G.2.8 Signage Methods

When OFSAA is installed, you must choose one of three available Signage Methods that indicate how you have chosen to store balances in the Management Ledger table.

• Natural Signage Convention: Under the Natural Signage Convention, balances initially loaded into the Management Ledger are always positively signed. The only time an initially loaded balance is negatively signed is when the balance in question is in a “contra” state. Accounts described as contra-accounts are normally in a “contra” state, that is, their balances are normally negative. Examples of such accounts include loan loss reserves, depreciation, and amortization. However, any account, maybe in a contra state, that is, carries a negative balance.
• GAAP Signage Convention: Under the GAAP signage convention, debit accounts (asset and expense balances) are generally stored with positive signage, and credit accounts (liability, equity, and revenue balances) are generally stored with negative signage. As with the Natural Signage convention, the exceptions are for balances that are in a “contra” state. Some prefer the GAAP signage convention over the Natural Signage convention because it is perceived to be easier to construct balance sheets when assets and liabilities are oppositely signed.
• Reverse GAAP Signage Convention: Under the Reverse GAAP signage convention, debit accounts (asset and expense balances) are generally stored with negative signage, and credit accounts (liability, equity, and revenue balances) are generally stored with positive signage. As with the Natural Signage convention, the exceptions are for balances that are in a “contra” state. Some prefer the Reverse GAAP signage convention to either the Natural Signage convention or the GAAP Signage convention because it is perceived to be easier to construct income statements when revenues are positively signed and expenses are negatively signed.

One of these conventions is likely to reflect how balances are stored in your General Ledger, but you need not necessarily adopt the same convention in your OFSAA data model as was adopted in your General Ledger. This is a decision you need to make as you are designing your GL data extract.