dokumen.tips_ebs-r12-subledger-accounting.pdf

Copyright © 2006, Oracle. All rights reserved.
Release 12 Field Readiness Workshop
Sales Track
Financials
Oracle Subledger Accounting

2
R12 Financials –
Oracle Subledger Accounting
Rob Zwiebach
Financial Applications Development

3
Purpose:
This document provides an overview of features and enhancements included in
Release 12. It is intended solely to help you assess the business benefits of upgrading
to Release 12.
Disclaimer:
This document in any form, software or printed matter, contains proprietary information
that is the exclusive property of Oracle. Your access to and use of this confidential
material is subject to the terms and conditions of your Oracle Software License and
Service Agreement, which has been executed and with which you agree to
comply. This document and information contained herein may not be disclosed,
copied, reproduced or distributed to anyone outside Oracle without prior written consent
of Oracle. This document is not part of your license agreement nor can it be
incorporated into any contractual agreement with Oracle or its subsidiaries or
affiliates. This document is for informational purposes only and is intended solely to
assist you in planning for the implementation and upgrade of the product features
described. It is not a commitment to deliver any material, code, or functionality, and
should not be relied upon in making purchasing decisions. The development, release,
and timing of any features or functionality described in this document remains at the
sole discretion of Oracle. Due to the nature of the product architecture, it may not be
possible to safely include all features described in this document without risking
significant destabilization of the code.

4

5
Agenda
• Introduction to Subledger Accounting
– Background
– Key Business Messages
– Impacted Applications
• Key Concepts and Terminology
– Part 1: Subledgers and Subledger Journal Entries
– Part 2: Accounting Methods Builder
– Part 3: Subledger Balances, Inquiries, and Reports
– Part 4: Additional Features
• Customer Impact / Upgrade Considerations
• Demo
• ADS Content
• Hands-on

6
Agenda
– Background
• Demo
• ADS Content
• Hands-on

7
Oracle Subledger
Accounting:
Oracle Subledger Ac cou nting is a rules-
based eng ine for generating acco unting
entries b ased on sou rce transactions from
AL L Oracle Ap plications .
Introduction to Solution - Definition

8
Background
Payables
Assets
Purchasing
Projects
Inventory
Receivables
Leasing
Payroll
Each Subledger Generated
Ac cou nting Entries Ind ividually

9
Background
Issues w ith this Appro ach:
• Inconsistencies in Accounting Generation
– Summary vs. Detail
– Direct to General Ledger vs. Open Interface
• Inconsistent Drilldown from General Ledger
• Inconsistent Mechansims for Controlling Accounting
– FlexBuilder
– Account Generator
– Automatic Offsets
– Etc.
• Duplication of Development Effort

10
Background
Requirement fo r Multiple Acc oun ting Representations
• Certain European countries require statutory
accounting in addition to corporate requirements
• Similar requirement in certain regulated industries (e.g.
Insurance)
• Global Accounting Engine (AX) introduced to address
European requirement
• Non-AX customers use consulting extensions and/or
Global Consolidation System (GCS)

11
Introduction to Subledger Accounting
Payables
Assets
Purchasing
Projects
Inventory
Receivables
Leasing
Payroll
Subledger A ccou nting
to th e Rescue

12
• Rule-based accounting engine, toolset & repository supporting
Oracle E-Business Suite modules
• Allows multiple accounting representations for a single business
event, resolving conflicts between corporate and local fiscal
accounting requirements
• Retains the most granular level of detail in the subledger
accounting model, with different summarization options in the
General Ledger, allowing full auditability and reconciliation
• Introduces a common data model and UI across subledgers,
replaces various disparate 11i setups, providing single source of
truth for financial and management analysis

13
• There are no SLA responsibilities
• Users do not login to SLA
• SLA is a service provided to Oracle Applications
• SLA forms and programs are embedded within standard Oracle
Application responsibilities (e.g. Payables Manager)
• SLA provides the following services to Oracle Applications:
– Generation and storage of detailed accounting entries
– Storage of subledger balances (e.g. third party control account
balances)
– Subledger accounting entries (with drilldown to transactions)
– Subledger reporting (e.g. Subledger journal reports, open account
balances listing)
Subledger Ac cou nting is a Service, not an Ap plication

