Accounting Transformation Configurations in Accounting Hub Cloud

What is Accounting Transformation?

To use Accounting Hub Cloud, accounting rules need to be established with the use of accounting transformation. Accounting transformation is a mechanism that helps you to manage the creation of accurate, detailed, auditable accounting journal entries and reference information for transactions that were recorded from a third party system.  And finally, those journal entries are pushed and posted to the General Ledger application. 

Planning and Modeling Subledgers

The first thing that needs to be done is to plan and model the custom subledger applications that will be registered in Accounting Hub. You would need exists to have separate control over accounting and other business operation decisions for a specific source system. 


If you look at the example below, we are presuming that we have a third-party application system that processes loans and billing:

For loan processing, we might be using a separate application for dealing with commercial loans and a separate application for dealing with individual loans. In that case, we need to register them as two separate subledger applications. Within that, we are going to have to determine what type of transactions are recorded in those individual subledger applications. In the example, both of them have a Transaction Type of Fixed Rate Mortgage and Adjustable Rate Mortgage.

In the same example, we have another third-party point of sale system that handles customer billing. This needs to be registered as a separate subledger application. Within that, there are two different entities that are operating in the US and UK. This can be registered together as one subledger because they can possibly share accounting methods and accounting rules.

Implementation Process for Accounting Transformation

There are six steps that are involved in the entire implementation process, but can be summarized into 3 Phases: Analyze, Build, Implement and Test. So whenever you are implementing the solution, you will have to keep these six steps always in mind, and they will give you a summarized idea of the implementation steps that you need to follow within the accounting transformation process.

The Analyze Phase is where you will analyze and identify transaction life cycle within the third-party application for transactions or activities that must be accounted and then you will analyze accounting, reporting, audit, and reconciliation requirements for each of the transaction types that you manage within those source systems.

For an in-depth explanation of the Analyze Phase, check out a separate article: Overview of the Accounting Transformation Analyze Phase in Implementing Accounting Hub Cloud.

The Build Phase is where you will actually register the source systems into the application. And then you will configure the accounting rules, and assign accounting methods to the respective ledgers. Whatever source system you have registered, you will have to build your event model underneath it. An event model basically represents the transaction types that you are managing in your source system applications which have financial impact in the Accounting Hub Cloud to make them eligible for accounting. Event Model will then have Event Classes and for each event class, you must establish the logic to generate the accounting entries by setting up the accounting rules and by establishing an accounting method.

For an in-depth explanation of the Build Phase, check out a separate article: Overview of the Build Phase in Implementing Accounting Hub Cloud.

Implement and Test Phase is the stage where you will implement and test the accounting methods by assigning them to ledgers to create a complete definition of accounting convention for the transactions and activities of each source system. Here, you will upload your transaction data from the source system as a sample data for testing purposes to ensure that all the accounting is correctly generated. Once confirmed correct, you can start moving setups into the production environment, and then start uploading your transactional data on a day-to-day basis, and start generating accounting entries for them.

Soon to follow!

• Manage the accounting transformation accounting methods
• how to create and process accounting entries,
• optional manual features of subledger accounting,
• advanced features of subledger accounting.

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