ap sla version 1.1 final

ORACLE APPLICATIONS

White Paper Subledger Accounting Setup for Oracle Payables

Written by Oracle Support Services

Author: Veronica Racoviteanu

Date Created: September 17, 2013

Date Changed: January 14, 2014

Version: 1.1

Status: Final

Subledger Accounting Setup for Oracle Payables ii AP_SLA_Version 1.1 Final Oracle/Client Confidential - For internal use only

Content

Introduction ...........................................................................................................................................................................5 Goal ......................................................................................................................................................................................5

Definitions .............................................................................................................................................................................6 Accounting Methods Builder (AMB) ..........................................................................................................................6 Account Derivation Rule (ADR) ..................................................................................................................................6 Event class and Event types .........................................................................................................................................6 Application Accounting Definition (AAD) ................................................................................................................6 Subledger Accounting Method (SLAM) .....................................................................................................................6 Ledger ..............................................................................................................................................................................7

General Overview of the setup steps ................................................................................................................................8 What are the setup steps that need to be made in AP? .............................................................................................8

Subledger Accounting Setup ............................................................................................................................................ 10 What does the default setup look like that Oracle Payables uses to generate accounting? ............................... 10

Subledger Accounting Customization Journal Line Definitions ........................................................................... 22 How to set up a Journal Line Definition (JLD)? ....................................................................................................... 22 How are the custom ADRs now linked to the JLDs? .............................................................................................. 24

Subledger Accounting Customization Application Accounting Definition ........................................................ 26 How to set up an Application Accounting Definition (AAD)? ............................................................................. 26 How are the custom JLDs now linked to the AAD? ............................................................................................... 29

Subledger Accounting Customization Subledger Accounting Method ................................................................ 31 How to set up the Subledger Accounting Method (SLAM)? ................................................................................. 31 How is the custom AAD now linked to the SLAM? ............................................................................................... 33

Subledger Accounting Method Custom Link with the Ledger ............................................................................... 34 How to link the Subledger Accounting Method (SLAM) with the Ledger? ........................................................ 34

Intracompany Balancing Rules ........................................................................................................................................ 36 How to set up the Intracompany Balancing Rules? ................................................................................................ 36

GL Reconciliation ............................................................................................................................................................... 39 How to set up GL Reconciliation for AP accounts with SLA? ............................................................................... 39

Subledger Accounting Customization Quick Setup ................................................................................................. 46 How to copy Oracle Seeded AAD? ........................................................................................................................... 46 How to copy Oracle Seeded JLD? .............................................................................................................................. 49 How to assign the new JLD created to AAD? .......................................................................................................... 51 How to copy Oracle Seeded JLT? .............................................................................................................................. 54 How to assign the new JLT created to JLD? ............................................................................................................. 56 How to assign the Oracle Seeded ADR to the new created JLT? .......................................................................... 58 How to copy the Oracle Seeded? ............................................................................................................................... 60 How to assign the new created ADR to the JLT? .................................................................................................... 63 How to copy Seeded SLAM? ...................................................................................................................................... 64 How to assign created AAD to the SLAM? .............................................................................................................. 67

Subledger Accounting Customization Account Derivation Rules ......................................................................... 69 Case 1: Accounting Flexfield Rules Examples: Using a mapping set to derive an Accounting Flexfield........ 69 Case 2: Segment Rules Examples: Using a specific source segment to derive the value of a different segment in a different chart of accounts ................................................................................................................................... 75 Case 3: Using Descriptive flexfield with a Value Set attached and a mapping set to derive the value of a segment ......................................................................................................................................................................... 81 Case 4: Custom your ADR using for Loss/Gain a constant value for the Account Segment ........................... 90

Subledger Accounting Setup for Oracle Payables iii AP_SLA_Version 1.1 Final Oracle/Client Confidential - For internal use only

Subledger Accounting Customization Journal Line Definition ............................................................................. 97 Case 5: Custom your Line Description...................................................................................................................... 97

Subledger Accounting Customization Application Accounting Definitions .................................................... 103 Case 6: Custom your Header Assignments ............................................................................................................ 103 Case 7: Automatic Offset Method Account enabled and the impact in SLA ..................................................... 108 Case 8: Automatic Offset Method Balancing enabled and the impact in SLA .................................................. 111

References .......................................................................................................................................................................... 115

Subledger Accounting Setup for Oracle Payables iv AP_SLA_Version 1.1 Final Oracle/Client Confidential - For internal use only

Document Control

Change Record

Date Author Version Change Reference

16-Sep-13

Veronica Racoviteanu A First draft

07-Jan-14 Veronica Racoviteanu 1.1 Final

Contributors

Name Organization Title

Reviewers

Name Role Title Date Reviewed

Octavian Modiga Senior Manager, Accounting Payables

Florentina Podeanu Senior Technical Principal Support Engineer

Daphna Amal Senior Technical Principal Support Engineer

Document References

Document Title Type of Reference Document Location

Oracle Subledger Accounting Implementation Guide Release 12.1 Part No. E13628-04

Reference Manual My Oracle Support (MOS)

Oracle Payables User's Guide Release 12.1 Part No. E12797-04


Oracle Payables Reference Guide Release 12.1 Part No. E12796-04


Oracle Payables Implementation Guide Release 12.1 Part No. E12795-04 August


Changes to Seeded Accounting Objects and How to apply these to Custom Accounting Objects (Doc ID 1359966.1)

Note My Oracle Support (MOS)

Subledger Accounting Setup for Oracle Payables 5 AP_SLA_Version 1.1 Final Oracle/Client Confidential - For internal use only

Introduction

Goal

THE PURPOSE OF THIS DOCUMENT IS TO PROVIDE AN OVERVIEW on possible Subledger Accounting setup for Payables. We will discuss various scenarios and explain the necessary setup steps.

