r12.x oracle project costing...

R12.x Oracle Project Costing Fundamentals Student Guide

D60115GC10

Edition 1.0

February 2010

D65238

Copyright © 2010, Oracle. All rights reserved. Disclaimer This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy and print this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way. Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display, perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorization of Oracle. The information contained in this document is subject to change without notice. If you find any problems in the document, please report them in writing to: Oracle University, 500 Oracle Parkway, Redwood Shores, California 94065 USA. This document is not warranted to be error-free. Restricted Rights Notice If this documentation is delivered to the United States Government or anyone using the documentation on behalf of the United States Government, the following notice is applicable: U.S. GOVERNMENT RIGHTS The U.S. Government’s rights to use, modify, reproduce, release, perform, display, or disclose these training materials are restricted by the terms of the applicable Oracle license agreement and/or the applicable U.S. Government contract. Trademark Notice Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

Author

Debjit Nag

Technical Contributors and Reviewers

Ivy Farren, Mayank Khandelwal, Ruth Kukla, Erin Moss

This book was published using: Oracle Tutor

Copyright © Oracle 2010. All rights reserved.

R12.x Oracle Project Costing Fundamentals Table of Contents i

Table of Contents

Overview of Oracle Project Costing...............................................................................................................1-1 Overview of Oracle Project Costing..............................................................................................................1-3 Objectives ......................................................................................................................................................1-4 Agenda...........................................................................................................................................................1-5 Oracle Enterprise Project Management Solution...........................................................................................1-6 Oracle Project Costing and Integration..........................................................................................................1-7 Agenda...........................................................................................................................................................1-11 Oracle Project Costing and Project Classes ...................................................................................................1-12 Overview of Resources In Oracle Projects ....................................................................................................1-13 Costing Flow .................................................................................................................................................1-15 Collect and Manage All Costs .......................................................................................................................1-17 Manage Costs ................................................................................................................................................1-18 View Accounting: Transaction Details..........................................................................................................1-20 View Accounting: Final Subledger Accounting Entries................................................................................1-21 View Expenditure Item Details .....................................................................................................................1-22 Summary........................................................................................................................................................1-23 Quiz ...............................................................................................................................................................1-24

Defining Projects for Costing .........................................................................................................................2-1 Defining Projects for Costing ........................................................................................................................2-3 Objectives ......................................................................................................................................................2-4 Agenda...........................................................................................................................................................2-5 Overview of Projects and Tasks ....................................................................................................................2-6 Project Classes and Project Types .................................................................................................................2-7 Overview of Project Templates .....................................................................................................................2-8 Organizing a Project Structure.......................................................................................................................2-9 Basic Project Information ..............................................................................................................................2-10 Quiz ...............................................................................................................................................................2-12 Agenda...........................................................................................................................................................2-14 Burden Schedules for Costing .......................................................................................................................2-15 Organization Overrides..................................................................................................................................2-16 Project Currency............................................................................................................................................2-17 Currencies and Expenditures .........................................................................................................................2-18 Costing Currency Options .............................................................................................................................2-19 Quiz ...............................................................................................................................................................2-20 Agenda...........................................................................................................................................................2-21 Controlling Expenditures Overview ..............................................................................................................2-22 Project Statuses..............................................................................................................................................2-23 Task Chargeable Status .................................................................................................................................2-24 Transaction Dates ..........................................................................................................................................2-25 Transaction Controls......................................................................................................................................2-26 Exclusive and Inclusive Transaction Controls...............................................................................................2-28 Allowable Charges for Each Transaction Control .........................................................................................2-29 Determining if an Item is Chargeable............................................................................................................2-30 Quiz ...............................................................................................................................................................2-31 Summary........................................................................................................................................................2-32

Overview of Budgetary Controls, Budget Integration and Core Budgeting ..............................................3-1 Overview of Budgetary Controls, Budget Integration and Core Budgeting ..................................................3-3 Objectives ......................................................................................................................................................3-4 Agenda...........................................................................................................................................................3-5 Overview of Budgetary Controls...................................................................................................................3-6 Budgetary Control Settings: Time Intervals ..................................................................................................3-7


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Budgetary Control Settings: Control Levels..................................................................................................3-9 Example: Budgetary Control Rollup .............................................................................................................3-10 Entering Budget Amounts for Controlled Budgets........................................................................................3-11 Budget Definition Strategies..........................................................................................................................3-13 Transaction Processing with Controlled Budgets ..........................................................................................3-14 Overview of the Budgetary Control Process Flow ........................................................................................3-16 Viewing Budgetary Control Results ..............................................................................................................3-18 Maintaining Budgetary Control Balances......................................................................................................3-19 Budgetary Controls Cross Charge Restriction...............................................................................................3-20 Quiz ...............................................................................................................................................................3-21 Agenda...........................................................................................................................................................3-24 Overview of Budget Integration ....................................................................................................................3-25 Generating Accounting for Integrated Budgets .............................................................................................3-26 Accounting Event Model Overview ..............................................................................................................3-28 Budget Check Funds Processing Overview...................................................................................................3-31 Creating a Baseline for an Integrated Budget ................................................................................................3-33 Budget Integration Workflow........................................................................................................................3-35 Reviewing and Overriding Budget Account Details......................................................................................3-36 Viewing Encumbrance and Budget Subledger Accounting...........................................................................3-37 Quiz ...............................................................................................................................................................3-38 Agenda...........................................................................................................................................................3-39 Top-Down Budget Integration.......................................................................................................................3-40 Top-Down Budget Integration Procedures ....................................................................................................3-41 Encumbrance Accounting Example...............................................................................................................3-43 Creating Project Budgets for Top-Down Budget Integration ........................................................................3-46 Maintaining the Project Budget .....................................................................................................................3-47 Year-End Processing .....................................................................................................................................3-49 Agenda...........................................................................................................................................................3-50 Bottom-Up Budget Integration ......................................................................................................................3-51 Bottom-Up Budget Integration Procedures ...................................................................................................3-52 Agenda...........................................................................................................................................................3-54 Non-Integrated Budgets with Budgetary Controls Procedures......................................................................3-55 Agenda...........................................................................................................................................................3-56 Budgeting Implementation Steps...................................................................................................................3-57 Define Additional Core Budgeting Setup......................................................................................................3-58 Implementing Budgetary Controls ................................................................................................................3-59 Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting .........................................3-60 Budgetary Controls: Define Profile Options..................................................................................................3-61 Budgetary Controls: Define Control Levels and the Time Interval...............................................................3-62 Budgetary Controls: Create an Initial Budget................................................................................................3-64 Budgetary Controls: Adjust Default Control Levels .....................................................................................3-65 Implementing Budget Integration..................................................................................................................3-67 Budget Integration: Define the Project Budget Account Generation Workflow ...........................................3-68 Budget Integration: Define Profile Options...................................................................................................3-70 Budget Integration: Implement Top-Down Integration .................................................................................3-71 Budget Integration: Implement Bottom-Up Integration ................................................................................3-73 Quiz ...............................................................................................................................................................3-74 Summary........................................................................................................................................................3-75

Entering Expenditures ....................................................................................................................................4-1 Entering Expenditures ...................................................................................................................................4-3 Objectives ......................................................................................................................................................4-4 Agenda...........................................................................................................................................................4-5 Costing Flow: Enter Expenditures.................................................................................................................4-6 Expenditures Overview .................................................................................................................................4-7 Multiple Organization Access Control (MOAC)...........................................................................................4-8 Expenditures Overview .................................................................................................................................4-9


