Skip Headers

Oracle Financials Implementation Guide
Release 12.1
Part Number E13425-05
Go to Table of Contents
Contents
Go to previous page
Previous
Go to next page
Next

Accounting Setup Examples

This appendix covers the following topics:

Introduction

This appendix provides comprehensive examples for different accounting environment type that you can create using Accounting Setup Manager (ASM). The examples relate to a company called Outdoor Outfitters, a U.S.-based retail apparel company implementing the E-Business Suite. Each example builds upon Outdoor Outfitters' changing business needs as they move from being a U.S. only retail establishment to one that operates in Canada and then Europe and Brazil.

Each accounting setup example describes the recommended implementation options, such as the number of ledgers, balancing segment value assignment issues, security issues, and consolidation issues.

Accounting Setup with Multiple Legal Entities – U.S. Only Operations

Outdoor Outfitters, a U.S. based retail apparel company, wants to use a single instance of Oracle Applications. It has two legal entities located in the U.S., U.S. East, and U.S. West. Both of these legal entities operate in a country that does not enforce strict rules regarding tax and document sequencing. Both legal entities can also share the same chart of accounts, accounting calendar (that is based on the fiscal year end of January 31), currency, subledger accounting method, and ledger processing options.

This section includes the following parts:

Additional Requirements

The following requirements apply to this example:

The following table outlines the ledger requirements for each of the U.S. legal entities.

Ledger Requirements for U.S. Legal Entities
Legal Entity Chart of Accounts Calendar Primary Currency Subledger Accounting Methods Ledger Processing Options
U.S. East Corporate Corporate USD Standard Accrual Both legal entities can share the same ledger processing options
U.S. West Corporate Corporate USD Standard Accrual  

Accounting Setup for U.S. Legal Entities

Outdoor Outfitters can assign both US legal entities to the same accounting setup. This allows both legal entities to share the same primary ledger. This is possible because both legal entities operate in the same accounting environment and can share the same primary ledger attributes.

The following table describes the accounting setup for the U.S. legal entities.

Accounting Setup for U.S. Legal Entities
Parameter Description
Legal Entities U.S. East; Balancing Segment Value Assigned: 01
U.S. West; Balancing Segment Value Assigned: 11

Note: Specific balancing segment values should be assigned to each legal entity. This is particularly important because both legal entities share the same ledger. Users can identify each legal entity's transactions during data entry and reporting. They can also take advantage of all of the legal entity features, such as Intercompany Accounting.

Primary Ledger Outdoor Outfitters (USD)
Chart of Accounts: Corporate
Accounting Calendar: Corporate
Currency: USD
Subledger Accounting Method: Standard Accrual

The following table describes the suggested primary ledger setup steps.

Suggested Primary Ledger Setup Steps
Setup Step Description
Ledger Options Required to complete the ledger definition
Balancing Segment Value Assignment Balancing Segment Value: 91
Because Outdoor Outfitters wants to keep their consolidation adjustments and elimination entries completely separate from the day-to-day transactions of their legal entities, they should assign a specific balancing segment value to the ledger.
Subledger Accounting Options Because Outdoor Outfitters uses Oracle financial subledgers, they should define Subledger Accounting options for the Standard Accrual subledger accounting method.
Intercompany Accounts Intercompany accounts should be defined to use the intercompany accounting feature.

No other setup steps are required to complete the accounting setup for Outdoor Outfitters (USD). The following accounting options can be used in the future if business needs change:

Consolidation

Outdoor Outfitters maintains both legal entities' accounting data in the same ledger; therefore, consolidation is not required. They can use Financial Statement Generator to produce consolidated reports. This is possible because the U.S. legal entities have fairly simple consolidation requirements. If their consolidation needs change in the future, they can choose to use Oracle Financial Consolidation Hub to address more complex consolidation requirements.

To address their month-end consolidation concerns to separate consolidation adjustments from their day-to-day transactions, an additional balancing segment value should be used to represent the elimination company. For example, balancing segment value 91 that was assigned to the ledger is used to enter all consolidation adjustments and eliminating entries.

To create consolidated reports that include the results from each legal entity as well as the consolidation adjustments, parent value U.S. is used. Parent U.S. includes child values 01 U.S. East, 11 U.S. West, and 91 U.S. Eliminations. The following figure describes this proposed balancing segment value hierarchy to achieve consolidated results by using the parent value U.S. in Financial Statement Generator reports.

the picture is described in the document text

Security

Data Access Sets

Because different balancing segment values represent transactions for two different legal entities in the same ledger, the only way to secure access to data for each legal entity is to create data access sets that use the balancing segment value Access Set Type.

