CLEARING ACCOUNTS
RECONCILIATION -
GENERAL LEDGER
ORACLE FUSION FINANCIALS
Authored By
CA Uday Yelchuri
Preface
In Oracle Fusion Financials, several clearing accounts play a crucial role in transaction
processing—such as the Asset Clearing Account in the Mass Addition process, the AP
Accrual Account for PO/GRN-matched invoices, and the Cash Clearing Account during
Payment Clearing.
At period end, along with key subledger control accounts (like Supplier Liabilities,
Customer Receivables, and Asset Cost Accounts), finance teams also need to reconcile the
balances sitting in these clearing accounts against the GL.
Ideally, clearing accounts should fully offset once the corresponding accounting events are
completed. However, when transactions remain open, these balances accumulate, making
it difficult for teams to identify the exact transactions contributing to the month-end
balance.
While Oracle offers robust reconciliation tools such as Payables to GL and Receivables to
GL reports for subledger control accounts, similar out-of-the-box reports are not available
for clearing accounts.
The good news? Oracle provides a robust Clearing Account Reconciliation feature that
allows users to efficiently track, match, and reconcile clearing account balances. You can
examine those unreconciled journal entries that are both relevant and responsible for the
buildup of the ending balance in a clearing account. Reconciliation can be performed
automatically or manually.
In this document, I will walk through the configuration and demonstrate this functionality
using the Cash Clearing Account, which is part of the Payment Clearing Process.
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A) Setups:
a) Enable ‘Reconciliation’ Option at Ledger Level
On the Specify Ledger Options page, within the Reconciliation section, activate the
primary and secondary ledgers for clearing account reconciliation by selecting the 'Enable
Reconciliation' option as needed.
(N) Setup and Maintenance > Financials > General Ledger > Specify Ledger Options
b) Set Reconcile Flag – ‘Yes’ at Natural Account Level
On the Manage Values page, set the Reconcile attribute to Yes for each reconcilable
clearing account value within the natural account segment.
In this tutorial, we will enable the Reconcile Flag for the Cash Clearing Account set up at
Bank Account # BofA-2871.
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(N) Setup and Maintenance > Financials > Financial Reporting Structures > Manage
Chart of Accounts Value Set Values
GL Account # 11506: BofA Clearing Account
Enable Reconcile Flag to ‘Yes’ as shown below,
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Existing Code Combinations:
(N) Setup and Maintenance > Financials > Financial Reporting Structures > Manage
Account Combinations
GL Code Combination # 101.10.11506.000.000.000
Run the Inherit Segment Value Attributes process to update existing account
combinations with the subsequent changes to the segment value
(N) Navigator > Tools > Scheduled Processes
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Observe that the ‘Reconciliation Flag’ is updated for the Code Combination.
c) Configure and Maintain Clearing Account Reconciliation Types
Reconciliation types include one or more clearing accounts along with their corresponding
reconciliation rules. You can configure and manage these using the Manage Clearing
Accounts Reconciliation task
(N) Setup and Maintenance > Financials > General Ledger > Manage Clearing Accounts
Reconciliation
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Defined a New Reconciliation Type: UY Cash Clearing Account Reconciliation
Reconciliation types can be defined at either the chart of accounts level or the ledger
level. Chart of accounts–level setups apply to all related primary and secondary ledgers
enabled for reconciliation and are recommended for easier maintenance.
If a specific ledger needs different rules, you can create a ledger-level reconciliation type
instead.
Account Matching Rules and Account Filters:
When defining a reconciliation type, you must choose an account matching rule, which
tells the system which chart of accounts segments matter when matching journal lines.
Segments not included in the rule are ignored during grouping and reconciliation.
Available matching rules include:
● Primary Balancing Segment + Natural Account
● Primary Balancing Segment + Natural Account + Cost Center
● Full Account Combination
These rules determine how journal lines are evaluated and matched in the reconciliation
process.
After choosing an account matching rule, you use account filters to define the segment
values that represent valid clearing account combinations. Generally, you only specify
values for the segments included in the selected matching rule.
In this tutorial, I chose the Account Matching Rule as ‘By Primary Balancing Segment &
Natural Account’ and set the filter condition with Company Segment (101) and Natural
Account (11506).
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B) Test Cases:
a) Manual Reconciliation: Reconcile clearing accounts manually using the Manual
Reconciliation page or the Reconcile Journal Lines spreadsheet.
(N) General Ledger > Task List: Journals > Clearing Accounts Reconciliation > Reconcile
Clearing Accounts Manually
Use the page to search for reconcilable clearing account journal lines by ledger,
reconciliation type, group, date, status, accounting period range, and other filters.
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Select the Reconciliation Type ‘UY Cash Clearing Accounts Reconciliation’ as defined above
and click on Search.
No Data is Displayed
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However, as shown, there is a period activity in the respective period for the GL Account.