What is Subledger Accounting (SLA)? Subledger Accounting (SLA) is a rule-based accounting engine that centralizes accounting for Oracle E-Business Suite products in R12. Subledger Accounting is not a separate product in itself. Together with the new ledger support, Subledger Accounting enables support of multiple accounting requirements concurrently in a single instance. Different accounting regulations can be satisfied by maintaining and applying different sets of rules to different sets of transactions, or accounting for the same transaction with multiple methods. Subledger accounting options define how journal entries are generated from subledger transactions at the subledger application level. Note: SLA replaces the different accounting engines available in 11i e.g., the AP accounting engine, FA accounting engine, Global Accounting Engine (AX), and so forth.


Definitions

Accounting Methods Builder (AMB)

The AMB enables you to create and modify subledger journal line setups and application accounting definitions.

Account Derivation Rule (ADR)

These are the rules that determine from where an accounting flexfield value is taken or how it is derived. Oracle does provide seeded rules, however one can create ones own rules to derive accounting flexfield

segment values.

Event class and Event types

Event class and event types are associated with Application Accounting Definitions.

Examples of Event class for Accrual AAD: Invoices, Payments, Debit Memos, Future Dated Payments, Prepayments, Prepayment Applications, Reconciled Payments, and Refunds.

Event types are grouped into event classes that in turn are grouped into event entities. These groupings play a prominent role in the setup of the AMB. The definition of several components in the AMB is by event class or event type.

You can assign multiple journal lines definitions to an event class or event type.

Application Accounting Definition (AAD) Oracle Payables predefines the Accrual Basis, Encumbrance Accrual, Encumbrance Cash, and the Cash Basis application accounting definitions. Use application accounting definitions to assign journal lines definitions, supporting references, and header descriptions to event classes and event types. This summary of the set of rules needs to be validated before it can be linked to the Subledger Accounting Method for the subledger. The Application Accounting Definition can be assigned only to a Subledger Accounting Method with the same chart of accounts.

Subledger Accounting Method (SLAM) The Subledger Accounting Method is the list of Application Accounting Definitions per subledger that can then be linked to the ledger. Only one Application Accounting Definition can be assigned to a Subledger Accounting Method with the same chart of accounts.


Ledger The ledger is a basic concept in Release 12. The ledger replaces the 11i concept of a set of books. It represents an accounting representation for one or more legal entities or for a business need such as consolidation or management reporting. It consists of the currency, chart of accounts, accounting calendar, ledger processing options and subledger accounting method.


General Overview of the setup steps

What are the setup steps that need to be made in AP?

1. Design your setup. This is best done via a spreadsheet listing the accounting flexfield segment in columns and the different transactions and the accounts needed for them in rows. 2. Determine account and segment which need to be derivate

Then one would determine for each segment for each account needed when creating journals for a transaction where the segment values should be taken or derived from. 3. Setup Account Derivation Rules (ADR) You have to start with the Account Derivation Rules (ADRs) setup linked with mapping set (if it is necessary). Account derivation rules determine the accounting for subledger journal entries. Oracle Payables predefines account derivation rules. When Oracle Subledger Accounting uses the predefined account derivation rules that Oracle Payables provides, it accepts the default accounting that Oracle Payables generates using accounting without change. You can optionally define your own account derivation rules for an Accounting Flexfield or for a segment. In this case, Oracle Subledger Accounting overrides the default accounts that Oracle Payables generates, or individual segment values in the default accounts, when it creates the draft or final subledger accounting. 4. Setup Journal Line Definition (JLD)

Once the necessary Account Derivation Rules are set up, then the Journal Line Definitions need to be set up, determining which Account Derivation Rule is needed per account for an event. Note: It can be a mixture of seeded Account Derivation Rules as well as newly created ones and not every event needs to be customized if the seeded setup covers the requirement. 5. Setup Journal Line Type (JLT)

Oracle Payables predefines journal line types for each predefined event class. Oracle Payables specifies conditions for the use of each journal line type.

6. Setup Application Accounting Definitions

When the Journal Line Definitions are set up, then one needs to set up the Application Accounting Definition (AAD), which needs to be validated when the setup is completed. 7. Setup Subledger Accounting Definitions (SLAM)


The Application Accounting Definition is then linked with the Subledger Accounting Method (SLAM), which is then assigned to the Ledger. The setup approach is from the bottom up, i.e. starting with the lowest

level element until the elements are linked together validated and assigned to a ledger. The flow of the setup steps can be seen in the diagram below:

ADRs

JEDs

JLTs

JLDs

AAD

SLAM

LEDGER


Subledger Accounting Setup

What does the default setup look like that Oracle Payables uses to generate accounting?

Oracle Payables does provide a default setup for subledger accounting. If that default setup satisfies the requirements, then no further setup needs to be made. The seeded SLA setup for Oracle Payables

1. The seeded SLA setup for Oracle Payables includes the following seeded Subledger accounting methods: STANDARD ACCRUAL

ENCUMBRANCE_ACCRUAL STANDARD_CASH

ENCUMBRANCE_CASH

You have the option to assign these subledger accounting methods to your ledger.

