Five Criteria for Designing a Chart of Accounts

© 2014 eprentise. All rights reserved.
Five Criteria for Designing a Chart
of Accounts
Helene Abrams
CEO
eprentise
habrams@eprentise.com

Learning Objectives
After completion of this program you will be able to:
 Objective 1: Explore the five fundamental design criteria for
creating a forward-thinking chart of accounts.
 Objective 2: Learn how a good design reduces costs, streamlines
reporting and provides global visibility.
 Objective 3: Understand how to leverage Release 12 features like
subledger accounting and ledger sets.
| 2

Agenda
 Introduction
 Chart of accounts (COA) basics
 Designing a good COA
 5 fundamental criteria for a good COA design
 Accommodating future growth
 Reduced costs, streamlined reporting, and global visibility
 Leveraging Release 12 features
 Global visibility, local compliance
| 3

eprentise Can… …So Our Customers Can:
 Consolidate Multiple EBS Instances
 Change Underlying Structures and
Configurations
 Chart of Accounts, Other Flexfields
 Inventory Organizations
 Operating Groups, Legal Entities,
Ledgers
 Calendars
 Costing Methods
 Resolve Duplicates, Change Sequences,
IDs
 Separate Data
: Transformation Software for E-Business Suite
 Reduce Operating Costs and Increase
Efficiencies
 Shared Services
 Data Centers
 Adapt to Change
 Align with New Business Initiatives
 Mergers, Acquisitions, Divestitures
 Pattern-Based Strategies
 Make ERP an Adaptive
Technology
 Avoid a Reimplementation
 Reduce Complexity and Control Risk
 Improve Business Continuity, Service
Quality and Compliance
 Establish Data Quality Standards and a
Single Source of Truth
Company Overview: Incorporated 2007  Helene Abrams, CEO
| 4

Example Structure
Segments, Values, Code Combinations
Company Business
Unit
Cost
Center
Region Account
01 100 150 East 1111
02 100 210 West 2222
Values
01.100.150.East.1111 Code Combination
| 5
Chart of Accounts Basics: The Flexfield

 The EBS accounting flexfield accommodates up to 30 segments for
categorizing transactions
 Structurally analogous to columns in a table
 Have defined lengths for the values they contain
 Answering the questions Who, What, Where, Why, and possibly
How helps identify segments that will give your accounting flexfield
the ability to classify each transaction
 Common segment examples: Cost Center, Department, Fund,
Location, Product Line
| 6
Chart of Accounts Basics: Segments

Flexfields in the Form
Accounting Key Flexfield
Code Combinations
Value Descriptions
| 7

Chart of Accounts Basics: Hierarchy
 The accounting flexfield incorporates parent-child relationships
among values
 Roll-up Groups
 A collection of parent values for a given segment
 Used to create summary accounts
 The most detail is at the lowest level
 Summary Accounts
 Hierarchical rollup of children and/or parents
 Faster reporting
 Account balance inquiries
| 8

5 Fundamental Criteria for a Good COA
1. There is only one type of information in each segment.
2. Information in the chart of accounts is not repeated from other
modules.
3. There is enough room to expand within each segment.
4. Summary accounts and rollup groups fall naturally within ranges.
5. You are able to report on critical business components with
standard reports without resorting to spreadsheets. FSGs and
other reports should be easy to create.
| 9

Criteria 1: One Type of Information per Segment, and
Only One Type of Information in a Single Segment
 Information should not overlap across segments.
 If each segment contains one (and only one) type of information,
you:
 Reduce the maintenance of keeping information accurate in two places
 Reduce the possibility of introducing errors into your accounting
 Case: If your cost center has the same type of information as a
business unit segment, there is no need to implement both.
 Case: You shouldn’t have a Department segment value such as HR –
Sacramento, CA if there is also a Location segment in the chart.
| 10