If data isn’t appearing on the Reconciliation page, it’s likely because the transactions
were created before the Reconcile flag was enabled at the GL account level. These older
entries are treated as historical journal lines.
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To make these historical journal lines available for reconciliation, you need to run the
Enable Journal Lines for Clearing Accounts Reconciliation process.
You should run this process when:
● You want to reconcile existing clearing account journal lines that were already
posted without reconciliation reference details.
● Clearing account reconciliation hadn’t been enabled for the ledger or natural
account values at the time those journals were originally posted.
(N) Tools > Scheduled Process > Click on ‘Scheduled New Process’
Name: Enable Journal Lines for Clearing Accounts Reconciliation
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Re-query the Journal Lines after the program completes successfully. As shown, the
historical journal lines are now displayed.
The above Journal Line is generated when a Supplier Payment Transaction occurs [Dr –
Liability A/C & Cr – Cash Clearing A/C]. After reconciling the payment in Cash Management
by matching it with the Payment Transaction and recording it in accounting, an offset
journal line [Dr – Cash Clearing A/C & Cr – Cash A/C] appears in the Reconciliation Page.
This line appears automatically because the transaction was created after the ‘Reconcile’
flag was enabled at the GL Account Level.
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Select the Lines Manually & Click on the ‘Reconcile’ button available.
A confirmation message is shown along with the Reconciliation Group Number.
Query the Journal to verify the Journal Line Reconciliation Status,
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Optionally, you can run the ‘Reconciled Transactions Report’ from ESS to see the
transactions that have been reconciled.
Report Name: Reconciled Transactions Report
Parameters:
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Report Output:
b) Automatic Reconciliation:
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The automatic reconciliation process identifies and groups related clearing account
journal lines and reconciles them automatically. It can process both reviewed and
unreconciled lines.
Journal lines are considered related when they share the same ledger, reconciliation type,
reconciliation reference, and clearing account combinations—based on the defined
account matching rule and filters.
Reconciliation References and Journal Lines:
A reconciliation reference is a unique identifier entered or assigned to related clearing
account journal entries. For example, an invoice number can serve as a reference, linking
an invoice accrual clearing journal line with its corresponding offsetting line.
The automatic reconciliation process for clearing accounts uses these references, along
with other criteria, to determine which journal lines should be grouped together.
When creating a journal in General Ledger, you can specify reconciliation references in the
Journal Lines section on the Create Journal page. For Sub Ledger Transactions, setting up
Subledger Accounting allows reconciliation references to be automatically populated on
journal lines.
SLA Customization – To populate the Payment Transaction Number as the
Reconciliation Reference for Cash Clearing Account Journal Lines.
As shown in the accounting entry below, the cash clearing account will be affected during
payment creation and reconciliation. Therefore, identifying a common attribute as a
reconciliation reference is essential for enabling Automatic Reconciliation.
In this tutorial, I will show how to populate the ‘Payment Transaction Number’ as a
reconciliation reference. Since this is not available by default, we need to customize the
SLA (Subledger Accounting).
Accounting Event Journal Entry
Create Payment AP Liability A/C Dr
To Cash Clearing A/C Cr
Reconcile Payment Cash Clearing A/C Dr
To Cash A/C Cr
Identification of Journal Line Rules (JLR) Related to Payment Transactions for
SLA Customization:
Step 1: Identify the Accounting Method assigned to your Ledger
(N) Setup and Maintenance > Financials > General Ledger > Specify Ledger Options >
Query the Ledger
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Step 2: Query for the Related Event Class
(N) Setup and Maintenance > Financials > Payables > Mange Accounting Methods
Search for the accounting method identified in Step 1, i.e., US Standard Accrual
The window below will result upon selection of the accounting method, navigate to the
‘Journal Entry Rule Set Assignments’ Section & Payables.
Event Class – Payments & Reconciled Payments are the relevant ones for our scenario.
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Navigate to Associated Rule Sets: Payment Accrual Basis & Journal Line Type: Cash
Clearing [Credit]
Click on Journal Line Rule: Cash Clearing
Navigate to Tab ‘Accounting Attribute Assignments’
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Change the Attribute Group to ‘Reconciliation’
Please note that no source has been assigned at this time. As a result, when the
transactions are posted to the GL, the Reconciliation Reference Column is Null.
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Step 3: SLA Customization for Event Class - Payments
Manage Accounting Attributes:
(N) Setup and Maintenance > Financials > Payables > Manage Accounting Attributes
Select the Event Class - Payments
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Query for ‘Reconciliation Reference’ Attribute, if not returned, add by clicking on the +
Symbol
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Creation of a Custom Journal Line Rule:
For any customizations to SLA, we should copy the seeded component and make the
necessary changes. Modifying seeded SLA components is not permitted.
