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Oracle Fusion Financial Application
Overview and Improvements in Fusion Subledger Accounting
This training document will provide users the basic setup steps that are part of Subledger Accounting Method (SLAM) in Oracle Fusion Applications with a brief description of Fusion Accounting Hub (FAH). In the later part of this document we will also learn what are the new changes/improvements done by Oracle in Fusion SLA in comparison to EBS R12 SLA with regards to processes and report.
The purpose of SLA is to separate transaction from the accounting which further helps to create accounting from any conditions or regulation. Secondary Ledger in R12 helps to achieve different representation of same transaction and fulfills accounting needs of a specific country.
As we know accounting data is stored in many different table and layout in 11i for AP, AR, FA, Payment etc. There has not been consistent mechanism to store accounting data in 11i. In R12 real accounting is stored in XLA table and act as single source of truth. Each Ledger creates accounting separately in respective ledgers, Accounting Method Builder is the only option to determine create accounting in SLA.
When we complete any transaction in AP or AR the suggested accounting (code combination) is created in these subledger module and actual accounting is created on the basis of SLA rules. This accounting in SLA can be different from the suggested accounting created in subledgers.
Overview of Subledger Accounting in Fusion:
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In Oracle Fusion HCM, when someone joins an organization, depending upon their grade, position, jobs & reporting line etc we should be able to auto assign them certain roles. For example someone with a Job named “IT Project Manager” should automatically get Manager role. Likewise someone with Position Chief FInancial Officer should automatically get role named Executive. All of these requirements can be very easily implemented in Oracle Fusion HCM using the steps outlined in this article.
This article shows how you can auto provision specific Roles to Employees into Oracle Identity Manager from Fusion HCM.
In this post we will learn how to assign Employee role(which is predefined Abstract role in Fusion Applications) automatically to new hire in Oracle Fusion HCM. In any organization all the employees must have Employee role to access common workarea which is available for all the employees.
In this case we should create a role mapping to auto-provision the role to eligible users rather than assigning role to each employee manually. Also Automatic Role Provisioning is highly efficient when we import employees from the legacy system and we need to bulk update the user roles.
Let’s first understand why we need roles in Oracle Fusion HCM which is a part of Oracle Fusion Applications suite. Fusion Applications security is designed based on Role Based Access Control(RBAC) to restrict access to authorised users. It ensures WHO can do WHAT on WHICH data. RBAC normalizes access to functions and data through user roles rather than only users. User access is based on the definition of the roles provisioned to the user.
In Fusion Applications, the RBAC implementation is based on abstract, job, duty, and data roles that work together to control access to functions and data. The definitions of these functional roles are as follows:
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Oracle Access Manager – Installation Planning
If you are reading this article, probably you understand what is Oracle Access Manager; how it fits in the Oracle Identity Management Stack and the value it brings in an enterprise.
We will start with the installation planning by keeping the below topology in mind:
We will create a single domain (oam_domain) with AdminServer and oam_server1 (managed server).
Oracle Access Manager required schema will be stored in Database.
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Oracle Fusion HCM comes out of the box embedded with OBIEE. OBIEE has three layers, one is physical layer that connects to databases or view objects. The middle layer is the logical layer where you can build the joins between data from different physical sources if required. Finally there is a presentation layer that is also known as Subject Area.
Oracle Fusion Applications comes out of the box with various subjects areas for each product. These subject areas allow the users to build their own reports or dashboards straight from the browser. In Fusion Applications, you may encounter after logging that you do not have access to Reports and Analytics.
In this article you will see how you can make the Reports and Analytics of Fusion HCM available to the user. This is made available by allocating a certain role to the user. When the desired role is not allocated for BI to the user then, you will find that “Reports and Analytics” is not available under Navigator -> Tools.
When in Fusion Apps we have given a generic role which did not have all required menus to explore and different areas like Reports and Analytics, Scheduled Processes etc. After going through different documents and oracle notes I found that those menus appear only if you have Employee role assigned to your user ID in OIM. Therefore in this article you will see how the Employee role is assigned to a user using OIM.
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Have you ever wondered that when you do online shopping you never loose the items in your cart unless you explicitly delete them. What does an application server do for you in the background to make e-commerce run smooth without even letting the user know that a server failure happened.
The above short paragraph lays the base and even answers the questions on "why we need clustering"? Here is a diagram which pictorially explains what happens to session data when a server failure occurs.
key components here : cookies, session data, oracle weblogic, clustering, primary server and secondary server.
Here is an explanation and chronology of events that happen in the background.
Pre-requisite : The 4 weblogic servers should be in a cluster. Weblogic plugin should be configured to route the requests to WLS.
1. A customer access the website for the first time and his request goes via the weblogic plugin (sitting on apache) and then hits the application server.
2. In a response weblogic renders the application page and also sends back a cookie which has a primary and secondary weblogic server information. Plus, it creates a session for the user on the primary weblogic server and a copy of the session goes on the secondary server.
