Instance. The Key Flexfield definition is just a template, but the instance is a reference or a wrapper around the definition. It is the instance of Key Flexfield that gets used in Fusion Applications. The benefits are that you can make multiple instances of a key flexfield, and make some instances having certain segments displayed & required, as compared to the display of the same segment in another instance of KFF.
Will I be adding an intercompany segment?
Yes, but not in this example. I will be adding the intercompany segment later when I discuss intercompany features of Fusion Financials. There is a unique qualifie/label named Intercompany for such segments. The intercompany features in Fusion Financials are much more advanced than Oracle in EBS.
The steps for implementing GL Chart of Accounts in Fusion Financials are detailed as per below.
