R12 General Ledger Management Fundamentals

Consolidations

R12 General Ledger Management Fundamentals

Objectives

After completing this lesson, you should be able to:• Identify how the consolidation process is positioned

within the Oracle General Ledger business flow• Identify the key implementation issues regarding

consolidations• Identify the features and functionality of Global

Consolidation System (GCS)• Describe the elements of the Consolidation Workbench• Create eliminating entries• Identify reports and inquiry options available for

consolidations

Overview of Consolidations

With Oracle General Ledger, you can consolidate any number of subsidiaries that use different ledgers, even those with different charts of accounts, currencies, and calendars

Subsidiary 1 Subsidiary 2 Subsidiary 3

ParentRun Consolidation

Consolidation Tools

You can use the method that best suits your needs to consolidate financial information.• Financial Statement Generator (FSG)• Global Consolidation System (GCS)

FSGGCS

Consolidating Multiple CompaniesSharing a Single Ledger

Parent company

Subsidiary 1 Subsidiary 2 Subsidiary 3Co-CC-AcctMonthlyUSD

Co-CC-Acct Monthly USD

Co-CC-Acct Monthly USD

Structure: Co - CC - Acct Calendar: MonthlyCurrency: USD

Use FSG to consolidate data

Use FSG to consolidate subsidiaries that share the same ledger

Consolidating Multiple Companieswith Multiple Ledgers

Parent company

Subsidiary 1 Subsidiary 2 Subsidiary 3Co-CC-AcctQuarterlyUSD

Co-Acct-Prd Monthly Euro

Co-Acct-CC-Prd Weekly AUD

Structure: Co - CC - Acct - PrdCalendar: MonthlyCurrency: USD

Use GCS to map and consolidate

Global Consolidation System (GCS) Features and Benefits

Global Consolidation System provides:• A workbench to view the consolidation status of your

subsidiaries• Sophisticated consolidation mapping rules to map

accounts and specify transfer rules from the subsidiary to the parent

• A color-coded consolidation monitor that guides you through the consolidation steps

• A Consolidation Hierarchy Viewer to graphically display your consolidation structure

• The Interface Data Transformer makes importing data from external feeder systems easier

Global Consolidation System (GCS) Features and Benefits (continued)

Global Consolidation System provides:• Automatic generation of eliminating entries• Multilevel drilldown capabilities to subsidiary balances

and subledgers• Interface Data Transformer (IDT)• Powerful report publishing capabilities using FSG and

Web ADI• Integrated multidimensional analysis using Oracle

Enterprise Planning and Budgeting

Consolidating Data in Multiple Instances

Parent company

ledger

Use Web ADI or IDT to copy data from another instance to another

Web ADI Journal Entry Spreadsheet

"Subsidiary 1"

Subsidiary 1 Ledger

Oracle Instance A

Oracle Instance B

Web ADIExtract

Consolidate

GL_INTERFACE TableExternal Data

IDT Rules Transform Data

External Data loaded into GL_Interface

GL Journals

Reformatted Data Imported to GL

Interface Data Transformer (IDT) Description

User-friendly tool that facilitates the importing of data from external feeder systems into Oracle General Ledger and Global Consolidation System

Interface Data Transformer (IDT)Benefits

Easier Integration with Non-Oracle Systems:• Automatic data conversion that converts disparate data

formats into an Oracle format• Reapplication of the same rules each time you transfer• Automatic data validation on imported data provides

greater flexibility!• Conditions allow you to control when Transformation

Rules should be applied

Interface Data Transformer (IDT) Rule Set Description

Rule Sets provide instructions to transform data in the GL_INTERFACE table: • Use String Functions to parse and concatenate

substrings• Call PL/SQL Functions to perform sophisticated

transformations • Reference Lookup Tables to convert one value into

another

100C B 540 20%

100CB Budget 108 20%

Column1 and Column2 are concatenated, placing the results in Column1.

Column1 Column2 Column3 Column4Parses and concatenates substrings

Source

Target

Interface Data TransformerString Function Example

Column3 is multiplied by Column4, placing the results in Column3

540 X 20% = 108

Performs sophisticated transformations

100C B 540 20%Column1 Column2 Column3 Column4

100CB Budget 108 20%

Source

Target

Interface Data Transformer PL/SQL Function Example

A lookup table maps "B" to "Budget," placing the results in Column2

Converts one value into another

100C B 540 20%Column1 Column2 Column3 Column4

100CB Budget 108 20%

Source

Target

Interface Data Transformer Lookup Table Example

Interface Data Transformer Steps

• Define Rule Set• Load Interface Table

– Load the external data into the GL_INTERFACE table using SQL Loader or another program