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Currency Fields for Expenditures ..................................................................................................................4-11 Pre-Approved Batch Expenditure Entry Flow Overview ..............................................................................4-12 Statuses for Pre-Approved Expenditure Batches...........................................................................................4-13 Enter Pre-Approved Batches .........................................................................................................................4-14 Submitting an Expenditure Batch ..................................................................................................................4-16 Reversing an Expenditure Batch ...................................................................................................................4-17 Correcting Expenditure Batches ....................................................................................................................4-18 Copying an Expenditure Batch......................................................................................................................4-20 Reviewing Project Expenditures....................................................................................................................4-21 Viewing Accounting Lines ............................................................................................................................4-24 Quiz ...............................................................................................................................................................4-25 Agenda...........................................................................................................................................................4-27 Automatically Reversing Expenditure Batches .............................................................................................4-28 Releasing the Batch .......................................................................................................................................4-29 GL Periods for the Expenditure Items ...........................................................................................................4-30 Agenda...........................................................................................................................................................4-31 Upload Expenditure Batches from Microsoft Excel ......................................................................................4-32 Upload Contingent Worker Timecards..........................................................................................................4-34 Quiz ...............................................................................................................................................................4-36 Agenda...........................................................................................................................................................4-37 Expenditure Batch Reports ............................................................................................................................4-38 Quiz ...............................................................................................................................................................4-39 Agenda...........................................................................................................................................................4-40 Costing Flow: Import Transactions ...............................................................................................................4-41 Overview of Transaction Sources..................................................................................................................4-42 Overview of Transaction Import ...................................................................................................................4-43 Resolving Import Exceptions ........................................................................................................................4-44 Quiz ...............................................................................................................................................................4-45 Correcting Rejected Transactions within Oracle Project Costing..................................................................4-46 Summary........................................................................................................................................................4-48

Implementing Expenditures ...........................................................................................................................5-1 Implementing Expenditures...........................................................................................................................5-3 Objectives ......................................................................................................................................................5-4 Expenditures Implementation Steps ..............................................................................................................5-5 Agenda...........................................................................................................................................................5-6 Expenditure Categories..................................................................................................................................5-7 Define Revenue Categories ...........................................................................................................................5-8 Define Units...................................................................................................................................................5-9 Expenditure Type Classes..............................................................................................................................5-10 Define Expenditure Types .............................................................................................................................5-12 Multiple Expenditure Type Classes Per Expenditure Type ...........................................................................5-14 Quiz ...............................................................................................................................................................5-15 Agenda...........................................................................................................................................................5-17 Transaction Control Extension ......................................................................................................................5-18 Quiz ...............................................................................................................................................................5-19 AutoApproval Extension ...............................................................................................................................5-20 Agenda...........................................................................................................................................................5-21 Define Transaction Sources...........................................................................................................................5-22 Example Predefined Transaction Sources .....................................................................................................5-23 Example Predefined Transaction Sources: Manufacturing and Inventory.....................................................5-24 Quiz ...............................................................................................................................................................5-26 Agenda...........................................................................................................................................................5-27 Listings ..........................................................................................................................................................5-28 Summary........................................................................................................................................................5-29

Performing Cost Processing............................................................................................................................6-1 Performing Cost Processing ..........................................................................................................................6-3


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Objectives ......................................................................................................................................................6-4 Agenda...........................................................................................................................................................6-5 Overview of Costing......................................................................................................................................6-6 Costing Concepts...........................................................................................................................................6-9 Overview of Encumbrance Accounting.........................................................................................................6-10 Quiz ...............................................................................................................................................................6-12 Agenda...........................................................................................................................................................6-13 Costing Flow: Distribute Costs......................................................................................................................6-14 Cost Distribution Processing Flow ................................................................................................................6-15 Determining Costs .........................................................................................................................................6-16 Quiz ...............................................................................................................................................................6-18 Burden Cost Calculations ..............................................................................................................................6-19 AutoAccounting: Distribution Programs .......................................................................................................6-20 Cost Distribution Concurrent Programs ........................................................................................................6-21 Agenda...........................................................................................................................................................6-23 Costing Flow: Create Accounting .................................................................................................................6-24 Integration with Oracle Subledger Accounting .............................................................................................6-25 Generating Cost Accounting Events..............................................................................................................6-26 AutoAccounting: Generate Accounting Events.............................................................................................6-27 Creating and Transferring Accounting ..........................................................................................................6-28 Oracle General Ledger Journal Import ..........................................................................................................6-29 Quiz ...............................................................................................................................................................6-30 Agenda...........................................................................................................................................................6-31 Streamline Processes .....................................................................................................................................6-32 Submitting Streamline Processes...................................................................................................................6-34 Agenda...........................................................................................................................................................6-35 Overview of Period Processing .....................................................................................................................6-36 Control of GL Period Statuses for Project Transactions................................................................................6-37 Transaction Accounting Methods..................................................................................................................6-38 Period End Date Accounting .........................................................................................................................6-39 Expenditure Item Date Accounting ...............................................................................................................6-41 Expenditure Item Date Accounting with Common Accounting Periods .......................................................6-43 Sweeping Transaction Accounting Events ....................................................................................................6-45 Quiz ...............................................................................................................................................................6-47 Summary........................................................................................................................................................6-48

Accounting for Costs .......................................................................................................................................7-1 Accounting for Costs .....................................................................................................................................7-3 Objectives ......................................................................................................................................................7-4 Agenda...........................................................................................................................................................7-5 Overview of Accounting for Costs ................................................................................................................7-6 AutoAccounting ............................................................................................................................................7-7 AutoAccounting Rules ..................................................................................................................................7-8 AutoAccounting Rule Mapping.....................................................................................................................7-9 Constant Value ..............................................................................................................................................7-10 Parameter Value ............................................................................................................................................7-11 SQL Select Statement Value .........................................................................................................................7-12 Lookup Sets ...................................................................................................................................................7-13 Selecting a Segment Value Source ................................................................................................................7-15 Assign Rules..................................................................................................................................................7-16 Quiz ...............................................................................................................................................................7-18 Agenda...........................................................................................................................................................7-19 AutoAccounting for Costs Implementation Steps .........................................................................................7-20 Accounting for Labor Costs...........................................................................................................................7-21 Accounting for Expense Report Costs...........................................................................................................7-22 Accounting for Usage Costs ..........................................................................................................................7-23 Accounting for Miscellaneous Costs .............................................................................................................7-24


