Implementing Oracle GCS (Part 2)

Client and Business Case - Global Manufacturing client wanted to implement GCS in Oracle GL to enable consolidation within Oracle. The steps involved in configuring GCS are detailed in the following sections.

I. DEFINE SETS OF BOOKS (SOB):
1. Where all subsidiaries share a single SOB which consists of the same COA, accounting calendar, and currency, it is purely a reporting kind of consolidation requiring FSG tool. No separate consolidation SOB is required
2. Where each subsidiary and the parent company require their own SOB meet their operational or local accounting needs:-
2.1 If Parent SOB can be touched, then data transfer can take place to the Parent SOB.
2.2 Else, a separate consolidation SOB is required where data transfer has to take place.
3. Where companies use non-Oracle Applications, Create dummy SOBs within the GCS parent’s database instance. Each of these SOBs represent the subsidiary SOBs on disparate application instances. The consolidation can happen to Parent SOB or a separate consolidation SOB.

II. GATHER DATA FROM DISPARATE INSTANCES OR NON–ORACLE GL SYSTEMS:
GCS provides a convenient interface to import subsidiary data from any external source,
such as a separate database instance of Oracle GL, or an entirely separate non–Oracle
accounting system. There are two options available for gathering data from diverse sources:
1. Applications Desktop Integrator (ADI) to work in a spreadsheet environment. Simply transfer the subsidiary information from the external system into ADI’s journal worksheet. Then upload the entries to the GCS system where it can be posted.
2. SQL Loader to load data from diverse sources into the GCS open interface.

III. MAP SUBSIDIARIES TO PARENT:
To consolidate multiple SOB that have different functional currencies, accounting calendars,
or charts of accounts, first map subsidiaries’ COA to parent’s COA. A consolidation mapping is a set of instructions for mapping accounts or entire account segments from a subsidiary SOB to the parent SOB. When one subsequently transfers amounts from a subsidiary to parent, GL creates an unposted consolidation journal batch in parent SOB based on the subsidiary’s mapping information.



IV. PREPARE YOUR SUBSIDIARY DATA:
Prepare subsidiary data by revaluing and translating balances before transferring the balances to parent.
1. Revalue Balances - If any subsidiary SOB has balance sheet accounts that are denominated in a foreign currency, revalue the balances to reflect the impact of any changes in exchange rates. Post the resulting revaluation journal.
2. Translate Balances - If any subsidiary SOB uses a functional currency different from parent, translate the account balances into the parent SOBs’ functional currency before transferring the subsidiary data to parent.
3. Multiple Reporting Currencies (MRC) - If MRC is used, then consolidate directly from subsidiary’s reporting SOB to parent SOB. Revaluation needs to be run on the primary and reporting SOB before consolidation. The primary issue to consider when deciding whether to consolidate directly from a subsidiary’s reporting SOB is: What accounting rules govern the parent’s and subsidiary’s business environments?

V. TRANSFER DATA:
1. Transfer the balances or transactions to be consolidated from subsidiary SOB to parent.
2. GL accumulates subsidiary information based on the mapping rules defined, then populates the GL_INTERFACE table with the consolidation data.
3. Journal Import must be run, to create an unposted consolidation journal batch in parent SOB.
4. One can initiate a subsidiary–to–parent transfer from the subsidiary or from the parent SOB.
5. One can transfer balances (Actual / Budget) or transactions (Actual only).


VI. POST CONSOLIDATED DATA:
Once the subsidiary data has been transferred to parent SOB, one needs to combine the subsidiary and parent data. This involves several steps:
• Run Journal Import if it was not chosen as one of consolidation run options.
• Review the unposted journal batch created by the transfer and subsequent Journal Import.
• Post the consolidation journal in parent SOB.

VII. ELIMINATE BALANCES:
The Oracle GL Automatic Intercompany Eliminations program eliminates intercompany balances. Create an elimination set which is a batch of one or more elimination journal entries.
1. Full Eliminations: Elimination sets can optionally use an elimination company to fully eliminate a group of intercompany elimination entries for a set of subsidiaries.
2. If your elimination journals are out of balance, you can specify balancing options to either allow out of balance journals to be created or to post the net difference to an alternative account. In addition, threshold rules can be applied to prevent the creation of elimination journals if the net difference exceeds a specific amount, a percentage of a particular account, or a percentage of the total journal.
3. You generate the elimination set every period to automatically create the elimination journal entries. You have the option of automatically posting the journal or wait till you review it.
4. You can also use the Consolidation Workbench to track the elimination status of your elimination sets and post any generated elimination sets.
5. Formula–Based Eliminations: If you have formula–based elimination entries or you want to eliminate average balances, use Oracle GL’s recurring journals feature.
6. The Automatic Intercompany Eliminations program automatically generates eliminating entries per the rules specified.

VIII. REPORT:
Use the FSG as the mechanism to sum up the subsidiaries to produce consolidated results in case of Single SOB. In case of companies having multiple SOB / non-Oracle Application, use FSG to report on consolidated results. Use the ADI to extend reporting to the spreadsheet environment. ADI allows to create and publish consolidated reports in HTML format to the Internet or corporate intranet.

IX. ANALYZE:
1. Use full drilldown capabilities to drill from consolidated balances down to subsidiary journal lines and subledger detail. GCS enables to drill from consolidated balances in the parent SOB directly to the subsidiary SOB within the same instance. In case of companies having disparate applications, one cannot drilldown to the subledger detail.
2. Directly link data to Oracle Financial Analyzer, an online analytical processing (OLAP) application, to analyze consolidated balance and prepare operational and financial analyses for your management team. One can also drill between a subsidiary’s translated balance to its original balance. GCS also provides you with the ability to drill between summary accounts, detail accounts, and the original journal entries, down to The subledger detail.