Where to Find It and How to Run It
The Secondary Ledger Reconciliation Report is a standard Oracle Fusion report available in the General Ledger responsibility. It compares primary and secondary ledger balances at the account level for a selected period and produces a variance line for every account combination where the two ledgers differ — whether that difference is expected (policy-driven) or unexpected (configuration error or missing transaction).
Most teams discover this report during their first period close and run it reactively — after the close is already late. The correct approach is to run it in the middle of the period, before subledger close, so variances have time to be investigated and resolved before the deadline.
Key Parameters
| Parameter | Recommended Setting | Notes |
|---|---|---|
| Primary Ledger | Your primary ledger | Required. Select the primary ledger — the secondary ledgers linked to it will be available in the next field. |
| Secondary Ledger | The secondary ledger to reconcile | Run separately for each secondary if you have multiple (statutory, tax, pre-consolidation). |
| Accounting Period | Current open period | Run for the period being closed. Can also be run for prior periods to investigate historical variances. |
| Balance Type | Period Activity AND Year-to-Date | Period activity identifies current-period variances. YTD confirms cumulative position. Run both. |
| Account Filter | Leave blank (all accounts) | Filter only if investigating a specific account. For period close, run against all accounts. |
| Show Zero Variances | No | Reduces report volume. Accounts with zero variance are correctly reconciled and need no action. |
| Threshold Amount | Set per use case — see thresholds section | Variances below threshold still appear but are flagged differently. Do not set so high that genuine errors are suppressed. |
Run the report at three points each period: (1) Mid-period after the first major Create Accounting batch — catches configuration errors early. (2) Before subledger close — all variances must be classified before subledgers are closed. (3) After all period-end journals are posted — final sign-off run. The close should not proceed until the final run is reviewed and all variances are either classified as expected or have a resolution plan.
Reading the Report Output
The report output groups accounts by segment hierarchy and shows primary balance, secondary balance, and variance (primary minus secondary) for each account combination. The variance column is what requires interpretation. A non-zero variance is not inherently a problem — it depends entirely on the type of variance.
| Account / Description | Primary Balance | Secondary Balance | Variance | Variance Type |
|---|---|---|---|---|
| BALANCE SHEET — ASSETS | ||||
| 1550 · ROU Asset | 500,000 | — | 500,000 | ✓ Expected — IFRS 16 ROU not recognised in secondary |
| 1600 · PP&E — Net | 2,450,000 | 2,380,000 | 70,000 | ✓ Expected — component vs pooled depreciation difference |
| 1900 · ECL Provision | (380,000) | (120,000) | (260,000) | ✓ Expected — ECL vs incurred loss difference |
| 1250 · Unbilled AR | 840,000 | 810,000 | 30,000 | ⚠ Investigate — PoC vs IFRS 15 timing gap |
| 1400 · Prepayments | 95,000 | 95,000 | — | ✓ Zero variance — no action |
| BALANCE SHEET — LIABILITIES | ||||
| 2850 · Lease Liability | (480,000) | — | (480,000) | ✓ Expected — IFRS 16 liability not in secondary |
| 2500 · Deferred Revenue | — | (220,000) | 220,000 | ✓ Expected — deferred under local GAAP, recognised under IFRS 15 |
| 9999 · Suspense | — | (14,500) | (14,500) | ✗ Error — unmapped accounts posted to suspense |
| INCOME STATEMENT | ||||
| 4000 · Revenue | 3,840,000 | 3,620,000 | 220,000 | ✓ Expected — matches deferred revenue difference |
| 6100 · Depreciation | (185,000) | (210,000) | 25,000 | ✓ Expected — stat depreciation rate higher than IFRS |
| 6300 · Bad Debt Expense | (95,000) | — | (95,000) | ✗ Missing — bad debt JLR not firing for secondary |
| Total Unexplained Variance | 109,500 | Requires resolution before close | ||
Variance = Primary Balance minus Secondary Balance. A positive variance means the primary has a higher balance (or a lower credit balance) than the secondary. A negative variance is the reverse. The sign alone tells you nothing about whether the variance is correct — you need the variance type to determine that.