To secure data for each legal entity, at least two different Data access sets need to be created, one to be assigned to U.S. West responsibilities, another for U.S. East responsibilities.

The following table describes an example of the two data access sets that should be created for each responsibility entering transactions for each legal entity:

Data Access Sets
Parameter Value for Data Access Set #1 Value for Data Access Set #2
Data Access Set U.S. East Access U.S. West Access
Description Access to U.S. East Only Access to U.S. West Only
Chart of Accounts Corporate Corporate
Calendar/Period Type Corporate/Monthly Corporate/Monthly
Ledger Outdoor Outfitters (USD) Outdoor Outfitters (USD)
Access Set Type Balancing Segment Value Balancing Segment Value
Balancing Segment Values 01 11
Privileges Read and Write Read and Write

Another data access set that provides full read and write access to the ledger is required for the controller. This allows the controller to view accounting information for both legal entities from a single responsibility as well as perform certain operations that require full ledger access, such as opening and closing periods, creating budgets, and creating summary accounts. With full ledger access, the controller can also use the balancing segment value 91 to enter consolidation adjustments.

The following table describes the additional data access set.

Data Access Set #3
Parameter Value
Data Access Set #3 U.S. Full Access
Description Full Access to U.S. Operations
Chart of Accounts Corporate
Calendar/Period Type Corporate/Monthly
Ledger Outdoor Outfitters (USD)
Access Set Type Full Ledger
Privilege Read and Write

Note: Depending on the number of different responsibilities and job roles used in the organization, additional data access sets may need to be defined that provide more restrictive or less restrictive access to the ledger and/or balancing segment values.

Definition Access Sets

Because both legal entities share the same ledger, both legal entities have access to each other's definitions. For example, the U.S. West legal entity has access to the U.S. East's definitions, such as their recurring journals and FSG report definitions.

To prevent one legal entity from using, viewing, or modifying the definitions used by another legal entity that shares the same ledger, definition access sets must be used and assigned to each legal entity's responsibility.

Accounting Setup – North American Company

Outdoor Outfitters, a U.S. based retail company, uses a single instance of Oracle Applications. It has two existing legal entities located in the U.S. that are assigned to the same accounting setup. Each legal entity is identified by a specific balancing segment value. The following table describes the primary ledger for Outdoor Outfitters.

Primary Ledger for Outdoor Outfitters
Parameter Value
Ledger Name Outdoor Outfitters (USD)
Legal Entity and Balancing Segment U.S. East: 01
Legal Entity and Balancing Segment Assignment U.S. West: 11
Chart of Accounts Corporate
Accounting Calendar Corporate
Currency USD
Subledger Accounting Method Standard Accrual

Note: Accounting Setup for Multiple Legal Entities - U.S. Only Operations

Outdoor Outfitters decided to expand its business and acquire a credit card company in Canada called Credit Services Group (CSG). Outdoor Outfitters can now provide credit processing, collections, and other services for the proprietary credit programs of its retail operating divisions. Outdoor Outfitters wants to incorporate its newly acquired Financial Services business into their existing E-Business Suite solution.

Both the U.S. and Canada operate in similar accounting environments where neither country enforces strict statutory compliance; however, they do use different currencies and Canada is required to meet special regulatory requirements for the financial services industry. The U.S. legal entities use the USD currency and the Canadian legal entity uses the CAD currency. In addition, because Credit Services Group is a Financial Services company, they want to maintain average daily balances. Because of these differences, Canada must maintain its legal entity transactions in its own primary ledger.

The following table compares the primary ledger requirements for both the U.S. and Canada.

Primary Ledger Requirements
Parameter U.S. Primary Ledger Value Canadian Primary Ledger Value
Name Outdoor Outfitters (USD) Credit Services Group (CAD)
Chart of Accounts Corporate Corporate
Accounting Calendar Corporate Corporate
Currency USD CAD
Accounting Method Standard Accrual Standard Accrual
Special Ledger Options None Maintain average balances

This section includes the following parts:

Additional Requirements:

The following graphic and table summarize the complete ledger requirements for Credit Services Group.

the picture is described in the document text

Legal Entity: Credit Services Group (CSG Canada)
Ledger Attributes Primary Ledger Secondary Ledger (Adjustments Only)
Name Credit Services Group (CAD) CSG Regulatory
Chart of Accounts Corporate Corporate
Accounting Calendar Corporate Corporate
Currency CAD CAD
Accounting Method Standard Accrual N/A
Reporting Currency Balance level reporting currency N/A
Name Credit Services Group (USD) N/A
Currency USD N/A

Credit Services Group wants to maintain two accounting representations: one for corporate accounting needs and another for regulatory reporting.

