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Oracle Financial Accounting Hub had a gap in functionality for a while, which is the lack ability to perform calculations via
configuration layer. In all prior FAH implementations we had to build this logic in a ETL or Staging layer. It appears Oracle
FAH team has now picked up the trick from Oracle Payroll teams 20 year old Fast Formula feature. It is a late but very
welcome feature in Oracle Fusion Accounting Hub & Fusion Public Cloud Accounting Engine. The calculation engine in FAH
has various benefits, specifically to financial services industry. In this white paper, we will go through the detailed steps for
implementing calculation logic into Oracle FAH configuration.
Some of the use case considerations for FAH Calculation Engine are listed below :
a. If you are being paid a large interest on an investment bond, then you may want to post such a bond into a high
performing investment bond
account, to create differing
buckets in General Ledger
for accounting &
management reporting.
b. You may want to account
for an investment bond with
distinctive value in UK
GAAP and different value
for IFRS and/or US GAAP
etc
c. You may want to calculate
the offset for accrued
amount
d. In insurance business,
insurance companies
receive money for the
Premium upfront, but the
earned premium must be
recognized on a month by
month basis. Therefore,
each month you need to
calculate how much is the earned amount.
e. In some countries such as Turkey, you post the journal to next month if the transaction is after a cut off date i.e.
example after 25th of the month for certain transactions. Hence you may want to calculate accounting date just
prior to Posting.
f. Use a different account segment value based on the interest rate range for a bond
Citing the examples above, it is a very common requirement in Financial Services to perform calculations when posting
Financial Accounting Hub ( FAH ) transactions. In traditional legacy EBS FAH world, these calculations are either performed
in staging layer or in Pre-Accounting Hook. But regardless of the approach, in the EBS R12 FAH you do not get a
configurable solution to implement just in time calculations for posting. Welcome to Fusion Accounting Hub Release 11,
that allows you to calculate the accounting attributes just prior to those being posted. The formulas that you define in
Fusion FAH can be leveraged for varying needs such as changing the Account Rules on the fly during posting, or changing
the mappings just prior to posting based on certain conditions or changing the value of analytic attributes i.e. Supporting
Reference or to change the description of the journal line based on certain conditions that are too complex to be achieved
via simple configuations
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Oracle Finance Tranformation Experts on Cloud
The possibilities of applying FAH calculation formulas are endless and exciting. You can define custom formulas from
existing sources to create new values for Subledger Journals. You can define either simple or complex formulas using the
new feature in Fusion FAH. You can apply arithmetic operations such as plus or minus or pre-defined functions such as first
date, last date or end month etc. You can also apply IF then ELSE conditions to derive the value for a journal line
accounting attribute. You can create custom formula to define account segment values that are not offered by pre-defined
configuration. You can use formulas for items that are not available in source system to meet Statutory, regulatory and
management reporting needs.
A typical IF condition will look like
IF <<Value of Source Attribute>> > 300 and less than 5000 THEN
THEN ‘10000’
ELSE ‘20004’
In the above arbitrary example, if the source attribute such as Payment Amount is between $300 and $5000 then you post
to account 10000 otherwise post to account 20004.
In order to define a formula, you navigate to Manage Formulas task Click on Create button and give your formula a name
and shortname. You will also specify the event class for which this formula is eligible to be used. Example, some formulas
will be only applicable when a INVESTMENT BOND is purchased and some formulas will be applicable when INTEREST IS
EARNED on INVESTMENT BONDS.
You can also apply the formula for standard Oracle Subledger accounting, as shown in screenshot below
The screenshot below shows a formula that decides the GL Account for posting based on Payables Discount Percentage.
This will allow you to track the value of discounts achieved for early payment invoices straight from GL. Such data for a
large enterprise can help define strategies & drive efficiencies in payment processes globally. Infact a global company can
compare discount percentage pattern across different geographic regions.
You can make your formulae complex by selecting advanced option as shown below.
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All the staging table columns in the FAH will be available to write formulas.
Both the standard sources and system sources can be used in the formula. System sources are internal variables used by
FAH engine.
Subsequently you can attach the formula to the account derivation rule. Likewise, on same principles, you can influence the
journal line description or GL Posting date etc via FAH Calculation formulaes.
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Oracle Finance Tranformation Experts on Cloud
After the formula has been created, you create accounting rule to use the results of the formula