1.1. How to assign one of the Seeded SLAM to your ledger:

Navigation: (N) Payables > Setup > Accounting Setups > Ledger Setup > Define > Accounting Setups:


Choose your ledger.

Click on pencil Update Accounting Options.

On the ledger (primary or secondary), click on Update pencil: Navigation: Ledger Definition page > section Subledger Accounting > Subledger Accounting Method


Choose from the List of Value one of the following values (according to your business requirements)

- Standard Accrual - Standard Cash - Encumbrance Accrual - Encumbrance Cash

2. Seeded Application Accounting Definitions

Application Accounting Definitions has to be connected with Subledger Accounting Method, securing the link with the ledger.

Navigation: (N) Payables > Setup > Accounting Setups > Subledger Accounting Setup > Methods and Definitions > Subledger Accounting Method > Click on Application Payables > (B) Application Accounting Definition


Application Accounting Definitions includes the following:

- Transaction Chart of Accounts: The transaction chart of accounts is the chart of accounts for the primary ledger and is referenced when users enter Accounting Flexfields for their transactions. This chart of accounts is employed when users enter and maintain the data required to support the daily operations of a company.

- Accounting Chart of Accounts:

Use the accounting chart of accounts to create the Accounting Flexfields for subledger journal entries. It is taken from the ledger for which the journal entries are created. Account derivation rules derive accounts for a specific accounting chart of accounts. The creation of all journal entries by Subledger Accounting is therefore done in the context of the accounting chart of accounts. Note: The transaction and accounting charts of accounts are always the same for the primary ledger. They can be different in cases where users create secondary multiple representations.

- Event Classes: Credit Memos, Debit Memos, Future Dated Payments, Payments, Prepayment Applications, Prepayments, Reconciled Payments, Refunds. List of values includes the event classes for the corresponding application.

- Create Accounting checkbox: Is designated to create subledger journal entries for the accounting events associated with the event class and event type. If this check box is deselected, no journal lines definitions can be assigned to the event class


and the event type. If any journal lines definitions are assigned to the event class and event type, this check box cannot be deselected.

- Header Assignments: Assign a header description to the event class or event type. For Oracle Seeded AAS, there are predefined header descriptions: Invoice Header Description, Payment Header Description:

3. Seeded Journal Line Definitions

For each event class, there is one Journal Line Definition Associated. Journal Line Definitions contains All Journal Line Type associated. Each Journal Line Type is associated with one or more Accounting Derivation Rules


- Line Type: Journal Line Type window is opened; - Line Description: Each Journal Line Type has associated a Journal Entry Description

- Tab Account Derivation Rules: ADRs are assigned to JLT.


4. Seeded Journal Line Type:

Journal line types are defined for a particular event class. They must then be assigned to a journal lines definition along with supporting references, account derivation rules, and journal entry descriptions.

The definition of a journal line type includes the following features:

Application: Automatically populate with the application name associated with the user's responsibility.

Line Type code: Note: Users cannot modify a seeded journal line type or any other seeded component as it could get overwritten in an upgrade. Instead users can copy the seeded type and then modify it appropriately. The copied journal line type has an Owner type of User. The list of values displays the component name and the owner to distinguish between seeded and user-defined components.

Accounting Class: Shared across applications and allow users to classify journal entry lines. For example, when the Payables invoice is matched to a purchasing document, Payables creates a journal line reversing the original accrual. In this case, Purchasing and Payables define journal line types to generate these accruals and both of them can assign the accounting class Accrual. Accounting classes are defined using an extensible lookup type. The list of values for this field contains all accounting classes that are seeded but users can add new accounting classes.


To define a lookup, follow navigation: (N) Payables > Setup > Lookups > Payables / Subledger Accounting Lookup

Enabled: If selected, makes this journal line type available for use.

Rounding class: Subledger Accounting uses rounding class along with the transaction rounding reference to group journal lines tighter and calculates transaction rounding. Subledger transaction rounding differences can occur when a transaction has multiple distributions.

Balance Type: The journal entry line can have an actual, budget, or encumbrance balance type.

Side: Journal line types specify if the journal line is to be a debit, credit, or gain/loss line. For example, when a Payables invoice is generated, the liability account should normally be credited. The journal line type must therefore specify the Side option as Credit. On the other hand, the payment of the Payables invoice must be accounted with a debit to the liability account. A separate journal line type must be defined to create this debit line. The gain/loss amount is the difference in the ledger currency due to foreign currency fluctuations. Gain or loss amounts occur when two related transactions, such as an invoice and its payment, are entered in a currency other than the ledger currency, and the conversion rate fluctuates between the times that the both are accounted. Note: If the business flow method Prior Entry or Same Entry is selected, the Gain/Loss option cannot be selected.

Switch Debit/Credit: Determines whether negative amounts will result in negative amounts on the same side or positive amounts on the opposite side. Note: If the Side is Gain/Loss, the Switch Debit/Credit field is disabled.

Merge Matching Lines: Summarizes subledger journal lines within each subledger entry. Journal entry lines with matching criteria are merged: The combination: Code combination ID - Event Type - Description has to be unique.

Subledger Gain Loss: Yes indicates that gain/loss is calculated in the primary ledger. The gain/loss amount is therefore not converted to the reporting currency and non-valuation method secondary ledgers. Select No for Subledger Accounting to calculate the gain or loss. Note: When Gain or Loss is set to Yes, multiperiod accounting is disabled.