R12.x Oracle Project Costing Fundamentals Table of Contents v

Accounting for Burden Transactions.............................................................................................................7-25 Accounting for Total Burdened Cost.............................................................................................................7-26 Accounting for WIP and Inventory Costs......................................................................................................7-27 Accounting for Supplier Cost Adjustments ...................................................................................................7-29 Listings ..........................................................................................................................................................7-31 Quiz ...............................................................................................................................................................7-32 Agenda...........................................................................................................................................................7-33 Account Generator.........................................................................................................................................7-34 Account Generator Terminology...................................................................................................................7-36 Implementing Accounting for Project-Related Supplier Costs and Expense Reports ...................................7-37 Quiz ...............................................................................................................................................................7-39 Agenda...........................................................................................................................................................7-40 Encumbrance Accounting and Project Budgets.............................................................................................7-41 Project Budget Account Generation Workflow.............................................................................................7-42 Quiz ...............................................................................................................................................................7-43 Agenda...........................................................................................................................................................7-44 Overview of Oracle Subledger Accounting...................................................................................................7-45 Integration with Oracle Subledger Accounting .............................................................................................7-46 Accounting Event Model Overview ..............................................................................................................7-47 Quiz ...............................................................................................................................................................7-49 Agenda...........................................................................................................................................................7-50 Oracle Subledger Accounting for Costs Implementation Steps.....................................................................7-51 Oracle Subledger Accounting for Costs Implementation Steps (continued) .................................................7-52 Sources and Custom Sources.........................................................................................................................7-53 Journal Entry Methods and Definitions .........................................................................................................7-54 Associating Subledger Accounting Methods and Ledgers ............................................................................7-56 Post-Accounting Programs ............................................................................................................................7-57 Cross-Entity Balancing Rules........................................................................................................................7-59 Oracle Subledger Accounting Inquiries.........................................................................................................7-60 Audit Reports.................................................................................................................................................7-61 Summary........................................................................................................................................................7-62

Implementing Non-Labor Costing .................................................................................................................8-1 Implementing Non-Labor Costing.................................................................................................................8-3 Objectives ......................................................................................................................................................8-4 Agenda...........................................................................................................................................................8-5 Implementing Non-Labor Costing.................................................................................................................8-6 Non-Labor Costing Implementation Steps ....................................................................................................8-7 Defining Non-Labor Resources.....................................................................................................................8-8 Non-Labor Cost Rates ...................................................................................................................................8-9 Non-Labor Cost Rate Overrides ....................................................................................................................8-10 Agenda...........................................................................................................................................................8-11 Listings ..........................................................................................................................................................8-12 Quiz ...............................................................................................................................................................8-13 Summary........................................................................................................................................................8-15

Implementing Labor Costing..........................................................................................................................9-1 Implementing Labor Costing.........................................................................................................................9-3 Objectives ......................................................................................................................................................9-4 Agenda...........................................................................................................................................................9-5 Labor Costing Implementation Steps ............................................................................................................9-6 Define Labor Costing Multipliers..................................................................................................................9-7 Quiz ...............................................................................................................................................................9-8 Labor Costing Rules ......................................................................................................................................9-9 Quiz ...............................................................................................................................................................9-11 Rate Schedules...............................................................................................................................................9-12 Assign Costing Rules and Rate Schedules ....................................................................................................9-14 Labor Costing Overrides ...............................................................................................................................9-16


R12.x Oracle Project Costing Fundamentals Table of Contents vi

Labor Costing Extension ...............................................................................................................................9-17 Labor Transaction Extension.........................................................................................................................9-18 Implement Overtime Processing....................................................................................................................9-20 Overtime Calculation Extension....................................................................................................................9-22 Quiz ...............................................................................................................................................................9-23 Agenda...........................................................................................................................................................9-24 Listings ..........................................................................................................................................................9-25 Summary........................................................................................................................................................9-26

Implementing Burden Costing .......................................................................................................................10-1 Implementing Burden Costing.......................................................................................................................10-3 Objectives ......................................................................................................................................................10-4 Agenda...........................................................................................................................................................10-5 Overview of Burdening .................................................................................................................................10-6 Burden Costing Terminology ........................................................................................................................10-7 Storing Burden Cost Calculations .................................................................................................................10-8 Accounting for Burden Costs ........................................................................................................................10-9 Project Types and Burdening.........................................................................................................................10-11 Quiz ...............................................................................................................................................................10-13 Agenda...........................................................................................................................................................10-14 Burden Costing Implementation Steps ..........................................................................................................10-15 Cost Bases and Cost Base Types ...................................................................................................................10-16 Burden Cost Codes ........................................................................................................................................10-17 Burden Structures ..........................................................................................................................................10-18 Burden Schedule Types and Burden Schedules.............................................................................................10-22 Assigning Burden Multipliers........................................................................................................................10-23 Defining Burden Schedules ...........................................................................................................................10-25 Assigning Burden Schedules .........................................................................................................................10-27 Burden Costing Extension .............................................................................................................................10-28 Reporting Separate Burden Transactions with Source Resources .................................................................10-29 Accounting for Cost Adjustments Resulting from Burden Schedule Revisions............................................10-31 Accounting for Cost Adjustments Example 1: Total Burdened Costs without Incremental Transactions ....10-32 Accounting for Cost Adjustments Example 2: Total Burdened Costs with Incremental Transactions .........10-34 Accounting for Cost Adjustments Example 3: Summarized Burden Cost Components without Incremental Transactions...................................................................................................................................................10-36 Accounting for Cost Adjustments Example 4: Summarized Burden Cost Components with Incremental Transactions...................................................................................................................................................10-38 Quiz ...............................................................................................................................................................10-40 Agenda...........................................................................................................................................................10-43 Burden Calculation in Costing Programs ......................................................................................................10-44 Concurrent Programs: Total Burdened Cost Accounting ..............................................................................10-47 Concurrent Programs: Account for Summarized Burden Cost Components.................................................10-48 Maintenance Concurrent Programs ...............................................................................................................10-49 Quiz ...............................................................................................................................................................10-50 Summary........................................................................................................................................................10-51

Performing Cost Adjustments ........................................................................................................................11-1 Performing Cost Adjustments........................................................................................................................11-3 Objectives ......................................................................................................................................................11-4 Agenda...........................................................................................................................................................11-5 Adjusting Expenditure Items .........................................................................................................................11-6 Adjustments to Imported Transactions ..........................................................................................................11-7 Project Status and Adjustments .....................................................................................................................11-9 Recalculate Burden Cost................................................................................................................................11-10 Recalculate Raw Cost ....................................................................................................................................11-11 Change Work Type........................................................................................................................................11-12 Change Comment ..........................................................................................................................................11-13 Split Item .......................................................................................................................................................11-14


R12.x Oracle Project Costing Fundamentals Table of Contents vii

Transfer Item .................................................................................................................................................11-15 Change Currency Attributes ..........................................................................................................................11-16 Adjustments to Multi-Currency Transactions................................................................................................11-17 Adjustments to Supplier Costs.......................................................................................................................11-18 Mass Adjustments..........................................................................................................................................11-20 Correct Approved Expenditure Items ............................................................................................................11-22 Processing Adjustments.................................................................................................................................11-24 Results of Adjustment Processing .................................................................................................................11-26 Quiz ...............................................................................................................................................................11-28 Agenda...........................................................................................................................................................11-32 Audit Reporting for Expenditure Adjustments ..............................................................................................11-33 Summary........................................................................................................................................................11-35

