Did you know in 11i with Family Pack E, a new flexfield qualifier has been added to enable you to nominate a segment in your chart of accounts to act as your secondary tracking segment.
This segment will be paired with the balancing segment when generating account balances for the Retained Earnings account, Unrealized Gains or Losses accounts, and the Cumulative Translation Adjustment account.
"Oracle define this feature as:
A segment in the chart of accounts can be designated as a secondary tracking segment, in addition to the balancing segment, to perform more detailed analysis within Oracle General Ledger. 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."
Therefore, you can use any segment, except the balancing segment or natural account segment, can be specified as the secondary tracking segment.
If you specified to use a Secondary Tracking Segment for Revaluation, the Unrealized Gains/Losses account will be tracked by the balancing segment and secondary tracking segment.
If you specified to use a Secondary Tracking Segment for Closing and Translation, the Retained Earnings account and the Cumulative Translation Adjustment (CTA) accounts will be tracked by both the balancing segment and secondary tracking segment.
This allows you to maintain accounting data at a finer level of detail for these accounts.
You should also note, Year-End Close refers to the standard process of closing out the year-to-date balances for your revenue and expense accounts to retained earnings when you open the first period of a new year. This does not apply to the Year-End Closing Journals feature. However, as per documentation you can achieve the same result using Income Statement Closing Journals by specifying different retained earnings accounts for a range of revenue and expense accounts.
You don't get confused with secondary tracking segment is not a second balancing segment for journal entry. The control is still for only one balancing segment. The posting is effected only in the measure of the Retained Earnings Account effect (these accounts will also track for the secondary segment instead of just the balancing segment).
Usage with Secondary Segment
Lets try to understand with two example
If Secondary tracking segment/qualifier is to breakdown the retained earnings balance (brought forward) at the beginning of the new financial year. Here is an example how the system will breakdown the retained earnings.
If you enable Secondary tracking for the state segment:-
Without Secondary Tracking
Enabling Secondary and Translation Check box. The Retained Earnings Account and CTA Account will be tracked by the Pair of Balancing as well as Secondary Tracking Segment.
Suppose the following are the Entries made during the year:
Account USD Balance Cumulative Rate Translated INR
01.100.Revenue 1000 50 50,000 CR
01.100.Expense 500 50 25,000 DR
01.200.Revenue 2000 45 90,000 CR
01.200.Expense 750 50 35,000 DR
At the Year End Closing and Translation, the following pair of Accounts are created :
Account USD Balance Calculated Rate Translated INR
01.100.Retained Earnings 500 60 30,000 CR
01.200. Retained Earnings 1250 50 62,500 CR
Secondary Tracking Segment Benefits
- Secondary tracking segments provide better audit and analysis capabilities.
You now have more visibility into the detailed components of Retained Earnings, Cumulative Translation Adjustment, and Unrealized Gains and Losses. Instead of tracking these accounts by a balancing segment alone, you can track them by the balancing segment and another segment of your choice, such as Department, Line of Business, or Cost Center.
- A secondary tracking segment also provides better control and consistency of similar transactions because this option is set at the ledger level instead of through a profile option.
- By being able to nominate any segment other than your primary balancing segment or natural account segment to act as your secondary tracking segment, you have greater flexibility in tracking accounts by pairs of segments.
How to Set Up Secondary Tracking Segment
Very simple, what you have to do it you need to navigate to:
(N) Setup > Financials > Flexfields > Key > Segments (B) Segments
Now you can choose any segment, other than your balancing segment or natural account segment, to be your secondary tracking segment.
You can set the Secondary Tracking Segment flexfield qualifier for new or existing charts of accounts at any time.
If you are currently using the Revaluation by Cost Center feature and wish to retain it, you do not have to do anything, this is very important.
(N) Setup > Financials > Flexfields > Books > Define
There is a new Secondary Segment Tracking region in the ledger form. Enable the Closing and Translation option to maintain account balances generated from the Closing and Translation process. Enable the Revaluation option to track account balances generated from the Revaluation process at a finer level of detail.
Both of these options are optional and can be turned on together or separately.
Oracle recommended that the Closing/Translation option be enabled when the ledger is first defined. This option cannot be disabled in the future.
The Revaluation option can be turned on and off at any time, but for consistency in processing, the setting should remain consistent throughout the life of your ledger.
There is separate process, who want to enable this feature in there existing setup, you can Follow Note 261961.1 for Enabling this feature for an Existing SOB, which requires some pre-requisite steps.
Some of query that end user or Finance Core user might interested
(1) Is the Secondary tracking segment qualifier mandatory
No, it is not mandatory.
(2) What is the benefit for using it during my closing process?
Very same as Better Audit and Analysis,Better Control and Consistency, Greater Flexibility are main key benefits as discussed above.
(3)Enabling a segment for secondary tracking does mean that you will get a tallied trial balance?
Enabling a segment for secondary tracking does NOT mean that you will get a tallied trial balance. What it means is that for some of the transactions you will get additional details.
(4) Which Version of Oracle Can use this functionality?
(5)Two Balancing Segments at a time...
The scenario is FICO would like to have balance sheet/trial balance balanced by entity (company) and division (responsibility center).Is there any way that we can have two segments in COA enabled as balancing segment?
The answer would be : you cannot have two balancing segments. Please have a look at the secondary Tracking segment feature if it suits your requirements.
(6) Any Limitation for this Functionlity?
You should not forgot secondary tracking segment does not support suspense adjustment, intercompany segment value balancing and rounding imbalnce processing.
Reference Note :
Note 237968.1, the Secondary Tracking Segment qualifier is new to 11i with Family Pack E
Note 261961.1 Enabling Secondary Tracking Segment for an Existing Set of Books
Note 277888.1 Setup Checklist to Enable the Secondary Tracking Segment in Oracle General Ledger
Note 268393.1 How Do Secondary Tracking Segment's Features Work
- Note.268391.1 How to Enable Secondary Tracking Segment For A New SOB