Why is the Global Accounting Engine needed?
The Global Accounting Engine is needed for European foreign subsidiaries as they are required to do reporting in foreign countries.
The Global Accounting Engine produces European reports not available in the standard accounting applications.
It is Legal compliance tool for some international accounting and audit requirements.
- Accounting transformation for inventory/purchasing
- Audit Trail:
- adds required sub-transactions (cash reversals,adjustments, and others)
- additional GL sequences across AR/AP
- Control accounts for sub-ledger-GL reconciliation
What is functionality of the Global Accounting Engine ?
The Global Accounting Engine provides you with features to satisfy the following basic business needs. You can:
- Comply with accounting regulations of any country. Some accounting entries are legal in one country but not in another.
- The Global Accounting Engine lets you choose the right accounting schemes for your country.
- Define accounting rules per set of books.
- Post different accounting rules to different sets of books.
- Generate different accounting entries from the same business transaction into different sets of books.
- Perform synchronous multiple set-of-book accounting. The multiple set-of-book accounting is synchronous because it ensures that a Business transaction is either posted in all related set of books or is not posted in any set of books.
- Comply with legal and fiscal audit trail requirements.
- Store all accounting entries in the same structure and format for all applications. An accounting entry always consists of a header and two or more accounting entry lines. The Global Accounting Engine uses this information to provide accurate reconciliation reports in applications such as Payables and Receivables.
- Reconcile your subledger accounting system with General Ledger. The Global Accounting Engine provides additional reports such as daily journal reports. Reports are used when a company needs to match the amounts in the subledgers such as Payables, Receivables, and General Ledger.
- Define journals rather than using hard-coded categories. These journals are numbered sequentially to comply with legal requirements.
- Assign sequential numbers to the defined journals across applications.
- Each accounting entry has a unique identifier as well as other header information. This accounting number is the primary key for your accounting lines. You can use the same numbering in applications such as Payables and Receivables.
- Audit and control period and fiscal year closing procedures.
- The Global Accounting Engine provides a new mechanism for closing periods that ensures a complete and gapless numbering is generated as required in some countries.
- Create journal entries and detailed balances for control accounts.
- Control accounts are General Ledger accounts that you can access only from subledger applications such as Payables and Receivables. The balances are calculated for each account with the control account status and third party period and identification. A third party can be a supplier in Payables or a customer in Receivables. The Global Accounting Engine uses these structures to provide legal balance reports that are the same across all applications.
- Secure subledger accounting entries. You can either secure accounts individually or secure the procedure to create accounting entries. To secure subledger accounting entries, use control accounts to define accounts. A control account is only accessible from the subledgers. Securing your entries ensures a valid audit trail is on paper. The secured posting makes sure that you are only given access to a range of steps involved in the posting cycle.
- Print reports that correspond to country-specific accounting practices.
- Print legal subledger accounting reports .
Which are potentially implementation using global accounting Engine(AX)?
AX is mainly used to comply with the European legislations mainly.Any European Implementation which is operating in more countries will have options to use.
Is Global Accounting Engine mandatory for Italy, France, Greece or Portugal?
Oracle has suggested for 6 countries (France, Italy,Greece, Portugal, Spain, Austria)
- AX has replaced localizations for France, Italy.
- AX provides legal report formats for specified countries.
How Global Accounting Engine works:
Operationally, the Global Accounting Engine changes the way in which transactions are posted from the sub-ledger to the General Ledger. For transactions from AR, AP, the standard GL Interface is switched off and postings are done via the Accounting Engine translator. A sub-ledger accounting entry is created for each Event, which represents a change in state of a document, e.g. an Invoice. Accounting Rules are used to translate these events and to create entries in the AX tables. A report is run to create the sub-ledger balances in AX by Third Party and accounting period. After AX translation is run, the accounting entries are transferred to the General Ledger via the normal GL interface tables.
The big difference in using AX is that instead of posting transactions direct to the GL Interface table, they are transferred via the AX Engine where they are translated before being transferred to the General Ledger. This can be shown as:
This ends of Global Accounting Engine(Product AX) discussion, will see some more information on dual posting and some important technical details in next post. Till than keep watching this space :)