COA Structure Vs COA Structure Instance

What is the Chart of Accounts Structure?

The Chart of Accounts (COA) is the account structure the organization uses to record transactions and maintain financial account balances. GL defines the COA structure in the Accounting Flexfield. The structure enables the organization to categorize accounting information during the recording process.

We are generally confused about COA Structure and COA Structure Instance in Oracle Fusion.

Let us try to understand the significance of both

Chart of accounts is called the accounting flex field and is used for financial reporting of an organization. In chart of account you have to define your segment. Segments are different dimensions of a business. They capture the different elements of a business for financial reporting purposes. For example, Company, Accounts, cost center, Product line etc. capture the financial position of a company with different reporting tools.

In each segment of Chart of Account you have to mention two important things- Segment level and Value set code.

Segment level is a qualifier for a segment .This qualifier tells how the segment is be used while creating a financial report. For example if the segment is enabled as a primary balancing segment -then for each and every journal and accounting the segment values should be balanced. Balanced means the debit and credit amount should be same for this segment.

You can notice here that-for each segment we are also assigning a unique value set code. Value set codes contents values for each segment.

Now the question is, if we have decided our segments and value set code at COA Structure level what is the use of the Chart of Account structure instance?

Let us understand carefully.

What is Chart of Accounts Structure Instance?

Chart of Accounts structure instance gives us flexibility to design our Accounting hierarchy multiple times with the same COA Structure. For example, we are implementing Chart of account for a big MNC. They have business operations in different countries, and so they have country-specific financial reporting requirements for each country.

We can use the same structure and create multiple structure instances for different countries. That means we can create one to one-to-many relationship between the COA Structure and the COA Structure instance.

For ex, we can see the value set code- it is defaulted from the COA Structure definition. But here at the instance level we have the flexibility to change the value set code. We can assign a new tree structure or account Hierarchy as per country-specific requirements.

Though we are using the same COA structure, we can still change the complete financial reporting simply by assigning a different Accounting tree at the COA instance level.

We can create as many COA Instances as with the same COA Structure. That is the significance of Chart of Accounts structure instance.

For ex: picture below shows an example of when we can have a different COA Structure Instance.