Customer Submitted Case Studies

Case Study on General Ledger Entry Reconciliation in R12

Author: Jaya Kiran Pidatala – Chartered Accountant (Equivalent to CPA of USA)

Skill Level Rating for this Case Study: Intermediate

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Case Study Abstract

The case study briefly discusses about how I configured General Ledger Entry
reconciliation feature for GL Journal lines. The document discusses about basic setups
performed and transactions done to reflect the functionality available in R12 Ledgers.
General Ledger Entry reconciliation is a feature available in General Ledgers wherein we
can reconcile balances of all accounts which ideally should net to zero at GL level. For
example, contra accounts, clearing accounts etc…

Case History

In Release 12, Oracle has given us functionality in General Ledger Entry Reconciliation
of GL journal lines. The feature can be used to reconcile all account balances which
should actually net to zero at closing. To achieve this, there are few setup steps needed
 In this case study, I have discussed in detail the basic setups needed to setup journal line
reconciliation. A sample transaction with screenshots is shown to demonstrate the
functionality.

The setups demonstrated in this document totally reflect my understanding of Oracle

Pre-Analysis Work

I had taken up the below assumed requirements to demonstrate the General Ledger Entry
Reconciliation.

Requirement: There are few clearing accounts, the balances of which at GL level should
net to zero. The system should facilitate automatic reconciliation of such clearing
accounts. Manual reconciliation should also be available for the same.

Analysis

Summary

I have used the standard functionality of General Ledger Entry Reconciliation introduced
in Release 12 General Ledger to meet the requirement.

I have discussed in detail the setup steps needed to enable General Ledger Entry
Reconciliation for the clearing accounts. Briefly, the steps required to make it work are

 Identify all clearing accounts which need to be reconciled

 Give the Journal References while passing the journal entry in lines

Detailed Analysis

Note: I have done the demonstration on Vision Instance and have also copied the
screenshots wherever relevant.

 Used the standard seeded ledger Visions Services (USA) and standard seeded
responsibility General Ledger, Vision Services (USA)

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Setup Steps:

Step 1: Identification of Clearing Accounts

As a first step, I identified all clearing accounts that are supposed to have a zero net
balance and which would have to be reconciled hence.

For the purpose of this document, I have taken one clearing account for which setup shall
be done.

Natural Account: Accrual Clearing Account: 2929

Step 2: Assignment of Segment Qualifiers

The next step would be to assign the necessary segment qualifier to the natural account
2929. The qualifier “Reconcile” should be set to “YES”

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I had queried the natural account in the Financials-Flexfields-Key-Values window and
assigned the necessary segment qualifiers as shown in the screenshot

Demonstration:

Step 1: Create a Journal

I have created a manual journal and saved it to demonstrate the Journal Line
Reconciliation feature. I have copied the screenshots below.

The natural account with the code combination 01-000-2929-0000-000 with a credit of
USD 2050 is credited in this example.

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Step 2: Give Journal References in Journals

While passing the journal, the reference column needs to be uniquely given for the
account. It means, for the account 2929 a unique reference need to be given every time a
journal is passed using the natural account. Though the system does not insist on the
value being unique, I felt that it would be more useful and advantageous to follow this as
a process

For this example, I gave a reference “ACCRUAL” for this account.

The reconciliation reference can be given

 Individually for each journal line manually

The reconciliation reference can be given individually for each of the journal lines
separately. Query an unposted journal, and we can give the reference in the column in
Reconciliation Reference for each of the lines as shown in the screenshot below.

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  At Journal Header Level – Other Information Tab

Alternatively, the reference can be given at the header level of the journal. It can be given
in the Reconciliation Reference field which can be found in the tab “Other Information”.

This will ensure that the same value flows down to all new prospective lines of this
journal whichever carry a natural account for which the segment qualifier Reconcile is set
to Yes.

It has to be noted that this information at header level need to be given even before
creation of any journal lines if it is desired that the value should flow automatically to all
eligible lines. Suppose, if we create 2 lines and then give the information in Other
Information Tab, those 2 lines shall not derive the reference automatically. But if we
create a new 3rd line in the same journal, it shall automatically derive the reference from
Other Information Tab.

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The Journal line references can be given in Journal lines or derived from Sub ledger
Accounting. This document does not discuss about importing of references from Sub
ledger Accounting.

Step 3: Create a Reversal Journal

For the purpose of this demonstration, I created a reversal journal for the original and
hence the natural account 2929 with the code combination 01-000-2929-0000-000 is
again debited with USD 2050. I posted the same.

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Step 4: Post the Journals

Once the references are given, the journals need to be posted so that the balances can be
updated.

Step 5: Automatic Reconciliation

System gives us the option of reconciling the accounts either manually or automatically.
For automatic reconciliation, I ran the program “Reconciliation – Automatic
Reconciliation” with the given set of parameters as shown below.

As it can been seen in the above screenshot, we need to select a reconciliation rule for the
report. Based on the rule given, the program picks up all eligible records for
reconciliation. The available options are

 By Account and Reference – All records for which the code combination and
reference fields match will be picked. Please note that the natural account
segment qualifier need to be set to Yes
 By Balancing Segment and Reference – All records for which the balancing
segment value and reference fields match will be picked

 By Balancing Segment, Natural Account and Blank Reference – All records for
which balancing segment value, natural account match and which do not have
reference field

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  By Balancing Segment, Natural Account and Reference - All records for which
balancing segment value, natural account and reference fields match will be
picked.

For the purpose of this example, I selected By Account and Reference as the rule.

We can also observe that there is a parameter “Perform Reconciliation”. By selecting this
parameter as No, the program gives a preliminary report output of selected transactions
for reconciliation. We can verify the same and if the output is as desired, we can re-run
the program with the parameter set to Yes.

Below is the screenshot of the report. We can observe that both the lines from the journals
created bearing the natural account 2929 got selected and are available for reconciliation.
On re-run of the program with the Perform Reconciliation parameter set to Yes, the lines
will be marked as Reconciled. Oracle gives a unique reconciliation ID for each of the
reconciliations performed.

Step 6: Manual Reconciliation

Oracle also gives us the option of picking the records for reconciliation and manually
reconcile. We can reconcile manually if we need to reconcile records with different
balancing segments, natural accounts or reconciliation references. We need to use the
reconciliation lines window to reconcile the transactions.

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I have found that the system gives few options as selection criteria for selection of
records for reconciliation. The below screenshot shows us the options available for
selecting the records.

We can select the lines by giving ranges for period, dates, Journal category, reference,
sequence name, sequence number and code combinations.

In the above example, I have given the period and the natural account as 2929. It selected
2 lines the screenshot of the same is attached below.

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 Now, we can click on the check box, “Reconcile” available on the left most corner of
each line and click on reconcile to reconcile the transactions. Oracle shall reconcile if the
net of debit and credit of all selected lines is equal to zero.

Results, Conclusion and Learnings

This way, I had demonstrated the requirements using R12’s functionality of General
Ledger Entry Reconciliation. It is a very useful feature especially when you have large
number of clearing accounts which need to be reconciled at the end of a period, the entire
process can be automated then.

References

Oracle General Ledger User Guide

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