– Specify a Source and Group ID in the flat file• Run Transformer Program

SQL

Other Uses forGlobal Consolidation System

Use Global Consolidation System (GCS) to transfer balances if you make changes to your chart of accounts or accounting calendar

Consolidation Workbench

The Consolidation Workbench and State Controller provide a central point of control for consolidating an unlimited number of subsidiaries to your parent ledger

Access all consolidation steps

Monitor consolidationprocess

View mappings and hierarchies

Consolidation Workbench (continued)

Find Consolidation Processes

Consolidation Workbench

Preparation/Transfer

Elimination

State Controller

MappingMapping Set

Translation StatusTransfer

Transfer SetReview Journal

PostElimination Set

EliminationReport

Using the State Controller

Button Name Consolidation Step

MappingMapping Set

Translation Status

TransferTransfer SetReview JournalPost

Report

Map consolidation data

Prepare consolidation data

Transfer consolidation data

Create eliminating entries

Report on consolidated balances

Review and post to consolidate data and update consolidated balances

Elimination SetEliminate

State Controller Button Colors

Blue

Gray

Red

Recommended

Not Recommended

Warning

Mapping

Mapping Set

Translation Status

Transfer

Review Journal

Post

Eliminate

Report

Transfer Set

Elimination Set

Defining a Consolidation Mapping

• A consolidation mapping is a set of instructions for mapping accounts or entire account segments from a subsidiary ledger to the parent ledger

• Define a consolidation mapping for each subsidiary you want to consolidate

Mapping Rules

Parent Ledger

SubsidiaryLedgers

Mapping Rules

• You can define segment rules, account rules or a combination of both

• If you use segment rules you must define a segment rule action for each segment in the parent's chart of accounts, but you cannot define more than one action

• Account rules override segment rules, if there is a conflict. Suggestion:– Use segment rules to define the default mapping– Use account rules to define exceptions

Using Account Mapping Rules

Account rules map a specific subsidiary account or range of accounts to a specific account in the parent ledger

02.300.5410.100 01.5000.100

maps toSubsidiary Parent

Low 02.400.5400.100

High 02.400.6999.10001.5200.100

Using Segment Mapping Rules

Segment rules map subsidiary account segments to parent account segments

Maps to

DepartmentAccountProduct

Cost CenterAccountLocation

Subsidiary Parent

Using Segment Rollup Rules

A rollup rule consists of the following:

Parent SegmentDetail Value

Transfer Level

Using

SubsidiarySegment ParentValue or Segment Ranges

Subsidiary values rollup into the specifiedparent detail segment value.

Specifies whether to rollup detail or summary data.

Specifies whether Parent, Detail Ranges, orParent Ranges from subsidiary are mapped.Dependent on Transfer Level selected.

• If you specify Parent in the Using field, enter the parent account value for the subsidiary.• If you specify Detail Ranges or Parent Ranges, enter the account ranges for the subsidiary.

Rule Description

Defining a Consolidation Mapping Set

Create a mapping set to transfer data for multiple subsidiaries simultaneously

Mapping Set

Subsidiary 1 Mapping

Rules

Subsidiary 2 Mapping

Rules

Subsidiary 3 Mapping

Rules

Transfer to Parent Company Ledger

Consolidation Hierarchy Viewer

-Vision Corporation (UK) (Vision Corporate Mapping)• Currency: GBP• Calendar: Fiscal• Chart of Accounts: Co-Dept-Acct

Vision Operations (USA) (Vision Operations Mapping)• Currency: USD• Calendar: Accounting• Chart of Accounts: Co-Dept-Acct-Sub-Acct-Prod

Vision Services (USA) (Services to Corporate)• Currency: USD• Calendar: Weekly• Chart of Accounts: Co-Serv Dept-Serv Acct-Prod

Vision Services (SNG) (Distribution to Corporate)• Currency: SGD• Calendar: Accounting• Chart of Accounts: Co-Dept-Acct-Prod

+

Preparing Subsidiary Data

Before you transfer balances from a subsidiary ledger:• Revalue balances• Translate to functional currency• Run trial balance reports

Run reports

Revalue balances

Translate balancesSubsidiary

Ledger

Revaluation Process

Revaluation is the process that:• Reviews a foreign currency balance• Reconverts the functional currency using the

Revaluation Rate• Creates a journal entry to adjust the functional balance

to the reconverted amount

Foreign currencies

Functionalcurrency

Translation

Foreign currency translation is the process that restates the functional currency account balances into another currency

Subsidiary functionalcurrency

Parentfunctional currency

Transferring Subsidiary Datato Parent Ledger

You can transfer data from your

subsidiary ledgers by:

Consolidating balances

Consolidating transactions

Transferring consolidation

sets

Consolidation Tracking and Reversals

Posting Consolidation Journal Entries

Run Journal Import Review

PostRun Reports

Global Consolidation SystemCross Instance Data Transfer

Transfer Subsidiary

DataRemote Parent Instance

Cross Instance Data Transfer enables you to transfer subsidiary data to your remote parent instance over your corporate intranet

Cross Instance Data Transfer Security

• Using Cross Instance Data Transfer Security:• You create a specific username for the central

consolidation database instance with limited access to specific objects in the database

• Subsidiaries use this username to define database links for cross instance data transfers

Global Consolidation SystemParallel Consolidation

Parallel Consolidation enables organizations to:• Run multiple concurrent consolidation processes

in parallel for different subsidiaries– Uses separate GL_INTERFACE tables to increase

processing speed– Must select the Run Journal Import option in the

Transfer Consolidation Data or Transfer Consolidation Data Set forms

Creating Eliminating Entries

Company A Company B

Formula-Based Eliminations

Use recurring journal entries set up with specific formulas or partial eliminating entries, such as those for:• Intercompany profit eliminations• Minority interest eliminations• Cross-ownerships• Intercompany transactions with partially owned

subsidiariesYou cannot use the Automatic Intercompany Eliminations program to eliminate formula–based eliminations or average balances

Automatic IntercompanyEliminations Program

Source Account from Subsidiary

Run EliminationDefine Elimination Set

Source Account from Subsidiary

Target Account in Parent or Elimination Company

Target Account in Parent or Elimination Company

Defining an Elimination Set

Required Components:Batch nameDescriptionElimination journalsCurrency Amount typeSource AccountType Account

Optional Components:Elimination companyTrack Elimination StatusEffective From and To datesBalancing options

Source and Target Account Examples

Parent Cost Center 999

100

Child Accounts

200 300 400

If SourceAccount

Is mapped toTarget Account

The outcome is

Null Null Source accounts 100, 200, 300, and 400 eliminate into individual target accounts 100, 200, 300, and 400

Null 100 Source accounts 100, 200, 300, and 400 eliminate into target account 100

200 Null Source account 200 eliminates into target account 200

999 Null Source accounts 100, 200, and 300 (children of 999) eliminate into individual target accounts 100, 200, and 300

200 100 Source account 200 eliminates into target account 100

999 100 Source accounts 100, 200, and 300 (children of 999) eliminate into target account 100

Balancing Options for Eliminations

Balancing Option OutcomeAllow out of BalanceJournal

Balance with NetDifferences Account

Balance with NetDifferences Accountwith threshold rules

Allows out of balance journal entries to be created. Journal review required.

• If the difference < threshold, a balanced journal entry is created with the difference posted to the net difference account.• If difference > threshold, an out of balance journal entry is produced for your review.

Difference in out of balance journals are posted to net difference accounts you specify for debits and credits. Threshold rules can be applied.

_

Allow Out of Balance Journal

Elimination Journal Entry

DR CR

I/C AR 100

I/C Sales 87

Out of Balance 13

Review and analyze difference

Balance with Net DifferenceElimination Journal EntryBalance with Net Difference Account Threshold = 5

DR CR

I/C AR 205

I/C Sales 199

Out of Balance 6

Elimination Journal EntryBalance with Net Difference Account Threshold = 15

DR CR

I/C AR 205

I/C Sales 199

Net Difference Account 6

Review and analyze difference

Consolidated Balances Inquiry

From your consolidated parent ledger, you can view consolidated balances, journals, subsidiary details, and subledger details

Total Consolidated Sales

Total Sales – Company A

A/R Subledger

Sales Account 2Sales Account 1

A/R Subledger

Performing Consolidated Balances Inquiry

Balances

Consolidation

SubsidiarySource Account

Display original

currency

Displaytranslated currency

Switch amount

type

Running Consolidation Reports

You can generate standard consolidation reports from the State Controller or Submit Request window• Consolidation Audit Report• Consolidation Exceptions Reports:

– Unmapped Subsidiary Report– Disabled Parent Accounts Report

• Consolidations Rules Report• Consolidations Journals Report

Creating Custom Consolidation Reports

To define customized consolidation reports, use Web Applications Desktop Integrator (Web ADI), or Financial Statement Generator (FSG)

Summary

In this lesson, you should have learned how to:• Identify how the consolidation process is positioned

within the Oracle General Ledger business flow• Identify the key implementation issues regarding

consolidations• Identify the features and functionality of Global

Consolidation System (GCS)• Describe the elements of the Consolidation Workbench• Create eliminating entries• Identify reports and inquiry options available for

consolidations