MINISTRY OF FINANCE IFMIS RE-ENGINEERING Record to report process General Ledger
Table ofContents 1.0 IFMIS Financial Management Operating Model 1.1 Overview of Record to Report 7 1.2 Record-to-Report Overall Process 8 1.3 Record to Report at a Glance 9 2.0 What is Oracle General Ledger? 2.1 Recording Flow 13 2.2 Reporting Flow 14 3.0 What is a Ledger in Oracle GL 3.1 The 4 C’s 16 3.2 Ledger 17 3.3 Accounting Setup Manager 18 3.4 Sub-ledger Accounting 19 3.5 Multi-Org Access Control 21
Table ofContents 4.0 Record Transaction Overview 4.1 Record Transactions To-Be Process Flow 26 4.2 Record Transactions Activity Descriptions 25 4.3 Record Transactions Key Inputs and Outputs 26 4.4 Other Considerations for the Record Transactions Process 27 5.0 Understanding Sources and Categories 5.1 Journal Sources: 28 5.2 Journal categories: 28 6.0 Create Journals 6.1 Automated Journals From Payables 31 6.2 Create Manual Journal – Journal Batch 35 6.3 Journal Creation : Reverse Journals 39 6.4 Journal Posting 40
Table ofContents 7.0 Perform Inter-Agency Accounting Overview 7.1 Perform Inter-Agency Accounting To be Process Flow 50 7.2 Record to Report Level 2 Perform Inter-Agency Accounting Flow 51 7.3 Perform Inter-Agency Accounting Key Inputs and Outputs 54 7.4 Other Considerations for the Perform Inter-Agency Accounting Process 55 8.0 Manage Interfaces Overview 8.1 GL Interface Flow 59 8.2 Manage Interfaces To be Process Flow 60 8.3 Manage Interfaces Activity Descriptions 61 8.4 Manage Interfaces Key Inputs and Outputs 62 8.5 Other Considerations for the Manage Interfaces Process 63 9.0 Analyze & Reconcile Accounts Overview 9.1 Analyze and Reconcile Accounts Process Flow 65 9.2 Analyze and Reconcile Accounts Process Flow 66 9.3 Analyze and Reconcile Accounts Activity Descriptions 67 9.4 Analyze and Reconcile Accounts Inputs and Outputs 68
Table ofContents 10.0 Online Account Inquiry 10.1 Online Account Inquiry – Drilldown 74 10.2 Reporting in GL – Standard Reports 77 10.3 Submit Standard Report flow 79 11.0 Close Books and Consolidate Financial Results Overview 11.1 Close Books and Consolidate Financial Results Process Flow 81 11.2 Close Books and Consolidate Financial Results Activity Descriptions 82 11.3 Close Books and Consolidate Financial Results Key Inputs and Outputs 84 11.4 Other Considerations for the Close Books and Consolidate Financial 85 12.0 GL Period Close 12.1 Close the Sub ledgers 87 12.2 Period Statuses 88 12.3 Close GL Period 89
Table ofContents 13.0 Perform Financial and Regulatory Reporting Overview 13.1 Perform Financial and Regulatory Reporting Process Flow 91 13.2 Perform Financial and Regulatory Reporting Activity Description 92 13.3 Perform Financial and Regulatory Reporting Key Inputs and Outputs 93 13.4 Other Considerations for the Perform Financial and Process 94 14 Overview of FSG’s 14.1 Run an FSG Report 96 15 Perform Management Reporting Overview 15.1 Perform Management Reporting To-Be Process Flow 98 15.2 Perform Management Reporting Activity Descriptions 99 15.3 Perform Management Reporting Key Inputs and Outputs 100 15.4 Other Considerations for the Perform Financial and Regulatory 101 Reporting Process 16.Proposed New Char of Accounts 102
Table of Figures Figure I Ledger 20 Figure II Accounting Setup Manager 22 Figure III Sub-ledger Accounting 24 Figure IV Multi-Org Access Control 26 Figure V Automated Journals From Payables 35 Figure VI Automated Journals From Payables 37 Figure VII Automated Journals From Payables 38 Figure VIII Create Manual Journal –Batch 39 Figure XI Create Manual Journal –Batch 40 Figure X Create Manual Journal –Header 41 Figure XI Create Manual Journal –Lines 42 Figure XII Journal posting-Window 45 Figure XIII Journal Posting- Automatic 46 Figure XIV Journal Entry- Header 47 Figure XV Exchequer Journal Entry – Lines 48