Criteria 2: Information Not Repeated
 The accounting flexfield should not repeat information that exists in
other modules of EBS.
 Reduced maintenance and errors (similar to Criteria 1)
 Case: If you are implementing Oracle Projects modules, there is no
need to have a project segment in your accounting flexfield.
 Case: If you are implementing Receivables, then there is no need for
a customer segment.
| 11

Criteria 3: Enough Room to Expand
 Define your segment lengths to be long enough to accommodate future values added.
Note: Although it likely won’t be an issue, the maximum number of characters for a
code combination string is 240, so there are upper limits on how long you can define
your segments.
 When designing values be sure to allow enough room for future growth within each
rollup group
 Increment by at least 5 within each group
 Increment by 10 if the group is likely to be a high growth area.
 Example: If you have a location segment, allow enough room to add ten additional
values between each of your lowest levels. Your Location segment hierarchy might
look like this:
10000 US
11000 Midwest
11100 Detroit Metropolitan Area
11110 Ann Arbor
11120 Canton
11130 Plymouth
20000 Canada
| 12

Criteria 4: Use Logical Ranges
 Ranging your values logically promotes streamlined reporting,
security, and maintenance.
 Include a whole range of values in your rule (cross validation, security)
and FSG report definitions
 Exclude specific values if needed
 Minimize the number of cross validation rules needed (under 50 using
logical ranges compared to hundreds or thousands when not using
logical ranges)
 Use numbers only randomly.
 Avoid using intelligent numbers
 For items with embedded intelligent numbers like Products, introduce
non-intelligent numbers as well
| 13

CVR Implications on COA Design
 Out of Range — Cross-validation rules can get messy if your chart of
accounts values are not organized in logical ranges.
 Rule elements are much more complex due to the inability to rely on
value ranges for exclusion
 Example Goal: Prevent revenue account values between 30000 and
40000 from being used with any department values other than the
following 5 values (we’ll begin with the familiar global Include element):
 3001
 5057
 6124
 8537
 9905
| 14

Example Goal: Prevent revenue account values between 30000 and
40000 from being used with any department values other than the
following 5 values (we’ll begin with the familiar global Include element):
3001  5057  6124  8537  9905
 Exclude Elements — 6 Steps Required
 Need Exclude elements for all the values above and
below each of the department values
This statement prevents all departments greater than 3001 and
less than 5057 from being used:
This statement prevents all departments below 3001 from being
used:
And finally, this statement prevents all departments greater than
9905 from being used:
| 15

Criteria 5: No Reliance on Spreadsheets
 Be able to get the information you need from built-in EBS reports.
 Real-time value
 No errors introduced by use of spreadsheets
 Streamlined workflow, lower resource requirements, and reduced
maintenance
 No need to integrate with 3rd party reporting applications
 Capitalize on a master row set for FSG reports.
 Allows you to generate different reports without having to rewrite each
report
| 17

A Global Chart of Accounts
 Primary ledger is single source of truth for all accounting,
reconciliation, and analytical reporting
 Consistency but flexibility to accommodate different requirements
 External reporting without relying on a separate financial
consolidation system
 Drill down to individual transactions in the subledgers without
translation
 Transparency (3 - 5 years) to meet IFRS standards and international
auditing requirements
 Common metrics and reporting structures with common
interpretation
Enterprise Visibility with Subledger Accounting and
Secondary Ledgers
| 18

A Global Chart of Accounts – Reduced Costs
 Reduce complexity of configurations
 Cross validation rules
 Security rules
 Reporting within ranges
 No conversions required for data warehouse queries, drill-down to
subledgers, ad-hoc reporting
 Facilitate movement to shared service centers
 Single COA to manage
 Standardized training
 Enterprise governance and control of new combinations
 Reduce redundancies
| 19