3. User from the same browser then access the site again and the request lands on apache and the weblogic plugin parses it, the plugin then extracts the weblogic primary and secondary server details from the cookie that comes along with the user's request.
The action starts here.....
4. The primary server which was serving user's request all this while goes down.
5. The next incoming request coming from the same user from the same browser, reaches the weblogic plugin ( apache ) .
6. Plugin knows that the primary server does not exist anymore.
7. The request is then routed by the plugin to another weblogic server which is part of the same cluster. This new weblogic server becomes the new primary.
8. The new weblogic primary server gets all the session information from the secondary server.
And that is how the user never loses his shopping cart items.
Question for you : Do we need anything special on the application code to achieve this, or is it all an application server's effort ?
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Weblogic Server (WLS) has been a very popular commercially available JEE application Server. After Oracle took over BEA , Weblogic replaced Oracle Application Server and now WLS is the platform for all the fusion middleware products.
You might ask me why do we need an application server in the first place? And why do I have to go through the tedious process of downloading and installing weblogic when I need only Oracle SOA.
Well, the Java EE application servers provide a runtime environment for Java enterprise applications (EAR, WAR).In a word I can say they are “containers” for the JEE application. But thats not it, as per the JEE specifications they provide feature like - JNDI, JMS, JDBC ,load balancing, failover capabilities etc.
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This training article will helps to understand various Currency Concepts available in Fusion Applications. The concept is not too different from Oracle E-Business suite.
Let’s first discuss why we need currency in Oracle Applications-
Currency is one of the “C” while defining Ledger and each Ledger has a ‘Functional Currency’, which is the prime reporting currency for the group of organizations. For every transaction, Oracle stores the amount in Entered Currency (currency of the transaction) and Functional Currency (the equivalent in the Functional Currency of the Ledger).Currency is always associated with Ledger even if its Primary Ledger or Secondary Ledger.
Account balances can be maintained in Foreign Currencies as well in Functional Currencies. Foreign Currency balances represents the total journals in that particular Foreign (Entered) Currency, whereas the Functional Currency balances represents the sum of journals in all currencies, using the Functional Currency equivalent. So, when a Foreign Currency journal is posted, this helps to update two balances; one for Foreign Currency and one for Functional Currency.
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Oracle Access Manager is a key component of Oracle Identity Management, and we saw in previous article the value OAM brings to an enterprise. Lets dive a bit deeper in this article into OAM. We know how OAM saves us from repeatedly entering passwords for different applications in an enterprise. For beginners it is important to note that Oracle Access Manager can be used only to protect applications or services which can be accessed over http/https protocol
i.e. of the format: http(s)://<hostname>:<port>/URL
Let us now discuss the functional implementation of OAM i.e. how SSO really happens.
Primary components in OAM that takes part in Single Sign On process are:
Agents -> Webgate
OAM server -> Policy Server
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Before we dive into the details of Legal Entities let’s acknowledge a fact….when it comes to large organizations, one size doesn’t fit all. For example if a bank has three arms, i.e. Investment Banking, Home Loans & Retail Banking….and If the Home Loans division is not performing well but Investment Banking & Retail Banking is doing well, then the bank would want to shut down just the Home Loans division. The legal obligations to staff, any contractual obligations or law cases or tax implications of shutting down Home Loans division must not impact Investment Banking or Retail Banking, In such case, the bank will create three different Legal Entities, so that each operation has its own legal umbrella. Also, an organization can be present in different countries, with each country having its own legal responsibilities to government with different laws in different countries. In such case, you create separate legal entities.
By going through this Oracle Fusion Financials Training article, user will understand all about Legal Entity in Oracle Fusion General Ledger, so that you get to the grips of... Legal Jurisdictions, and Legal Authorities along with roles of individual legal entity. In the later part of this articles readers will be able to understand set up steps to define Legal Entity screen by screen with proper navigation.
Let us first understand different terms-
What is Legal Jurisdictions?
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All the companies report their results of profitability annually. They also report their financial results quarterly. Often we hear stock prices of a company go up or down depending on their quarterly or annual reports. These financial reports are produced from General Ledger, in this case Oracle Fusion Financials General Ledger. The companies also do internal reporting on a monthly basis. Sometimes there are occassions when a company has to adjust its financial reports. All this becomes possible because Fusion General Ledger can be used to define Calendars and Periods. In this Fusion Financials Training article we will see how to create a new accounting calendar step by step in Fusion General Ledger Application.
As per the statutory requirements all profit/non profit organizations are required to report its financial transactions in the form of Balance Sheet/ in any format prescribed by the governing statute. The transactions reported should be confined to a particular period interval which has a start date and an end date. Usually the requirement would be for a complete financial year. This lays down the basis for using an accounting calendar in the ERP.
