Journal Line Reconciliation is a new standard feature in General Ledger for R12. In fact it's not really new, in 11i it was already available as a globalization. This functionality is frequently used in Europe (not sure about the rest of the world), it gives more control for your accounts that should have a zero-balance.

Excerpt from the General Ledger User Guide:

General Ledger Entry Reconciliation lets you reconcile transactions in General Ledger accounts that should balance to zero, such as a VAT control account. You can enable reconciliation either for natural account segment values or for complete accounting code combinations. Journal reconciliation is available for journals of the balance type of Actual, and journal type of Standard.

With General Ledger Entry Reconciliation, you can selectively cross-reference transactions in General Ledger with each other by entering reconciliation reference information at journal line level. When the balance for a group of transactions is zero, you can mark the transactions as reconciled.

You can perform account reconciliation either automatically with the General Ledger Automatic Reconciliation report, or manually in the Reconciliation Lines window.

The main improvement of the R12 functionality is the ability to populate the reconciliation reference automatically in the GL Interface from the subledgers. This can be done by enabling the Reconciliation Reference in the respective Journal Line Type, and requires a custom Subledger Accounting Method.

See Metalink Note 431504.1 for required Subledger Accounting setup changes.

Another difference with 11i is that the datamodel for this functionality is extended. Instead of stroring the reconciliation reference in the journal lines table (GL_JE_LINES), a new table is introduced (GL_JE_LINES_RECON).

For some reason the R12 upgrade process did not took this into account, so one of my upgraded customers lost all their unreconciled journals in their new environment. Full reconciliation of their journals in the 11i environment was not an option (they used it for a lot of accounts). So we ended up in writing an update script to solve this issue.

insert into gl_je_lines_recon
select jl.JE_HEADER_ID
,      jl.JE_LINE_NUM
,      jl.LEDGER_ID
,      jl.CREATED_BY
,      nvl(jl.CREATION_DATE,jl.last_update_date) creation_date
,      jl.LAST_UPDATED_BY
,      jl.LAST_UPDATE_DATE
,      nvl(jl.LAST_UPDATE_LOGIN,-1) last_update_login
,      'U'
,      jl.JGZZ_RECON_DATE_11i
,      jl.JGZZ_RECON_ID_11i
,      jl.JGZZ_RECON_REF_11i
from gl_je_lines jl
,    gl_code_combinations cc
where cc.code_combination_id =jl.code_combination_id and cc.jgzz_recon_flag='Y'
and jl.jgzz_recon_status_11i is null
AND NOT EXISTS
(SELECT 1
FROM   gl_je_lines_recon gjr
WHERE  gjr.je_header_id = jl.je_header_id
AND    gjr.je_line_num = jl.je_line_num)