Table of Figures Figure XVI Exchequer Journal-Receipt 49 Figure XVII Imprest Journal 50 Figure XVIII Salaries Journal 51 Figure XIX Agency Transactions Journal-Principal 59 Figure XX Agency Transactions Journal-Agent 60 Figure XXI Agency Transactions Journal-Surrender 61 Figure XXII Summary Account-Online Inquiry 73 Figure XXIII Summary Account-Online Inquiry 74 Figure XXIV Online Account Inquiry 76 Figure XXV Online Account Inquiry 77 Figure XXVI Submit Report Flow 81 Figure XXVII Run an FSG Report 97
List of Abbreviations A-I-A Appropriation in Aid AIE Authority to Incur Expenditure AP Accounts Payable AWP Annual Work Plans BD Budgeting Supplies Department BPG Budget Procedural Group BPR Business Process Re-Engineering BPS Budget Policy Statement BSC Budget Steering Committee BSP Budget Strategy Paper CBK Central Bank of Kenya CMM Cash Management Module CoA Chart of Accounts EFT Electronic Funds Transfer ERD External Resources Department EXU Exchequer Unit GL General Ledger GoK Government of Kenya GPAY Government Payment System ICT Information, Communication and Technology IFMIS Integrated Financial Management Information System
List of Abbreviations IPPD Integrated Personal Payroll Data KRA Kenya Revenue Authority MDG Millennium Development Goals MoF Ministry of Finance MPER Ministerial Public Expenditure Reviews MTC Ministerial Tender Committee MTEF Medium Term Expenditure Framework P2B Plan to Budget P2P Procure to Pay PBB Programme Based Budgeting PFM Public Financial Management PO Purchase Order PPOA Public Procurement Oversight Authority PR Purchase Requisition PS Permanent Secretary R2C Revenue to Cash R2R Record to Report RFP Request For Proposal RFQ Request For Quotation VAT Value added Tax
IFMIS Financial Management Operating Model
Overview of Record to Report Record to Report is an end to end process which underpins Plan to budget, Revenue to Cash, and Procure to Pay, as it provides a structure for recording transactional data effectively, processing that data right through to the production of regulatory, financial and management reports. It begins with the collection of source transactions and other accounting data and ends with the creation of reports. It encompasses the majority of activities typically referred to as “general accounting” and encompasses the following Level 2 processes:
Record-to-Report Overall Process
Record to Report at a Glance ASSETS Asset Addition Depreciation JOURNALS PURCHASING Receipt Accruals Transfer To REVIEW PAYABLES Supplier Invoices Payments POSTING General Ledger RECEIVABLES Customer Invoices Receipts CASH MANAGEMENT REPORTING Reconciliation Bank Charges
What is Oracle General Ledger? A Big Bucket, where most financial transactions end up! A “book of final entry, summarising all of a company’s financial transactions”
Recording Flow ASSETS SPREADSHEET PURCHASING Journal Batches Journal Transfer To GL_INTERFACE PAYABLES Journal Header General Ledger Import RECEIVABLES Journal Lines EXTERNAL SOURCES CASH MANAGEMENT
What is a Ledger in Oracle GL Ledger 4 Cs Calendar Chart of Accounts Currency A ledger represents the core of a company`s records where every transaction flows.
The 4 C’s In R12 there is Introduction of 4 C’s (Chart of Accounts, Calendar, Currency, Accounting Method ) in comparison to 3 C’s in R11i The purpose of introducing the Accounting Method is to assign different accounting methods to different ledgers. You can have multiple ledgers with multiple accounting methods for the reporting requirements. For Government of Kenya (IFMIS) there is a Single Ledger which is being assigned Standard Accrual Accounting Method.