14
• SLA generates accounting for Oracle Applications
• Financial Services Accounting Hub (FSAH) generates accounting
for any transaction source (Oracle or non-Oracle)
• SLA is included with any E-Business Suite license
• FSAH is a separate product that must be licensed separately
• FSAH was introduced last year with 11i BUT:
– It is not compatible with 11i Oracle subledgers
– It was essentially a pre-release of the R12 version
SLA and Financial Services Acco unting Hub

15
Invoice Internal Identifier: 1001
Ledger: FR Statutory
GL Date: 2-Mar-2006
Invoice# 100
Supplier: ABC Networks
Invoice #100
ABC Networks
2 Monitors – Marketing $1000
5 Printers – Marketing $ 500
Freight $ 100
Tax $ 110
Total $1710
Ledger: US Corporate
GL Date: 2-Mar-2006
Invoice# 100
DR CR
1 Expense 01-EXP-200 $1500
2 Freight 01-FR-200 $100
3 Tax 01-TX-200 $110
4 Liability 01-LIAB-200 $1710
Invoice Line 1
Invoice Line 2
Invoice Line 3
Invoice Line 4
Transactions and A ccou nting Entries

16
This is a transaction
This is a transaction
This is NOT an accounting entry
(New Slide)

17
Transactions vs. Accounting
• SLA provides a distinction between a transaction and
the accounting representation of the transaction
• Accounting distributions did not necessarily go away
– Needed for upgrade customers
– Needed as starting point for SLA (Don’t want to force
customers to define their own SLA rules)
– In some cases, necessary to allow user input
• Most default SLA rules just ‘pass through’ the
distribution accounts (where applicable)
• If you modify SLA rules, the ultimate accounting entry
may not match the distributions.
• OK because distribution accounts are just defaults
(New Slide)

18
Key Business Messages
• Better, Richer Information: Automatically capture detailed
information to drive financial and management reporting – without
cluttering up your general ledger
• Improved Control: Control every transaction that impacts your
accounts and drive consistency across the enterprise
• Business Agility: React quickly to accounting rule changes,
regulatory shifts, and new information requirements without
involvement from IT
• Clear, Easy Reconciliation: The link between general ledger
balances and underlying transactions is maintained automatically
for internal and external audit purposes

19
• Account for any transaction from any application and centralize
accounting policies and processing
• Enable compliance with multiple legislative, industry or geography
requirements concurrently in a single instance through
configurable rules
• Streamline accounting processing
• Provide GL to subledger transaction reconciliation platform by
maintaining link between transaction and accounting data
• Increase transparency and enable full auditability of the
transaction and accounting data through the new data model

20
Management
Framework
Information
Delivery
Regulatory
Reporting
Subledger
Accounting
Transaction Systems
Oracle Payroll
Oracle Projects
Oracle Payables
Oracle Receivables
• Centralized accounting
rules
• Predefined Validations
• Date effective policies
• Sophisticated error
handling
• Full audit trail
• Bidirectional drilldowns
• Detailed Journal Entries
• Configurable Reference
Information
• Consistent Balances
• On-line inquiries
Analytics

21
configurable rules

22
US GAAP
US COA
US Calendar
$
US GAAP
US COA
US Calendar
£
Simultaneous
Accounting
for All Entities…
US GAAP
US COA
US Calendar
$
…while Ensuring
Corporate Visibility
& Local Compliance
French IAS
Plan Comptable
French Calendar
€
Operations in US, UK, France

23
configurable rules
• Streamlined accounting processing

24

25
configurable rules

26

27
Impacted Applications
• General Ledger
• Payables
• Receivables
• Projects
• Assets
• Costing
• OPM
• Public Sector/Federal
• Payroll
• Property Manager
• Loans
• Lease Management
(Post R12)
• Cash Management
• Globalizations
• Intercompany