Integration with Oracle Purchasing and Oracle Payables...........................................................................12-1 Integration with Oracle Purchasing and Oracle Payables..............................................................................12-3 Objectives ......................................................................................................................................................12-4 Agenda...........................................................................................................................................................12-5 Overview of Supplier Costs...........................................................................................................................12-6 Oracle Purchasing and Oracle Payables (Accrual) ........................................................................................12-7 Oracle Purchasing and Oracle Payables (Cash).............................................................................................12-9 Quiz ...............................................................................................................................................................12-11 Agenda...........................................................................................................................................................12-12 Entering Project-Related Information............................................................................................................12-13 Validating Project Information ......................................................................................................................12-15 Budgetary Control Activation........................................................................................................................12-16 Commitment Reporting .................................................................................................................................12-17 Accounting Transactions ...............................................................................................................................12-19 Quiz ...............................................................................................................................................................12-21 Agenda...........................................................................................................................................................12-22 Integration with Oracle Purchasing ...............................................................................................................12-23 Documents in Oracle Purchasing...................................................................................................................12-25 Agenda...........................................................................................................................................................12-26 Supplier Costs and Accounting Methods.......................................................................................................12-27 Integration with Oracle Payables (Accrual)...................................................................................................12-28 Integration with Oracle Payables (Cash) .......................................................................................................12-30 Invoices in Oracle Payables...........................................................................................................................12-31 Quiz ...............................................................................................................................................................12-32 Agenda...........................................................................................................................................................12-33 Interfacing Supplier Costs .............................................................................................................................12-34 Payment Control ............................................................................................................................................12-36 Predefined Transaction Sources ....................................................................................................................12-37 Predefined Transaction Sources (continued) .................................................................................................12-38 Supplier Cost Audit Report ...........................................................................................................................12-39 Expenditure Inquiry.......................................................................................................................................12-40 Viewing Project Adjustments from the Invoice Workbench .........................................................................12-41 Agenda...........................................................................................................................................................12-43 Managing Subcontractor Payments ...............................................................................................................12-44 Managing Financing and Advances...............................................................................................................12-46 Managing Retainage ......................................................................................................................................12-47 Quiz ...............................................................................................................................................................12-49 Agenda...........................................................................................................................................................12-50 Supplier Cost Adjustments Overview............................................................................................................12-51 Restrictions to Supplier Cost Adjustments in Oracle Project Costing...........................................................12-53 Adjusting Project-Related Documents in Oracle Purchasing ........................................................................12-55 Writing Off Receipt Accruals in Oracle Purchasing......................................................................................12-57 Adjusting Project-Related Documents in Oracle Payables............................................................................12-58 Adjusting Supplier Costs for Non-Capital Assets .........................................................................................12-60


R12.x Oracle Project Costing Fundamentals Table of Contents viii

Manually Adjusting Unmatched Reversing Expenditure Items.....................................................................12-61 Processing Adjustments.................................................................................................................................12-62 Prioritizing Supplier Costs Adjustments........................................................................................................12-64 Accounting for Supplier Cost Adjustments ...................................................................................................12-69 Quiz ...............................................................................................................................................................12-74 Agenda...........................................................................................................................................................12-76 Oracle Purchasing and Oracle Payables Integration Implementation Steps ..................................................12-77 Implementing Oracle Purchasing and Oracle Payables Integration...............................................................12-79 Set Profile Options for Project-Related Documents ......................................................................................12-80 Define the Supplier Invoice Account Generator............................................................................................12-82 Defining a Project-Related Purchasing Transactions Account Generator .....................................................12-83 Specify a Default Supplier Cost Credit Account ...........................................................................................12-84 Define Project-Related Distribution Sets.......................................................................................................12-85 Define Oracle Payables Descriptive Flexfields and Related Profiles ............................................................12-86 Summary........................................................................................................................................................12-87

Integration with Oracle Internet Expenses ...................................................................................................13-1 Integration with Oracle Internet Expenses.....................................................................................................13-3 Objectives ......................................................................................................................................................13-4 Agenda...........................................................................................................................................................13-5 Oracle Internet Expenses ...............................................................................................................................13-6 Expense Report Flow.....................................................................................................................................13-7 Deriving Project Data from Expense Reports................................................................................................13-9 Disconnected Expense Reporting Process.....................................................................................................13-10 Adjusting Expense Reports............................................................................................................................13-11 Quiz ...............................................................................................................................................................13-13 Agenda...........................................................................................................................................................13-15 Integration with Oracle Internet Expenses Implementation Steps.................................................................13-16 Install and Implement Oracle Internet Expenses ...........................................................................................13-17 Set Profile Options for Project-Related Expense Report Entry .....................................................................13-18 Set Profile Options for Project-Related Expense Report Approval ...............................................................13-19 Define the Project Expense Report Account Generator.................................................................................13-21 Define a Project-Related Expense Report Template .....................................................................................13-22 Quiz ...............................................................................................................................................................13-23 Summary........................................................................................................................................................13-25

Integration with Oracle Time & Labor .........................................................................................................14-1 Integration with Oracle Time & Labor ..........................................................................................................14-3 Objectives ......................................................................................................................................................14-4 Agenda...........................................................................................................................................................14-5 Oracle Time & Labor Overview....................................................................................................................14-6 Disconnected Time Entry ..............................................................................................................................14-7 Collecting and Processing Project-Related Timecards ..................................................................................14-8 Editing Timecards in Oracle Time & Labor ..................................................................................................14-10 Contingent Worker Timecards with PO Integration......................................................................................14-11 Quiz ...............................................................................................................................................................14-13 Agenda...........................................................................................................................................................14-15 Integration with Oracle Time & Labor Implementation Steps ......................................................................14-16 Install and Implement Oracle Time & Labor.................................................................................................14-17 Set Profile Options for Project-Related Timecards .......................................................................................14-18 Implement Client Extensions to Route and Approve Timecards...................................................................14-19 Quiz ...............................................................................................................................................................14-20 Summary........................................................................................................................................................14-21

Allocations and AutoAllocations ....................................................................................................................15-1 Allocations and AutoAllocations...................................................................................................................15-3 Objectives ......................................................................................................................................................15-4 Agenda...........................................................................................................................................................15-5


R12.x Oracle Project Costing Fundamentals Table of Contents ix

Overview of Allocations................................................................................................................................15-6 Allocation Terminology ................................................................................................................................15-7 Difference between Allocation and Burdening..............................................................................................15-9 Allocation Rules Implementation Steps ........................................................................................................15-10 Allocation Rules ............................................................................................................................................15-11 Basis Method .................................................................................................................................................15-12 Basis Method - Spread Evenly ......................................................................................................................15-13 Basis Method - Target Percent and Spread Evenly .......................................................................................15-14 Basis Method - Prorate ..................................................................................................................................15-15 Basis Method - Target Percentage and Prorate..............................................................................................15-16 Allocation Rule Definition ............................................................................................................................15-17 Source Definition...........................................................................................................................................15-19 Target Definition ...........................................................................................................................................15-21 Offset Definition............................................................................................................................................15-23 Prorated Basis Method Definition .................................................................................................................15-25 Copy Allocation Rules...................................................................................................................................15-26 Deleting or Modifying Allocation Rules .......................................................................................................15-27 Client Extensions for Allocations..................................................................................................................15-28 Quiz ...............................................................................................................................................................15-30 Agenda...........................................................................................................................................................15-34 Allocating Costs ............................................................................................................................................15-35 Creating Allocation Runs ..............................................................................................................................15-36 Allocation Run Statuses.................................................................................................................................15-37 Deleting Allocation Runs ..............................................................................................................................15-38 Releasing Allocation Runs ............................................................................................................................15-39 Reversing Allocation Runs............................................................................................................................15-40 Quiz ...............................................................................................................................................................15-41 Agenda...........................................................................................................................................................15-42 Overview of AutoAllocations........................................................................................................................15-43 AutoAllocation Rules Implementation Steps.................................................................................................15-46 AutoAllocation Set Definition.......................................................................................................................15-47 Implementing Workflow and Client Extensions for AutoAllocations...........................................................15-49 Quiz ...............................................................................................................................................................15-50 Agenda...........................................................................................................................................................15-51 Submitting an AutoAllocation Set.................................................................................................................15-52 Viewing the Status of AutoAllocation Sets ...................................................................................................15-53 Summary........................................................................................................................................................15-54