Ledger R11i Set of Books is being replaced by Ledger in R12i Defining of the Ledger is now centralized You can define single or multiple ledgers. Multiple Legal Entitles can be defined to a Single Ledger. Different ledgers can have different accounting methods as per statutory reporting requirements. You can map Legal Entity to Balancing Segment within a Ledger. For Government of Kenya (IFMIS) there is only one Single Ledger called ‘Government of Kenya’.
Ledger Fig i Ledger
Accounting Setup Manager With Accounting Setup Manager you can define and maintain the following from a centralized Page. *Ledger. * Legal Entities. * Reporting Currencies . * Intercompany Accounts and Balancing Rules. * Accounting Method. * Balancing Segments assigned to Legal Entities. * Operating Unit assigned to Ledgers.
Accounting Setup Manager Fig ii Accounting Setup Manager
Subledger Accounting Sub-ledger Accounting is not a module but a process. In 11i the data flows directly from Sub-Ledger modules (like AP and AR) to General Ledger. In R12 the data flows from Sub-Ledger modules like (AP,AR) to Subledger Accounting and then it moves to General Ledger Module. The accounting entries are first created in Subledger Accounting, validated and then moved to General Ledger. This is complete seeded automated process where user intervention is not required.
Sub-ledger Accounting Fig iii Sub-Ledger Accounting
Multi-Org Access Control In11i the Super User needs to switch responsibility to access multiple organizations data. In R12, with the introduction of Multi-Org Access Control feature, there is no need to switch responsibility to access multiple organizations data. You can enter, process data and generate reports from single responsibility. Multi-Org Access Control can be assigned to specific responsibilities.
Multi-Org Access Control Fig iv Multi-Org Access Control
Record Transaction Overview The Record Transactions Level 2 process deals with creating, approving, and posting transactions (manual, automated, recurring, ad-hoc, etc.) to the ledger. This process may be triggered by different roles/departments dependent on the journal voucher type. This section describes the process for posting JVs to the GL from (i) within IFMIS e.g. Purchase Orders and (ii) from external systems integrated with IFMIS e.g. HRM – PPDS module for salary vouchers.
Record Transactions To-Be Process Flow
Record Transactions Activity Descriptions
Record Transactions Key Inputs and Outputs
Other Considerations for the Record Transactions Process The following considerations should be taken into account in the detailed system design and implementation of this agreed Level 2 process: * Journal vouchers should be processed to the general ledger through a standardized, controlled, timely process with the appropriate supporting documentation. * Journals can be entered and posted to the ledger throughout the month (real-time posting). * Tolerance settings should be considered in order to limit the journal amount a user can post without approval. * Journal documents that have been posted to the ledger can be reversed in their entity.
Understanding Sources and Categories Journal Sources: * Defines from where the journal entry was created – e.g. Manual, or Payables * Oracle General Ledger comes seeded with many predefined Journal sources * Additional sources are useful for manual journal entry or for automatic interfaces that may be built Journal categories: * Signifies the type of journal entry, e.g. Respective Ministry followed by Adjustment * Oracle General Ledger comes seeded with many predefined Journal categories * Optionally, user defined categories could be useful
Create Journals Post Journals Review /Approve Journals Identify Method of entry Entering Journals / Importing Journals Methods include – Manual Recurring Reversing Allocations ADI Enter or Import Define and generate recurring, reversing, and Allocations Upload, and import ADI journals Post journals from the Journals, Post Journals, or Auto Post forms Review unposted journals for accuracy Correct Journals as required
Automated Journals From Payables Fig v Automated journals From AP
Automated Journals From Payables Fig vi Automated Journals
Automated Journals From Payables Fig vii Automated Journals
Automated Journals From Payables Fig viii Automated Journals
Create Manual Journals – Enter Journal Header Fig xi Create Manual Journal
Create Manual Journals – Enter Journal Lines Fig xii Create Manual Journals
Journal Creation : Reverse Journals Reversing journal entries are used to reverse accruals, estimates, errors, or temporary adjustments and reclassifications. Reversal Method: Switch Debit / Credit Change Sign
Journal Posting Update Account balances by posting journals. Three methods of journal posting: Use the Post Journals window to select and post several journal batches. Use the More Actions window to post a journal batch directly. This option is available only if the profile option Journals: Allow Posting During Journal Entry has been set to Yes. Use the Auto Post program to periodically post journal batches Manual Posting through Post Screen.