The Five Variance Types — What Each Means
Every variance in the reconciliation report is one of five types. Classifying the variance correctly is the entire skill of secondary ledger reconciliation — it determines who owns the variance, whether action is required, and whether the period can close. Click each type to expand.
The variance exists because the primary and secondary ledgers are supposed to be different. This is the correct behaviour of a well-configured secondary ledger. The variance represents a genuine accounting policy difference between the two standards — IFRS vs local GAAP, standard vs actual cost, IFRS 16 vs operating lease, ECL vs incurred loss.
Characteristics
The variance amount is consistent with the expected policy difference. It can be traced to a specific SLA rule that is functioning correctly. The affected accounts are those defined in the secondary SLAM as having different treatment. The variance has been documented in the secondary ledger design specification.
Examples
- ROU Asset (1550) balance in primary, zero in secondary — IFRS 16 suppressed in secondary
- Lease Liability (2850) in primary, zero in secondary — same reason
- ECL Provision (1900) larger in primary than incurred loss provision in secondary
- Depreciation (6100) differs between books — component vs pooled, different rates
- Deferred Revenue (2500) in secondary only — IFRS 15 recognised on invoice, local GAAP defers
Period Close Action
No corrective action required. Document the variance amount in the reconciliation sign-off with reference to the policy difference. The reconciliation note typically reads: "Variance of [amount] on account [X] represents the expected difference between IFRS [treatment] and Local GAAP [treatment] per secondary ledger design. Consistent with prior periods."
Red Flag
If the variance amount changes significantly from the prior period without a corresponding change in underlying transactions, investigate. A Type 1 variance that suddenly doubles or disappears without explanation may indicate a SLA rule has stopped firing — reclassify as Type 3 and investigate.
The variance exists because the primary and secondary ledgers recognise the same transaction in different periods — not because the total lifetime recognition differs. The variance will reverse in a future period when the secondary catches up. This is distinct from a permanent policy difference (Type 1) because the total over the life of the transaction will be the same in both ledgers.
Characteristics
The variance reverses in a future period (sometimes the next period, sometimes over the life of a contract or asset). A running total of the variance across periods trends toward zero. The affected accounts are typically revenue, deferred revenue, unbilled AR, or depreciation.
Examples
- Project revenue: IFRS 15 performance obligation recognised in Month 3, local PoC in Month 4 — Month 3 shows variance, Month 4 reverses it
- Lease rental: IFRS 16 interest and depreciation front-loaded vs straight-line rental in secondary — timing difference that narrows over lease term
- Unbilled AR: primary recognises unbilled on completion milestone, secondary on cash receipt — variance clears on receipt
- Prepayment: primary expenses over service period, secondary expenses on payment date — timing difference over the prepayment period
Period Close Action
Document as a timing variance with the expected reversal period. No corrective journal required. Track across periods to confirm self-correction. If the variance does not reverse within the expected period, reclassify and investigate.
The variance exists because a secondary ledger SLA rule is not firing when it should, is firing when it should not, or is deriving the wrong account. The secondary ledger is producing incorrect accounting — not just different accounting. This must be resolved before the period closes.
Characteristics
The variance appears on an account that should either have a zero variance (accounts with no policy difference) or a known, stable variance (accounts with documented policy differences where the variance is suddenly a different amount or on a different account than expected). The variance does not match any documented policy difference.
Examples
- Bad Debt Expense (6300) has a large variance in secondary with no corresponding provision account entry — bad debt JLR condition missing or priority too low
- Revenue (4000) shows a large unexpected variance in a period with no new subscription contracts — deferred revenue rule firing for incorrect transaction type
- FA depreciation variance much larger than expected — statutory asset book running wrong depreciation rate
- PPV appearing in secondary ledger when it should not — PPV suppression JLR missing for secondary
Investigation Steps
Navigate to Subledger Accounting › Accounting Event Inquiry. Filter by the affected subledger, period, and account. Examine the Create Accounting output for specific transactions that show the unexpected secondary entry. Check which JLR fired for the secondary ledger line — if the wrong JLR fired, the priority or condition is incorrect. If no secondary line was created, the JLR condition is not matching.