Before defining a calendar in Oracle Fusion it is mandatory to keep certain things in mind –
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In this Oracle Access Manager Training article, let us try to understand what is Oracle Access Manager [ OAM ] and what problem it solves in an enterprise with this simple example:
Suppose you join a new organization. After joining you would require access to multiple systems to access different applications like transport portal, recruitment portal, HR portal, Expense Reporting System, Effort portal etc.
You might get annoyed if you have to enter your credentials each time you access some application within your company as shown:
Oracle Access Manager saves us from this pain of multiple login id's and multiple passwords. When you have implemented Oracle Access Manager, i.e. OAM, then you only have to enter your credentials one time and can access all the applications which are integrated with OAM like as shown below:
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In this article we will see how to create chart of account step by step in Fusion Financial Application. First we will create Chart of Account structure and then Chart of Account Instance.
Before we see Fusion Financials Flexfields , why do I need a chart of accounts in Fusion General Ledger ?
Companies use their General Ledger to report their profit, losses, assets, liabilities & owners equity. But how does General Ledger calculates the values for profit, asset, loses etc for various segments within the business. For example, how does Reliance Bank know that the Loan Division needs to be sold off cos its performing poorly but the Investment & Trading Division of the bank must be retained? They do so, by looking at the positioning of the company division's GL Balances. They will have a GL segment named Entity in GL Chart Of Accounts which has one value for Investment Division another for Trading Division and another one for Loan Division. The CFO can then see that loan division is making losses and has huge liabilities but very less assets. The CFO might further ask, which types of Loans are making loses, and for that, the CFO will check profit/losses/assets/liabilities for a combination of Entity Segment and Account Segment. The account segment may state that Commercial Loan division is profitable but the Retail Loan division is the one causing loses. The level at which you can investigate is called GL Granularity. Oh dear, we could spend all day here discussing about thick or thin chart of accounts. But let us begin this Fusion Financials Training article to see how this gets configured into Fusion Financials.This happens because each transaction in the ERP system gets accounted using a GL Code Combination. One of the fields in code combination is Account. Each account field value is tagged as being a revenue or expense which results in profit/loss. Account values can also be flagged as asset, liability etc. This is how Oracle General Ledger keeps track of companies health.
This article explains how Oracle Fusion Financials allows you to configure these rules.
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In this training article, before we get into the finer details of Oracle Identity and Access Management, let us consider some use cases. After all, there must have been some reason as to why Oracle Identity and Access Management suite is a need for the business. In this example, a new employee joins an organization; a record gets created in HR System. This can be in Oracle EBS HR or Peoplesoft or Fusion HCM or Workday or SAP. But this employee that has joined would require access to the enterprise applications like emails, access to websites, and company resources to do their job.
A typical problem faced by Organizations in this use case are :
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A common question asked at Apps2Fusion forums is...what is Oracle Identity Manager…. Well, Oracle Identity Management is a collection of processes, procedures, software, and business rules that a company uses to manage the security life cycle for its users. In other words it controls what user can access, how they can access and also what operations you can perform on the components of the system that you can access. Oracle Identity Management is suite of products that together helps to manage the security life cycle of a user and user’s access to resources inside an organization.
Why does a customer need Oracle Identity and Access Management ? [ also known as IDM or IAM]
Oracle IDM is enterprise build software which manages the end-to-end life cycle of user identities in an organization. It helps to address the basic business problems: for example right from the day when someone comes onboard in an organization, how to provide users access to company resources to do their job? How the users are to be authenticated? If the user is authenticated, are they authorized? How strong the authorization needs to set up? As they maintain their career with an organization, they move from different departments, to different cities, to different roles. So, what they are authorized to do and what privileges they should have needs to be modified accordingly. Also, when they finally leave the company, we need to revoke all the access which should be consistent across the board. And these are exactly the questions which Oracle Identity management allows us to address. To perform each of these functions, Oracle Identity Management Suite provides different product.
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This white paper on Oracle SOA 12c will explain to you why your business will benefit from SOA 12c
A lot of new integration adaptors out of the box means that businesses can replace their hand coded integration to cloud with the native offerings within the Oracle SOA 12c suite.
White paper linked here
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In Oracle 11i and R12, you could set up a profile option named Flexfield:Shorthand Entry to Yes
This will allow the users to quickly select code combination by selecting an alias value. This saves a lot of time for the business users when entering commonly used code combination in the accounting flexfield.
We get this asked very frequently in Fusion Financials training course at apps2fusion as to why can't they use alias in Fusion Apps for the key flexfield
In response to this quesiton, it is recommended that you keep an eye on this enhancement request raised with Oracle, i.e. ER 18118900 GL ACCOUNT ALIAS FUNCTIONALITY IN FUSION APPS with Oracle GL Fusion Development
We are fairly confident that this will be delivered in the due course. The manual journal entry through the web screen is anyways much slower than the D2K based professional forms used in 11i and R12. One alternative or workaround to this shortcoming in Fusion Financials is to use Web ADI equivalent in Fusion Financials. It is called the ADF Desktop Integrator.
So what is ADFDI?