Journal Posting - Post Journals Window Fig xiii Journal Posting
Journal Posting- Automatic Posting Fig xiv Journal Posting
Journal Scenario #1 Exchequer Entry Line Fig xvi Exchequer Journal Entry Line
Journal Scenario #2 Receipt of Exchequer Fig xvii Exchequer Journal Receipt
Journal Scenario #3 Advances to Employees(Imprest to Employees) Fig xviii Imprest Journal
Journal Scenario #4 Salaries Journal before Payment in AP Fig xix Salaries Journal
Perform Inter-Agency Accounting Overview This is the end-to-end processing associated with invoicing, posting of transactions, settlement, dispute, reconciliation, and query management between entities within a Government or organization. For GoK, inter-agency accounting refers to when one ministry or agency acts as an agent on behalf of another ministry/agent for the purposes of procuring goods/services usually to benefit from economies of scale or because the agent ministry has the supplier relationships required already in place The initiation process is detailed below. However the accounting process will depend on the scenario and reasons for inter-agency accounting. If the procurement is in association with a particular project or program with its own budget inter-agency accounting is not relevant. Inter-agency accounting applies where the transaction is procurement outside of program-based budgeting – for example where these are recurrent expenses but procured by one agency for another.
Perform Inter-Agency Accounting To be Process Flow
Record to Report Level 2 Perform Inter-Agency Accounting Initiation To be Process Flow
Perform Inter-Agency Accounting Key Inputs and Outputs
Other Considerations for the Perform Inter-Agency Accounting Process Inter-agency transaction policy should be clearly defined and strictly enforced. Inter-agency transactions should be automatically managed in the system – no “out-of balance” should be possible and no “reconciliation” should be required Agree inter-agency balances promptly (e.g. 5 days before the month end), by reporting balances that exist at that point in time (so only monitored and agreed final weeks) After applying the group consolidation tool, investigate only mismatches over a certain threshold (by the local reporting units). Require all entities to use a single, standard chart of accounts - Simplifies inter-entity transactions, reconciliations, and automating off-set entries
Journal Scenario #6Agency Transactions in Principal Ministry Fig xx Agency Transactions Journal
Journal Scenario #7Agency Transactions in Agent Ministry Fig xxi Agency Transactions Journal
Journal Scenario #8Surrender of Agency Transactions in Principal Books Fig xxii Agency Transactions Journal
Manage Interfaces Overview There are a number of key integration points both within IFMIS and with external systems via purpose built interfaces. This process deals with the management of interfaces between these systems. Manage interfaces focuses on ensuring that the correct data files are transferred at the right time as per business need and liaising with sub-ledger departments and peripheral departments to resolve issues/errors
GL Interface Flow ASSETS SPREADSHEET PURCHASING Journal Batches Journal Transfer To GL_INTERFACE PAYABLES Journal Header General Ledger Import RECEIVABLES Journal Lines EXTERNAL SOURCES CASH MANAGEMENT
Manage Interfaces To be Process Flow
Manage Interfaces Activity Descriptions
Manage Interfaces Key Inputs and Outputs
Other Considerations for the Manage Interfaces Process Establish standard, electronic requisition and purchase order process available to appropriate members of the organization Post all transactions to sub-ledger instead of the GL in order to keep GL clean and minimize reconciliation and analysis between the GL and sub-ledgers Aggregate sub-ledgers to GL frequently (weekly, daily, or instant) – removes activities from close process; allows for interim flash reportingAutomate interfaces. Any integrated ERP solution can provide drill-down capability from GL to the sub-ledgers simplifying account analysis Sub-accounts and general ledger should continuously reconcile Leverage single ERP / integrated systems to reduce number of interfaces. Key data elements should have the same definitions, usage guidelines, etc. regardless of what system the data resides
Analyze & Reconcile Accounts Overview Qualitative and quantitative reconciliation of an account balance in accordance with documented policies and reconciliation criteria to a reliable and independent information source, identifying differences and assigning actions to resolve as appropriate. Reconciliations contribute towards the financial statement assertions of completeness and accuracy.
