Monthly Archives: April 2017

Fusion Chart of Accounts

In this article we will see how to create chart of account step by step in Fusion Financial Application. But before creating chart of accounts, we try to understand the basic need for chart of accounts.

Why do I need a chart of accounts ?

Organization create Ledger to record all the financial transactions and use ledger (financial transactions) to report their P&L, Balance sheet, and other boardroom financial reports. The various financial reports, in turn, makes the management or strategy team to take various important decisions. Like, after looking on the financial data (coming from the ledger) and related analysis, an organization takes the decision to sold off its Loan division and put more investment in Trading division.

But what makes the Ledger capable to calculate/derive the profit, loss, asset, liability & owner equity across the financial calendar for various companies, business, departments within an organization.

Ledger is build of Segments. Each segment represents or capture the each level of business hierarchy, organization used to record and report financial numbers to measure company performance. For example, XYZ Bank wants to know the performance of company, region, division, product, department. Hence, the ledger should comprise five segments and each segment represent the each level in business hierarchy, that makes the ledger capable to provide various financial reports to an organization indicating the performance of, each division across region, each product within division, cost incurred by various departments, etc.  The combination of these segments is called as GL Code Combination and each transaction in the ERP system gets accounted using a GL Code Combination. Each company, division, product, etc. is represented by the Segment values created under respective segment. These segment values enable the organization to investigate its business operations at granular level, depending upon the segment structure created. Therefore, deciding on the segment structure is the indispensable building block of chart of accounts. The ledger will record & report the financial numbers based on the segment structure created in the system.

Chart of Account Design in Fusion

Let’s say after a careful observation of your reports and discussion on the deficiency in current reporting structure, organization finalize the below components to record any financial transaction in the books of account.

  1. Company
  2. Department
  3. Cost Center
  4. Natural Account
Value set

Chart of account value set created to represent each segment used in an organization financial hierarchy for reporting purpose.

Create 4 value set for each of the CoA components, as shown below.

Navigation: Financials > Define Common Application Configuration for Financials>Define Enterprise Structure for Financials>Define Financial reporting Structures>Define Chart of Accounts>Manage Chart of Account Value Sets

1

CoA Structure

After creating the value set, you will map each value set to the Fusion Segments and assign the appropriate segment label as per the requirement.

2

Once you assign segment and segment label to all the Value set, your CoA Structure is ready.

3

CoA Structure Instance

Once your CoA Structure is ready, you can create multiple CoA instance out of that, if there is multiple ledgers(Book of Accounts) and each ledger has some specific need as per the company requirement.

You will decide out of 5 value set defined, which one is required to enter. Let’s say if there are 2 separate ledgers used by organization for its North America and South America region. North America ledger require to track each financial transaction by Cost Center, but South America ledger do not require Cost center due to business nature. Then, organization will create once CoA structure but use 2 separate CoA structure instance out of that.

While creating CoA structure instance, as soon as, you select CoA Structure system displays all the value sets under CoA structure, then you decide which value set or segment you need and select accordingly.

5

4

Once you have completed the CoA Structure instance, your CoA are ready to deploy in system for use.

Click on “Deploy Flexfield” to deploy the Chart of Accounts.

6

Once the deployment status for Accounting Flexfield is Deployed, that means, system is ready to create value set values and use these values to create financial transaction.