It leverages ADF framework and offers Excel spreadsheet templates to provide validated data entry into Oracle Fusion Applications. Just as was the case with Web ADI, this new ADFDI provides LOV/pick lists to search for valid values during data entry, can throw error messages, and allows submission of transactions into the Oracle database directly from Excel Spreadsheet
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A common question that we get asked in our Fusion Financials Training at apps2fusion.com is ....Why did Oracle decide to store General Ledger balances in Essbase ?
Essbase is a multidimensional database software that can store values for facts against the various dimensions. The values stored have to be pre-aggregated at various levels. For example, if a Pencil is purchased for $1 and a stationary is purchased for $2, the Cost Controller is usually interested in asking ...where was my $3 spent, and the answer he wants is ...it was spent on Office Stationary Expenses. Now, you can either at runtime summarise the $1 and $2 in a SQL query or store pre-aggregated values in some repository. This repository is called the cube. Another question that might be asked is how much Stationary expense was made in month of March and how much in April. For this, the Essbase cube will contain another dimension named Month or Period.
You may wonder why over-engineer with Essbase when you can build materialised views or run SQL statements with aggregation? Hmm of course you can, but we are talking about the enterprise platform that will have millions of transactions being fed into Oracle Fusion General Ledger via the Fusion Accounting Hub. Therefore to accelerate reporting, Oracle Fusion General Ledger preaggregates balances at every possible summarization level across each dimension of the chart of accounts and accounting periods so that retrieval is quick. During the hands on trainings in apps2fusion.com we do cover the details of how to interrogate the Essbase databsae in Fusion Financials Training.
If you are new to multi-dimensions, you may ask, what is a dimension? Well, a dimension is data category used to organize business data for query and storing of values. For example Account Type is a dimension and so is a GL Period. The Account Type in our example will contain a value of Office Expense. As evident from our example, Dimensions usually contain hierarchies of related members grouped within them. Another example is , in a time dimension likely members would be year, quarter, month, weeks and days.
Dimensions can be sparse or dense. Sparse dimensions do not have data values for the majority of its members. An example would be revenue in which an entry only exists if customer a buys product x, which may only happen once a month or twice a year.
Dense dimensions are characterized by high data volumes, which mean that they have data values for the majority of its members. A classical example is warehouse stock. For each day in the year a stock of product x exists leading to high data volumes.
For someone with relational database experience, they are new to the term outline. Think of outline as a table with a set of columns. In case of Essbase, it is a cube with a set of dimensions. Data is stored in the Essbase according to the structure defined in the outline. The outline is the structure of the multidimensional database, including for example all dimensions.
Now in Fusion Financials database tables, how do you know table stores the linkage of information in Fusion Applications General Ledger with Essbase. Well, when the Chart of Accounts is defined then it is pushed to Essbase and the Cube creation takes place. After that, the process updates the table GL_BALANCES_CUBES. All cubes and their connection information are stored in this table.
In essbase you also have something known as the rules files which are nothing but the schema files for the definition of the cube. There is one rules file per Calendar and Chart of Accounts combination.
For the Essbase lovers, you must note that Fusion Applications only uses cubes with ASO, i.e. Aggregated Storage Option.
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A very common question asked during Oracle Fusion Financials Trainings for functional people is...what are the different reporting mechanisms available in Oracle Fusion Apps. Everyone knows that there is a sea change in the reporting capabilities in Fusion Financials. Let us touch base on these reporting options. Of course, for any hands on experience of these reporting techniques, have a look at our training packages available on apps2fusion.
Yes, this good old BI Publisher is still here in Fusion. The difference from EBS is that in case of Oracle Fusion Applications, the basic BI Publisher reports can be built straight into the browser without the need of any plugin for Microsoft office. Of course if you need pixel perfect cheque printing then you should use the MS Office BI Publisher plugin
OTBI - Oracle Transactional Business Intelligence
This solution allows you to build ad hoc reports using ADF view objects on transactional tables. The magic here is that these ADF objects get imported into OBIEE and made available via the subject area. Our hands on trainings in Fusion Financials will walk you through these steps in details. You can build your own reports using OBIEE dashboards by dragging and dropping the available objects from subject area. The beauty of this solution is that the data security layer implemented in APM layer is available for reporting as well because you use the same ADF View objects as are used by the ADF screens.
Financial Report Studio - Inherited from Hyperion suite of products
The financial reporting studio allows you to run reports on Essbase cubes. As you know, in Fusion Financial the GL balances are stored into essbase cubes. Therefore Financials reports utilize the essbase cube to present financial data in real-time environment. You can build these reports using FR Studio tool that also allows drilldowns to be implemented. We run a training course at apps2fusion for functional consultants, teaching them how to build reports in Financial Studio.
Smart View -- Essbase
Smart View is an excel add-in from Hyperoin Suite that allows users to query GL Balance data real-time within Excel. This again is a very powerful tool, and is very commonly used for analytics defined by the business users. Once the data from Essbase is in the excel, the users can do various things for reporting such as feature. And it works by exploiting some of the capabilities inherent in the cube.