Accounting Setup for Canadian Legal Entity

Outdoor Outfitters should define another accounting setup for the Canadian legal entity.

The following tables summarize the Accounting Setup for CSG Canada and the suggested ledger setup steps.

Accounting Setup for CSG Canada
Parameter Description
Legal Entity Legal Entity: CSG Canada
Balancing Segment Value Assigned: 21
Even though only one legal entity is assigned to this accounting setup, specific balancing segment values should be assigned to the legal entity. It shares the same chart of accounts as the U.S. legal entities and automatically shares the same value set for the balancing segment value.
By assigning a specific balancing segment value to this legal entity, it prevents users from accidentally using the values intended for other legal entities during transaction processing and journal entry.
CSG can also take advantage of other features, such as Intercompany Accounting, that require specific balancing segment values be assigned to all legal entities.
Shared Legal Environment Type for CSG Canada: Suggested Primary Ledger Steps
Setup Step Description
Primary Ledger Credit Services Group (CAD)
Ledger Options Required to complete the ledger definition and enable Average Balance Processing
Balancing Segment Value Assignment N/A
Balancing segment values do not need to be assigned directly to the ledger unless reserving a value for non-legal entity related transactions. Balancing segment values can be assigned to the ledger at any time.
Subledger Accounting Options Define Subledger Accounting Options for the Standard Accrual accounting method to successfully integrate data from Oracle financial subledgers .
Reporting Currencies Name: Credit Services Group (USD)
Currency: USD
Currency Conversion Level: Balance
This USD balance level reporting currency represents the translated USD balances that are used for consolidation purposes.

No other setup steps are required for the primary ledger. The following accounting options can be completed in the future if business needs change.

The following table summarizes suggested secondary ledger setup steps.

Suggested Secondary Ledger Setup Steps
Setup Step Description
Secondary Ledger- Adjustments Only CSG Regulatory
Ledger Options Average Balance Processing can be enabled for the secondary ledger to keep it consistent with the primary ledger.

Note: No subledger accounting method should be assigned to the adjustments only secondary ledger unless planning to use Subledger Accounting to create adjusting entries from Oracle transaction sources.

A subledger accounting method can be assigned at any time.

Note: No other setup steps need to be performed for the Adjustments Only Secondary Ledger.

Ledger Sets

By itself, the adjustments only secondary ledger only holds the regulatory adjustments. To obtain a complete statutory representation, the results from the adjustments only secondary ledger must be combined with the primary ledger, which holds the day-to-day transactions using a ledger set.

Note: Ledger Sets

Consolidation

No balance transfer consolidations need to be performed to obtain consolidated results for the parent entity, Outdoor Outfitters.

CSG's balance level reporting currency that is assigned to the primary ledger uses the same chart of accounts, accounting calendar/period type combination, and currency as the parent entity, Outdoor Outfitters.

By creating another ledger set that combines the balance level reporting currency with the primary ledger of the parent entity, consolidated results are obtained without having to run consolidation.

The following figure shows the configuration of both accounting setups with the use of ledger sets to combine ledgers in different accounting setups:

the picture is described in the document text

the picture is described in the document text

During month-end close, Credit Services Group simply needs to run translation to update the translated balances in the balance level reporting currency. The parent entity can then run a Financial Statement Generator report that references the ledger set for consolidation purposes to report on consolidated balances.

Note: Using ledger sets consolidation purposes is not recommended if you have complex consolidation requirements. For example, if your organization performs frequent acquisitions, disposals, and reorganizations, or has many partially owned subsidiaries, you should use Oracle Financial Consolidation Hub for your consolidation needs.

Note: See Oracle Financial Consolidation Hub User's Guide.

