Oracle EBS Release 12 General Ledger Configuration Steps

In previous post we discussed about the concept of Legal Entity in Oracle R12. Now we see the
configuration steps involved in Oracle General Ledger.
Oracle General Ledger provides highly automated financial processing. It can import and post
millions of journal lines per hour, making it the fastest and most scalable general ledger on the
market. It provides tools for effective management control and real-time visibility to financial
results. It also helps to meet financial compliance.
Following steps are involved in Oracle General Ledger configuration:
Step#1-Legal Entity Creation (Its detail is already discussed in previous post naming Legal
Entity Concept in Oracle R12)
Navigation path: Legal Entity Manager>Legal Entity Configurator

Step#2-Accounting Flexfield
Accounting Flexfield is a Key Flexfield which is created to define your Chart Of Accounts (COA). A
chart of accounts is a list of accounts used by a business to classify financial transactions. A good
chart of accounts provides flexibility for recording and reporting accounting information, provides
structure for managing business uniformly, and enhances communication across all parts of the
business.
(In next post we will discuss the detail about the determinants which should be kept in mind while
finalizing the structure of Chart Of Accounts)
When you first define your chart of accounts, you must enable Dynamic Insertion. This will enable
you to create the necessary account combinations when you define your ledgers using Accounting
Setup Manager. After you complete your ledger options, you can optionally disable dynamic
insertion for your chart of accounts.
NOTE: You can define multiple charts of accounts per installation, or you can define
a single chart of accounts that is shared by multiple ledgers within a single instance.
If you use multiple charts of accounts, it is recommended that you share the same
value set for the balancing segment across all charts of accounts.
Every time when we create any Key Flexfield in Oracle we have to follow 6 steps:

1.

Create Key Flexfield Structure

2.

Assign qualifiers if required

3.

Create Value Set for each segment of Flexfield

4.

Assign Value Set to each segment

5.

Add Values in each Value Set

6.

Create combinations for all segments in each structure

First step is to create Flexfield Structure.

Navigation path: Oracle General Ledger>Setup>Financials>Key>Segments
After creating segments, select each segment and assign Flexfield Qualifier to each segment.
Following table show the mandatory Flexfield Qualifiers for Accounting Flexfield:
Flexfield Qualifier

Purpose
The segment on which Accounting Entry is

Balancing Segment

balanced. Normally the segment which is

representing operating unit is qualified as
balancing segment.
The segment which is representing

Cost Center

departments/cost centers is qualified as Cost

Center.
The segment which represents nature of account

Natural Account

i.e. Equity, Liability, Asset, Expense or Income is

qualified as Natural Account.

Recommendation as per Oracle Documentation: We recommend that you consider a

standardized approach to accounting for your organization in the Oracle ledgers by using a global
chart of accounts.
A global chart of accounts is a designated account structure format and set of values that all
entities (Legal Entities) in a group will use. Some values within the segments will differ according
to local requirements. However, each segment is designated for a specific use and therefore is
consistent in its function across all ledgers.

Step#3- Opening Values in Accounting Flexfield

After creating the Accounting Flexfield structure and their value sets, we have to add values for each
value set.
Navigation path: General Ledger>Setup>Financials>Key>Segments>Values

Step#4- Define Currency

Ledgers have a definitive currency used to construct the balances and can accommodate an infinite
number of transaction denomination currencies. The transactions, activity, or balances can be valued
in several currencies. There are three types of currencies which are:
i.

Transaction currency: Transaction currency is the currency of denomination for a

transaction document. We sometimes refer this as entered currency. When an item is denominated
in a currency that is different than the local accounting currency, you might think of this as a
foreign currency item. Transactions that are entered in currencies other than the accounting
currency are automatically valued and recorded in the accounting currency using conversion rates
that are stored in daily rate tables. Gains and losses based on changes in the exchange rates are
calculated at settlement. Revaluation is calculated at the various dates on which you need to record
unrealized exchange gains.
ii.

