Use of General Ledger Entry
Reconciliation feature for Sub –
Ledger Transactions
Author: Sidhartha Anireddy – ACA, CISA (Examination Passed)
Contributors – Sierra Atlantic Software Services Ltd
Applies to R 12.0.6
Skill level rating for this Case Study Expert
Case Study Overview
This case study briefly discusses about
The basic GL setup steps required for enabling reconciliation reference. These setups
are discussed under the two following heads.
o During initial setup.
o When reconciliation reference is desired after initial setup.
Modifying Journal Line Type to capture reconciliation reference in Subledgers for
Subledger Transactions.
Reconciling Subledger Journal lines in GL using reconciliation reference. Subledger
Journal Lines posted to Clearing Accounts usually are required to be reconciled.
Different Subledger transactions where reconciliation reference can be used (Based on
my experience & Perception)
Feature & Requirement
General Ledger Entry Reconciliation feature was available in R 11 of Oracle General Ledger.
In Release 11 to populate reconciliation reference for sub ledger transactions we had to
populate the GL_INTERFACE table with the required information (Reference: FAQ: Automatic
and Manual Reconciliation Functionalities in GL). However this feature had restricted use for
Subledger Transactions as it was not capable of automatically capturing reconciliation reference
of Subledger transactions. In Release 12 Oracle introduced Subledger Accounting which enables
us to capture Reconciliation Reference of each Subledger transaction.
To use the General Ledger Entry Reconciliation feature for GL & Subledger Transactions
setups are required in GL and Subledger Accounting Method. Reconciliation Reference should
be enabled in GL and Subledger Accounting Method should be modified to capture any
reconciliation reference.
The requirement was that from GL one should be able to identify, for all clearing accounts
the GL Lines (Created from Subledger Transactions) which are not reconciled. To meet this
requirement we have enabled General Ledger Entry Reconciliation feature in GL and Modified
the Subledger Accounting Method.
Using this feature we demonstrated that a person responsible for GL could identify in GL all
subleger GL lines which are not reconciled and pass necessary adjustment accounting entries in
GL after appropriate investigation.
Requirement Analysis
I have taken up the above requirement to demonstrate the General Ledger Entry
Reconciliation Feature for Subledger Transactions.
Requirement: Several clearing accounts are used in various Subledgers. Balances in these
clearing accounts should net to zero. If these account balances do not net to zero
Then some adjustment entries may have to be passed in GL depending upon specific
client requirement and
From GL for each clearing account one should be able to identify the Unreconciled
Subledger transactions.
Summary of Setups
In order to be able to use the General Ledger Entry Reconciliation feature Setups are
required to be done at GL as well as Subledger Level.
Setups can be summarized as under:-
Enabling Journal Reconciliation for a Ledger
Enabling Reconcile Qualifier for Natural Accounts
Subledger Accounting Method Setups
o In this case study I am enabling reconciliation reference for Subledger process
Addition of Assets. I am assuming that all assets would be added from one or
more Payables Invoice. Hence reconciliation reference would be enabled for the
below Journal Line Types
Payables – Item Expense
Assets – Additions Cost Clearing
Detailed Setups
(A) GL Initial Setup:-
1. Ledger Setup – Enable Journal Reconciliation-
For making use for Reconciliation Reference for reconciling GL Journal Lines, we need to
enable Journal Reconciliation during ledger setup. In accounting setups for a ledger in advanced
options tab check the box “Enable Journal Reconciliation”. Find below the relevant screen shot.
This document contains only setups relevant for enabling General Ledger Entry
Reconciliation feature.
2. Natural Account Values – Enable Reconcile Flag
Identify the clearing natural accounts whose balances should net to zero. For these natural
accounts, before any code combinations are created, set the reconcile qualifier to yes for the
natural account. The reconcile qualifier can be set to yes by following the below steps:-
Navigate to System Administrator responsibility. Query for the Value set attached to
Natural Account Segment of Accounting Flexfield. (Navigation>System
Administrator>Application>Validation>Values)
Query for the Natural Account value(s) for which you wish to set the Reconcile qualifier
to ‘Yes’. From the “Values, Hierarchy, Qualifiers” tab. Click on qualifiers field, the
segment qualifiers window opens. In this window for the field Reconcile choose Yes,
click ok and save the record. The reconcile qualifier is set to yes for this natural account
value.
Reconcile
Qualifier
By setting the reconcile flag to yes before any code combinations with this natural
account is created, it will ensure that all code combinations that get created with this
natural account will have the reconcile flag set to yes.
In this case study I would be using the Asset Clearing Account. The Reconcile flag will be set
as yes for this natural account.
3. GL Setup (Code Combinations created before the Reconcile attribute on Natural Account
was not set to Yes).
R 12 provides for a new flag called reconcile in the account combinations window. By
checking the flag reconcile we can ensure that these combinations would also capture
the reconciliation reference information.
Navigation>General Ledger Super User>Setup>Accounts>Combinations. Query for the
combination(s) for which you wish to enable the reconcile flag.
This step may have to be performed for each of the combinations already created in the
system on the date of setting of the reconcile flag.
(B) Setup – Custom Journal Line Type (SLA Setup)
1. Payables – Item Expense
For creating an Asset from a payables invoice, the Invoice Distribution Account should have
asset clearing account. From our setup we would be assigning the AP Invoice Number as the
reconciliation Reference to all Invoice Distributions having Distribution Line Type of “Item”. For
creating a custom Journal Line Type please follow the below steps:-
Navigation>Payables Manager>Setup > Accounting Setups > Subledger Accounting
Setup > Accounting Methods Builder > Journal Entry Setups > Journal Line Types
In the find Journal Line Types Window choose the owner as “Oracle”, in the name field
enter “Item Expense” in the event class enter “Invoices” and the line type code
“AP_ITEM_EXPENSE_INV”, click on find.