Security

Definition Access Sets

CSG's accounting information is contained in its own ledger, separate from other legal entities. This creates a natural boundary from Outdoor Outfitter's other legal entities. Thus, the other legal entities are not able to to view CSG’s financial information unless they are explicitly granted view access to CSG’s ledger. Because CSG shares the same chart of accounts as the other US legal entities, many definitions that are at the chart of accounts level, such as FSG reports and MassAllocations, will be shareable across all legal entities. If the Canadian and US legal entities do not want some definitions to be shared, they can secure use, view, or modify access to specific definitions using Definition Access Sets.

For example, if CSG does not want certain users to be able to change their FSG Report definitions, they can secure those reports using definition access sets.

Accounting Setup – European Operations

Outdoor Outfitters, a U.S. based retail company, currently operates in both U.S. and Canada and uses a single instance of Oracle Applications. The following graphic describes the existing accounting setups for Outdoor Outfitters:

the picture is described in the document text

Outdoor Outfitters has chosen to expand its business internationally and has acquired London Rain, a U.K.-based retail company that currently has operations in the U.K.

Note: Accounting Setup - U.S. Only Operations

Accounting Setup with Multiple Legal Entities - North American Company

This section includes the following parts:

Note: For information about consolidation for this entity, see Accounting Setup with No Legal Entity - Consolidation Example.

Requirements for London Rain (U.K.):

London Rain U.K. has statutory reporting requirements and needs to report VAT to the appropriate taxation authorities. They want to maintain two accounting representations: one for statutory reporting and another for corporate accounting needs.

The following graphic and table summarize the complete ledger requirements for London Rain (U.K.).

the picture is described in the document text

Legal Entity: London Rain U.K.
Ledger Attributes Primary Ledger Secondary Ledger (Subledger Level)
Name London Rain Corporate (GBP) London Rain U.K. (GBP)
Chart of Accounts Corporate Fiscal
Accounting Calendar Corporate Fiscal
Currency GBP GBP
Accounting Method Standard Accrual U.K. GAAP
Reporting Currency Balance Level Reporting Currency N/A
Name London Rain Corporate (USD) N/A
Currency USD N/A

Accounting Setup for the U.K.

An accounting setup with only one legal entity is defined for London Rain (U.K.) in the following tables.

Exclusive Legal Environment Type for London Rain (U.K.)
Parameter Description
Legal Entity Legal Entity: London Rain U.K.
Balancing Segment Value: 31

Note: Even though only one legal entity is assigned to this accounting setup, specific balancing segment values should be assigned to the legal entity. It shares the same chart of accounts as the U.S. and Canadian legal entities; it automatically shares the same value set for the balancing segment. They can also take advantage of other features, such as Intercompany Accounting, that require specific balancing segments values be assigned to all legal entities.

Accounting Setup for London Rain (U.K.): Suggested Primary Ledger Setup Steps
Setup Step Description
Primary Ledger London Rain Corporate (GBP)
Ledger Options Required to complete the ledger definition
Subledger Accounting Options Because London Rain U.K. uses Oracle financial subledgers, they should define Subledger Accounting options for the Standard Accrual accounting method.
Reporting Currencies Currency Conversion Level: Balance
Name: London Rain Corporate (USD)
Currency: USD
This balance level reporting currency maintains the translated USD balances for the primary ledger.
This reporting currency is used for consolidation purposes when consolidating to Outdoor Outfitters.
Intercompany Accounts Intercompany accounts should be defined to use the intercompany accounting feature.

No other setup steps are required for the primary ledger. The following accounting option can be completed in the future if business needs change.

Suggested Secondary Ledger Setup Steps
Setup Step Description
Secondary Ledger – Subledger Level London Rain U.K. (GBP)
Ledger Options Required to complete the ledger definition
Primary to Secondary Ledger Mapping Assign a chart of accounts mapping because both the primary and secondary ledgers use a different chart of accounts.
Specify journal conversion rules to have General Ledger Posting select those journals for automatic transfer to this secondary ledger.
Subledger Accounting Options Because London Rain U.K. wants to maintain a statutory accounting representation at the subledger level they should define Subledger Accounting options for the U.K. GAAP accounting method.

No other setup steps are required for the secondary ledger unless their business needs change.

Accounting Setup - Latin America Operations

Outdoor Outfitters, a U.S. based retail company, currently operates in the U.S., Canada, and the U.K. and uses a single instance of Oracle Applications. The following graphic describes the existing accounting setups for Outdoor Outfitters.

the picture is described in the document text

Outdoor Outfitters has chosen to expand its business to Latin America and create a company in Brazil called Outdoor Outfitters Brazil.

