Welcome to the Oracle R12 Financials Blog. The purpose of this blog will be to share information, experiences, best practices, and strategies for implementing, configuring and using the Oracle R12 Financials. My hope is that the content put forth on this site will be useful and informative and hopefully, spur discussion and some debate amongst the readers.
The four C’s – Calendar, Currency, Chart of Accounts and Accounting Convention – are the foundation of every applications implementation. A well designed chart of accounts must capture the relevant information required for financial and operation reporting, while maintaining flexibility for growth and business change. With the introduction of subledger accounting and secondary reporting ledgers, increased integration between the Oracle Applications and improved reporting tools such as OBIEE and Hyperion the need to cram everything possible into the chart of accounts has drastically increased.
I have always gone by the adage: “If you need a financial report by “it”: Cost Center, Profit Center, Line of Business, Department, Legal Entity, Bob, etc., “it” should be in your chart of accounts”. This is a holdover from the days of the true FAT ledgers where everything related or desired for reporting was included in the chart of accounts. This drove companies to have huge, bloated charts of accounts that were difficult to maintain, and use, and often caused great pain and heartache when it came to writing and updating FSGs. That is not what I am advocating, but instead, I am focused on Financial Reports only: Profit and Loss, Balance Sheet, Statement of Cash Flows, etc.
The chart of accounts may be best summarized as follows:
- Three segments are mandatory: natural account, balancing segment, and cost center
- The balancing segment reflects organizational units, both legal and management
- The cost center is generally aligned with the department structure used in your human resources application
- Additional segments are optional and should only be added if required to generate financial reports directly from Oracle GL
Additional segments are added as required for product hierarchies, project codes, or channel analysis or whatever you wish to track. All products that perform accounting derive the account code combination identifier (CCID) using Oracle Subledger Accounting and write a full entry for each business event. These entries may be summarized and posted on your schedule (for example posted immediately or monthly) to the ledger.
What are your thoughts and experiences? Please post your reply and let’s get some good old fashioned debate started on this subject!
Please make sure to come and see me at OAUG Collaborate 2011 where I will be participating in several Collaborative Special Interest groups covering best practices in the P2P and O2C flows, as well as presentation with Party City on the very subject of Chart of Accounts design and use for a retail environment! Thanks and see you in Florida.