Business flow Method:

None: Retains the existing business rules enforced by the Journal Line Types window. This option has no impact on the accounting program and the journal line does not rely on any other journal entry. Journal entries are created using the definitions and conditions assigned to the various journal entry components.

Prior Entry:


Instructs the Subledger Accounting program to: Copy the entire General Ledger account and certain accounting attribute values from the journal entry of an upstream transaction Optionally copy the journal entry description into the current

entry instead of assigning a separate description

Note: If Prior Entry is selected, then the following accounting attributes are inherited from an upstream journal entry and cannot be selected or updated in the Accounting Attributes Assignments window:

Currency Code Conversion Rate Type Conversion Date Conversion Rate Party Type Party Identifier Party Site Identifier Encumbrance Types

Note: If the prior entry is selected you are not able to complete the ADR, the accounting rules will be the same with the upstream transaction.

Same entry: Instructs the Subledger Accounting program to build the General Ledger account using segments from the offsetting entry of the current journal line. For example, it provides the option to overlay the balancing segment value on the credit side of the entry with the balancing segment value from the debit side. This option does not copy the accounting attribute values. It provides the ability to copy the journal entry description instead of assigning a separate description.

Note: If Prior Entry or Same Entry is selected, the Gain/Loss option in the Side region cannot be selected.

Transfer to GL: Select Detail to maintain the same level of detail as the subledger journal entry line. Select Summary to summarize subledger journal entry lines by Accounting Flexfield. One journal line is created in General Ledger to record the subledger activity.

Conditions: Users can define conditions to restrict the use of a journal line type by controlling when a particular journal line type is used by the Subledger Accounting program.

Accounting Attribute Assignments: When creating a journal line type, accounting attribute assignments are automatically established based on the default accounting attribute assignments for that journal line type's event class or entity.

5. Seeded Account Derivation Rules

Note: Oracle strongly recommends that users do not modify a seeded rule or any other seeded component as it could get overwritten in an upgrade. Instead, copy a seeded rule and then modify it appropriately. The modified rule has an Owner type of User.

Use account derivation rules to determine the Accounting Flexfields for subledger journal entries.

5.1. Rule defined by Accounting Flexfield:


The rule determines the entire Accounting Flexfield combination. For example, an account derivation rule defined by Accounting Flexfield can be used to determine the complete supplier liability Accounting Flexfield in Payables. Set up Accounting Flexfield rules based upon four possible Value Types as follows:

Source Value Type: For Accounting Flexfield rules, all the code combination identifiers from the transaction chart of accounts that have been setup as sources are available to create the account. Derive the account combination by specifying a source such as the Distribution Account in the rule. The Subledger Accounting program then obtains the account by referencing the distribution Accounting Flexfield. The transaction or accounting chart of accounts does not need to be known when this type of rule is defined. If no chart of accounts is specified, the value derived from the source uses the default chart of accounts for the subledger application.

Constant Value Type: Establish the account as a constant value. For example, the constant could be the account combination 01.000.2210.0000.000 from the accounting chart of accounts specified. This is the simplest way to derive an account.

Mapping Set Value Type: Derive the account combination by referencing a mapping set. Set up a mapping set rule to determine the complete account combination from the accounting chart of accounts specified. Note: An accounting chart of accounts must be specified for rules using either constants or mapping sets.

Account Derivation Rule Value Type: Derive the account by referencing another account derivation rule. You cannot select account derivation rules that already have an assigned account derivation rule. The transaction or accounting chart of accounts does not need to be specified when defining this type of rule. If the account derivation rule has an accounting chart of accounts, then all account derivation rules that are assigned must have the same or no chart of accounts. When the value type is Account Derivation Rule, select only account derivation rules with matching output types.

5.2. Rule defined by Segment: Define segment rules to derive the Accounting Flexfield segment by segment. Set up segment rules as follows:

When an accounting chart of accounts is specified, create a rule to derive a specific segment from the accounting chart of accounts.

If the accounting chart of accounts is not specified, create a rule to derive the value for an Accounting Flexfield qualifier.

Set up segment rules using the same four methods discussed for Accounting Flexfield rules. By specifying different value types, users can choose the way in which the segment value is derived.

Source Value Type: For Segment rules, all sources defined for the application are available. If the source is an Accounting Flexfield, take the value from a particular segment of the transaction


chart of accounts. For example, derive a segment value from the cost center segment of the liability Accounting Flexfield. In addition, use sources that are not Accounting Flexfields. For example, take the value for a Project segment from a Project Number source. Use sources that are marked as Accounting Flexfield qualifiers and use them to derive the value for the segment.

Note: When creating rules for an Accounting Flexfield qualifier, only sources that are marked as Accounting Flexfield sources or the same Accounting Flexfield qualifier segment as the qualifier specified for the rule can be selected.

Constant Value Type: Establish the segment value as a constant. For example, the company segment can be set to 01.

Mapping Set Value Type: Use a mapping set to determine the value of the segment. For example, using a mapping set that maps supplier types to departments, the supplier type can determine the department segment value.

Note: An accounting chart of accounts must be specified for rules using either constants or mapping sets.


5.3. Rule defined by Value Set:

Define account derivation rules based on value sets in the absence of an accounting chart of accounts. Value set based rules can be created when an accounting chart of accounts is not specified. This enables you to share the same rule between more than one accounting chart of accounts if the segments in this chart of accounts share the same value set. By specifying different Value Types, you can choose the way in which the segment value is derived.