Slice and Dice - Restrict dimensions of your data to a specific value or range of values. This is achieved by point of view in Excel/Essbase. Using Point of View window you can narrow down the data brought back from cube into the essbase. This limits the data that you want display for a set of dimensions of your Fusion General Ledger chart of accounts.
Pivot Tables & Power Pivot Tables - This is the normal excel feature which organizes and aggregates your data so you can view it from a various different perspectives. Power pivots on top of Essbase Smart view is a Nirvana, because a user can do any kind of modelling as they wish, join up to other data sources without writing a single line of VB Scripting and produce reports as they wish, i.e. reports by the user for the user, in Oracle Fusion Financials
Expansion- This allows you to expand data values from summary level values into the detailed GL transaction values
Drilldown - It reveals the underlying data that constitutes an account balance. Click on an account balance in Smart View to open up the underlying journals (and drill back further to originating transactions) so you can investigate in more detail.
Refresh - You cna click the "Refresh" button on the Point of View window in excel of smart view to re-populate the spreadsheet with the latest GL data from live balances in the essbase cube
OBIEE Analytics - Oracle Business Intelligence Analytics
Also known as OBIA, similar concept to R12, it provides information from the pre-built data warehouse that pulls info from Fusion database. Of course this is batch based refresh, and not real-time based as with the other solutions. OBIA is not required and is separately licensed but we do not see a wider implmenetation of this given the advent of In Memory Database coupled with OTBI present in Fusion Financials.
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When we start any training in Oracle Fusion Financials, we ask the trainees to ensure that role synchronization requests are running.
Sometimes the trainees will say, oh I can't see my roles or I created a user and did all allocation of grants in Oracle Identity Management, but yet I can't do anything using that user when I log in to the system.
If you hit these kinds of issues, then please ensure you schedule the following tasks
LDAP Role Create and Update Reconciliation
LDAP Role Delete Reconciliation
LDAP Role Hierarchy Reconciliation
LDAP Role Membership Reconciliation
LDAP User Create and Update Reconciliation
LDAP User Delete Reconciliation
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In one of our previous training articles linked here on Intercompany Accounting training, you learnt how to define Intercompany Balancing Segment in Fusion Financials.
In this training article, you will learn how intercompany balancing journal lines are created in Oracle Fusion Financials General Ledger. In a typical processing scenario between Company Fusion Practices and its affiliate Company Apps2Fusion….Company Fusion Practices receives a $1000 invoice for supplies that are used by both Company Fusion Practices and Company Apps2Fusion. Company Fusion Practices makes a journal entry for $1000 in the Oracle Fusion general ledger under Fusion Accounts Payable and splits the expense with Company Apps2Fusion, resulting in journal entries under expenses of $600 for Fusion Practices and $400 for Apps2Fusion. This is because Fusion Practices consumes the bigger chunk of this supplies purchased from Vendor.
In this scenario of Intercompany Transactions, the Company Fusion Practices has a liability of $1000 and an expense of $600. Company Apps2Fusion has $400 in expenses and zero liability. At this point, Company Fusion Practices’s books are out of balance and must be reconciled through intercompany journal entries in Fusion GL.
Above mentioned case is a typical Intercompany transaction with distributed expenses. Now, lets assume that you are trying to mimic the above example via a manual journal in Oracle Fusion Financials General Ledger. This will result in the following journal lines in a journal
Company Fusion Practices
Credit Payables Liability $1000
Debit Expense Account by $600
Debit Expense Account by $400
Note - There is no credit entry here
You will notice that the Credits in journal will match debits, i.e. $1000
But the credit and debits within the Company Fusion Practices do not match up.
Likewise, the credits and debits within Apps2Fusion do not match up either
Auto creation of balancing lines
In Fusion Financials when Legal Entities are unbalanced but the journals are balanced then intercompany balancing lines are auto-generated as per the rules defined in Intercompany setup.
Oracle Fusion Financials, we can define Upto 3 balancing segments. Therefore in the sequence of training screenshots below, you will see how the system automatically generates the balancing journal lines to ensure that journals are balanced by credit=debit not just at journal level, but also at the balancing segment level, i.e. the Entity/Company segment.
In Oracle Fusion Financials Common Module the Intercompany is supported as the internal business activity between two or more related legal entities within the same enterprise. An Intercompany segment label can define a segment in a chart of accounts structure. A segment with this label means that Oracle Fusion Accounting Hub will populate a value in this segment to identify the trading partner for the intercompany transaction or the contra primary segment value, whenever it generates intercompany receivable or payable lines using the Intercompany Balancing Rules.
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Before I show you how to configure the Legal Entity in Fusion Financials, let us first understand the concepts, i.e. what exactly the Legal Entity means in Fusion Financials and how it gets used in the Fusion Applications.
The purpose of this article is to give training to you on all the information that you need to understand and configure the Legal Entities in Oracle Fusion Financials.