Search for Cash Clearing JLR
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Save and Close
Create Custom Journal Rule Set:
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Click on the ‘Duplicate’ icon
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Remove the seeded JLR – Cash Clearing after adding the Custom JLR for Cash Clearing.
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Ensure the JER Status to set to Active
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Step 4: SLA Customization for Event Class - Reconciled Payments
Follow the same steps as outlined above for Event Class- Reconciled Payments to enable
Accounting Attribute & define Custom JLT, JER
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Custom JER Set:
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Step 5: Custom Accounting Method
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Remove the Seeded Assignment for Event Class: Payments – Payments Accrual Basis & Add
the newly created JER Set Assignment as shown below
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Step 6: Update the Accounting Method at Ledger Options
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Creation of Payment Transactions:
Since the required SLA customization is completed, let’s create a few payment
transactions and validate.
Payment Transactions Created: 2025004 & 2025005
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Run Create Accounting and transfer the entries to GL. Note that the Payment Transaction
Number is populated as ‘Reconciliation Reference’ for the journal lines created [Journal
Category- Payments].
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Now, reconcile the Payment Transactions with the Bank Statement in the Cash
Management Module to generate the offset accounting lines.
(N) Cash Management > Bank Statements and Reconciliation > Task List: Manage Bank
Statements
(N) Cash Management > Bank Statements and Reconciliation > Task List: Reconciliation >
Manual Reconciliation
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Post reconciliation with the bank statement, payment transactions are in ‘Partially
Accounted’ status.
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Run ‘Create Accounting’ to account and transfer the corresponding entries to GL
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Query the Journals in GL
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Observe that the ‘Reconciliation Reference’ is updated with the Corresponding Payment
Transaction Number for Cash Clearing Accounts [Journal Category- Reconciled Payments]
Navigate to the ‘Manual Reconciliation’ Page to review the lines available for
reconciliation.
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Now that the reconciliation references are populated on the transactions, we can proceed
with Auto Reconciliation.
Run Auto Reconciliation:
Run the automatic reconciliation process. Many related clearing account journal lines may
be marked as reconciled during this process. As a result, the number of unreconciled
journal lines remaining is reduced.
(N) General Accounting > Journals > Task List > Clearing Accounts Reconciliation >
Reconcile Clearing Accounts Automatically
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Run Reconciled Transactions Report
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Optionally, navigate to ‘Inquire On Journal Lines’ to review the Reconciliation Status
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Now, only leftover transactions require manual intervention to reconcile.
Run the Unreconciled Transactions report to determine why journal lines weren't
reconciled during automatic reconciliation. Possible reasons include:
● Anomalous reconciliation references or absence of reconciliation references on
related journal lines.
● The total debits and credits of related journal lines do not sum to zero.
● Some transaction cycles might not have been completed, so not all related
in-and-out journal lines were recorded in the system.
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This can be manually reconciled as needed, or the Recon Reference can be updated, and
the Automatic Reconciliation process can be proceeded with again.
c) Reverse Reconciliation for Clearing Accounts:
You can undo previously reconciled clearing account journal lines using either the Reverse
Reconciliation page or the Reverse Reconciled Journal Lines spreadsheet. These can be
accessed from the Reverse Reconciliation task in the Journals work area or from the
Reverse Reconciliation tab on the Manual Reconciliation page.
Both manually and automatically reconciled lines can be reversed. Once reversed, the
journal lines return to the unreconciled pool and become available for future
reconciliation.
(N) General Ledger > Journals > Task List: Clearing Accounts Reconciliation > Reverse
Reconciliation
When querying the Journal Lines using the available search criteria, the system displays
previously reconciled journal lines (both manual and automatic) as shown below.
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Select the necessary Reconciliation Group/Lines to reverse the reconciliation, & Click on
the ‘Reverse Reconciliation’ Option available on the Page.
Post successful reversal, reversed journal lines will no longer appear.
Optionally use the 'Inquire on Journal Lines’ window with status 'unreconciled' to review
the lines that were reconciled in the previous step.
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d) Reconciliation Via Spreadsheet:
Journal lines can be reconciled using the spreadsheet option available in the Manual
Reconciliation Window.
Query the Journal Lines with the various search parameters that are available.
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An ADFDi document, as shown below, will be downloaded with the data.
Update the ‘Reconciliation Reference’ for missing lines, then select ‘Select All’ to include
all records in the Excel sheet for upload and reconciliation.
Updated records are marked as ‘changed’ by default, but it’s crucial to ensure the ‘Select
All’ option in the ‘Manual Reconciliation’ tab is chosen; otherwise, the upload might fail
by considering only the updated records.
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Once the Records are successfully uploaded & reconciled, no data will exist.
Validate the process by navigating to the Manual Reconciliation Page and querying for any
Journal lines.
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Optionally, use the ‘Inquire on Journal Lines’ window to query the reconciled lines.
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