This section includes the following parts:

Note: For information about consolidation for this entity, seeAccounting Setup with No Legal Entity - Consolidation Example.

Requirements for Brazil:

The following graphic and table summarize the ledger requirements for Brazil.

the picture is described in the document text

Legal Entity: Outdoor Outfitters Brazil
Ledger Attributes Primary Ledger Secondary Ledger (Subledger Level)
Name Outdoor Outfitters Brazil Corporation (BRL) Outdoor Outfitters Brazil Statutory
Chart of Accounts Corporate Brazil Statutory
Accounting Calendar Corporate Brazil Statutory
Currency BRL BRL
Accounting Method Standard Accrual Brazil GAAP
Reporting Currency Subledger Level Reporting Currency N/A
Name Outdoor Outfitters Brazil Corporation (USD) N/A
Currency USD N/A

Accounting Setup for Brazil

An accounting setup with only one legal entity should be defined for Brazil. The Brazilian legal entity operates in a country with strict statutory requirements. In addition, Brazil has unique document sequencing requirements that can only be accomplished if only one legal entity is assigned to an accounting setup.

The following tables summarize the exclusive legal environment and the suggested ledger setup steps.

Accounting Setup for Brazil
Parameter Description
Legal Entity Assigned Legal Entity: Outdoor Outfitters Brazil
Balancing Segment Value: 41

Note: Even though only one legal entity is assigned to this accounting setup, specific balancing segment values should be assigned to the legal entity. It shares the same chart of accounts as all of the other legal entities and automatically shares the same value set for the balancing segment. They can also take advantage of other features such as Intercompany Accounting that require specific balancing segment values be assigned to all legal entities.

Exclusive Legal Environment for Brazil: Suggested Primary Ledger Setup Steps
Setup Step Description
Primary Ledger Outdoor Outfitters Brazil Corporation (BRL)
Ledger Options Required to complete the ledger definition
Reporting Currencies Name: Outdoor Outfitters Brazil Corporation (USD)
Currency: USD
Currency Conversion Level: Subledger
To address the need to maintain Brazil's primary accounting transactions using a more stable currency, such as USD, a reporting currency at the subledger level is used. This reporting currency is assigned to Brazil's primary ledger to act as a complete additional currency representation of Brazil's transactions. This allows Brazil to simultaneously maintain two complete currency representations, one in Brazilian Real and the other in U.S. Dollars.
Subledger Accounting Options Because Outdoor Outfitters Brazil uses Oracle financial subledgers, they should define Subledger Accounting options for the subledger accounting method.
Exclusive Legal Environment for Brazil: Suggested Secondary Ledger Setup Steps
Setup Step Description
Secondary Ledger - Subledger Level Outdoor Outfitters Brazil Statutory
A secondary ledger at the subledger level is used to maintain a complete statutory representation.
Ledger Options Required to complete the ledger definition
Primary to Secondary Ledger Mapping Assign a chart of accounts mapping because both the primary and secondary ledgers use a different chart of accounts.
Specify journal conversion rules to have General Ledger Posting select those journals for automatic transfer to this secondary ledger.
Subledger Accounting Options Because the secondary ledger uses a different subledger accounting method than the primary ledger, specify Subledger Accounting options to provide instructions on how to account for subledger transactions differently.

No other setup steps are required for the primary or secondary ledger. The following accounting options can be completed in the future if business needs change

Accounting Setup with No Legal Entities - Consolidation Example

Outdoor Outfitters, a U.S. based retail company, uses a single instance of Oracle Applications. It has the following legal entities and accounting setup types defined:

Outdoor Outfitters has decided they want to use a separate consolidation ledger to consolidate data across multiple legal entities in different accounting setups This allows them to keep their consolidation adjustments completely separate from the day-to-day transactions for each legal entity.