Legal entity is an Organization Unit that is registered with the legal governmental authorities, also known as jurisdiction. Jurisdiction generally describes any authority over a certain area. Therefore any company doing business in that area should be registered as a Legal Entity in that Jurisdiction. If you are a consultancy implementing Fusion Financials for a client, then you need to Register your client's legal entities as required by local business requirements in their jurisdictions. During the implementation of Fusion Financials you will be defining jurisdictions and related legal authorities, and then be registering the Legal Entities belonging to those jurisdictions.
What is the significance of Jurisdictions and Authorities in Fusion General Ledger
Legal Jurisdictions and Authorities are likely only relevant to Oracle Fusion when you need to perform tax calculations, as you would normally do in Oracle Fusion Payables and Oracle Fusion Receivables.
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Oracle Fusion Applications
Understanding Oracle’s Future ERP
(Senior Oracle Functional Consultant)
The purpose of this document is to make reader understand what exactly Fusion Applications is all about, various component of Fusion application and its architecture at broader level and key business benefits to enterprises with brief details on Fusion Accounting Hub.
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In the continuation of the previous article of this series linked here, the next step would ideally be to define the Legal Entity. However, before we do so, let us add the intercompany segment first to our chart of accounts. Before we go ahead and see the steps for adding the intercompany segment, let us first understand the basics of intercompany accounting.
Firstly what is an intercompany segment?
The Intercompany segment allows you to track the internal business activity between different legal entities within the same group company or enterprise.
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When you implement Oracle Identity Management with Oracle EBusiness Suite, then first the records get created in Human Resources. This is because the Human Resource team is the first team to know that someone is hiring.
With Identity Management in place and integrated, the HR records in PER_ALL_PEOPLE_F get picked up with Oracle Identity Management reconciler process, that sucks our records from per_all_people_f and puts into USR table of Oracle Identity Management database. From OIM, the records get synchronised into Oracle Internet Directory, and from there they go into FND_USER.
In typical cases you will find the flow to be
HRMS System -->Central Data Warehouse[if exists]->OIM->AD->OID->FND_USER
If HR System is Oracle EBS, then the flow will be
PER_ALL_PEOPLE_F -->Central Data Warehouse->OIM->AD->OID->FND_USER
If there is no Active Directory, lets assume
PER_ALL_PEOPLE_F -->Central Data Warehouse->OIM->OID->FND_USER
The two diagrams below show how these links are created between the different layers during Oracle Identity Management implementation with Oracle EBusiness Suite.
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In Fusion Financials, you need to define the currencies in which your organization either transacts or reports. For example an American company might have operations in United Kingdom and Denmark. Therefore they will have transactions in USD, GBP & DKK [Danish Krone]. But in Denmark, there may be a reporting requirement to produce their balance sheet in EURO. In this case you will define USD,GBP, DKK & EURO currencies in Fusion Financials. Once you have defined these currencies, the currency code in ISO itself becomes the primary key in the currency table. Therefore you can not change the currency code after you have defined it, because the currency code gets referenced into many of the transactional tables.
You can also capture currencies with an effective start date, i.e becoming effective in future, for example Euro was started in Jan 2002, and if you were to have implemented a system prior to that date, you can in theory create these currency codes well in advance.
In this article you will learn how currencies are defined in Fusion Financials, their various configuration options and how they get used by various processes in Fusion Financials.
Note - It is assumed that you have already read the previous article for defining calendars in Fusion Financials as per this link.
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As with any other General Ledger system, Oracle Fusion too allows you to define accounting year and the periods within that year. It is a very normal practice to setup periods on a monthly basis. The question is why just a month, why not quarter. With the period frequency that you define in General Ledger, it means that you can track the balances at that frequency. For example, the management might want to see month by month trending of sales by line of business. For example, a company such as Fusion Pracitces Ltd, might want to see how much revenue is being made by their Consulting Business, how much by their Training Business and how much by their Support Business. For this, if the GL Periods are defined monthly, then you will be able to see from your Fusion General Ledger the trending of performance for each line of business within the company on a monthly basis.
Before reading this article, I believe you have already understood the GL Chart of Accounts concept in Fusion Financials. If not, then you need to read the articles linked here.
Adjusting periods in Fusion General Ledger
The periods when defined monthly, have to be closed after each month, so that users can not fudge the transactions going backwards. This is required for audit & control purposes. But sometimes, either mistakes can be made, or reconciliation errors found after the periods have been closed. To manage this situation, the implementors can define the adjustment periods. These adjusting periods can either be Quaterly or Annually, which means you can make adjustments at the end of every Quarter or at the end of every year.
In Fusion GL, you also have another option to define how many adjusting periods that you need. In this case, implementor have to themselves go and define those adjusting periods themselves after deciding the number of adjusting periods they need. If you select Quaterly or Annually adjusting periods, then Fusion GL will auto generate these Adjusting periods in the calendar for you.