28
Agenda
– Background
• Demo
• ADS Content
• Hands-on

29
Subledger
• A transactional application that generates accounting
impact
• Used to store detailed information not needed for a
general ledger
• Subledgers post summarized activity to a general
ledger periodically to maintain centralized account
balances for the company
• Example: The A/R subledger stores receivables by
customer, but this detail is not needed in a general
ledger

30
Subledger Journal Entry

31
Subledger vs. GL Journal Entries
Invoice No: 136274 GL Date: 01/27/07 3rd Party: Fender
101.100.63580.0000.720.000.000 6,000 EUR
101.100.22100.0000.000.000.000 6,000 EUR
Invoice No: 131299 GL Date: 01/27/07 3rd Party: Gibson
101.100.63580.0000.720.000.000 3,000 EUR
101.100.22100.0000.000.000.000 3,000 EUR
Invoice No: 116555 GL Date: 01/27/07 3rd Party: Kramer
101.100.63580.0000.720.000.000 2,000 EUR
101.100.22100.0000.000.000.000 2,000 EUR
Batch: AP Invoices 27-Jan-07 GL Period: Jan-07
101.100.63580.0000.720.000.000 11,000 EUR
101.100.22100.0000.000.000.000 11,000 EUR
SLA
JE #1
SLA
JE #2
SLA
JE #3
GL
JE #1
(New Slide)

32
SLA – GL Flow
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
Create Accounting
(New Slide)

33
SLA – GL Flow with Subledger-Level Secondary Ledger
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
Create Accounting
(New Slide)

34
SLA – GL Flow with Journal-Level Secondary Ledger
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
GL Journal Entry
GL Balances
Posting
Create Accounting
Posting
(New Slide)

35
SLA – GL Flow with Balance-Level Secondary Ledger
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
GL Journal Entry
GL Balances
Create Accounting
GCS Posting
(New Slide)

36
SLA – GL Flow with Subledger-Level Reporting Currency
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
Create Accounting
(New Slide)

37
SLA – GL Flow with Journal-Level Reporting Currency
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
GL Journal Entry
GL Balances
Posting
Create Accounting
Posting
(New Slide)

38
SLA – GL Flow with Balance-Level Reporting Currency
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
GL Balances
Create Accounting
Translation
(New Slide)

39
Event Model
• Event Model: definition of the subledger transaction types and
lifecycle
– Event Class: classifies transaction types for accounting rule
purposes
– Event Type: for each transaction type, defines possible actions with
accounting significance
• Applications must tell SLA when an event has occurred.
• When a user runs the SLA Create Accounting program, it
processes all events with the appropriate status

40
Event Classes
Payables
• Invoice
• Debit Memo
• Prepayment
• Payments
• Refunds
Receivables
• Invoice
• Deposit
• Receipt
• Bill Receivable
Assets
• Additions
• Adjustments
• Capitalization
• Depreciation
etc.

41
Event Types
AP Invoice Events
• Validated
• Adjusted
• Cancelled
AR Receipt Events
• Created
• Applied
• Unapplied
• Updated
• Reversed
FA Depreciation Events
• Depreciation
• Rollback depreciation
etc.

42
Sources
• Identified by application development teams and made
available as data in SLA for:
– Deriving accounts
– Inclusion in descriptions
– Conditial logic: generate a journal line if distribution type
= accrual
• Mapped to specific SLA accounting attributes such as
account, amount, GL Date, conversion rate type, etc.

43
Sources

44
Accounting Attributes
AP_INVOICE_LINES_ALL.AMOUNT
AR_CASH_RECEIPTS_ALL.AMOUNT
AP_INVOICE_LINES_ALL.ACCOUNTING_DATE
AR_CASH_RECEIPTS_ALL.RECEIPT_DATE
(New Slide)

45
Accounting Attributes

46
Agenda
– Background
• Demo
• ADS Content
• Hands-on

47
Accounting Methods Builder (AMB)
Description
Line Type
Account Derivation Rule

48
Journal Line Type
Line Type

49
Journal Line Type
• Identify the natural side
– Debit
– Credit
– Gain/Loss
• Determine the accounting class
• Set under which conditions the rule will create a line
• Define the values needed for entry line generation, such as
amount, currency, conversion rate information
• Control behavior for certain features i.e. multiperiod accounting,
business flows, line merging and summarization