The following graphic and tables describe the different accounting setups for all of Outdoor Outfitters' legal entities:

the picture is described in the document text

Accounting Setups for Outdoor Outfitter Legal Entities (Primary Ledger)
Legal Entity U.S. East/West Canada U.K. Brazil
Chart of Accounts Corporate Corporate Corporate Corporate
Calendar Corporate Corporate Corporate Corporate
Currency USD CAD GBP BRL
Accounting Method Standard Accrual Standard Accrual Standard Accrual Standard Accrual
Accounting Setups for Outdoor Outfitter Legal Entities (Reporting Currency)
Legal Entity U.S. East/West Canada (Balance Level) U.K. (Balance Level) Brazil Subledger Level)
Currency N/A USD USD USD
Accounting Setups for Outdoor Outfitter Legal Entities (Secondary Ledger)
Legal Entity U.S. East/West Canada (Adjustments Only) U.K. (Subledger Level) Brazil (Subledger Level)
Chart of Accounts N/A Corporate Fiscal Brazil Statutory
Calendar N/A Corporate Fiscal Brazil Statutory
Currency N/A CAD GBP BRL
Accounting Method N/A N/A U.K. GAAP Brazil GAAP

Accounting Setup for Consolidation Purposes

An accounting setup with no legal entities assigned should be defined. The primary ledger should share the same ledger attributes as the parent entity, such as the same chart of accounts, accounting calendar, and currency.

The following table summarizes the suggested primary ledger setup steps for the Other accounting setup

Accounting Setup for Consolidation
Setup Step Description
Primary Ledger Consolidation Ledger
  • Chart of Accounts: Corporate

  • Calendar: Corporate

  • Currency: USD

Note: No Subledger Accounting Method is required because this ledger will be a standalone ledger. It will not integrate with Oracle subledgers.

Ledger Options Required to complete the ledger definition

No other setup steps are required for the primary ledger. By not assigning any balancing segment values to the ledger, it allows the ledger to use all balancing segment values

Consolidation Steps

Step 1: Translate balances for the following legal entities to convert balances from their local currencies to U.S. Dollar, the currency of the parent entity:

Note: For the Brazilian legal entity, the subledger level reporting currency already maintains subledger journals, GL journal entries, and balances in USD. No translation is required because every time a transaction or journal entry is entered, it will be converted to the subledger level reporting currency.

Step 2a:If you have simple consolidation needs and do not want to perform balance transfer consolidation, you can define a ledger set for consolidation purposes. This ledger set should include the following ledgers and reporting currencies:

Step 2b: If you prefer to transfer balances for consolidation purposes, transfer balances to the consolidation ledger

Use GL Consolidation to transfer USD balances from the ledger or reporting currencies of the respective legal entities to the consolidation ledger.

Step 3: Enter consolidation adjustments in the consolidation ledger.

Step 4: Prepare consolidation reports.

Use Financial Statement Generator to create and submit consolidated financial statements.

Management Reporting Example - U.S. Only Operations

Outdoor Outfitters, a U.S. based retail apparel company, uses a single instance of Oracle Applications.

The following table shows the accounting setup for its U.S. operations:

Accounting Setup for U.S. Legal Entities
Parameter Description
Legal Entities U.S. East; Balancing Segment Value Assigned: 01
U.S. West; Balancing Segment Value Assigned: 11
Primary Ledger Outdoor Outfitters (USD)
Chart of Accounts: Corporate
Accounting Calendar: Corporate
Currency: USD
Subledger Accounting Method: Standard Accrual

Outdoor Outfitters decided they want to maintain an additional ledger for management reporting and analysis purposes. They only want to do this for their U.S. Operations. They want their U.S. Department Managers to use this ledger to book internal management adjustments that are not published to their financial statements.

This section includes the following parts:

Additional Requirements

Outdoor Outfitters currently uses the following chart of accounts structure. They have specified the Department segment to be both their cost center and management segment.

Note: You can enable the management segment at any time for an existing chart of accounts.

The following table describes the chart of accounts.

Chart of Accounts
Segment Number Segment Name Segment Qualifier
1 Legal Entity Balancing Segment
2 Department Cost Center and Management Segment
3 Account Natural Account
4 Product  
5 Future Use  

The following figure illustrates the Department hierarchy for the U.S. managers only and is described in the following table:

the picture is described in the document text

Department Hierarchy for U.S. Managers
CEO: Steve Jones Managers Parent Values Child Values
  Linda W. 100 Finance 101-199
  Bernie L 200 Sales
300 Marketing
201- 299
301-399
  Steve S. 400 Consulting 401-499

Transactions are entered across all four departments during the normal course of business. For example, expenses are entered for each department. Outdoor Outfitters does not want any of the Department Managers to view or enter data outside of their own departments.

Using Secondary Ledgers for Management Reporting

Because Outdoor Outfitters only need to enter management adjustments for a specific legal entity or group of legal entities that are represented in the same accounting setup, you can assign an adjustments only secondary ledger to the existing accounting setup for the U.S. legal entities.