Source value type: For Value set based rules, all sources that are data type Alphanumeric and are not marked as Accounting Flexfields or Accounting Flexfield qualifiers are available.

Constant value type: Establish the segment value as a constant. This list of values is based on the value set defined for the rule.

Mapping Set Value Type: Use a mapping set to determine the value of the value set based rule. In this case, the mapping set must be created for the same output value set as the value set for the account derivation rule.


Subledger Accounting Customization Journal Line Definitions

How to set up a Journal Line Definition (JLD)? Note: Each Event Class has the own JLD.

1. Navigation: Payables > Setup > Financials > Subledger Accounting > Accounting Methods Builder > Methods and Definitions > Journal Line Definitions

2. Query the seeded Event Class or Event Type of the JLD to be customized.

3. Click on the Copy Definition button at the bottom left. Give your JLD definition code, name, and description a meaningful name.

Seeded JLD: ACCRUAL_INVOICES_ALL


Custom JLD:


3. The accounting flexfield needs to be picked, if for the JLD, any ADR to be chosen uses it. 4. For each line assignment review the seeded ADRs and add the ones defined earlier as appropriate. Note: The seeded definition covers each segment either for the qualified segments or via the All Segments rule. A segment or all segments can be chosen only once and so in some cases a seeded ADR would have to be deleted from the Account Derivation Rule section before the segment can be chosen again with a custom ADR.

5. Save. The JLD is later used when doing the Application Accounting Definition.

How are the custom ADRs now linked to the JLDs? ADRs are added at the Journal Line Type Level, In Journal Line Definitions window. The relation is: one JLT can contain more ADRs. Note: Segment Field can be populated with:

- Segment name when Transaction / Accounting Chart of accounts are completed - Segment qualifiers when / Accounting Chart of accounts are blank


Subledger Accounting Customization Application Accounting Definition

How to set up an Application Accounting Definition (AAD)?

1. Navigation: Payables > Setup > Financials > Subledger Accounting > Accounting Methods Builder > Methods and Definitions > Application Accounting Definition

2. Query the seeded Application Accounting Definition:

- Accrual Basis - Cash Basis - Encumbrance Accrual - Encumbrance Cash

3. Click on the Copy button at the bottom right. Give your AAD definition code, name, and description a meaningful name. Seeded AAD: Accrual.


Custom AAD: VRC_ACCRUAL_TEST


3. The accounting flexfield needs to be picked for the AAD if any JLD to be chosen uses it. 4. For each line assignment, add the JLDs defined earlier as needed. Note: There should only be one JLD assignment per event class/event type, either the seeded one or the custom one as otherwise Create Accounting will create duplicate lines per JLD assignment.

5. Save.

6. Click on the Validate button to validate the Application Accounting Definition. The AAD is later used when doing the Subledger Accounting Method.

Note: One can alternatively run concurrent program Validate Application Accounting Definitions.


The Event Classes / Event Types are now all valid after Validate Application Accounting Definition completes successfully.

How are the custom JLDs now linked to the AAD?


This is the custom JLD containing the custom ADRs set up earlier.


Subledger Accounting Customization Subledger Accounting Method

How to set up the Subledger Accounting Method (SLAM)?

1. Navigation: Payables > Setup > Financials > Subledger Accounting > Accounting Methods Builder > Methods and Definitions > Subledger Accounting Method

2. Query the seeded Subledger Accounting Method:

- Encumbrance Accrual - Standard Accrual - Encumbrance Cash - Standard Cash


3. Click on the Copy button at the bottom right. Give your SLAM method code, name, and description a meaningful name

4. The accounting flexfield needs to be picked for the SLAM if it has been chosen for the custom

AAD.

5. Pick the custom AAD for application. Note: The Subledger Accounting Method contains the SLA setup for all subledgers. As one can link only one Subledger Accounting Method to a Ledger, one needs to make sure that all subledger use the same SLAM per ledger.

6. Save. The SLAM is later used when it is linked to the ledger.


How is the custom AAD now linked to the SLAM?

Application: Payables;

Name: Choose your custom AAD

This is the custom SLAM containing the custom AAD for the demo SLA setup.


Subledger Accounting Method Custom Link with the Ledger

The custom Subledger Accounting Setup is now complete and only the last step now needs to be performed:

How to link the Subledger Accounting Method (SLAM) with the Ledger?

1. Navigation: Payables > Setup > Financials > Accounting Setup Manager > Accounting Setups

2. Query the Ledger to which the SLAM should be attached

Search your ledger. Click on Update Accounting Options.

3. Update the Legder (Eg: Vision Operations)


4. Pick the custom Subledger Accounting Method.

Subledger Accounting Method: Change the seeded SLAM Standard Accrual with your custom SLAM.

5. Click on Finish Button to save the information.


Intracompany Balancing Rules

In Release 12, the Intercompany Accounts Payable and the Intercompany Accounts Receivable accounts can no longer be found in the Accounts tab of the Book Controls form. They are replaced by the Intracompany Balancing Rules to be set up via the Accounting Setup Manager. This allows more flexibility as for each journal category, one can decide to use a different intracompany account.

How to set up the Intracompany Balancing Rules?

1. Navigation: Payables >Setup > Financials > Accounting Setup Manager > Accounting Setups

2. Query the Ledger to which the SLAM is attached

3. Choose to update the Subledger Accounting Options and then the Intracompany Balancing Rules

4. If you do not have the legal entity assigned then chose to define rules under No Legal Entity. Else choose to define rules under your legal entity.


