Oracle Financials R12 - GL STEP 3 - Journal Controls

Step by step Guide

Mohammed Raouf

Step 3

General Ledger Setup & Maintenance

Journal Controls

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Journal Controls o Journal Sources o Journal Categories o Automatic Reversals o Automatic Posting o Journal Approvals

In this step some setups required Ledgers/Ledger Set to be done. Well, Ledgers & Legal Entities are the next Step, so be ready !

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Journal Controls

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Journal Sources

Journal Sources identify the source of the journal entries. EBS comes with a large number of journal sources already seeded, which are used by the subledgers that integrate into the General Ledger, as well as Manual for journals keyed directly into the GL, and Spreadsheet, used for journal entries loaded from Web ADI (Application Desktop Wizard, also known as Journal Wizard). Additional sources can be added for journals imported from third-party systems or for any type of transaction.

SOURCE and SOURCE KEY should not be updated. Use this form to add a new Source, by entering a meaningful name in the SOURCE field. SOURCE KEY is an alternative name that can be assigned to a specific source or groups of sources, making the names consistent across instances and/or languages. This field is ignored if the IMPORT USING KEY box is not checked.

Will prevent users from changing a journal after it has been successfully imported, and this setting is recommended for all EBS subledgers, such as Payables or Assets. There are times that a manual update is needed on an imported journal entry from the subledgers, such as changing a period. This check box can be unchecked to make these changes, but it should be rechecked as soon as it is completed, and in busy systems, it is best to do this during non-peak accounting hours.

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Tells EBS if this journal will require an approval prior to posting. In order for Journal Approvals to be enforced, the LEDGER must also have ENABLE JOURNAL APPROVAL turned on, in addition a few more steps will be discussed in this chapter in DETAIL.

Appears only if Average Balancing is enabled in this ledger, and it allows the system to decide if Journal Entries that are imported for not valid business days, should ROLL back to the nearest valid business day within the same period. If there is no prior valid business day within the same period, the effective date is rolled forward, FAIL, or LEAVE ALONE Journal import will accept all transactions regardless of the effective date.

Required if you want to use the drill-down functionality on journal and account inquiry screens, and it should be checked for most of the EBS-seeded SOURCES. This functionality allows users to drill down on a summarized entry created from a subledger, like Payables, to see the invoices or payments that originated the journal entry. For third-party journal entries, drill-down can only be used if the transactions are first run through Subledger Accounting.

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Journal Categories

Journal Categories are another way of segregating journal entries, and when combined with Sources, it can make finding all the journals that pertain to specific transactions, such as Accruals or Payments, much easier.

Categories that come seeded with EBS cannot be deleted or disabled, nor can the CATEGORY KEY be changed. Manually added categories can be modified or deleted at any time. And the Existing data should be left alone.

Setup | Journal | Categories

As with SOURCE KEY, this requires IMPORT USING KEY to be selected on the source to be used. When this is selected, both the CATEGORY and SOURCE KEYS will be used, as opposed to the SOURCE and CATEGORY during imports. The DESCRIPTION will assist in understanding why this is used or added.

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AutoReverse

Journal entries are reversed for a few main reasons: either a journal was posted in error or posted incorrectly, or an accrual needs to be reversed when the actual expenses are recognized. AutoReverse is most useful for reversals of accruals, and when you know what month it needs to be reversed in.

Setup | Journal | AutoReverse

The maximum is one CRITERIA SET can be assigned to each LEDGER, If you have multiple LEDGERS, selecting ENABLE SECURITY will prevent others from accessing a specific autoreversal rule that does not pertain to them. At this point the data needs to be saved, which will populate all the Categories in the system for this set.

Select each category you want to set up AutoReverse for, and enter the REVERSAL PERIOD to default as Next period or Next non-adjusting period, [Next day only for

average balance ledgers], or Same Period, or else use No Default to require the users to identify the period.

You cannot use this feature to automate budget or encumbrance journal reversals, only Actuals.

Once an AutoReverse Criteria Set is saved, it can be assigned to specific Ledgers in the Ledger Option Setups.

If you want these reversing entries to be generated when Program – Automatic Reversal is run.

Automatically post the generated reversing journals when Program – Automatic Posting is run.

Switch DR/CR: reverses journals by changing the debits and credits of your journals. Change Sign: reverses journals by changing the sign of your journals. There is one profile option, GL: Launch AutoReverse After Open Period, that determines if the

autoreverse process will automatically generate reversing entries when a period is open.

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AutoPost

Automatic posting of approved (if required) journal entries not only helps save a few manual steps by the accountants, but it can also ensure that once a journal entry is approved, it is posted in the system. AutoPost is set up at the source and category levels, allowing some level of control over what journals are automatically posted and which are not. At the very least, it is a good idea to set up subledger journals to post automatically to streamline the process and ensure there are no changes to them.

AutoPost Criteria Sets set up journal entries, based on the Sources and Categories, to be posted by EBS when Program – Automatic Posting is run. If multiple Ledgers have the same Chart of Accounts, then a Ledger Set [Later] can be created for them and AutoPost can be set up to post all the journals for the Ledgers assigned to the set.