Filter: Ledger = [Secondary] · Account = [affected] · Period = [current]
→ Examine Journal Line Type and JLR Name for each secondary line
Period Close Action
Fix the SLA rule in the current period if the number of affected transactions is small. If the volume is high or the fix cannot be completed before close, post a manual correcting journal to the secondary ledger for the current period amount and fix the SLA rule in the following period. Document the issue and resolution in the reconciliation sign-off.
The variance exists because a transaction was processed in the primary ledger but has no corresponding entry in the secondary ledger. The most common cause is that the secondary period was closed (or was not yet open) when Create Accounting ran for the primary, meaning the primary accounting was created but the secondary accounting was not.
Characteristics
The variance appears on a large number of accounts simultaneously (not just one or two). The variance amount is exactly equal to a specific batch of primary transactions. The secondary ledger has fewer journal lines than the primary for the same source and period. Often discovered when the period-end Create Accounting batch ran before the secondary period was opened.
Examples
- Secondary period not open when nightly Create Accounting ran — multiple accounts show identical imbalance
- Subledger period (e.g., AP) open for primary but not for secondary — AP invoices not in secondary
- Create Accounting run with explicit primary-only scope parameter — secondary excluded by error
- Secondary ledger added post-go-live with no historical balance migration — all prior-period accounts show variances
Investigation Steps
Check the Create Accounting execution report for the period. Look for any transactions where the secondary ledger shows "Unaccounted" status while the primary shows "Accounted". Navigate to Accounting › Create Accounting › Review Accounting Events and filter by secondary ledger status = Unaccounted.
Filter: Ledger = [Secondary] · Status = Unaccounted · Period = [current]
→ Identify unprocessed events for secondary
Period Close Action
Open the secondary period if it is closed. Run Create Accounting again with both primary and secondary ledger scope. If the secondary period has been permanently closed, you must create manual journals to the secondary ledger to replicate the missing accounting. This is the most time-consuming recovery — automation of period open (as described in the configuration guide) prevents it entirely.
The secondary ledger suspense account has a non-zero balance. This means Create Accounting could not derive a valid secondary ledger account for one or more transactions — the CoA Mapping Set has a gap. Transactions with no valid mapping route are posted to suspense rather than failing entirely, which means the secondary ledger is technically balanced but the suspense account balance has no business meaning.
Characteristics
Account 9999 (or whatever your secondary ledger suspense account is) shows a balance in the report. The variance is always on the suspense account specifically. Other accounts may appear in balance because the offsetting entry went to suspense rather than to the correct account. This is particularly deceptive — the report may look mostly clean but the suspense balance means other accounts are understated.
Examples
- New primary account created during the period — not yet added to the CoA mapping set
- New cost center or segment value combination not covered by mapping rules
- Account rule exception not configured for a new transaction type introduced this period
- Post-go-live addition of a new legal entity or business unit whose accounts are not in the mapping set
Investigation Steps
Navigate to the secondary ledger suspense account in Account Inquiry. Drill down to see which journals posted to suspense and from which source transactions. The journal description will typically contain the primary account that could not be mapped. Add the missing account(s) to the CoA Mapping Set and reprocess the affected transactions.
Ledger = [Secondary] · Account = 9999 (Suspense) · Period = [current]
→ Drill to journals → identify unmapped primary accounts
Setup › Manage Chart of Accounts Mappings
→ Add missing segment rules → Reprocess transactions
Period Close Action
The suspense account must be zero at period close. Fix the mapping set, reprocess the affected transactions, and confirm the suspense account clears. Do not post a manual journal to clear suspense — this masks the mapping gap and leaves the underlying account incorrectly stated. Fix the root cause.
Investigation Workflow — Any Unexplained Variance
When a variance appears on the reconciliation report that cannot immediately be classified as Type 1 (expected policy difference), follow this sequence. The goal is to classify the variance as one of the five types and either confirm it requires no action or identify the specific resolution step.
Check the Design Specification
Before investigating in the system, check the secondary ledger design document. Is this account listed as having an expected policy difference? If yes, does the variance amount match the expectation? If yes — Type 1, no action. If the amount is materially different from expectation, proceed to Step 2.
If the account is not in the design specification at all — it should have zero variance — proceed immediately to Step 3.
Check for Suspense
Before doing anything else, check the secondary ledger suspense account balance. A non-zero suspense balance means some of the variance you are seeing on substantive accounts is actually the offset of a mapping error. Clear suspense first — then re-run the report to see the true variance picture.
