Financial Statements: Generating Business Segment Reports with JD Edwards
Are your financial statements too general? Are you spending way too much time playing around with financial data in Excel? Would you like your financial reports to show results per client, region, product type, sub-product type, etc.? In this blog, I will demonstrate, using advanced accounting, how to meet that need with JD Edwards’ Business Segment reporting.
In Oracle JD Edwards’ ERP, the links between some of the functionalities allow you to meet the needs of managers, without burdening the implementation of those reports by detailing, for example, the various segments required to be analyzed.
What are Business Segment Financial Statements?
According to the Canadian Institute of Chartered Professional Accountants, a Business Segment Financial Statement is:
“The information a company includes in its financial statements about its operating segments, the various goods and services it sells, the various geographical regions where it operates and its main customers. “
Why Do We Need to Issue Business Segment Information?
Also according to the Canadian Institute of Chartered Professional Accountants:
“Communicating segment-related information aims at enabling financial statements users get information on the various commercial activities of the company and the various economic sectors pursued by the company. “
It is thus necessary, for organizations to better manage the various business segments (products, customers, specific customers, suppliers), to produce such information. To attain that objective, they need to easily access that type of information.
Using JD Edwards Accounting System
In Oracle JD Edwards’ ERP solution, the information needed to prepare business segment financial statements is made available through the axis analysis functionality of the advanced accounting module. Data visualization screens and predefined reports are available to better analyze it.
Below is a graph illustrating the flow of transactions that allows setting up the necessary information to get the data you need.
1. Financial Data Sources
Various transaction operations are feeding financial data. Sales, purchases, work orders are the source of this financial data. They are updated at various points in time of the various processes:
When merchandise is received to add it to the inventory files;
When a work order is marked as completed, to add finished product to the inventory files, and deduct raw materials that were used to manufacture the products;
At the time orders are being shipped to customers to deduct the merchandise from the inventory file and record amounts receivables in the accounts receivable auxiliaries;
When completing inventory transactions to make adjustments to the inventory level.
2. Accounting Instructions
The General ledger accounts comprise three variables: cost centres (departments/warehouses/plants), objects (account type), and sub accounts.
The general ledger accounts for manufacturing, selling, purchasing and inventory transactions are determined by automatic accounting directives. The combination of companies, transaction types and the GL code entered in the items’ master file determines the GL account in which the financial information will be recorded.
If the field corresponding to the cost centre is empty that shows that the original transaction’s cost centre will be used to determine the grand ledger account combination.
Here too, the use of flexible accounting makes it possible to change the cost centre or sub accounts according the chart of accounts additional requirements.
Depending on the type of transactions, automatic distribution and manufacturing accounting instructions will make it possible for financial information to be directed to different grand ledgers.
3. Flexible Accounting
Flexible accounting is used when operational transactions are recorded. This functionality allows including additional information to the grand ledger, that is, among other things, add axis analysis.
This set-up is transparent for all system users No other additional operation is required for the data to be extracted to the axes of analysis. Flexible accounting must be activated in the programs that generate financial transactions.
Information entered into the various axes comes from the fields in the transaction source tables. Stock-specific information will be entered, for example, in the material master records category codes. If our need is related to our business partners, we will use the address book category codes.
4. Grand Ledger Accounts Axes of Analysis
To enter segment information into the advanced accounting axes of analysis, it must first be entered in the details of the grand ledger accounts.
Axes of analysis are forwarded to the grand ledger through transactions originating from the following modules:
Purchases and manufacturing, merchandise receiving;
Axes of analysis can also be manually entered when supplier invoices and journal entry are recorded.
To ensure the information is complete, the grand ledger accounts used for the publication of segment information can be configured in such a way that values are entered into axes of analysis fields.
The information entered in the axes of analysis at the time of accounting, coming from the distribution or the manufacturing accounting modules, will also be entered using flexible accounting.
5. Viewing Segment reports
Axes of analysis are used to enter segment related data (customers, regions, products). JD Edwards offers the possibility of using four fields of analysis axes additionally to the product field. Which axis to use is determined by the entire group of stakeholders and according to the needs of your organization at the beginning of the project during process design workshops.
The use of advanced accounting allows creating financial reports according to identified axes of analysis. An additional functionality allows getting, for the same axis, two different financial reports.
These five steps are only a glimpse of the depth of the advanced accounting module and its integration to other JD Edwards modules.
Creating segment financial reports using the module will allow you to optimize your work by spending more time analyzing results than compiling them in Excel.
Need help? Contact one of our experts, we will be more than happy to contribute to your success!