© 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved.
A Global Chart
of Accounts –
Reduced
Complexity Taiwan
Malaysia
China
India
UK
Russia
DolEx US
DloEx Mexico
DolEx Guatemala
Eurofil
Muzo
Hong Kong
Maldives
Singapore
Sri Lanka
Philippines
Brunei
US
Canada
Macau
USD
EUR
GBP
AUD
PHP
USD
BND
TWD
USD
MYR
CNY
USD
INR
USD
GBP
EUR
USD
SGD
CAD
AUD
HKD
CHF
DKK
JPY
MOP
HKD
USD
SGD
USD
LKR
NOK
NZD
SEK
RUB
USD
MXN
USD
CAD
USD
GTQ
EUR
CZK
AsiaPac LKR
AsiaPac AUD
AsiaPac EUR
AsiaPac GBP
AsiaPac BND
AsiaPac PHP
AsiaPac MYR
AsiaPac INR
AsiaPac TWD
AsiaPac CNY
Europe GBP
Europe EUR
Europe USD
Europe SGD
Europe CAD
Europe AUD
Europe HKD
Europe CHF
Europe DKK
Europe JPY
Europe NOK
Europe NZD
Europe SEK
GPN RUS
AsiaPac MOP
AsiaPac HKD
AsiaPac SGD
DOLEX US
DOLEX MX
DOLEX GT
GPN EUR
GPN MZO
NAm USD
AsiaPac USD
NAm CAD
021
023
911
912
913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106
105
103
107
022
960
961
962
963
001
005
002
Hong Kong
Singapore
Taiwan
China
India
Sri Lanka
Sri Lanka
Sri Lanka
Sri Lanka
Brunei
Philippines
Malaysia
India
Taiwan
China
UK
UK
UK
UK
UK
UK
UK
UK
UK
Canada
Sri Lanka
Maldives
Singapore
Philippines
Macau
UK
UK
UK
UK
US
Canada
Comerica
GPS LKR
GPS AUD
GPS EUR
GPS GBP
GPS BND
GPS MYR
GPS INR
GPS TWD
GPS CNY
GPS CHF
GPS DKK
GPS JPY
GPS NOK
GPS NZD
GPS SEK
GPS MOP
GPS HKD
GPS SGD
GPS US
GPS CAD
021
023
911
912
913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106
105
103
107
022
960
961
962
963
001
005
002
021
023
911
912
913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106
105
103
107
022
960
961
962
963
001
005
002
Location CCY Op Unit BalSegLocation GPS Book BalSegBalSeg
GPS
US
201
301
401
Bk Seg
GPN SRL
GPN BRU
GPN PHI
GPN MLS
GPN IND
GPN TWN
GPN CHN
UK SOB
GPN MAC
GPN HK
GPN SNG
US SOB
CAN SOB
525
575
585
505
570
804
802
803
801
915
565
545
851
205
021
023
911
912
913
025
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106
105
103
107
022
960
961
962
963
001
005
002
GPN Book BalSegBalSeg
201
301
401
US
SOB
205
565
570
801
802
803
525
575
585
505
804
915
545
851
DLX
RUS
EUR
MZO
Seg Bk
 Streamline the month- and
year-end closing processes
 No more messy financial
consolidations using
spreadsheets
 R12 eliminates the need for
using and maintaining
multiple charts of accounts
| 20

R12 Features – Ledger Sets
 Open/Close periods
 Create journals
 Allocations across ledgers
 Recurring journals for all ledgers
 Elimination sets for all ledgers
 Translate and revalue balances
 View information without changing
responsibilities
 View journals and account balances across
ledgers
 Submit standard reports
 Create financial statements that include
data for multiple ledgers
| 21

Global COA Design Recommendations
 Add an intercompany segment – take advantage of AGIS
 Add a segment to accommodate local requirements
 Ranges, rollups defined for each country to use
 Local bank accounts
 Statutory reporting
 Location segment (optional) but helps with security, cross
validation
 Implement other modules for detailed tracking at a local level
(through an OU)
 Project Accounting
 Collections
 Implement Multiple Reporting Currencies, secondary ledgers to
report in different currencies
| 22