Primary currency: The currency used for accounting and reporting in a ledger is

called the ledger primary currency, although it is often referred to as the ledgers accounting
currency. A primary ledger interfaces closely with the economy in which the entities that are using
that ledger are trading. For example, your local banks issue bank statements that tie to the ledger.
You account for local employees payroll, in local currency, in the primary ledger. Local
contractors and vendors are reimbursed in local currency. For these reasons, we recommend that
the primary currency of a primary ledger be the local business currency.
iii.

Reporting currency: You may need to report in additional currencies to satisfy

management, legal, and statutory requirements. Reporting currencies represent the data of a
ledger in other currencies. Reporting currencies reflect the same chart of accounts, calendar, and
accounting convention as the primary ledger. Each ledger must be assigned a primary currency.
Ledgers that are not primary should also have a primary currency.
After creating COA next step in setting up Oracle General Ledger is to enable or define currencies
which will be used.
Navigation path: General Ledger>Setup>Currencies>Define

Step#5- Period/Calendar Type

After enabling/defining currency next step in setup General Ledger is to make period types. You can
define your own period types to use in addition to the General Ledger standard period types Month,
Quarter and Year. You use these period types when you define the accounting calendar for your
organization.
Each set of books has an associated period type. When you assign a calendar to a set of books, the set
of books only accesses the periods with the appropriate period type. Thus, you can define an
accounting calendar with periods of more than one period type; however, each set of books will only
use periods of a single period type.
Navigation Path: General Ledger>Setup>Calendars>Types

Step#6- Define Accounting/GL Calendar

After creating the period types, the next step in General Ledger setup is to define Accounting / GL
Calendar. Balance sheets are snapshots of your assets and liabilities at points in time, and income
statements are an analysis of the change in your net wealth between each balance sheet.
Each ledger has an accounting calendar, which represents a period of time in General Ledger,
defined by a start and end date. You must design your calendar based on your business and
management practice. Manufacturing businesses often use calendars with periods and quarters that
end on weekends and are equal, for comparability and standards calculation. Service businesses
often use the regular calendar.
Navigation path: General Ledger>Setup>Calendars>Accounting
NOTE: There is often a need for an adjusting period at year end to include General
Ledger transfers, account reconciliations, adjusting journals, and other period end
specific tasks. Some countries have specific requirements such as a closing journal
voucher that can be accommodated in an adjusting period.
All Oracle subledgers depend on the General Ledger calendar. You can associate a
common calendar with multiple ledgers.

Step#7- Define Transaction Calendar

Each set of books for which average processing is enabled, must be assigned a transaction calendar,
which is used to control transaction posting. When you define the transaction calendar, you choose
which days of the week will be business days. You can also specify other non-business days, such as
holidays, by maintaining the transaction calendar.
After creating the Accounting Calendar, the next step in General Ledger setup is to define
Transaction Calendar.
Navigation path: General Ledger>Setup>Calendars>Transactions

Step#8- Set Sequence Profile Option

For using document sequence a Profile Option is required to set from System Administrator
responsibility. This profile option assigns a document number to the any document created in the
sub-ledger. Sequential numbering provides a method of checking whether documents have been
posted or lost. Not all forms within an application may be selected to support sequential numbering.
Navigation path: System Administrator>Profile>System
Following table explains the different variables for Sequential Numbering profile option:
Variable

Description

Always Used

You may not enter a document if no sequence exists for it.

Not Used

You may always enter a document.

Partial Used

You will be warned, but not prevented from entering a document, when no sequence
exists.