Asset Capitalization.........................................................................................................................................16-1 Asset Capitalization.......................................................................................................................................16-3 Objectives ......................................................................................................................................................16-4 Agenda...........................................................................................................................................................16-5 Overview of Asset Capitalization..................................................................................................................16-6 Project-Related Asset Processing Flow .........................................................................................................16-9 Accounting Example .....................................................................................................................................16-10 Quiz ...............................................................................................................................................................16-16 Agenda...........................................................................................................................................................16-18 Project Types for Asset Capitalization ..........................................................................................................16-19 Quiz ...............................................................................................................................................................16-21 Agenda...........................................................................................................................................................16-22 Asset Processing Flow...................................................................................................................................16-23 Specifying Costs ............................................................................................................................................16-25 Defining Assets for Capital Projects..............................................................................................................16-27 Streamlining Asset Creation ..........................................................................................................................16-29 Asset Grouping Levels ..................................................................................................................................16-30 Asset Cost Allocation Methods .....................................................................................................................16-31 Specifying an Actual Date in Service or a Retirement Date..........................................................................16-32


R12.x Oracle Project Costing Fundamentals Table of Contents x

Capital Events................................................................................................................................................16-33 Generating Summary Asset Lines .................................................................................................................16-35 Assigning Asset Lines ...................................................................................................................................16-37 Sending Asset Lines to Oracle Assets ...........................................................................................................16-38 Quiz ...............................................................................................................................................................16-40 Agenda...........................................................................................................................................................16-41 Adjusting Capital Project Costs.....................................................................................................................16-42 Reversing Capitalization of Assets in Oracle Project Costing.......................................................................16-43 Abandoning a Capital Asset in Oracle Project Costing .................................................................................16-45 Agenda...........................................................................................................................................................16-46 Asset Capitalization Implementation Steps ...................................................................................................16-47 Implement Asset Extensions..........................................................................................................................16-48 Define Standard Unit Costs for Asset Cost Allocations ................................................................................16-50 Enable Retirement Cost Processing...............................................................................................................16-51 Define Proceeds of Sale Expenditure Types..................................................................................................16-52 Summary........................................................................................................................................................16-53

Cross Charge....................................................................................................................................................17-1 Cross Charge .................................................................................................................................................17-3 Objectives ......................................................................................................................................................17-4 Agenda...........................................................................................................................................................17-5 Overview of Cross Charge.............................................................................................................................17-6 Cross Charge Terminology............................................................................................................................17-7 Cross Charge Types Example........................................................................................................................17-9 Processing Methods.......................................................................................................................................17-10 Quiz ...............................................................................................................................................................17-11 Agenda...........................................................................................................................................................17-12 Borrowed and Lent Processing......................................................................................................................17-13 Project and Task Setup ..................................................................................................................................17-14 Subledger Accounting Process Flow: Cross Charge .....................................................................................17-16 Borrowed and Lent Accounting.....................................................................................................................17-18 Cross Charge Adjustments ............................................................................................................................17-19 Processing Cross Charge Adjustments ..........................................................................................................17-21 Quiz ...............................................................................................................................................................17-23 Agenda...........................................................................................................................................................17-25 Borrowed and Lent Cross Charge Processing Implementation Steps............................................................17-26 Transfer Price Rules ......................................................................................................................................17-27 Transfer Price Schedule.................................................................................................................................17-29 Cross Charge Implementation Options..........................................................................................................17-31 Provider and Receiver Controls for Borrowed and Lent Accounting............................................................17-32 AutoAccounting Rules for Borrowed and Lent Transactions........................................................................17-33 Implement Cross Charge Extensions.............................................................................................................17-34 Quiz ...............................................................................................................................................................17-35 Summary........................................................................................................................................................17-36

Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking ..............18-1 Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking .....................18-3 Objectives ......................................................................................................................................................18-4 Agenda...........................................................................................................................................................18-5 Integration with Oracle Inventory..................................................................................................................18-6 Integration with Oracle Inventory Flow ........................................................................................................18-7 Miscellaneous Transactions...........................................................................................................................18-8 Launching Transaction Managers..................................................................................................................18-9 Transfer and Import .......................................................................................................................................18-10 Quiz ...............................................................................................................................................................18-11 Agenda...........................................................................................................................................................18-12 Oracle Inventory Integration Implementation Steps......................................................................................18-13 Install and Implement Oracle Inventory ........................................................................................................18-14


R12.x Oracle Project Costing Fundamentals Table of Contents xi

Enable Project Cost Collection......................................................................................................................18-15 Create a Project-Enabled Transaction Type ..................................................................................................18-16 Create an Inventory Expenditure Type..........................................................................................................18-18 Set Expenditure Type Profile Option.............................................................................................................18-19 Quiz ...............................................................................................................................................................18-21 Agenda...........................................................................................................................................................18-22 Integration with Oracle Project Manufacturing .............................................................................................18-23 Importing Project Manufacturing Costs ........................................................................................................18-24 Transaction Sources.......................................................................................................................................18-25 Transaction Sources (continued) ...................................................................................................................18-26 Quiz ...............................................................................................................................................................18-27 Agenda...........................................................................................................................................................18-28 Integration with Oracle Asset Tracking.........................................................................................................18-29 How Purchase Order Receipts Flow into Project-Related Transactions........................................................18-31 Importing Oracle Asset Tracking Cost ..........................................................................................................18-33 Summary........................................................................................................................................................18-34

Appendix B: Budgetary Controls and Budget Integration ..........................................................................19-1 Appendix B: Budgetary Controls and Budget Integration.............................................................................19-3 Objectives ......................................................................................................................................................19-4 Agenda...........................................................................................................................................................19-5 Budgeting Implementation Steps...................................................................................................................19-6 Define Budget Change Reasons ....................................................................................................................19-7 Define Additional Budget Types ...................................................................................................................19-8 Define Additional Budget Entry Methods .....................................................................................................19-10 Budget Calculation Extensions......................................................................................................................19-12 Budget Verification Extension ......................................................................................................................19-14 Budget Workflow and Budget Workflow Extension.....................................................................................19-15 Quiz ...............................................................................................................................................................19-16 Agenda...........................................................................................................................................................19-18 Implementing Budgetary Controls ................................................................................................................19-19 Defining Profile Options for Budgetary Controls..........................................................................................19-20 Defining Control Levels and the Time Interval .............................................................................................19-21 Creating an Initial Budget..............................................................................................................................19-23 Adjusting Default Control Levels..................................................................................................................19-25 Quiz ...............................................................................................................................................................19-26 Agenda...........................................................................................................................................................19-27 Implementing Budget Integration..................................................................................................................19-28 Implementing Bottom–Up Integration...........................................................................................................19-29 Implementing Top-Down Integration............................................................................................................19-31 Summary........................................................................................................................................................19-33

