Planning for Sub ledger accounting setup – SLAM for primary and secondary ledger set up

When there is a re-implementing or new implementation of R12 Oracle Financials SLAM (Sub-Ledger Accounting Method) will be one of the new concepts to understand however before configuring SLAM understand how the high level design of the ledgers, chart of accounts and data sets relate to the setup of SLAM in relation to primary and secondary ledgers.

Different Business Scenarios may exist:

Scenario 1 – A global business operation with two parent companies one UK parent reporting using IFRS and one US parent using US GAAP with separate foreign subsidiaries in many countries each with their own functional currencies.

Scenario 2 – A global business operation with one UK parent reporting using IFRS. This business has separate foreign subsidiaries accounting in each country each with their own functional currencies.

Scenario 3 – A business operation with one parent company reporting in US GAAP and one separate subsidiary accounting using a local currency of EUR and the functional currency is US dollars.

Scenario 4 – A UK operation with many subsidiary companies and the parent company reporting in IFRS and functional currency is UK pounds.

Pre-requisites to ledger and SLAM set up

> assume decisions made on functional currency based on operations and adherence to IAS21

>assume decisions made on multicurrency reporting based on business requirements

>assume decisions made on shared corporate chart of accounts

>assume decisions have been made on primary and secondary ledger use in Oracle based on shared ledger sets ,transaction and accounting chart of accounts and use of multi-org and data access requirements, calendar requirements and accounting method and currency.

The SLAM set up will vary according to solution but will be something like below:

Scenario 1

This is a typical global business example where more than one consolidation needed and there are many subsidiary companies. Functional currency is likely to be that of each entity and therefore reporting needs to be in more than one currency.

Solution a

The many subsidiary entities can share the corporate chart of accounts i.e. the transaction chart of accounts. The consolidations will need to be performed using secondary ledgers in the two parent entities.

Each subsidiary entity will have its’ own ledger with its’ own currency, calendar and accounting method however the ledgers will all use the corporate chart of accounts it will be shared across the group.

The corporate chart of accounts has to be able to support the transaction accounting in all entities.

Separate currency reports if required are to be utilised for both primary and secondary ledgers.

SLAM will need additional configuration for the secondary statutory reporting ledgers to support the required level of data conversion e.g. journal.

Solution b

If the corporate chart of accounts cannot support the solution above then the subsidiaries may need to use a local accounting chart of account and therefore a secondary ledger is required for this chart of accounts.

SLAM can then use additional set-ups so these entities can post the sub-ledger transactions or journal level to the secondary ledger for internal reporting.

Scenario 2The solution is as per scenario one but only one consolidation is required.

Scenario 3In this scenario, the functional currency of the subsidiary and the parent is USD.Therefore, the subsidiary can use the primary ledger with the corporate or statutory chart of accounts and use the multi-currency feature of Oracle Financials to report in USD. The local subsidiary can also use the secondary ledger with their local chart of accounts, local currency EUR for local GAAP. The consolidation of the subsidiary must be in the primary ledger of the parent. SLAM will need additional configuration to support the secondary ledger.

Scenario 4A UK business with one functional currency and one corporate chart of accounts. The Primary ledger of the entities will use the transaction corporate chart of accounts and functional currency for both will be GBP. There will be no requirement to report in another currency. There may be a requirement to consolidate to a secondary ledger with a different chart of accounts. If this is so then the parent entity may set up a secondary ledger to consolidate the results.SLAM will need additional configuration to support the secondary ledger.

Additional SLAM set ups for use with secondary ledgers

The sub-ledger accounting to secondary ledgers is set at any of the following levels

Sub-ledger Level Secondary Ledgers Journal Level Secondary Ledgers Balance Level Secondary Ledgers Adjustments Only Secondary Ledger

It is a prerequisite to create a chart of account mapping if the secondary ledger uses a different chart of accounts.

The accounting set up below is an example of the set up in Oracle Financials suitable for scenario 1 solution (a) in this example a French subsidiary is using the corporate chart of accounts for its’ transactions and mapping into the US Parent consolidation ledger so they report in US GAAP.

Navigate to accounting set up in Oracle>

Primary Ledger French Operations Secondary ledger US StatutoryChart of accounts

Corporate Chart of accounts US GAAP

Accounting calendar

Monthly Accounting calendar

Fiscal

Currency Euro Currency USDSub-ledger accounting method

Standard accrual Sub-ledger accounting method

USGAAP

Chart of accounts mapping

Currency conversion rules

Error Handling

If missing conversion rate o report error

* Use last rate

Number of days to find last rate 15

Journal conversion Rules

Post journal automatically from source ledger o

Ledger information

Data conversion level

Journal

Disable conversion date

01-Feb-2013

Corporate to Statutory mapping

Source representation French operations

Default rate types CorporateRetain transaction rate type

Yes

Retain journal creator from source ledger no