Step#9- Create Ledger

Now, create the Ledger for legal entity. A fundamental concept in Oracle Applications is Ledger. The
Ledger represents an accounting representation for an organization that is accountable in a selfcontained way. A legal Entity accounts for itself in a Ledger. A Ledger provides balance ledger
accounting for the accounting entity and serves as the repository of financial information.
Navigation path: General Ledger>Setup>Financials>Accounting Setup
Manager>Accounting Setups

Step#10- Run Replicate Seed Data

The purpose of the Replicate Seed Data Concurrent Program is to populate the Installed modules
seeded values, so that new organizations can use the seeded data.
Whenever new Organizations are created (under the Multi-org Setup, which is mandatory), running
Replicate Seed data is a pre-requisite step before you can start working in the newly created
organization.
The Replicate Seed Data Concurrent Program can be run for a particular Operating Unit or for all
Operating Units (as it is not mandatory parameter) but you cannot run the program for a particular
module, for example, Incentive Compensation.
Running this program will not damage the system because it is providing a new organization with the
basic information required to set up the organization.
Caution: When running the Replicate Seed Data process ensure no users are loggedin.
Navigation path: System Administrator>View>Requests

Step#11- Create Security Profile

A security profile is created to give access to more than one operating unit.
Navigation path: Global HRMS Manager>Security>Profile

Step#12- Set Security Profile

Navigation path: System Administrator>Profile>System
Following table gives a little description of Security Profiles:
Profile

Purpose

MO: Operating Unit

To restrict access to specific Operating Unit

MO: Security Profile

To give access of more than one OU

MO: Default Operating Unit

To appear default

NOTE: Atleast one of the profile option is required to be set out of last 2

Step#13- Set GL Ledger Name

The ledger which we have created is required to be assigned to that responsibility which will make
entries in that ledger. This profile is generally set t responsibility level because there may be multiple
ledgers which are required to be set for different responsibilities.
Navigation path: System Administrator>Profile>System

Step#14- Set GL: Data Access Set Profile Option

This profile is set to restrict ledger access to a responsibility. There is a default Data Access Set which
we applied.
Navigation path: System Administrator> Profile>System

Step#15- Create Data Access Set (Restriction for specific OU)

Data Access Set is created to allow or restrict the access to multiple ledgers or segments in the
Accounting Flexfield.
Navigation path: General Ledger>Setup>Data Access Sets

Step#16- Create Journal Categories

Journal categories help you differentiate journal entries by purpose or type, such as accrual,
payments or receipts. When you enter journals, you specify a category.
Navigation path: General Ledger>Setup>Journal>Categories

Step#17- Define Document Sequences

A document sequence uniquely numbers documents generated by an Oracle E-Business Suite

product. Using Oracle E-Business Suite, you initiate a transaction by entering data through a form
and generating a document, for example, an invoice. A document sequence generates an audit trail
that identifies the application that created the transaction, for example, Oracle Receivables, and the
original document that was generated, for example, invoice number 1234. Document sequences can
provide proof of completeness. For example, document sequences can be used to account for every
transaction, even transactions that fail.
Document sequences can also provide an audit trail. For example, a document sequence can provide
an audit trail from the general ledger into the subsidiary ledger, and to the document that originally
affected the account balance.
Document sequences generate audit data, so even if documents are deleted, their audit records
remain.
Navigation path: General Ledger>Setup>Financials>Sequences>Document>Define

Step#18-Assign Document Sequences

After defining document sequences, you must assign a specific sequence to an application and
category. You can assign sequence numbers to journal entries, but only to those journals created for
actual transactions. You can choose to assign sequence numbers to journal entries that General
Ledger automatically creates, or to journal entries you enter manually in the Enter Journals window.
General Ledger automatically creates journal entries for actual transactions when you perform the
following tasks:
Import Journals
Reverse Journals
Revalue Balances
Generate Recurring Journals
Generate Mass Allocation Journals
Consolidate Sets of Books

Note: You should not assign a manual sequence to an Automatic method.

Navigation path: General Ledger>Setup>Financials>Sequence>Document>Assign

Step#19- Define Security Rules

Define segment value security rules to restrict user access to certain segment values when entering
journals, performing online inquiries, and running FSG and some standard reports. Segment value
security rules can work alone or with data access set security that secures data in ledgers, balancing
segment values, or management segment values.
Navigation path: General Ledger>Setup>Financials>Key>Security>Define

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