Oracle General Ledger has wonderful tool to be used for quick generation of journal entries for a group of cost centers, departments, divisions, ledgers. Instead of creating many manual journals to transfer amounts from one account to others based on specific business rules or to create similar journals manually every month, users can use these advance journal functions that will generate all these journals directly. This document describes the key features of Oracle General Ledger advance journal entries functions and the key issues and considerations when implementing those functions:
• Mass Allocation Journals
• Recurring Journals
Mass Allocations – Overview
Mass Allocation Journals are for single journal entry formula that allocates revenues and expenses across a group of cost centers, departments, divisions or cost centers. It’s a five-step process:
1. Create MassAllocation Definition – One Time Setup
2. Validate Definition – One Time Setup
3. Generate MassAllocation Journals – Performed on a regular Schedule (monthly most often)
4. Review Entries – Performed on a regular Schedule (monthly most often)
5. Post the Journal Entry – Performed on a regular Schedule (monthly most often)
Create Mass Allocations
To create MassAllocation Journal, use the following basic steps:
1. Open the Define MassAllocations window.
2. Enter a Name and Description (optional) for the MassAllocation batch.
3. Choose Actual or Encumbrance from the Balance Type pop list.
4. Select Formulas to enter MassAllocation formulas, then save your work.
5. Select Validate All to validate this batch and other un-validated batches.
6. Check the MassAllocation batch validation status:
• Validated: The definition is valid and follows the definition rules.
• Not Validated: The definition has not been validated yet. Select the Validate ALL button.
• In Process: Oracle General Ledger is still validating the formula.
• Error: The formula is not correct. Make corrections and select for validation again.
7. Generate unposted journal batches from your MassAllocation formulas.
Note: You can identify errors using the MassAllocations/MassBudgeting Validation Report.
Mass Allocation Formula
The Mass Allocation formulas use the below equation to determine the amounts to be allocated:
The above formula is represented in Oracle General Ledger as below. Each factor in this equation relates to separate formula line
Any combination of fixed amounts and account combinations can be entered in formula lines A, B, or C
Mass Allocation Formula Lines
Enter the formula lines using the formula A*B/C.
• A is the Cost Pool that will be allocated. This can be fixed amount or an account combination for the allocation.
• B is the numerator of the factor (a number or statistical account) that multiples the cost pool for the allocation.
• C is the denominator of the factor (a number or statistical account) that multiples the cost pool for the allocation.
Account Segment Types
Assign a segment type to each account segment, while entering an account into a Mass Allocation formula line:
• Assign this type to a parent segment value to include each child value assigned to the parent value in the formula.
• The allocation program runs the formula once for each corresponding child segment value.
• You can loop only on parent values.
• Assign this type to a parent segment value to sum the account balances of all the child segment values assigned to a parent.
• You can sum only on parent values.
• Assign this type to a child segment value to use the detail account balance associated with the child value.
Target and Offset Accounts
These are the lines that are the actual journal entry.
• Enter an account in the Target line to specify the destination for your allocations.
• The parent value used in the target must be the same parent value used in the B and C lines of the formula.
• Enter an account in the Offset line to specify the account to use for the offsetting debit or credit from your allocation.
• The Offset account is usually the same account as formula line A to reduce the cost pool by the allocated amount.
Allocation Formula Rules
There are certain allocation formula rules and the allocation validation program checks that your formulae adhere to these rules.
For formula lines A, B and C (operand lines):
• If you use a Looping segment type on the same segment in more than one of the operand lines, you must use the same parent.
• If you use a Looping segment type in your Target line, you must use a Looping segment type on the same segment using the same parent in lines A, B or C.
For target and offset lines (lines T and O):
• Parent values must have a Looping segment type.
• The Target account must be different from the Offset account.
For the target line only (line T):
• If a Looping segment type is used in lines A, B or C then you must use a Looping segment type on the same segment using the same parent in your Target line.
For the offset line only (line O):
• The Looping segment type in your Offset line can be used only if the corresponding segment type in your Target line is Looping.
• If a Looping segment type is used in your Offset line, you must use the same parent as in your Target line.
Validate Mass Allocations
Validate the mass allocation after defining a new allocation batch, or changing an allocation formula
Generate Mass Allocation Journals
Generate Mass Allocations to create unposted journal batches based on the validated mass allocation formulas. The generated journal batch contains one journal entry per allocation formula in the batch. Generate mass allocation journals for any range of open or future enterable periods.
AutoAllocations is a powerful feature to automate journal batch validation and generation for:
• Mass Allocations
• Recurring Journals
Use AutoAllocations to process journal batches you generate regularly, such as month end closing.
Business Benefits of AutoAllocation Workbench
• Automates step-down and parallel allocations
• Monitors allocation processes online
• Optional automated rollback eases error recovery and control
• Oracle Workflow notifies users of step-down allocation process results
• You can use Oracle Workflow to incorporate approvals into the step-down process
AutoAllocations Set Type
Choosing an Allocation Method
You can generate journals from allocation formulas using a full or incremental allocation method, depending on whether you want to replace or increment existing account balances.
Generating Journals Using the Full Allocation Method
• Full allocation method means each time you generate allocation; the full source amount is allocated.
• We recommend that you use this method only if you are allocating amounts for the first time, or only once. Otherwise you will be allocating more than the original source pool amount.
• To replace a previous allocation requires two steps. First, reverse the original allocation. Second, create a mass allocation for the new amounts.
Generating Journals Using the Incremental Allocation Method
• Choose the Incremental allocation method when you want to update allocated balances without reversing the previous allocation batches.
• Using this method, you can generate allocation journals as many times as you wish, provided there is no activity against the target accounts between runs.
Step Down Mass Allocation – Example
Let’s take an example to auto allocate certain expenses on a step-down basis.
In this example, we would like to first allocate the portion of the rent based on fixed percentages to an IT account (7420) and then allocate total IT costs (including the allocated rent) to other departments.
Step 1. Fixed Percentage Rent Allocation
Enter the below allocation rule to allocate on a fixed percentage basis.
Row A: It represents the cost pool that you want to allocate to certain accounts for the ledger. In our example, we have taken account instead of amount.
Row B and C: It computes the percentage to be allocated
Row T: It represents the target account where the allocated amount will be transferred to.
Row O: It represents the offset account for the allocation
Save it and close the form
Select ‘Validate All’ to validate the batch. General Ledger submits a concurrent request to validate the batch.
***You have come this far…Part 2 is now available!