Analyze and Reconcile Accounts Process Flow
Analyze and Reconcile Accounts Activity Descriptions
Analyze and Reconcile Accounts Key Inputs and Outputs
Other Considerations for the Analyze and Reconcile Accounts Process Sub-accounts and general ledger should continuously reconcile Accountability for data integrity should lie with local reporting unit. The local reporting unit should always have ownership of their own numbers To assist in reinforcing this, central accounting should always notify the local unit of errors in their results
Online Account Inquiry Perform Journal Inquiry using the Journal Inquiry screen View Journal line details and export the details to excel or drill down to sub ledger Select Journal Name / source etc to inquire in view Journals screen Perform Account Inquiry using the Account Analysis and Drilldown screen View Balance, Detail, and Variance Information and export to excel or drill down to sub ledger View account balances View Oracle GL or Oracle subledger transactions Select range of accounts for inquiry Select period Select balance type (actual / budget)
Reporting in GL – Standard Reports Account Analysis: Account Analysis Report, Account Analysis Detail Reports Average Balance Audit Report Chart of Accounts: Account Hierarchy Report, Chart of Accounts Listing, Rollup Detail Listing, Segment Values Listing, Suspense Accounts Listing Journal: General Journals Reports, Journal Batch Summary Report, Journal Entry Report, Journal Line Report, Journals Report with Sub ledger Detail Trial Balance: Average Balance Trial Balance Report, Budget Trial Balance Report, Detail Trial Balance Report, Summary Trial Balance Reports Other: Mass Allocation Formula Listing, Recurring Formula Listing Multi-Company Accounting and Consolidation: Consolidation Audit Report, Consolidation Exception Reports, Consolidation Journals Report, Consolidation Rules Report,
Reporting in GL – Standard Reports Account Analysis Report with Payables Detail This report can be used to reconcile asset additions imported into General Ledger from Oracle Payables. The report prints the beginning balance, journal entry lines, and ending balance of the accounts you request. For each journal entry line, the report prints the batch name, journal entry name, account, line description, vendor name, invoice number, and the debit or credit amount. Account Analysis Report with Sub ledger Details The report displays detail amounts for a specific journal source and category, in functional currency or STAT. This report prints the journal entry lines and beginning and ending balances of the accounts requested. For each journal entry line, the report prints the accounting date, category, journal batch name, header, sequence, number, line, description, and amount. For each journal entry line, the report also prints subledger details, including the vendor or customer name, transaction number, associated transaction, sequence, number, line, and transaction type.
Submit Standard Report flow Choose to submit a request or a set of requests Enter request information Enter parameter values May be required Define submission schedule Optional Define completion options Optional Select Submit Request Record request ID
Submit Standard Report flow View-> Request-> Submit New Request-> Single Request Fig xxvii Submit Standard Report Flow
Close Books and Consolidate Financial Results Overview This sections details the monthly, quarterly, and / or annual process of booking period end entries, closing the ledger, consolidating financial results. Preparation of the actual financial reports is covered in the “Financial Reporting” process.