50
Journal Line Type

51

52
• Determine if rule will be generic or specific for a given chart of
accounts
• Identify what will be derived
– Accounting flexfield
– Segment/qualifier value
– Value from a value set
• Define how the value will be derived
– Constant
– Source value
– Mapping Set
– Another account derivation rule
• Set under which conditions the rule will derive a value

53

54

55
Oracle-Owned vs. User-Owned AMB Components
(New Slide)
Owner: Oracle User
Created by: Oracle
Development
Customer
Updatable? No Yes
Chart of Accounts? Generic Generic or
Specific

56
Account Derivation Rules
Chart of Accounts: Generic Specific
Use Source for entire
Account?
Yes Yes
Use Source for individual
segment?
Yes for Qualified
segments
Yes for Any
Segment
Use Mapping Sets? No Yes
Use Specific Values? No Yes
(New Slide)

57
Journal Entry Description
Description

58
• Define how the description on a journal entry or on each of its
lines will be built:
– Constant
– Source Value
• Set under which conditions the rule will be used

59

60
Journal Lines Definition
• Identify the journal line types, descriptions, and account derivation
rules that will be used to create a journal entry for a particular
event type
• Generic or specific for a chart of accounts
• Define processing options for advanced features such as
Multiperiod Accounting and Business Flows

61
Journal Lines Definition

62
Application Accounting Definition
Payables Accrual Application Accounting Definition
Journal Line
Types
Account Derivation
Rules
Journal Entry
Descriptions
Invoice Journal Line Definition
Transaction Objects
Sources

63
Subledger Accounting Method
Vision Operations (USA) Ledger
Standard/GAAP Accrual Subledger Accounting Method
Payables Accrual Application Accounting Definition
Journal Line
Types
Account Derivation
Rules
Journal Entry
Descriptions
Invoice Journal Line Definition
Transaction Objects
Sources

64
Agenda
– Background
• Demo
• ADS Content
• Hands-on

65
Subledger Balances
• Third Party Control Account Balances
– Track balances by account and Customer/Supplier
– Statutory reporting requirement in certain countries
• Supporting Reference Balances
– Store an unlimited number of sources as supporting
references on the accounting entries
– Optionally track balances by account and supporting
reference
• Open Account Balances
– Track balances by originating transactions and
downstream applied transactions
• Balances calculated and stored AFTER Accounting
Program Completes
(New Slide)

66
Subledger Balances
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
Create Accounting
(New Slide)
SLA Balances
Balance
Calculation

67
Third Party Control Accounts
• Certain accounts can be identified as control accounts.
In this case:
– You cannot enter manual adjustments against these
accounts in General Ledger
– SLA maintains balances for these accounts by third party
• This typically only applies to balance sheet accounts

68
Third Party Control Accounts

69
Supporting References
• Transaction attributes can be identified as supporting
references and stored on journal entries. In this case:
– SLA maintains subledger balances for each supporting
reference value and account.
• This can apply to balance sheet as well as income
statement accounts. In the latter case, subledger
balances are reset automatically at fiscal year end.
• Formerly (in 11i FSAH) known as analytical criteria.

70
Invoice No: 136274 GL Date: 01/27/07 3rd Party: Fender
101.100.63580… 6,000 EUR Product: X8F54
101.100.22100… 6,000 EUR Buyer: Smithers
Invoice No: 131299 GL Date: 01/27/07 3rd Party: Gibson
101.100.63580… 3,000 EUR Product: S7000
101.100.22100… 3,000 EUR Buyer: Siszlak
Invoice No: 116555 GL Date: 01/27/07 3rd Party: Kramer
101.100.63580… 2,000 EUR Product: 8811920
101.100.22100… 2,000 EUR Buyer: Flanders
Batch: AP Invoices 27-Jan-07 GL Period: Jan-07
101.100.63580… 11,000 EUR
101.100.22100… 11,000 EUR
SLA
JE #1
SLA
JE #2
SLA
JE #3
GL
JE #1
(New Slide)

