Objective:

In this training article we will see how to configure Secondary ledger and implementing its mapping with the primary ledger.

Secondary Ledger:

Secondary Ledger is optional ledger linked to a primary ledger for the purpose of tracking alternative accounting or to represent the primary ledger’s accounting data in another accounting representation.

A secondary ledger can differ from the primary ledger in one or more of the following ways-

• Chart of accounts
• Accounting calendar/Period type combination
• Currency
• Subledger accounting method
• Ledger processing options

Secondary ledger is always associated with primary ledger and there can be multiple of such ledgers attached to main primary ledger in an organization. Based on secondary ledger we can also create reporting currency which we will also discuss in the article.

There are four types of Secondary Ledgers-

• Balance Level Secondary Ledgers: The balance level secondary ledger maintains primary ledger account balances in another accounting representation. Balance level secondary ledgers are useful if no adjustments are to be done in primary ledger.
• Journal Level Secondary Ledgers: The journal level secondary ledger maintains journal entries and balances in an additional accounting representation. Every time we post a journal in the primary ledger, the same journal can be automatically replicated and maintained in the secondary ledger for those journal sources and categories that are set up for this behavior.
• Subledger Level Secondary Ledgers:The subledger level secondary ledger includes the functionality of the balance level and the JE level secondary ledgers, but then adds the subledger level. The subledger level is one of the most powerful secondary ledgers, allowing every entry made to the respective primary ledger subledger to be duplicated in a different accounting representation in a secondary ledger subledger.
• Adjustments Only Secondary Ledgers:The adjustment only secondary ledger is particularly relevant when discussing audit and period-end adjustments. It is a very special type of secondary ledger that is an incomplete accounting representation and instead only reflects adjustments. The adjustments can be manual adjustments or automated adjustments from subledger accounting. This type of ledger must share the same chart of accounts, accounting calendar/period type combination and currency as the associated primary ledger.

Let us try creating secondary ledger- Navigate from Setup and maintenance area to your implementation project and click on Manage Secondary Ledger. Please make sure to select scope as Primary ledger which you must have defined before attempting this step.

 Manage secondary Ledgers--> Go to Task--> 

Click on Create icon

Left side of the screen shows the details of primary ledger. Input the following details for Secondary ledger-

• Name and description of Secondary Ledger
• Chart of account- If we want to use different char of account, then before coming to this step we should define the chart of account for secondary ledger completely in advance. In this example we will take the same COA which was used in the primary ledger.
• Accounting calendar
• Currency- In this example we will use currency as USD. To be noted that the currency of Primary ledger is GBP.
• Accounting Method- We need to select standard accrual in case we are selecting data conversion level as subledger. This is because subledger will post the transaction depending upon the accounting method. In rest of the cases we can ignore this field.
• Data conversion level- In this example we will use Balance.
• Click Save and Edit task

Now before moving ahead with Secondary ledger related configuration we need to select the scope as secondary ledger defined above.

Choose select an add and click on Apply and Goto Task,

Choose the secondary ledger (in this case we have created one ledger) and Click on Save and Close

Specify Secondary ledger options in the same way we have defined it for Primary, as shown below

Click on Save and Close

Primary to Secondary ledger mapping:

If the primary and secondary ledgers use different charts of accounts, the chart of accounts mapping is required to instruct the system how to propagate journals from the main transactional chart of accounts to the target chart of accounts.

If the primary and secondary ledgers use different accounting calendars, the accounting date is used to determine the corresponding non adjusting period in the secondary ledger. The date mapping table also provides the correlation between dates and non-adjusting periods for each accounting calendar.

Chart of Account mapping option helps to correlate source chart of account to target chart of account for creating journal entries. One can also define account rules as a part of chart of account mapping which further helps to map complete account combinations in multiple chart of accounts.

If the primary ledger and secondary ledger use different ledger currencies, currency conversion rules are required to instruct the system on how to convert the transactions, journals, or balances from the source representation to the secondary ledger. 

Let us try with an example on primary to secondary mapping-

Click on Complete Primary to Secondary Ledger Mapping, we get to the following screen

From the above screen shot we can notice that whatever changes are there between Primary ledger and Secondary ledger, are highlighted in the Conversion rules. If we have different COA, the system will show COA conversion rules; in case of period, it will show mapping; and in currency is different as in this case, the system will show currency conversion rules. Ideally in case when only currency is different, we can configure reporting currency rather than secondary ledger.

Click Save and Close

We can also define reporting currency with reference to Secondary Ledger -

Click Save and Close

We can see that the trial is defined. Click on save and Close

After completing all above steps we need to run a report called Review and Submit Accounting Configuration for the Primary ledger. This means that the scope should be Primary ledger as shown below. If we run the report for primary ledger, the system will automatically do it for secondary ledger as well as reporting currency. This is the last step in ledger configuration.

The system will show the complete structure. Click on Submit button. We can check the details in Scheduled process from Setup & Maintenence area

Anjan Mukerji

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