Accounting for Multiple Companies with Multiple Sets of Books
If your companies have different account structures, accounting calendars, or functional currencies, you will need to create a set of books for each company. You also need separate sets of books if you use multiple Oracle Applications instances for your companies.
To create multiple sets of books for multiple companies:
1. Define value sets to enter your segment values once and use them for multiple sets of books within the same Applications instance. This enables you to access existing segment values when defining a new chart of accounts, and facilitates mapping segments or accounts during consolidation.
2. Define the account structure, calendar, and functional currency you want to use for each set of books. Optionally, you can use the same structure, calendar, or currency more than once if the sets of books reside in the same Applications instance.
Note: If you want to consolidate budgets, your parent and subsidiary sets of books must share the same calendar.
3. Define a set of books for each subsidiary company, as well as for the parent company.
Note: You can create consolidated reports only in your parent set of books. If you define a separate consolidation set of books with a unique chart of accounts, you will have to define new reports in that consolidation set of books.
Caution: Anyone with access to your parent set of books will be able to view consolidated data from your subsidiary sets of books.
Suggestion: If your subsidiary has local currency reporting needs, consider using General Ledger's Multiple Reporting Currencies (MRC) feature to define both a primary and reporting set of books for the subsidiary. Use your parent company's functional currency as the reporting currency for the reporting set of books.
See: Multiple Reporting Currencies Overview
4. Complete your setup tasks.
Entering Intercompany Transactions
General Ledger's Centralized Transaction Approval (CENTRA) feature helps you manage your intercompany transactions through a highly centralized process. With CENTRA, your parent and subsidiaries can send intercompany transactions to one another for review and approval, before the transactions are posted in each company's set of books. CENTRA is discussed later in this chapter.
See: CENTRA Overview
We generally recommend that you use CENTRA for your intercompany transaction needs. However, if you prefer a decentralized approach where each subsidiary enters intercompany transactions autonomously, you can choose not to use CENTRA. In this case, each subsidiary enters intercompany transactions directly into their set of books.
To enter intercompany transactions without using CENTRA:
You must enter separate transactions in each subsidiary set of books to reflect each subsidiary's portion of a multi-company transaction. For each subsidiary:
1. Choose the subsidiary set of books by selecting a responsibility that has access to the set of books.
2. Enter the subsidiary's portion of the multi-company transaction, making sure to balance the entry against an intercompany account. Post the transaction when complete.
For example, to record a cash sale from Company A to Company B (subsidiaries of the same parent), you might make the following entries:
Company A's set of books:
| Cash...................
| 25,000
|
|
|
| Intercompany Sales...........
| 25,000
|
Company B's set of books:
| Intercompany Purchases...
| 25,000
|
|
|
| Cash..........................
| 25,000
|
The intercompany accounts should be eliminated during the consolidation process.
Note: You can only consolidate subsidiary account balances or journal batches to your parent set of books. See: Posting Journal Batches.
Consolidation Methods
To consolidate multiple companies whose accounting information is maintained in separate sets of books in one Applications instance, use the Global Consolidation System provided with General Ledger.
See: Global Consolidation System.
You can also use the Global Consolidation System if you maintain multiple sets of books in multiple Applications instances. However, you must maintain dummy sets of books for those subsidiaries whose sets of books are located external to the Applications instance where you plan to perform your consolidation activities.
Suggestion: If you maintain multiple sets of books in multiple Applications instances, we suggest that you discuss your consolidation needs with an Oracle consultant.
Reporting Set of Book's Beginning Balances
If you choose to use MRC for reporting in multiple currencies, you must initialize the beginning balances in your reporting sets of books. We recommend that you use Translation and Consolidation to initialize your reporting set of books.
See: Initializing Reporting Set of Book's Balances