Appendix C: Asset Capitalization: Capitalizing Interest .............................................................................20-1 Appendix C: Asset Capitalization: Capitalizing Interest ...............................................................................20-3 Objectives ......................................................................................................................................................20-4 Agenda...........................................................................................................................................................20-5 Overview of Capitalized Interest ...................................................................................................................20-6 Setting Up Capital Projects for Capitalized Interest ......................................................................................20-8 Generating Capitalized Interest Expenditure Batches ...................................................................................20-9 Reviewing Capitalized Interest Expenditure Batches....................................................................................20-10 Inactive Capital Projects Report ....................................................................................................................20-11 Quiz ...............................................................................................................................................................20-12 Agenda...........................................................................................................................................................20-14 Capitalized Interest Implementation Steps ....................................................................................................20-15 Defining Capitalized Interest Rate Names.....................................................................................................20-16 Defining Capitalized Interest Rate Schedules................................................................................................20-19 Specifying Capitalized Interest Rate Schedules for Project Types................................................................20-21 Setting Project Status Controls for Capitalized Interest.................................................................................20-22


R12.x Oracle Project Costing Fundamentals Table of Contents xii

Implementing the Capitalized Interest Extension ..........................................................................................20-23 Quiz ...............................................................................................................................................................20-24 Summary........................................................................................................................................................20-26

Summary of R12.x Project Costing Fundamentals.......................................................................................21-1 Summary of R12.x Project Costing Fundamentals........................................................................................21-3 Objectives ......................................................................................................................................................21-4 Agenda...........................................................................................................................................................21-5 Defining Projects for Costing ........................................................................................................................21-6 Expenditures ..................................................................................................................................................21-7 Performing Cost Processing ..........................................................................................................................21-8 Accounting for Costs .....................................................................................................................................21-11 Burden Costing..............................................................................................................................................21-12 Integration with Oracle Purchasing and Oracle Payables..............................................................................21-13 Integration with Oracle Internet Expenses.....................................................................................................21-14 Integration with Oracle Time & Labor ..........................................................................................................21-15 Integration with Other Applications ..............................................................................................................21-16 Allocations and AutoAllocations...................................................................................................................21-17 Asset Capitalization.......................................................................................................................................21-18 Asset Capitalization: Capitalized Interest......................................................................................................21-19 Cross Charge .................................................................................................................................................21-20 Budgetary Controls and Budget Integration ..................................................................................................21-21 Agenda...........................................................................................................................................................21-22 Oracle Projects Fundamentals Learning Path ................................................................................................21-23 Summary........................................................................................................................................................21-24


R12.x Oracle Project Costing Fundamentals Table of Contents xiii

Preface

Profile

Before You Begin This Course

• Working experience with project management and project accounting

Prerequisites

• R12.x Oracle E-Business Suite Essentials for Implementers

• R12.x Project Foundation Fundamentals

How This Course Is Organized

This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations and written practice sessions reinforce the concepts and skills introduced.


R12.x Oracle Project Costing Fundamentals Table of Contents xiv

Related Publications

Oracle Publications Title Part Number

Oracle Project Costing User Guide E13438-03

Oracle Projects Implementation Guide E13582-03

Oracle Projects Fundamentals E13581-03

Additional Publications

• System release bulletins

• Installation and user’s guides

• Read-me files

• International Oracle User’s Group (IOUG) articles

• Oracle Magazine


R12.x Oracle Project Costing Fundamentals Table of Contents xv

Typographic Conventions

Typographic Conventions in Text Convention Element Example Bold italic Glossary term (if

there is a glossary) The algorithm inserts the new key.

Caps and lowercase

Buttons, check boxes, triggers, windows

Click the Executable button. Select the Can’t Delete Card check box. Assign a When-Validate-Item trigger to the ORD block. Open the Master Schedule window.

Courier new, case sensitive (default is lowercase)

Code output, directory names, filenames, passwords, pathnames, URLs, user input, usernames

Code output: debug.set (‘I”, 300); Directory: bin (DOS), $FMHOME (UNIX) Filename: Locate the init.ora file. Password: User tiger as your password. Pathname: Open c:\my_docs\projects URL: Go to http://www.oracle.com User input: Enter 300 Username: Log on as scott

Initial cap Graphics labels (unless the term is a proper noun)

Customer address (but Oracle Payables)

Italic Emphasized words and phrases, titles of books and courses, variables

Do not save changes to the database. For further information, see Oracle7 Server SQL Language Reference Manual. Enter [email protected], where user_id is the name of the user.

Quotation marks

Interface elements with long names that have only initial caps; lesson and chapter titles in cross-references

Select “Include a reusable module component” and click Finish. This subject is covered in Unit II, Lesson 3, “Working with Objects.”

Uppercase SQL column names, commands, functions, schemas, table names

Use the SELECT command to view information stored in the LAST_NAME column of the EMP table.

Arrow Menu paths Select File > Save. Brackets Key names Press [Enter]. Commas Key sequences Press and release keys one at a time:

[Alternate], [F], [D] Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]


R12.x Oracle Project Costing Fundamentals Table of Contents xvi

Typographic Conventions in Code Convention Element Example Caps and lowercase

Oracle Forms triggers

When-Validate-Item

Lowercase Column names, table names

SELECT last_name FROM s_emp;

Passwords DROP USER scott IDENTIFIED BY tiger;

PL/SQL objects OG_ACTIVATE_LAYER (OG_GET_LAYER (‘prod_pie_layer’))

Lowercase italic

Syntax variables CREATE ROLE role

Uppercase SQL commands and functions

SELECT userid FROM emp;

Typographic Conventions in Oracle Application Navigation Paths

This course uses simplified navigation paths, such as the following example, to direct you through Oracle Applications.

(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve

This simplified path translates to the following:

1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches Summary.

2. (M) From the menu, select Query then Find.

3. (B) Click the Approve button.

Notations:

(N) = Navigator

(M) = Menu

(T) = Tab

(B) = Button

(I) = Icon

(H) = Hyperlink

(ST) = Sub Tab


R12.x Oracle Project Costing Fundamentals Table of Contents xvii

Typographical Conventions in Oracle Application Help System Paths

This course uses a “navigation path” convention to represent actions you perform to find pertinent information in the Oracle Applications Help System.

The following help navigation path, for example—

(Help) General Ledger > Journals > Enter Journals

—represents the following sequence of actions:

1. In the navigation frame of the help system window, expand the General Ledger entry.

2. Under the General Ledger entry, expand Journals.

3. Under Journals, select Enter Journals.

4. Review the Enter Journals topic that appears in the document frame of the help system window.


R12.x Oracle Project Costing Fundamentals Table of Contents xviii

Copyright © Oracle, 2010. All rights reserved.

Overview of Oracle Project Costing Chapter 1 - Page 1

Overview of Oracle Project Costing Chapter 1



Overview of Oracle Project Costing



Objectives



Agenda



Oracle Enterprise Project Management Solution

Oracle Enterprise Project Management Solution

You can use Oracle Project Costing to collect, process, and track costs against projects and tasks. You can enact cost controls and report on costs for all project activities. Oracle Project Costing is part of the Oracle Enterprise Project Management solution. Oracle Enterprise Project Management provides a set of applications that help companies deliver global projects by integrating and managing project information. It enables all persons at all levels of the enterprise to participate in and collaborate on the projects at appropriate levels in a centralized environment. Information is available to the project team through personalized and secure role-based views.



Oracle Project Costing and Integration


Oracle Project Costing imports data from these applications: • Oracle Asset Tracking - Oracle Asset Tracking enables you to provide users with access

to tracking information, without allowing them access to sensitive processes related to assets and purchasing. You can also track inventory items after you have installed them and link financial transactions to the physical movement of equipment. Oracle Asset Tracking enables you to create assets upon receipt in Oracle Purchasing. After you create the asset, Oracle Asset Tracking performs the changes in the background for any further physical movement. For example, if you move the asset from one location to the other, then Oracle Asset Tracking performs the asset cost, distribution, and unit changes without manual intervention. Oracle Asset Tracking integrates with Oracle Inventory, Oracle Purchasing, Oracle Project Costing, Oracle Assets, and Oracle Payables, and stores information collected from them.

