What all should be in consideration?
The business dimensions differ from business to business. It is important to plan an AFF that handles current business as well as future growth. Business dimensions are the different ways the organization can be viewed and, in turn, the different ways that the transactions can be reported. Some common business dimensions are Company, Division, Cost Center, Account and Proiect. When deciding on what segments the AFF should consist of, the objective is to provide enough information to satisfy reporting requirements while minimizing data repetition.
Accounting Flexfield (AFF) in Oracle General Ledger can have over 25 segments with each segment being 30 characters. The AFF needs to be designed so it provides the necessary information to satisfy all reporting requirements and at the same time be manageable in size.
Manageable in size refers to entry, performance, storage, and display. All transactions need to be entered into the system and at stored as an AFF account combination. Remember that longer the AFF the more difficult it is to enter and the higher the data entry costs and error rate.
Ease of Maintaining Security Rules
Security Rules control user access to values in the Chart of Accounts for data entry users in GL or Subledgers. The accounting Flexfield should be structured so that security rules can be defined and maintained simply and easily. These rules are assigned to responsibilities, which are then assigned to individuals.
The accounting Flexfield should be designed with a view to facilitating reporting requirements. This is important both from a data quality standpoint (i.e.: are we collecting the data we need to effectively manage the business and meet statutory requirements?) and a data entry and reporting standpoint (i.e. Will the accounting Flexfield fit on standard screens and reports; Does the accounting Flexfield have a logical structure which makes report definition and maintenance easy?).
The segments can be displayed in any order. Usually the segments are displayed in the easiest way to enter and view the information. This is normally from high level to more a detailed level of information.
Cross Validation Rules
Cross validation rules ensure that users/system does not create accounting combinations that are not valid. Keep the accounting Flexfield structured as simple and logical as possible to ease of maintenance validation rules. Remember that invalid code combinations need to be disabled in addition to the regular maintenance of cross validation rules.
Independent and Dependent Segments
Although the dependency of segments does simplify data entry it can cause potential problems with Mass Allocations and Summary Accounts. Mass Allocations are used to write complicated formula journals. Summary accounts are used for online inquiry into summary totals of accounts. With dependent segments, the above functionality is available although to a limited degree. Due to this limitation in functionality it is not advisable that Client have a dependent segment.
Another alternative to using dependent segments is to use cross validation rules that restrict the user from combining certain segment values. In our department and cost center example mentioned earlier, the user would see the full list of cost centers but be prevented from selecting those that do not adhere to pre-determined rules.
Numeric is preferable from a data entry perspective as users can use the numeric keypad. Alphanumeric characters cause users to move from the numeric keypad. With numeric, sort order is clear and ranges are easy to use.
If there are many values for an alphanumeric segment, the assignment of meaningful codes may become difficult. Sometimes sorting of alphanumeric, especially mixtures of numeric and alphanumeric can make data more difficult to locate. Using ranges may be more difficult as well. You can view segment value descriptions on virtually all screens and many reports so alphanumeric codes may be less valuable than in older systems. If you do use alphanumeric codes, set-up codes in all uppercase for consistency, sorting, and ease of querying. Since there are usually fewer parents than values in most segments and you can reassign parent/child relationships, you may be able to assign logical alphanumeric codes to parents.
Apart from the above in GL, reporting is the primary concern. You run many standard reports and Financial Statement Generator (FSG) reports by ranges and groups of values for one or more segments. Determine the factors by which your organisation analyses financial performance and wants to produce reports. Ensure you can generate required financial reports based on the segments in your accounting Flexfield. Review reports currently produced outside of GL, such as in spreadsheets, and determine if adding segments will allow you to generate them from GL.
You usually produce a balance sheet for each balancing segment value. Balancing segment is usually a major sort on GL reports, such as the trial balance, and reports in other systems, such as AP, FA and AR. As mentioned in the segmentation section, balancing segment is used for some subsystem features such as AP Auto Offsets and many FlexBuilder set-ups.
You specify certain accounts on your set of books, such as retained earnings, intercompany, suspense, and translation adjustment. GL functions that use these accounts substitute the proper balancing segment, as shown below. Ensure that substituting balancing segment will generate an appropriate combination.
Default on set of books: 1-99999-221100
For closing company 02: 2-99999-221100
For closing company 03: 3-99999-221100
Your account segment is used for sorting some reports, and is a major GL trial balance sort and summarisation level. When you set-up each account, you indicate whether it is asset, liability, owners equity, revenue, or expense. GL uses these account types to determine what to close to retained earnings at yearend and which type of rate to use for currency translation. Some applications also use account type to restrict choices of accounts, especially for set-up options. For example, AP cash and FA clearing accounts must have asset account types. The account segment is often referred to as the natural account.
Your cost centre segment is used in FA for reporting, as explained above. It is also used for some Project Accounting reports and a report in Purchasing, Open Purchase Orders by Cost Centre.
From Release 11.5.10 onwards, General Ledger has the facility to track a secondary Balancing Segment The secondary tracking segment is used in the revaluation, translation, and fiscal year-end close processes. The system will automatically maintain unrealized gain/loss, retained earnings, and cumulative translation adjustments by unique pairs of balancing segment and secondary tracking segment values.
Changing the Accounting Flexfield is not recommended. However, you can easily change some accounting Flexfield characteristics in normal set-up screens, such as:
Enabling/disabling long list prompt, Enabling/disabling shorthand alias window, Enabling/disabling security, Default values and Prompts.