71

72
Online Inquiries: Events

73
Online Inquiries: Journal Entries

74
Online Inquiries: Journal Lines

75
New Reports
• XML Publisher Reports
– Journal Entries: Listing of subledger journal entries
– Account Analysis: Listing of beginning and ending balances from
General Ledger with merge of subledger and General Ledger journal
entries
– Open Account Balances (a.k.a. Trial Balance): Listing of open
balances by third party (leverages business flows)
– Third Party Balances: Balances by third party control account and
third party
– Period Close Exceptions Report: Listing of transactions / subledger
journal entries that have not yet been posted to General Ledger
(New Slide)

76
Account Analysis Report
(New Slide)

77
Journal Entries Report
(New Slide)

78
Open Account Balances Listing
(New Slide)

79
SLA Reports Detail
• All reports are native to XML Publisher
• All extracts are very fat, i.e. they include a tremendous
amount of data that is not displayed by default but can
be added by simple template modifications
• Journals and Account Analysis reports include GL
journals for non-SLA sources
• Open Account Balances Listing is based on Business
Flows
– It replaces (and genericizes) the AP Trial Balance.
– You must create a report definition in advance
(New Slide)

80
New Reports
• XML Publisher Reports
– Journal Entries: Listing of subledger journal entries
– Account Analysis: Listing of beginning and ending balances from
General Ledger with merge of subledger and General Ledger journal
entries
– Open Account Balances (a.k.a. Trial Balance): Listing of open
balances by third party (leverages business flows)
– Third Party Balances: Balances by third party control account and
third party
– Period Close Exceptions Report: Listing of transactions / subledger
journal entries that have not yet been posted to General Ledger

81
Agenda
– Background
• Demo
• ADS Content
• Hands-on

82
Dual Posting
Ledger: FR Statutory
GL Date: 2-Mar-2006
Invoice# 100
Invoice #100
ABC Networks
2 Monitors – Marketing $1000
5 Printers – Marketing $ 500
Freight $ 100
Tax $ 110
Total $1710
Ledger: US Corporate
GL Date: 2-Mar-2006
Invoice# 100
DR CR
1 Expense 01-EXP-200 $1500
2 Freight 01-FR-200 $100
3 Tax 01-TX-200 $110
4 Liability 01-LIAB-200 $1710
Invoice Line 1
Invoice Line 2
Invoice Line 3
Invoice Line 4

83
Draft Accounting

84
Online Accounting

85
Straight-Through Accounting

86
Straight-Through Accounting
Transaction
SLA Journal Entry
GL Journal Entry
GL Balances
Journal Import
Posting
Create Accounting
(New Slide)
Create Accounting
(Final Post)

87
Replacement Accounts
• When you disable an account in General Ledger, you
can specify a replacement account
• SLA and GL will both use the replacement account
when generating a journal entry which uses the
disabled account
• This helps avoid a common source of errors (and
Service Requests)

88
Replacement Accounts

89
Journal Entry Sequencing
• Journal entries in GL and SLA can be assigned
sequence numbers:
– Accounting Sequence: Assigned at time of SLA entry
creation or GL posting
– Reporting Sequence: Assigned at time of period close
• Intended to address statutory requirements in certain
countries
• This is in addition to Document Sequencing, available
in 11i

90
Journal Entry Sequencing

91
Business Flows
Invoice #100 $1000
01-EXP-200
DR CR
$800
01-EXP-240
DR CR
$200
Invoice #100 Invoice #100
01-LIAB-200
DR CR
01-LIAB-240
DR CR
Invoice #100
$200
Invoice #100
$800
Payment 1101
for Invoice
#100
$100
Payment 1101
for Invoice
#100
Payment 1101
for Invoice
#100
$400
01-CASH-200
DR CR
01-CASH-240
DR CR
$100
$400 Payment 1101
for Invoice
#100
Payment #1101 $500
Invoice #100

92
Multi-period Accounting
• You can spread a transaction amount across multiple
periods, for example to recognize a revenue or expense
over time.