Leveraging the Chart of Accounts for
Global Operations
Two ways to handle local/regulatory requirements
 Separate Segment
 Each country can use a range of values for their statutory requirements
 Secondary Ledger
Analysis Segment Ranges Values Descriptions
000000-001000 France 000321 Crédit Agricole Bank Account
000544 Droits D'enregistrement Tax
001001-002000 Italy 001321 Intesa Sanpaolo Bank Account
002001-003000 UK 002321 Barclays Bank Account
002584 VAT Tax
| 23

Under Chart of Accounts Mapping, select Create Mapping or query
“Chart of Accounts Mapping from Oracle’s navigation window
| 26

Define the Mapping title and description and add a Source and
Target Chart of Accounts
| 27

Target and Source fields above will populate with the segments
from the defined COA’s
| 28

Available segment rules available under action options
| 29

For each segment selected, additional rule options will populate, in
this instance providing a transfer of detail ranges
| 30

Global Visibility – Local Compliance with R12
Subledger Accounting, Accounting Methods Builder Replaces Global Accounting Engine
| 31

How Do You Leverage AGIS?
 Advanced Global Intercompany System
 Intercompany Balancing
 Intercompany Invoicing
 Intercompany Reconciliation/Eliminations
 Manual Intercompany Transactions
 Netting Process
 Common Chart of Accounts
 Intercompany Segment
| 32

 Use the transition to R12 to redesign your COA if it is not optimized or
to adopt a single COA if your organization is currently using multiple
charts.
 As you are redesigning your COA, focus on the 5 fundamental criteria.
 One type of information per segment
 No repeated information from other EBS modules
 Leave room for future expansion and flexibility
 Use logical ranges
 Make sure you can get the reporting you need straight from the flexfield
structure
 Design your chart with Ledger Sets, Secondary Ledgers, Subledger
Accounting, AGIS in mind.
Conclusions
| 33

Questions?
| 34

© 2014 eprentise. All rights reserved.© 2013 eprentise. All rights reserved.| 35
Thank You!
- One World, One System, A Single Source of Truth -
Helene Abrams, CEO
www.eprentise.com
habrams@eprentise.com
Visit eprentise at booth 1033!

Transformation Software Solutions
Two Product Lines
FlexField®
 Change chart of accounts in EBS
 Built-in Rules
 Changes data in all subledgers
 Retain all historical transactions
 Quick, easy project, low price point
eprentise®
 Software that remodels any setup data
 Reorganizes configuration, master, and transaction data
 Maintains all history resulting in a single source of truth
 Based on a source that is transformed into a target
 Enterprise-level scope project
 Metadata Analysis and intelligent knowledge repository
| 37

FlexField Software – Process Flow
• Run report set to reconcile
• Pair accounting flexfields
• Map either segments and values or code combinations
• Create mapping file from software
• Add new values, combinations in Excel®
• Load csv file into FlexField Software
• Resolve Exceptions
• Execute Changes
• Transform CCIDs
• Apply changes to history, subledgers
• Align balances
• Print audit report
• Create new COA in E-Business Suite (Structure, Qualifiers)
• Install FlexField software (client/server)
• Run current baseline report set
| 38

Mapping the Accounting Flexfield
Either Segments and Values or Code Combinations
Segments
Company Company
New
Segment
Current
Segment
Cost Center Cost Center
New
Segments
Current
Segment
+ Location
Product Line Line of Business
New
Segment
Current
Segments
+ Cost Center
1:1
1:M*
M:1
Values or Code Combinations
Company
01
Company
100
New
Value
Current
Value
Cost Centers
01
02
03
Activity
101
New
Value
Current
Values
1:1
M:1
New Mapping Must be Derived from Old Segment Values
*Segment Level Only
CO-CC-ACT
01-10-1000
01-20-1500
CO-CC-ACCT-LOC
100-300-16000-200
New
Value
Current
Value
| 39

Select the Source and Target Flexfield
| 40

FlexField Software to Change your EBS Chart of
Accounts
Map Segments and Values
or Code Combinations
Segment MappingChanges CCID everywhere
• All setups
• All subledgers
• All history
• Looks as though the
new chart of accounts
was part of the original
implementation
• Full audit trail, drill
down, roll up
• Built in exception
reporting
1 1 Mapping
M 1 Mapping
1 M Mapping
| 41