Note: You could also create another accounting setup with no legal entities assigned for management adjustments and reporting. This is preferable if you need to book management adjustments across ledgers in multiple accounting setups. For more information, see Accounting Setups with No Legal Entities.

The following table provides an example of how your accounting setup would be configured with the addition of the secondary ledger:

Accounting Setup for U.S. Legal Entities
Parameter Description
Legal Entities U.S. East; Balancing Segment Value: 01
U.S. West; Balancing Segment Value: 11
Primary Ledger Outdoor Outfitters (USD)
Chart of Accounts: Corporate
Accounting Calendar: Corporate

Currency: USD

Subledger Accounting Method: Standard Accrual

Secondary Ledger (Adjustments Only) Management Ledger (USD)
Chart of Accounts: Corporate
Accounting Calendar: Corporate

Currency: USD

The primary ledger would hold the day-to-day transactions and the adjustments only secondary ledger would hold the management adjustments. By itself, this secondary ledger does not represent the complete management picture; it only holds the management adjustments. This allows you to keep your management adjustments completely separate from your day-to-day transactions. In order to obtain a complete management picture, you must group both ledgers in a ledger set to see the combined results.

Ledger Set

The Ledger Set described in the following table is created to allow them to obtain management results.

Ledger Set: Management Results
Parameter Description
Ledger Set U.S. Management Set
Description Ledger Set for U.S. Management Reporting
Chart of Accounts Corporate
Calendar/Period Type Corporate/Monthly
Ledgers
  • Outdoor Outfitters (USD)

  • Management Ledger (USD)

Security

Data Access Sets

In order to prevent department managers from accessing the data for other departments, Outdoor Outfitters must create data access sets that use the Management segment value access set type.

Assume the parent values for each department as described in the following table:

Department Values
Value Department
100 Finance
200 Sales
300 Marketing
400 Consulting

To secure data for each of the three department managers, at least three different data access sets need to be created, one to be assigned to each U.S. department manager.

The following tables describe the three data access sets that should be created for each manager's responsibility. The ledger set is assigned and parent segment values ease the creation and maintenance of data access sets.

Data Access Set #1
Parameter Value
Data Access Set #1 Finance Access
Description Access to Finance Department
Chart of Accounts Corporate
Calendar/Period Type Corporate/Monthly
Ledger Set U.S. Management Set
Access Set Type Management Segment Value
Management Segment Values 100
Privileges Read and Write
Data Access Set #2
Parameter Value
Data Access Set #2 Sales Access
Description Access to Sales and Marketing Departments Only
Chart of Accounts Corporate
Calendar/ Period Type Corporate/Monthly
Ledger Set U.S. Management Set
Access Set Type Management Segment Value
Management Segment Values 200, 300
Privileges Read and Write
Data Access Set #3
Parameter Value
Data Access Set #3 Consulting Access
Description Access to Consulting Department Only
Chart of Accounts Corporate
Calendar/ Period Type Corporate/Monthly
Access Set Type Management Segment Value
Ledger Set U.S. Management Set
Management Segment Values 400
Privileges Read and Write

The first data access set is assigned to Linda's responsibility, the manager for Finance. She is not able to access the information for any other departments but those assigned to the parent value 100.

The second data access set is assigned to Bernie's responsibility, the manager for Sales and Marketing. She has read and write access only to her departments.

The third data access set is assigned to Steve's responsibility, the manager of Consulting. He has access only to his departments.

Another data access set that provides full read and write access to the management ledger is required for the controller. The controller can view accounting information across all departments as well as perform certain operations that require full ledger access, such as opening and closing periods, creating budgets, and creating summary accounts. By assigning a ledger set to the data access set, the controller can open and close periods for both ledgers simultaneously.

The following table describes the fourth data access set.

Data Access Set #4
Parameter Value
Data Access Set #4 U.S. Management Ledger Access
Description Full Access to U.S. Management Ledger
Chart of Accounts Corporate
Calendar/Period Type Corporate/Monthly
Ledger Set U.S. Management Set
Access Set Type Full Ledger
Privileges Read and Write

Definition Access Sets

Because all of the managers are entering their management adjustments to the same ledger, they all have access to each other's definitions, such as each other's Recurring Journals, MassAllocations, and FSG Reports. To prevent one manager from changing, viewing, or using a definition created by another manager, definition access sets should be used and assigned to each manager's responsibility.