To post journals in order. You can use the same priority number more than once.

The POSTING SUBMISSION OPTIONS setting determines if all your criteria sets are submitted at the same time (SUBMIT ALL PRIORITIES IN ORDER), or if only a specific number are submitted at the same time, based on the NUMBER OF PRIORITIES entered (SUBMIT ONLY PRIORITIES WITH BATCHES IN ORDER), this will decrease system load on the concurrent manager and can be useful if autoposting is happening throughout the business day on systems with a large load. The way this works is that if the NUMBER OF PRIORITIES is set to 2, EBS will only post the first two PRIORITIES that have journals, bypassing any priorities that have journals available for posting. The next time AutoPost is run, it runs the next two PRIORITIES, and so on until it reaches PRIORITY 99

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Determine what criteria of journal entries, based on effective dates, are available for AutoPost. They serve as a second control to opening and closing periods. Reducing the time frame here will not prevent manual journal postings, but it will prevent postings from happening automatically too far in the past and too far in the future. Before and After Dates means [AutoPost submission date].

ALL / Actual / Budget / Encumbrance.

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Journal Approvals

Journal Approvals can be enabled for some or all of your General Ledger journal sources. This is a nice feature to replace manual journal approvals, but it is important to understand that EBS does not track who actually approved the journal entry, only that it was approved. For auditing purposes, this takes a little explaining, and usually proof that the approval limits and processes are tightly controlled in EBS. Once the decision to enable Journal Approvals has been made, the following [6] setups must be completed to use the feature:

Setup | Financials | Accounting Setup Manager | Accounting Setups | Ledger options | Page 2

(1) SET UP THE LEDGER TO REQUIRE APPROVALS.

(3) OPTIONAL – APPROVAL WORKFLOW

(2) SELECT WHICH JOURNAL SOURCES WILL REQUIRE APPROVALS.

Check Journal Approval for every source you want Journal Approvals to be used for. As we mentioned in this Step, noting new to add here.

Without completing this step, when any journal entry is submitted where an approver is not in the employee’s hierarchy or there is no manager set up for a person in the hierarchy, [NOT COMMONLY] the workflow will error out with a No Performer error. Setting these performers will send notifications to the system administrator of the actual error, with the journal name and employee with the problem, so that it can be Resolved by modifying THE APPROVAL WORKFLOW TO SET THE PERFORMERS FOR THE NOTIFY SYSTEM ADMINISTRATOR – NO APPROVER AND NO APPROVER MANAGER. See Oracle’s Workflow Guide for instructions on how to set an approver. To Download the Last Workflow Builder: http://www.oracle.com/technetwork/database/options/winclient-101059.html

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(4) SET PROFILES OPTIONS FOR APPROVALS.

There are two profile options associated with approvals that need to be set in the System Administrator | Profile | System at the Site, Application, or Responsibility level.

System Administrator | Profile | System

(A) JOURNALS: ALLOW PREPARER APPROVAL determines if the person submitting the journal entry has the ability to approve it, based on that person’s approval levels, or if it is required to go to the next level for approval. Yes will allow any person entering a journal with an approval limit set to potentially approve his or her own journal. No requires all journal entries to be approved by someone other than the person entering it.

(B) JOURNALS: FIND APPROVER METHOD

GO DIRECT find the first person in the approval hierarchy with the proper limits and notify that person that he or she must approve the journal entry. GO UP MANAGEMENT CHAIN will require every person in the hierarchy of the person who entered the journal to approve it. The journal will become approved for posting after it finally reaches a person with the proper authority, as well as when all the people in the hierarchy between the submitter and the final approver have approved the journal. ONE STOP THEN GO DIRECT will require the manager of the person submitting the journal to approve it prior to notifying the person in the hierarchy with the proper authority and securing the final approval.

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(5) SET UP EMPLOYEE HIERARCHIES.

It is the Employee form that creates the hierarchies for journal approvals. Oracle Approvals Manager (AME) is still not available for Journal Approval hierarchies, as it is in many other areas of EBS. Use the Enter Employee form to create the supervisor hierarchy. To access this form, the Profile Option HR: User Type will need to be set to HR User for the General Ledger responsibility being used, General Ledger | Setup | Employees | Enter . BUT if you have the Human Resources application fully installed you will use this path : Human Resources | People | Enter and Maintain, as we do here. By the way it’s the same setups but the form in the GL is less required fields.

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(6) SET UP APPROVAL LIMITS Finally

set up the actual approval limits for people with final approval authority. If someone has journal approval authority in more than one ledger, that person will need to be set up multiple times. Journal approval limits are determined by the largest line item on a journal entry, not the total debits or credits of that journal. The theory behind journal approvals is that each person should be set up to be authorized to approve a risk of up to a specific dollar amount for a given account, not the total of a journal entry.

Setup | Employees | Limits

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Always Be Ready

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