Create Mapping Files
1:M – Mapping of Company to (Company and Business Unit)
M:1 – Mapping of (Region, Account, Product) to Account
A B C D E F
CO
Value
CO Description
New
CO
Value
New CO Description
New BU
Value
New BU Description
1 01 North America Company 01 New Company 101 New Business Unit
2 02 Overseas Distribution 02 New Distribution Company 102 Overseas Operations BU
3 03 French Company 03 French Manufacturing Company 103 Project Mfg BU
4 27 Consulting Services Company 04 New Vision Consulting Ltd 104 Vision Consulting BU
5 95 Operation Elimination 05 Intercompany 195 Operations Elimination BU
6 99 Corporation (Vision Consolidation) 99 New Vision Consolidation 199 Vision Consolidation BU
Current
Company
Segment
Values and
Descriptions
New
Company and
Business Unit
Segment
Values and
Descriptions
Current
Region,
Account,
and Product
Segment
Values and
Descriptions
A B C D E F G H
Reg
Value
Reg
Description
Account
Value
Account Description
Product
Value
Product
Description
New
Account
Value
New Account
Description
1 01 Southwest 1400 SALES COMMISSIONS 001 computer 140000
SALES COMMISSIONS
GENERAL
2 01 Southwest 1405 SALES COMMISSIONS - OTHER 002 hard drive 140500
SALES COMMISSIONS
HARD DRIVE
3 02 Northeast 1410 SALES COMMISSIONS - RESERVE 001 computer 140000
SALES COMMISSION
GENERAL
4 02 Northeast 1415
SALES COMMISSIONS SERVICES -
SUPPORT
003 Services 146000
SALES COMMISSION -
SERVICES
5 02 Northeast 1415
SALES COMMISSIONS SERVICES -
WARRANTY
003 Services 146000
SALES COMMISSION -
SERVICES
6 03 Southeast 1410 SALES COMMISSIONS - RESERVE 002 hard drive 141000
SALES COMMISSIONS
- RESERVE
New
Account
Segment
Values and
Descriptions
Exceptions:
• Account Type Mismatch
• Multiple Descriptions
• Splitting Balancing Segment
• Length of Value
| 43

Create Mapping File from FlexField
| 44

Load Mapping Files into FlexField
• Overwrites existing segment value mappings
• Repeat Loading until you are satisfied with mappings and have no exceptions
| 45

Apply Changes to Database
| 46

Align Accounts
| 47

Merging Balances
 Balance Tables (GL, AX, XLA etc.)
 Unique constraint on code combination ID
 Forces one balance per code combination
 No other tables are affected
Old
CCID
Entity Cost
Center
Account Interco Future
Use
Balance
7754 02001 00965 150170 0000 0 $100,000.59
7766 02001 00965 150170 0000 0 $10,250.33
7783 02001 00965 150170 0000 0 ($7,432.84)
02001 00965 150170 0000 0 $102,818.08
Many old CCIDs mapped to the same new code combination
| 48

Export Current and New Code Combinations
| 49

Post-Change Steps (Not covered by Software)
 Hard-Coded (RICE Activities)
 Interfaces to third-party systems
 Data Warehouse
 Reports
 Workflows
 OFA – Oracle Financial Analyzer
 Uses Ranges
 Approval Assignments
 Budget Assignments
 New EBS Features
 New Modules/Functionality
 Some Configuration – New CoA, Ledgers
 Upgrade to R12
 Definition of Target
 Testing and Cutover Strategy &
Execution
 Rules (Use Business Logic)
 Cross Validation
 Consolidation
 Account Derivation Rules
 Accounting Generator
 Roll-up Groups
 Security Rules
 Summary Templates
 Mass Allocations
 Costing and Revenue Recognition
Rules
| 50

Five Criteria for Designing a Chart of Accounts

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