The seeded journal line type will open, click on copy to create your own custom journal
line type. In the copy window enter the Line Type Code, Name, Description & the name
of your transaction chart of accounts and click on done. You have now created your own
custom journal line type.
Click on Accounting Attribute Assignments button on the right hand corner of the
window. The “Journal Line Accounting Attribute Assignments – Payables” window
opens. Query for the accounting attribute “Reconciliation Reference”. Choose Invoice
number as the source for reconciliation reference from the list of values.
Save the record and close the windows. Reconciliation Reference Invoice number has
been assigned to the Custom Journal line type Item Expense.
2. Assets – Additions Cost Clearing
For modifying the Journal Line Type follow the same steps as suggested above from Fixed
Asset Responsibility.
Note: - Any Subledger setup whose owner is Oracle cannot be modified; hence for
capturing reconciliation reference for Subledger transactions you should have your own
custom Subledger Accounting Method.
3. Creating Custom Subledger Accounting Method
After creating your own custom Journal Line type as suggested above follow the below
steps to associate it with your custom Subledger Accounting Method, this is explained by taking
Payables Subledger Accounting Method as an example.
Attach the Custom Journal Line Type to Journal Lines Definition. Navigation > Payables
Manager> Setup > Accounting Setups > Subledger Accounting Setups > Methods and
Definitions > Journal Line Definitions. Query for the Journal Line Definition for the event
class Invoices and copy the definition to create your own custom Journal Line Definition.
Assign your Custom Journal Line Type in the line assignments of the Custom Journal Line
Definition.
Attach the Custom Journal Line Definition to Application Accounting Definitions.
Navigation >Payables Manager> Setup > Accounting Setups > Subledger Accounting
Setups > Methods and Definitions > Application Accounting Definitions. Query for the
application accounting definition code that you wish to copy. In your custom application
accounting definition attach the custom journal line definition to Even Class Invoices.
Attach the custom application accounting definition to Custom Subledger Accounting
Method and ensure that the custom Subledger Accounting Method is attached to the
Ledger from which you will be processing the transactions.
Submit the Validate Application Accounting Definitions before you can start using the
custom Subledger Accounting Method.
(C) Transaction Processing
Enter AP Invoice.
Navigation > Payables Manager > Invoices > Entry > Invoices. Enter an Invoice in AP, in
the invoice distributions enter Asset Clearing Account. Chose the same Asset Clearing
account for which reconcile qualifier is set to yes.
Validate the Invoice; Create Accounting and Transfer to General Ledger.
Submit the Concurrent Request Set – Mass Additions Create from payables
responsibility.
Navigate to General Ledger SuperUser Responsibility and query for the Journal Entry
created from the above invoice and check if the reconciliation reference is populated for
the invoice distribution account.
Asset Addition
Navigate to Fixed Assets SuperUser Responsibility. Navigation > Fixed Assets Manager >
Mass Additions > Prepare Mass Additions.
Query for the invoice and change the status from new to post, enter other information
for creating the asset.
Post Mass Additions and run the create Accounting – Assets concurrent request for
process category Assets and transfer the accounting information to GL.
Review the Asset Addition Journal in GL to ensure that the asset clearing account has AP
Invoice Number as Reconciliation Reference.
General Ledger – Journal Reconciliation
From general Ledger Asset Clearing Account can be reconciled in either of the following
ways
Manually
Automatically by submitting the concurrent request “Reconciliation – Automatic
Reconciliation”.
General Ledger – Manual Reconciliation
To reconcile Journal Lines based on Reconciliation Reference please follow the below steps
Navigation > General Ledger Super User> Journals > Reconciliation > Reconcile.
The Unreconciled Lines Search Criteria <Ledger Name> window opens. In this window
enter the search criteria to search the journal lines. In the below screen shot I have
entered the Invoice Number in the Reference Field to search for the journal lines for my
above transactions.
After clicking the search button the Reconcile Journal Lines window opens. In this
window click on the Reconcile check box and click the button Reconcile to reconcile
both these Journal Lines. See the below screen shot for details.
After clicking the reconcile button both these journal lines will get reconciled.
General Ledger – Automatic Reconciliation
To automatically reconcile journal lines based on Reconciliation Reference submit the
“Reconciliation – Automatic Reconciliation” concurrent Request. For the reconciliation rule
parameter you can choose any of the following values
By Account and Reference
By Balancing Segment and Reference
By Balancing Segment, Natural Account and Blank Reference
By Balancing Segment, Natural Account and Reference.
After successful completion of the concurrent request review the output to see the result of
automatic reconciliation. See the below screen shot for details.
GL Reports for Available for Journal Entry Reconciliation Feature
The following GL reports are available in GL for reviewing Reconciled and Unreconciled GL
Lines:
Reconciliation – Reconciled Transactions
Reconciliation – Unreconciled Transactions
(D) Perceived Areas Where General Ledger Entry Reconciliation can be used are:-
1. Cash Clearing Account
2. Asset Clearing Account
3. CIP Clearing Account
4. Inventory AP Accrual Account
5. Inventory Receiving Account
6. Deferred COGS Account
7. Natural Accounts to which Manual Journals are posted at period end, which are
reversed in the beginning of next period.
The above list of areas where reconciliation reference can be used is based only on my
experience and perception, the above list is not intended to be exhaustive.
References:
The below references provide further details about the functionality of reconciliation
reference.
Oracle General Ledger User Guide Release 12 Part No: B31218-03
Oracle Subledger Accounting Implementation Guide Release 12 Part No: B13984-03
FAQ: Automatic and Manual Reconciliation Functionalities in GL
What are the setup steps to enable GL Reconciliation from Subledgers in R12?