5. Choose Source: Payables, then click on the Options tab

6. Tab Options: Choose the Level of Summarization, the Clearing Balancing Segment Value, and the Default Options. Save.


GL Reconciliation

In Release 12, the reconciliation functionality that was part of localization has been incorporated in the core General Ledger. In order to use it in GL for accounts created by the subledger, there are some setup steps necessary.

How to set up GL Reconciliation for AP accounts with SLA?

1. Navigation: Setup > Financials > Subledger Accounting > Accounting Methods Builder > Journal Entry Setups > Journal Line Types

2. Give your JLT rule code, name, and description a meaningful name when you copy the seeded JLT. Click on Accounting Attribute Assignments and pick the account as the source for the Reconciliation Reference. Save.


4. Navigation: Setup > Financials > Subledger Accounting > Accounting Methods Builder > Methods and Definitions > Journal Line Definitions.

Query your JLD. Do not forget to deactivate the default Journal Line Type:


5. Add the newly created Journal Line Types


5. Validate the AAD


6. Attach AAD to SLAM

7. Attach SLAM to Ledger

8. Submit Create accounting, this time in Final mode.


8. Switch to the General Ledger responsibility and navigate to the Reconcile Journal Lines form. Enter the selection criteria. You will find the Journal lines and can now manually reconcile them.


Subledger Accounting Customization Quick Setup

How to copy Oracle Seeded AAD?

Navigation: (N) Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Methods Builder > Methods and Definitions > Application Accounting Definitions

Owner: Oracle

Definition Code:

Choose Oracle Seeded AAD you want to copy.

Confirm with OK Button.


(B) Find.

Press Copy button.


Chart of Accounts Transaction and Accounting: complete them if it is necessary.

See Cap: Subledger Accounting Setup / What does the default setup look like that Oracle Payables uses to generate accounting? / 2. Seeded Application Accounting Definitions

Confirm with (B) Done.


How to copy Oracle Seeded JLD?

After you have completed first step (Copy AAD), you have option to copy the associated JLDs.

Click on the Event Class. On the Journal Line Definition Name Assignments you will see the Oracle Seeded JLD associated.

Click on Journal Line Definition button.


Click (B) Copy Definition.

Definition Code: enter your Definition Code

Definition Name: enter your Definition Name

Description: Enter your Description.

Confirm using (B) Done.


How to assign the new JLD created to AAD?

Return to the copied AAD:


Delete Accrual, Invoices All JLD using: Delete button from the tool bar:

Assign the new JLD created.

Save your work.

Result:


How to copy Oracle Seeded JLT?

Click on the JLT you want to copy.


Click Copy Button.

Line Type Code: enter your Line Type Code;

Name: Enter your Name

Description: enter your Description



On the JLT created you can modify:

- Switch Debit / Credit

- Merge Matching Line;

- Transfer to GL (Summary / Detail)

- Subledger Gain/Loss

- Conditions

- Accounting Attribute Assignments etc.

How to assign the new JLT created to JLD?

On the JLD already created, deactivate the Oracle Seeded JLT (Item expense in our case)


Insert a new row using button.


How to assign the Oracle Seeded ADR to the new created JLT?


How to copy the Oracle Seeded?

On the ADR you want to copy, click Account Derivation Rule.


Click Copy button.

Rule Code: enter your Rule Code

Name: enter your Name


Description: enter your Description.

Confirm using Done button.


How to assign the new created ADR to the JLT?

Delete Seeded ADR using Delete button from the tool bar


Assign New Created ADR.

Save your work.

How to copy Seeded SLAM?

Navigation: (N) Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Methods Builder > Methods and Definitions > Subledger Accounting Method

Press (B) Find.


Choose the Oracle Seeded you want to copy. This has to be in accordance with AAD you already created.

Eg:

AAD SLAM

---------------------------------------------------------------

Accrual Basis Standard Accrual

Cash Basis Standard Cash

Encumbrance Accrual Encumbrance Accrual

Encumbrance Cash Encumbrance Cash

Choose Copy.


Method Code: enter your Method Code;

Name: enter your Name for the Method Code

Description: enter the Description



How to assign created AAD to the SLAM?

Navigation: (N) Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Methods Builder > Methods and Definitions > Subledger Accounting Method

Find your SLAM already created.

Search Payables Application.

On the name field, choose the AAD already set up.

Save your work.

Note 1: The SLAM created has to be attached to your ledger

See: Cap. Subledger Accounting Customization Link with the Ledger

Note 2: The Application Accounting Definition should be in status Validated to finish the setup.

Application Accounting Definition > (B) Validate.

Note 3: If you want to validate all AADs:

Submit the request 'Validate Application Accounting Definitions' with the below set of parameters.

i) If all the AAD's need to be validated for a given Application:


Uncompiled Status Only - No

Application - >


Subledger Accounting Customization Account Derivation Rules

The way the SLA setup forms have been designed make alterations easy as one can query a seeded definition and copy it and then make the changes in the copy. The only form where that may not always be the quickest way is the Account Derivation Rules form.

We will also not look into custom sources which can use custom functions and PL/SQL procedures

We are, however, discussing six common setup cases below.

Note: Make sure that a clear and logical syntax for the naming convention is used so that one can quickly see the purpose of a definition.

Case 1: Accounting Flexfield Rules Examples: Using a mapping set to derive an Accounting Flexfield

1. Navigation: Setup > Financials > Subledger Accounting > Accounting Methods Builder > Journal Entry Setups > Account Derivation Rules > Mapping Set

2. Consider a mapping set Vendor Category, which assigns the following accounts based on input vendor category described in the following table.