→ If balance ≠ 0: fix mapping set → reprocess → re-run report → continue investigation
Check Create Accounting Status
Navigate to Create Accounting event inquiry for the secondary ledger. Filter by Unaccounted status and the current period. If there are unaccounted transactions — Type 4 (missing transaction). Open the period and reprocess.
→ If events exist: open secondary period → Run Create Accounting → re-run recon report
If no unaccounted events — the transaction has been processed but the accounting is wrong. Proceed to Step 4.
Examine SLA Output for Affected Transactions
Use Accounting Event Inquiry to find the specific transactions contributing to the variance. Drill into the secondary journal lines and check which JLR fired. Compare to which JLR should have fired per the design. Common findings:
- Default JLR fired instead of secondary-specific JLR → priority error → fix priority
- Secondary JLR fired for wrong transaction type → condition error → fix condition
- No secondary JLR fired at all → JLR missing from SLAM → add JLR to SLAM
- Secondary JLR derived wrong account → ADR error → fix ADR condition or mapping
→ Drill to Journal Lines → check JLR Name on each secondary line
→ Compare JLR name to expected SLA design
Classify, Document, and Action
Once the root cause is identified, classify as Type 1–5, determine the resolution, and document in the reconciliation sign-off. For Type 3 and Type 4 variances, the resolution must be completed (or a compensating manual journal posted and the root cause fix scheduled) before period close sign-off is given.
The reconciliation sign-off document should record: account affected, variance amount, variance type, root cause, resolution action, and responsible owner. This is the audit trail for secondary ledger reconciliation.
Setting Variance Thresholds by Use Case
The Secondary Ledger Reconciliation Report allows you to set a threshold amount — variances below the threshold are still reported but treated differently in the alert workflow. The threshold should be set per use case, not as a single organisation-wide number. A threshold set too high suppresses genuine errors; set too low it creates noise that teams stop reading.
| Use Case / Account Type | Recommended Tolerance | Rationale | Action if Breached |
|---|---|---|---|
| Statutory — Revenue / P&L | < 0.1% of period revenue | Revenue recognition differences are high-risk for audit. Tight tolerance catches deferred revenue JLR gaps early. | Immediate investigation. Must be classified before subledger close. |
| Statutory — Balance Sheet | < 0.1% of total assets | Balance sheet variances carry into future periods and compound. Tight tolerance prevents accumulation. | Investigation before GL period close. |
| Fixed Assets — Depreciation | ± 5% of expected policy difference | Depreciation variance is expected (policy difference). Threshold alerts when variance moves outside the expected policy band — indicating a rate or method error. | Verify stat asset book depreciation rate has not changed. |
| Cost Accounting — Inventory | < 0.5% of inventory balance | Standard vs actual cost difference should be stable within a period. Large movements indicate missed standard cost update or PPV suppression failure. | Review cost book assignments and PPV JLR conditions. |
| Tax Ledger | < 1% of pre-tax profit | Tax temporary differences can legitimately vary. Wider tolerance acceptable — tight monitoring of suspense account is more important here. | Reconcile to tax provision workpaper. Suspense must be zero regardless of P&L variance. |
| Pre-Consolidation (Adj Only) | No threshold — document all | Adjustment-only ledger should have intentional, documented entries only. Every balance requires a specific posted journal — no variance should be unexplained. | Every variance requires a signed journal approval as supporting documentation. |
| Suspense Account (all use cases) | Zero — no tolerance | Any suspense balance indicates a CoA mapping gap. There is no acceptable suspense balance at period close. | Fix mapping and reprocess before any close activity continues. |
Period Close Checklist — Secondary Ledger Reconciliation
The checklist below covers the minimum steps required to sign off secondary ledger reconciliation for a period close. Click each item to mark it complete. The period should not close until all items are checked.
The sign-off document should be a standing template completed each period. At minimum it records: run date, period, secondary ledger name, total variance amount, number of variance lines, classification of each line (Type 1–5), any open items and their resolution dates, and sign-off by the finance controller. This document is the primary audit evidence for secondary ledger reconciliation. If it does not exist, the auditor will ask for it — and if it has never existed, that is an audit finding.