Close Books and Consolidate Financial Results Process Flow
Close Books and Consolidate Financial Results Activity Descriptions
Close Books and Consolidate Financial Results Key Inputs and Outputs
Other Considerations for the Close Books and Consolidate Financial Results Process Assign formal closing process owners Formal close process and calendar managed by a single process owner Issue clear and concise instructions to all departments / entities stating what will be required of them and by when Pre-define communication and issue resolution approach Continuously focus on and formally measure close process improvements Establish a “pre close meeting” early in the closing cycle; Shift non-critical items to pre-close Discuss any unusual results with management and auditors Accountability for data integrity lies with local reporting unit. The local reporting unit should always have ownership of their own numbers Perform as many activities as possible in parallel (rather than consecutively). Limit period end / closing entries to only those that are required for financial reporting purposes or are material from a management reporting standpoint Currency translation happens automatically Simplify the allocations process Transmit all data electronically Create and post all reversals automatically
GL Period Close Import journals from sub-ledgers Perform reconciliation of sub-ledgers Close the period for each sub-ledger Perform revaluation of foreign currency balances Verify all journals are posted Reconcile account balances Translate balances Perform consolidation if required Run Trial Balance and other reports Close the GL period Open the next period
Close the Sub ledgers Subledgers Close Period Suggested order for closing sub ledgers: Projects Payables Purchasing Assets Receivables Inventory
Period Statuses PERIOD STATUS JOURNAL ENTRY POSTING NEVER OPENED FUTURE ENTERABLE OPEN CLOSED PERMANENT CLOSED
Close GL Period Navigation : Setup Open/Close) Navigate to the Open and Close Periods window. General Ledger displays all accounting periods defined for your calendar with the period type of your set of books. Select the open period that you want to close. Enter a new status for the period. Enter Closed to prevent entering or posting journals to that period. You can reopen a closed period at any time. Enter Permanently Closed to prevent entering or posting journals to that period. You cannot reopen a permanently closed period. However, A period should be marked as Permanently Closed only after the Statutory Financial audit of the set of books for the given financial Year and after adaptation of the audited results by the Board of Directors. Save your work.
Perform Financial and Regulatory Reporting Overview Financial Reporting: Creation of standard financial statements and supplemental reporting in accordance with appropriate accounting principles. Regulatory Reporting: The process of creating statutory and / or regulatory reports and submitting to the appropriate authority
Perform Financial and Regulatory Reporting Process Flow
Perform Financial and Regulatory Reporting Activity Descriptions
Perform Financial and Regulatory Reporting Key Inputs and Outputs
Other Considerations for the Perform Financial and Regulatory Reporting Process Differentiate between internal (mgmt.) and external (financial / regulatory) reporting needs – but leverage a single data source One version of the truth All statutory/management reporting needs are supported through a single chart of accounts Automated financial reporting ERP / consolidation system should automatically feed financial reports / templates Quarterly hard closes are performed to meet external reporting needs, with monthly soft closes to meet internal management needs Put in place comprehensive training plans to ensure all staff are up to date on current and future financial reporting requirements. Regularly review accounting policies and compare to best practice, with reviews actively involving external and internal advisors Put in place comprehensive statutory reporting procedures that are regularly updated and communicated to staff.
Overview of FSG’s Financial Statement Generator is the embedded tool provided within the General Ledger module of Oracle Applications, Generate financial reports, such as income statements and balance sheets, or compare based upon data in your general ledger It can be used for creating Financial Reports of Actual, Budgeted, Encumbered and Statistical Balances e.g. Balance Sheet, P & L, Comparison of Actual Balance against the Budgeted balance etc.
Run an FSG Report Reports-Define -> Reports Page 97 Fig xxviii Run an FSG Report
Perform Management Reporting Overview Management reporting deals with the consolidation and presentation of data, to managers, to support managerial decision making. In contrast to the previous section on financial and regulatory reporting these reports are generally published internally. This section details the Level 2 process for generating management reports. Management reports are highly varied and must be clearly defined as part of report development however all reports generally require the four steps detailed below to be followed.
Perform Management Reporting Key Inputs and Outputs
Other Considerations for the Perform Financial and Regulatory Reporting Process Focus on the “critical few” metrics necessary to measure successful execution of strategy Address unit of measure, data source, frequency, and dimensions If we improve this metric, does it really matter for our stakeholders? Ensure metrics support key leadership decisions, what is the frequency of those decisions, and the information requirements for each? Segregate metrics by purpose Trending and root cause analysis are key components of an effective reporting process Information should be captured and reported quickly and consistently for all levels and all parts of the business Multi-dimensional profitability analysis methodology extended to all applicable dimensions e.g. customer, product, project, geography, market, contract type, pricing level, and channel Use analytics to customize offerings and maximize revenue / profit Fully integrated and automated reporting capability including simple user interface with drill-down capability Use a single reporting and analytic tool across the enterprise