• Oracle Internet Expenses - Oracle Internet Expenses enables you to enter project-related expense reports. Once approved, the expense reports are imported into Oracle Payables. Oracle Payables creates invoices from the expense reports, maintains payments, and creates subledger accounting entries. In Oracle Project Costing, expense reports are interfaced as actual costs from Oracle Payables.



• Oracle Inventory - You can implement Oracle Inventory to Oracle Project Costing integration, enabling you to interface costs from Oracle Inventory to Oracle Project Costing, without installing Oracle Project Manufacturing. When you enter project–related transactions in Oracle Inventory, you enter the project information on the source transaction. Oracle Inventory and Oracle Project Costing carry the project information through from the Issue To or Receipt From transaction in Oracle Inventory to the project expenditure in Oracle Project Costing.

• Oracle iProcurement - You can enter project-related purchase requisitions using Oracle iProcurement. After requisition approval, you can AutoCreate a purchase order in Oracle Purchasing. Oracle Purchasing copies the project information to the purchase order.

• Oracle Payables - In Oracle Payables, you can match a supplier invoice to an existing purchase order or receiving transaction. Oracle Payables automatically copies the project information from the purchase order distribution lines when you perform the match. You can also create non-matched supplier invoices in Oracle Payables and enter invoice distributions to charge invoice costs to projects. You can use both Oracle Purchasing and Oracle Payables, or just Oracle Payables. You can set up Oracle Payables to apply discounts to payments. After you enter a payment with discounts, you interface the discounts to Oracle Project Costing. Oracle Payables creates subledger accounting entries for project-related supplier costs.

• Oracle Purchasing - When you enter project-related transactions in Oracle Purchasing, you only need to enter project information on the source document; either the requisition or the purchase order. The Account Generator automatically creates the account information, based on the project-related information you enter. You can also use the Buyer WorkCenter in Oracle Purchasing to enter project-related purchase orders. When a purchase order shipment is flagged to accrue at receipt and the purchased goods are delivered to an expense destination, you enter a receiving transaction for the purchase order in Oracle Purchasing and create subledger accounting for the receiving transaction in final mode. Next, you interface receipt accruals to Oracle Project Costing.

• Oracle Project Manufacturing - Oracle Project Costing acts as a cost repository for manufacturing-related activities from other products in the Oracle Project Manufacturing suite. Oracle Project Manufacturing is a type of manufacturing environment where large projects drive production requirements. You define the Work Breakdown Structure for a manufacturing project in Oracle Project Costing. You track manufacturing costs by project and task and use Transaction Import to import them into Oracle Project Costing.

• Oracle Time & Labor - Oracle Time & Labor integrates with Oracle Project Costing to enable employees and contingent workers to enter and submit project-related timecards. Employees and contingent workers enter their own time, which you can subject to an approval process according to your business rules. You can transfer approved timecards to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you import the timecards into Oracle Project Costing, you cost the timecards and derive the default accounting using AutoAccounting. During cost processing, the raw cost and any additional burden cost is calculated. Finally, you generate cost accounting events and create accounting for the timecards in Oracle Subledger Accounting.





Oracle Project Costing sends data to these applications: – Oracle Assets - Using asset capitalization functionality, you can define capital assets and

capture construction–in–process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work–in–process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.

– Oracle General Ledger - Oracle Project Costing integrates with Oracle General Ledger via Oracle Subledger Accounting so that you can update your general ledger with Oracle Project Costing activity. You use Oracle Project Costing to collect project cost detail transactions, and then to generate accounting events that Oracle Subledger Accounting uses to create the accounting. Oracle Subledger Accounting transfers the final accounting entries to Oracle General Ledger.



– Oracle Subledger Accounting - Oracle Subledger Accounting is an intermediate step between each of the subledger applications and Oracle General Ledger. Oracle Subledger Accounting stores a complete and balanced subledger journal entry in a common data model. Oracle Project Costing uses AutoAccounting, or the Project Budget Account Generation workflow for integrated budgets, to derive default accounts for transactions. You submit concurrent programs in Oracle Project Costing to generate accounting events and create accounting entries in Oracle Subledger Accounting. Oracle Project Costing predefines setup in Oracle Subledger Accounting so that it accepts the default accounts that Oracle Project Costing derives without change. Oracle Subledger Accounting transfers the final accounting to Oracle General Ledger. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting.



Agenda



Oracle Project Costing and Project Classes

Oracle Project Costing and Project Classes

You can use Oracle Project Costing to collect costs associated with all of your project activities. For example, you can use indirect projects to track costs associated with research and development, non-billable sales proposal activities, or general overhead operational costs for departments such as purchasing or human resources. Capital projects enable you to capture construction-in-process (CIP) costs for assets you are creating. You can also use capital projects to capture the cost of removal and proceeds of sale amounts (RWIP) for assets you are retiring. You also can track costs associated with contract projects. In conjunction with Oracle Project Billing, you can generate revenue and customer invoices for contract projects. This enables you to report on both project costs and revenue. For additional discussion regarding contract projects, see the course titled “R12.x Project Billing Fundamentals.”



Overview of Resources In Oracle Projects

Overview of Resources in Oracle Projects

Oracle Projects provides a centralized resource pool as part of the core foundation in which employees and contingent workers are identified as resources. Each of the applications in the Oracle Projects suite utilizes this resource pool differently:

• Oracle Project Costing: Collects project-related timecard and expense report costs for resources. Provides resource cost controls and cross-charging for shared resources.

• Oracle Project Billing: Generates revenue and invoices by billing labor hours on a project.

• Oracle Project Management: Creates a budget for labor costs to plan and manage the financial performance of projects throughout the project lifecycle.

• Oracle Project Collaboration: Allows resources to participate as team members for communicating progress against assigned tasks by directly accessing the published workplan, and assigns actions to fellow team members so that the ownership and steps to resolution are communicated clearly and consistently.

• Oracle Project Resource Management: Locates the appropriate resources to staff project requirements based on competencies and availability. As a resource, you can also search for requirements that match your particular skills.



Collecting Resource Costs Resources can charge time to projects. For labor costs, you can:

• Associate each labor expenditure item with a scheduled work assignment and a work type. • Maintain labor cost rate schedules by employee or by job. • Calculate costs based on labor. • Override labor cost rates for individuals. • Define a method for calculating overtime cost. • Maintain burden schedules to calculate additional costs of doing business that support the

raw costs. • Report on actual resource utilization based on actual hours from timecards. • Query expenditure items for specific resources.

Oracle Project Costing integrates with Oracle Time & Labor to capture project-related timecards for resources. Resources can also charge expenses to projects. Oracle Project Costing integrates with Oracle Internet Expenses and Oracle Payables to capture project-related expense reports. Note: Employees and contingent workers do not have to be schedulable project resources to charge time and expenses to projects. Optionally, you can use transaction controls to control charges to tasks based on the resources assigned to the workplan tasks. Cross Charge When projects share resources within an enterprise, it is common to see those resources shared across organization and country boundaries. Further, project managers can also divide the work into multiple projects for easier execution and management. Oracle Project Costing provides cross charge features to enable project managers to view the current total costs of the project, regardless of who performs the work or where it is performed. Project Allocations You can use the allocations feature to distribute cost amounts between and within projects and tasks, or to projects in other organizational units. You can select resources groups and resources when you define allocation sources and proration basis methods.



