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Chart of Accounts (CoA) in Oracle Fusion Financials

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Chart of Account which is popularly known as CoA in Oracle Fusion world. CoA is determined by business to know what data they need to capture when any transaction is accounted. CoA structure composed of segments. Now question comes what is segment and what is its significance? Ans: Segment is a label which can be used for identifying the origin of transaction. Let us take an example and visualize it.

For representation purpose I am taking small setup where there is a conglomerate called Super Corp having multiple child companies catering to separate business e.g. Super Motor which is into Automobile segment and Super Foods which is into FMCG business. Below is the chart of Super Corp structure.

Now Super Corp’s CEO need to know how well each of his company is performing and on the other hand each company’s CEO on a standalone basis wants to know What’s their company’s profit and loss and which product category is Cash cow and which is Dog 😉

SuperCorp’s COA will have segments which identifies Company, Product category ,Account (Account segment will help me to identify my Payables and Receivables) after all its vitamin M which matters 😉 .So we will define our segment accordingly and number them uniquely.

Assume company is planning to use this data to strategize their sales then they can have even one segment of product. This will help them to deep dive more into their product portfolio to know which product is performing well and which is not. We need to know both sides of the coin.
Assume in accounts segment 4001 represents my Accounts Receivable and 5001 represents my Accounts Payable then accounting entry 101.201.301.4001 will give AR balance and 101.201.301.5001 will give AP balance. Below diagram shows us this representation.
So when anyone see this accounting entry in ledger they can easily recognize which entity and product it is referring to. Above e.g. show us how the CoA accounts look, What the segments are and How the transactions can be identified. In layman’s language you can visualize the CoA as you Aadhaar card number where it has 3 segments of 4 digits. 😊

In the e.g. the structure is only possible if the conglomerate uses same CoA across its companies. However there are more complexities involved with CoA like how to use Cost center segment, How many Primary balancing segment we need to define, Which are the mandatory segments, Calendar usage ,Best practices..
Stay tuned for my next article which will answer the above questions. Do give feedback and have a great weekend.

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