If your company has multiple countries in implementation, then you will be running translations to translate balances from one currency into another, normally the group Head Quarter’s currency. In this case you need to specify a calendar start date that is a full year before the start date of the year of the first translation period for your ledger. This is so, because the translation cannot be run in the first period of a calendar. You also need to consider your data migration needs before you define the first period, because you may wish to load balances of last 5 years into the system. This is important because you cannot add previous years once the first calendar period has been opened.
EBusiness Suite Considerations
Organizations which have multi-country implementations will normally define multiple calendars in the system. In Oracle Fusion Financials a calendar can have one period frequency and a period type only. Therefore, if you have a calendar in Oracle EBS with more than one period type in it, then you must create separate calendars with unique calendar and period type combination.
Opening the periods
From operational perspective, once you have opened the period or made it future enterable, then it is difficult to change your period status because the transactions might have been entered against those periods. Therefore caution must be exercised for opening the GL Periods.
In this article, we will see how Fusion GL generates the periods allowing you to define your calendar.
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In the continuation to my previous article wherein we defined some Expense accounts, next we will be creating Asset, Liability, Revenue & Owner Equity accounts. Firstly, we need to understand the concepts, i.e. what is asset and liability and how does it impact the accounting. The understanding of this concept will help you appreciate why the account values within the Fusion Financials Value Set must be qualified as an Asset or Liability or Revenue or Owners Equity. There is a lot of information on the web, and therefore I will be touching base at a very high level in the context of Fusion Financials Accounting Hub.
If you haven’t read the previous article, it must be read using this link. In that article, I explained that any value in the accounting flexfield value set, a segment that has label named Natural Account, can be assigned one of the Account types.
Some examples of Assets, Liabilities and Revenue are
If you pay to staff in cash for a loan that they must return, then following components are involved from accounting perspective
1. Cash is given out by the company to the staff
This is a credit to the Cash Account. Now cash account is of type Asset.
2. Employee owes the money back to the company. In other words, the company has not thrown away the money, it is owed and that money still remains an asset to the company. The reality is that this is a piece of money that still belongs to the company and must be displayed in their balance sheet as an asset
This is a debit to the Staff Loan Account, which is of type Asset.
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In the previous article, we learnt how a GL Accounting Flexfield can be designed in the Fusion Financials. That article can be read from this link. In this article, we will see how the different account values in the Natural Account Segment can be classified as either of type Expense, or Revenue, or Asset or Liability or Owners Equity. The steps for configuring this are simple in Fusion Financials, and those will be explained, but it is good to touch base on why this config is required in the first place.
What are the account types that can be attached to the Natural Account Segment ?
4. Owners Equity
The others are related to Budget allocation, that we will keep out of this specific article so to keep things simple from accounting perspective.
Firstly, why do we need to perform this classification of Account Segment Value Set?
As stated in previous article, the senior management at any point in time might wish to know how much asset or liability does the company have at any point in time. They would like to know how much are different line of businesses or cost centres spending and on what type of expenses i.e. hardware, train, flights etc. For printing the companies balance sheet and income statement in GL, the system should know which accounts fit into Asset or Liability or Income. The Fusion General Ledger will not be able to produce reports unless the accounting transactions have been flagged as expense transactions or liability transactions etc.
Also let us go back to the equation of accounting that uses 5 Account Types
Assets = Owners Equity + Liabilities + Revenue - Expenses
It means, Oracle Fusion general ledger system should be able to flag any Journal Line into one of these buckets. This happens by attaching Natural Account Segment Value set values to one of these five account types.
Now let us see how how this gets implemented in the Fusion Financials.
Go to the task that allows you to manage the Chart of Account Value Set Values
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In this artcle, you will learn why GL Chart of Accounts is so important and is backbone of any organization, and how you can configure the same in Fusion Financials Accounting Hub. In the Oracle EBS article for Key Flexfield, you learnt why a Key Flexfield is required. That article can be read from here. In this article, we will continue with our implementation steps for configuration of Fusion Financial Accounting Hub. In the previous article linked here we created the value sets that will be used by the GL Key Flexfield in Fusion Financials. In this article, we will configure the GL Chart of Accounts itself in Fusion.
Firstly why is GL Chart of Accounts required?
The senior management can know what is strategically happening in the company just by looking at the GL Balances. These GL Balances are tracked against the GL Chart of Account Segments. For example, if you have an account segment in GL and a cost centre. Lets assume following
GL Cost Centre Values Are
C001 - IT Cost Centre
C002 - Human Resource Cost Centre
GL Account Values Are
2323490 - Hardware Expense
2323491 - Software Expense
5412000 - Travel Expense
5453291 - Flight Travel Expense
5453293 - Train Travel Expense
The accounting entries will be transferred into GL from various modules such as Procurement, iExpense, Receivables, Projects, Assets etc.
Now. if a person in Human Resource department travels via flights, their expenses will be booked to “C001 - IT Cost Centre” & “5453291 - Flight Travel Expense”.