Accounting Flexfield Rules Example: Mapping Set Vendor Category

Input Value Output Value

---------------------------------------------------------------

Manufacturing 01-110-2210-0000-000

Services 01-210-2210-0000-000

Consulting 01-402-2210-0000-000


3. For the given transaction, assume that the accounting event information includes a Source called Supplier Type. This serves as the Mapping Set Input Source. The account derivation rule is defined to use the mapping set as described in the following table.

Accounting Flexfield Rules Example: Account Derivation Rule Mapping Set

Priority Value Type Value Input Source

---------------------------------------------------------------------------------------------

1 Mapping Set Vendor Category Supplier Type

To derive an account, the values of the Mapping Set Input Source specified in a rule are compared with the input values of the mapping set. In this example, Mapping Set Input Source values from the accounting event information include the Supplier Type source values. These are now compared with the Vendor Category input values to determine what the account should be.

Assume that the accounting event data of the transaction to which the account derivation rule is applied has a value for the Source Supplier Type of Manufacturing. The account built by the Subledger Accounting program is derived by applying the account derivation rule to the transaction object data. Using the mapping set defined, if the supplier type is Manufacturing, the account created is 01-110-2210-0000.

Note: Next steps are necessary to complete the setup:

1). Assign the ADR to a JLD:


2). Associate AAD:


3). Assign AAD to SLAM:

4). Assign SLAM to Ledger:


5). Test the setup:

Supplier Type: Manufacturing

Invoice: Liability account by default is: 01-000-2210-0000-000 (from the supplier site level)


Liability account after Create accounting: The account is derived from Mapping set, for the supplier type Manufacturing.

Case 2: Segment Rules Examples: Using a specific source segment to derive the value of a different segment in a different chart of accounts

1. Navigation: Setup > Financials > Subledger Accounting > Accounting Methods Builder >

Journal Entry Setups > Account Derivation Rules

2. In this example, a segment rule is created to derive the cost center segment of the Accounting Flexfield. Flexfield Qualifier for Department is Cost Center Segment.


Segment Rules Example 1: Chart of Accounts Structure Chart of Accounts Name Structure ________________________________________________________________________________________

Transaction Company-Department-Account-Sub-Account-Product Accounting Company-Department-Account-Sub-Account-Product

3. The account derivation rule is defined to derive the cost center segment value from the Cost Center segment of the Invoice Distribution Account. The ADR is attached at the Liability event class.

4. This setup can be used when Automatic offset option from Payables Option. The table below describes the account derivation rule for Example 1.

Segment Rules Example 1: Account Derivation Rule Priority Value Type Value Segment

____________________________________________________________________ 1 Source Invoice Distribution Account Cost Center


5. The segment built by the Subledger Accounting program is determined by applying the account derivation rule to the source values. According to the account derivation rule, the segment to be used to derive the cost center segment of the accounting chart of accounts is the Cost Center segment.

Complete the setup: 1). JLD: Eg: For Liability, Basic Event Class attach ADR created for Cost Center Segment: VRC_ADR_INV_DISTR_ACC_C2

2). AAD: For Invoices Event Class we have to associate JLD: VRC_ACCR_INV_C2


4). Attach AAD to SLAM: (N) Payables > Setup > Accounting Setups > Subledger Accounting Setup > Methods and Definitions > Subledger Accounting Methods


5). Attach SLAM to Ledger:

6). Test the setup: Enter the invoice: Liability account: 01-000-2210-0000-000


Enter the invoice distribution account:

Accounting: Liability account has the same Cost Center as Item Expense Account from Invoice distributions.


Case 3: Using Descriptive flexfield with a Value Set attached and a mapping set to derive the value of a segment

In this example, a value set is defined at the Invoice header level: Invoice Type. Assume that the values are given as described in the following table.

1. Setup Descriptive flexfields at the Invoice header level:

Navigation: (N) Payables > Setup > Flexfields > Descriptive > Segments


Define Values for Value Set:


2. Setup Mapping set:

Assume that Mapping set has the following values: Value Set Example 1: Mapping Set Value Type Input Value Output Value

________________________________________ Input Consulting 294 Input Maintenance 293 Input Training 291 Note: Input Values from Mapping set have to be the same with Value from Value Set. The Segment Product from Accounting Flexfield has to have these values already set.


3. Define Account Derivation Rules based on Mapping Set:


4. Define Journal Line Definitions: attach ADR to each JLT where you want to derive the account In this Test ADR created is attached for Item Expense and Liability, Basic.


5. Define AAD:

6. Attach AAD to SLAM


7. Attach SLAM to Ledger

8. Test the setup:


Accounting created for the invoice contain Product 293 (Maintenance)


1. Navigation: Setup > Financials > Subledger Accounting > Accounting Methods Builder > Journal Entry Setups > Account Derivation Rules

2. Give your ADR rule code, name, and description a meaningful name. 3. The accounting flexfield needs to be picked if the ADR is to be on a rule for segments that do not have a flexfield qualifier or if a constant value is to be chosen. As the product segment does not have a qualifier and we do intend to use a constant value, it is necessary to assign an accounting flexfield to the rule. The output type is segment and the segment chosen is the Product Segment. This segment will only be available in the pick list if the appropriate accounting flexfield is chosen. 4. In the Priorities zone of the form assign a priority. The Value Type is Constant and the Value is 150, which is a valid segment value for this segment. 5. No Condition is necessary here. 6. Save. This ADR is later used when doing the Journal Line definitions.