93
Accrual Reversals
• You can schedule the automatic reversal of accrual
entries.

94
Manual Journal Entries
• You can enter manual entries in SLA, similar to GL
journal entries
• Manual subledger journal entries must be posted to GL
like any other subledger journal entry
• Unlike GL journal entries, subledger journal entries are
identified by a subledger journal source (e.g. Payables)

95
Error Handling
• If the accounting program cannot generate any journal
entry (for any ledger), it completes with status Error
• The accounting program generates an execution report
detailing any errors
• To avoid errors, keep in mind:
– Accounting rules are pre-validated
– When you disable an account, you can specify a
replacement account

96
Diagnostics Framework
• The diagnostics framework captures all sources
passed to the accounting program
• This allows you to validate whether the Accounting
Program is doing the correct thing
• There is performance overhead associated with this, so
only enable it when needed.

97
Diagnostics Framework
Accounting
Program
Diagnostic
Extract Diagnostic
tables

98
Agenda
– Background
• Demo
• ADS Content
• Hands-on

99
Customer Impact
• Default SLA rules preserve the accounting rules used in 11i
– All seeded rules are generic – not chart of accounts specific
– In most cases, accounts are passed from Oracle Applications
into SLA as sources
• Users can optionally copy and then modify the seeded SLA
rules
• Users do not need to modify any responsibilities
– If using custom menus or responsibilities, you may need to add
SLA forms/reports/programs to the custom responsibilities
• Accounts on transaction distributions are now default
accounts; seeded rules use these accounts when generating
entries. If customer modifies the rules to derive a different
account, then there will be a discrepancy between the
transaction distribution and journal entries.

100
Who Does What in Deploying SLA?
• SLA Development Team:
– Builds SLA infrastructure (Accounting Methods Builder, Create
Accounting program, Transfer to GL, balance calculation
programs, inquiries and reports, etc.)
• Other Oracle Development Teams (AP, AR, FA, etc.):
– Defines event model and sources for their product
– Inserts code in their product to raise SLA events where needed
– Maps sources to accounting attributes
– Defines default Accounting Methods Builder rules
• Customer:
– Copies and modifies default AMB rules if desired
– Defines supporting references if desired
– Enables control accounts if desired
– Etc.
(New Slide)

101
Who Does What in Deploying FSAH?
• SLA Development Team:
– Builds FSAH infrastructure (Accounting Methods Builder,
Create Accounting program, Transfer to GL, balance calculation
programs, inquiries and reports, etc.)
• Customer
– Defines event model and sources for each transaction source
– Creates code to raise FSAH events where needed
– Maps sources to accounting attributes
– Defines Accounting Methods Builder rules
– Defines supporting references if desired
– Enables control accounts if desired
– Etc.
(New Slide)

102
Upgrade Considerations
• By default, the R12 upgrade migrates at least 6 periods
of accounting entries from each application to the SLA
data model.
• You can modify this if desired.
• For prior periods, the historical data is preserved. You
can drill from General Ledger to the historical
transactions using standard GL drilldown
• You can upgrade prior periods by request during
uptime

103
Agenda
– Background
• Demo
• ADS Content
• Hands-on

104
Demonstration Flow
• Enter an invoice and validate it
• Create accounting and post to GL
• View SLA journal entry and T-account
• Query entry in GL and drill back to SLA entry and to invoice
• Modify AMB Rules:
– Journal Line Type
– Account Derivation Rule
– Journal Entry Description
• Construct a rule for Invoice Validation event
• Create accounting and post to GL
• View SLA journal entry and compare against first entry

105
Agenda
– Background
• Demo
• ADS Content
• Hands-on

106
Agenda
– Background
• Demo
• ADS Content
• Hands-on

107
Hands-on Lab Logistics
• Use your initials to unique identify your setup to avoid
testing collisions

108
Resources
• Oracle University Recorded TOI
http://ouweb.us.oracle.com/ebus/prod_financials_index.html

109
Q U E S T I O N S
A N S W E R S

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