Likewise. if a person in Human Resource department travels via flights, their expenses will be booked to “C002 - Human Resource Cost Centre” & “5453291 - Flight Travel Expense”.
These accounting entries will be transferred from iExpense to GL. Thus allowing the management to know how much is IT deparment spending on flights every month and how much is HR department.
As evident from above example, you can literally track any strategic activity just from GL. This is why all the modules in Oracle EBS and Fusion post into the general ledger.
The level of activity that you can track from GL Balances depends on the level of values[known as granularity] you put into the values of the GL Accounting Segment Value Sets. Of course the other modules must also create accounting entries at the desired level.
For example, if your client’s iExpense allows creation of accounting entry for “5412000 - Travel Expense” then GL will not be able to tell how much spend was for train and how much for flights. For this reason, we create roll up groups, so that even though accounting transactions are captured at granular level, those can still be reported at the desired levels. You can go from Train n Flight to Travel, but not the other way around.
If you wish to track balances i.e. expenses, revenue, asset & liabilities for segments that do not exist in GL then you have various other options such as extended charts in FAH, operational dimensions in your warehouse or Essbase cube or any other planning & modelling tool. Contact http://fusionpractices.com for any consulting advise that your organization requires. A typical example would be that a bank will track balances at investments product & activity levels, whereas an insurance company will track balances at insurance policy level.
Anyways, let us see the steps involved in creating a GL Chart of Account Segments in Fusion Financials Accounting Hub. You will notice that we can have upto three segments in Fusion Financials at which the journals can be balanced.
For my example, I will be enforcing that the journals are balanced at Legal Entity, Line Of Business Level & Cost Centre Level. This is not very usual for most organizations, but a very large enterprise that is global across the world with billions in revenue should consider this level of 3 tier balancing. Again, this is a case by case approach, and get in touch with me for scenario discussions.
Are all the steps the same in GL Accounting Flexfield config in Fusion as compared to EBS?
Not really, on the contrary, very different. For example, in Fusion Financials, you have a concept of Key Flexfield Instance. The Key Flexfield definition is just a template, but the instance is a reference or a wrapper around the definition. It is the instance of Key Flexfield that gets used in Fusion Applications. The benefits are that you can make multiple instances of a key flexfield, and make some instances having certain segments displayed & required, as compared to the display of the same segment in another instance of KFF.
Will I be adding an intercompany segment?
Yes, but not in this example. I will be adding the intercompany segment later when I discuss intercompany features of Fusion Financials. There is a unique qualifie/label named Intercompany for such segments. The intercompany features in Fusion Financials are much more advanced than Oracle in EBS.
The steps for implementing GL Chart of Accounts in Fusion Financials are detailed as per below.
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Now that you have created a project & tasks for Fusion Financial Accounting Hub as per this link, next we need to configure Oracle Fusion Accounting Hub. Amongst many other things, we will require is a GL Chart Of Accounts Flexfield. To learn basics of Value Sets, you can refer to the Oracle EBS article linked here.
In case of our Fusion FAH implementation, we will be creating a GL Chart of Account with the following segments
Tells which company does this transaction belongs to
Line Of Business
Example for line of business is that Apple will have Mobile Phones & Laptops as two different line of business
Cost centre examples are IT Department, or Human Resource Department etc
Accounts segment tells the nature of transaction. For example, if an invoice liability has been created into the system or Cash has been received & reconciled in the system
You will always find that all the subledgers such as Payables, Receivables, Projects, Inventory etc send the journals to GL. These journals contain either a credit or a debit to a combination of these GL Accounting Flexfield segments. For example, you can query GL Balances to know which Line of Business has how much cash sitting with them. Or you can query which Cost Centre has most amount of expense in a period.
Anyways, coming back to value sets in Fusion Financials, we will be creating one single value set for each of the above GL segments, using the steps shown below.
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In this article, we will begin a brand new Fusion Financials implementation using a step by step approach. Before you follow this article, I assume that you would have created a super admin user using one of my previous articles on this website. That superuser would give you access to all the screens and processes, thus allowing you to smoothly configure the system for use.
You will learn the following in this article
1. Creation of offering, which is similar to modules
2. Creation of project in Fusion Financials
3. Planning the tasks to imlpement Fusion Financials
Assign due dates, resources to these tasks
First, let us create an offering. An offering is like a module in Oracle EBS. Just as the modules contain features, here in Fusion Financials, the Offerings contain features as well. For example, in Fusion Financial Accounting Hub, creation of localizations is a feature, Legal Entity assignment to Accounting Configuration is a feature, Secondary Ledger Accounting is a feature. For those coming from Oracle EBS background, please note that General Ledger is a part of the Fusion Accounting Hub feature. Therefore don’t be surprised if you do not see an offering for the General Ledger in Fusion. This becomes an inherent part of Fusion FAH implementation.
Login to the Fusion Financials home page, and click Configure Offerings.