Case 4: Custom your ADR using for Loss/Gain a constant value for the Account Segment


For this Test Case it was used a Credit Memo with a Refund. 1. Setup Financials Options:

Normally, the Realized Gain and Loss are defaulted from Payables Options > Tab Currency.

2. SLA Setup for Refund Loss:

2.1 Application Accounting Definitions:


2.2 Journal Line Definitions:


2.3 Journal Line Type:


2.4 Account Derivation rules associated to JLT:

A constant value will be generated for the Account segment.


Instead of Realized Loss: 01-740-7844-0000-000 defined in Payables Options, the following account will be generated according to ADR defined in SLA: 01-740-7855-0000-000

2.5 Results: Credit memo:

Refund created:

Accounting for Refund:

Loss account: 01-740-7855-0000-000


Subledger Accounting Customization Journal Line Definition

Case 5: Custom your Line Description

1. Query The Journal Line Definitions you want to adjust description

Choose Line Description. The Line Description seeded will be displayed:


2. Complete the details you want to see on Journal Line Description:

- Value Type: Enter Constant for a constant value and specify Constant Value. - Source: Find the source you need to view in the journal line.


3. Change the Seeded Line description with the custom line description.


4. Test the setup

(M) Reports View Accounting:


(B) View Journal Entry:

Select Show for Item Expense Line:

Run Create accounting and click on Journal Import:


(B) View Output. View Journal created:

Payables A 2535051 11043701 Go to GL Journals:


Subledger Accounting Customization Application Accounting Definitions

Case 6: Custom your Header Assignments

(B) Header Assignments:


(B) Journal Entry Descriptions. To customize Journal Entry Description (JED), you have to copy Oracle Seeded JED or you can create one new JED. This example is made using Copy option.


(B) Done.

Select the line you want to modify or remove if you consider unnecessary. Choose (B) Details.


Assign Header Description in the Header Assignments:

Save your work.


If you want to have the same header assignments for other categories, please complete for:

- Credit Memo; - Debit Memo; - Invoices; - Prepayment; - Prepayment applications.

Note: AAD has to be validated. Choose (B) Validate to validate it. Results: Before custom header assignments:


After custom header assignments:

Case 7: Automatic Offset Method Account enabled and the impact in SLA

Automatic Offset Method. Enable Automatic Offsets by selecting Balancing or Account as your Offset Method if you want Payables to automatically create balancing accounting entries for your invoice and payment transactions. For details, see: Automatic Offsets. Attention: Carefully consider this option before setting it. Changing your automatic offset setting after creating accounting entries can result in slower accounting process performance. Also, under certain circumstances, changing this setting can result in accounting irregularities. None. Do not use Automatic Offsets. For your invoice transactions, Payables creates one liability accounting entry, and for your payment transactions, Payables creates one cash type accounting entry. Account. When creating the offsetting liability account, Payables uses the expense GL Account from the invoice distribution and overwrites the account segment with the default liability account from the supplier site. Navigation: Payables > Setup > Options > Payables Options > Account enabled


When the Automatic Offset Account is enabled, the Invoice will have the following accounting, even if the liability account introduced was 01-000-2210-0000-000: Example of accounting Liability account Item Expense account --------------------------------------------------------------------------------

Line 1: 01-111-2210-0000-000 Line 2: 01-112-2210-0000-000 Line 1: 01-111-2372-0000-000 Line 2: 01-112-2373-0000-000 The liability account will take the same segments from the distribution accounts and will be broken and updated with two different segments: 111 and 112 instead of 000.

1. Enter the invoice with Liability account: 01-000-2210-0000-000


2. Enter the distributions with different values for segment2: 111 and 112.

3. Verify accounting: (M) Reports > View Accounting


Select the liability line you want to verify > (B) View Journal Entry:

Select Show to verify the Journal Line Type for Liability Account:

JLT Name: Liability with Automatic Offsets Account Segment

Case 8: Automatic Offset Method Balancing enabled and the impact in SLA

Balancing. Payable uses the supplier site's default liability account and overwrites the balancing segment (usually the company code) with the balancing segment from the expense distribution GL Account. Navigation: Payables > Setup > Options > Payables Options > Balancing Enabled


When the Automatic Offset Balancing is enabled, the Invoice will have the following accounting, even if the liability account introduced was 01-000-2210-0000-000: Example of accounting Liability account Item Expense account -------------------------------------------------------------------------------- Line 1: 01-000-2210-0000-000 Line 2: 70-000-2210-0000-000 Line 1: 01-111-2107-0000-000 Line 2: 70-112-2110-0000-000 The liability account will take the balancing segments account from the distribution accounts and will be broken and updated with two different segments: 111 and 112 instead of 000.

1. Enter the invoice with Liability account: 01-000-2210-0000-000


2. Enter the distributions with different balancing segments: 01 and 70

3. Verify accounting: (M) Reports > View Accounting


Select the liability line you want to verify > (B) View Journal Entry:

Select Show to verify the Journal Line Type for Liability Account:

JLT Name: Liability with Automatic Offsets Balancing Segment


References

Refer to the following documentation for more information on the Subledger Accounting feature: Oracle Subledger Accounting Implementation Guide Oracle documentation can be found at: http://www.oracle.com/technetwork/documentation/applications-167706.html

ap sla version 1.1 final

Documents

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default setup

accounting methods builder

journal line definition

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