Costing Flow

Costing Flow

Oracle Project Costing enables you to track and account for all project costs. You can enter transactions directly into Oracle Project Costing using expenditure batches, import transactions from other Oracle Applications, such as Oracle Time & Labor, or import transactions from external systems. Costing Flow Example (Labor Cost)

1. Enter or import expenditures - You can enter pre-approved expenditure batches or import transactions from other Oracle applications or external applications.

2. PRC: Distribute Labor Costs - Calculates the raw and burden cost amounts for labor cost expenditure items and uses AutoAccounting to determine the default debit account for each expenditure item.

3. PRC: Generate Cost Accounting Events - Uses AutoAccounting to determine the default credit account for expenditure items and generates accounting events for distributed transactions.

4. PRC: Create Accounting - Creates subledger journal entries for eligible accounting events. You can run the program in either draft or final mode. Optionally, the program can post journal entries in Oracle General Ledger.



5. PRC: Transfer Journal Entries to GL - When you run the program PRC: Create Accounting, if you select No for the parameter Transfer to GL, then you run must the program PRC: Transfer Journal Entries to GL to send journal entries to Oracle General Ledger.

6. Journal Import (in Oracle General Ledger - Imports the final accounting entries from Oracle Subledger Accounting into Oracle General Ledger.



Collect and Manage All Costs

Collect and Manage All Costs

Oracle Project Costing is an integrated cost management solution for all projects and activities within an enterprise. With Oracle Project Costing you can manage costs across currency and organizational boundaries. Oracle Project Costing also acts as a central repository of project transactions, processes project costs, and creates corresponding accounting. Methods of Entering Expenditures You can use pre-approved batches to enter expenditures directly into Oracle Project Costing and Transaction Import to import expenditures into Oracle Project Costing from external sources. In addition, you can use Microsoft Excel Integration to enter expenditures and then import the expenditures into Oracle Project Costing. Oracle Project Costing also integrates with other Oracle applications. You can collect project-related costs in applications such as Oracle Time & Labor, Oracle Purchasing, Oracle Payables, Oracle iProcurement, Oracle Inventory, Oracle Project Manufacturing, Oracle Asset Tracking, and Oracle Internet Expenses.



Manage Costs

Manage Costs

After you collect costs, you can perform adjustments as needed. You can also use features such as cross charge, burdening, project allocations, and asset capitalization to further process the costs. The adjustment functionality in Oracle Project Costing gives you control over your project costs. You can adjust your project costs online, create accounting for the adjustments, and provide a historical audit trail of all activities. You can perform a wide variety of adjustments - including correcting approved expenditures, changing the capitalizable or billable status of expenditure items, recalculating raw or burdened costs, splitting expenditure items, and transferring expenditures to another project. Cross Charge A cross charge takes place when the expenditure organization of an expenditure item is different from task owning organization of the task being charged. These organizations are called the provider and receiver organizations. The organizations can be within the same operating unit or belong to different operating units. You may perform additional cross charge processing to pass costs or share revenues between the provider and receiver organizations. This processing includes creating borrowed and lent accounting entries or generating intercompany invoices.



Burdening Burden costs are costs of doing business that support raw costs. For example, you can define a burden cost code of G&A to burden specific raw costs with general and administrative overhead costs. You can create subledger accounting for burden cost and post the accounting to Oracle General Ledger. Project Allocations The allocations feature in Oracle Project Costing can distribute amounts between and within projects and tasks, or to projects in other organizational units. For example, you can allocate amounts such as salaries or administrative overhead across several projects and tasks. Your allocations can be as simple or elaborate as you like. You identify the amounts you want to allocate (source) and then define the targets, the projects and tasks to which you want to allocate the source amounts. Optionally, you can offset the allocations with reversing transactions. The system gathers source amounts into a source pool, and then allocates to the targets using the basis method that you specify in the allocation rule. You can use a basis method of Spread Evenly to divide the source pool amount equally among all the chargeable target tasks included in the rule. Alternatively, you could select Prorate as the basis method to use the attributes set in the Basis window. When you allocate amounts, you create expenditure items whose amounts are derived from one or more of the following sources:

• Existing summarized expenditure items in Oracle Project Costing • A fixed amount • Amounts in an Oracle General Ledger account balance

Asset Capitalization Using asset capitalization functionality, you can define capital assets and capture construction–in–process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets you are building, installing, or acquiring. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work–in–process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset. You can also calculate and record capitalized interest for capital projects. Capitalized interest (also referred to as Allowance for Funds Used During Construction) is an estimate of the interest cost that enterprises incur when they invest in long–term capital projects. Subject to accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total cost of acquiring and constructing assets that require an extended amount of time to prepare for their intended use.



View Accounting: Transaction Details

View Accounting: Transaction Details

From Oracle General Ledger, you can drill down to subledger details from the Account Inquiry, Enter Journals, or View Journals windows for journals that have specific journal sources assigned to them. For example, you can select a labor cost journal entry line with the source Projects and select the Line Drilldown button to view the details in Oracle Subledger Accounting. Next you can choose to either view the subledger journal entry or to view the transaction. When you choose to view the transaction, the system drills down to Oracle Project Costing and queries the individual expenditure items that make up the subledger journal entry in expenditure inquiry. You can also perform inquiries directly in Oracle Subledger Accounting to view transaction details for accounting events. When you view a transaction for a cost accounting event, Oracle Subledger Accounting drills down to Oracle Project Costing and automatically opens and queries information in expenditure inquiry. Similarly, you can drill down to other subledger applications to view transaction information for the accounting events that originated in those applications. In Oracle Subledger Accounting, you can query accounting events, journal entries, and journal entry lines based on multiple selection criteria.



View Accounting: Final Subledger Accounting Entries

View Accounting: Final Subledger Accounting Entries

You can use expenditure inquiry in Oracle Project Costing to view final subledger accounting entries for expenditure items. Use the View Accounting option from the Tools menu to review accounting entries. You must create accounting in final mode for the accounting events associated with the expenditure item to view accounting entries. Note: For both historical (prior to Release 12) expenditure items not migrated to Oracle Subledger Accounting, and transactions accounted in an external system and interfaced into Oracle Project Costing, the View Accounting option displays accounts from the cost distributions table in Oracle Project Costing.



View Expenditure Item Details

View Expenditure Item Details

You can also use expenditure inquiry to view detailed information for each expenditure item. Depending on the expenditure item, you can:

• View cost distribution line information for each expenditure item, including the default accounting entries that Oracle Project Costing derived using AutoAccounting, the PA and GL period, and the accounting event generation status.

• View the revenue distribution lines for billable expenditure items (contract projects). • Drill down to Oracle Payables if the supplier cost expenditure item was interfaced to

Oracle Project Costing from Oracle Payables. • Drill down to the Receipt Transaction Summary window in Oracle Purchasing for

receipt accrual expenditure items. • Drill down to view purchase order details in Oracle Purchasing for contingent worker

labor cost expenditure items that are associated with a purchase order.



Summary



Quiz

Answer: a, d



Quiz

Answer: b, c



Quiz

Answer: b



Quiz

Answer: a


Defining Projects for Costing Chapter 2 - Page 1

Defining Projects for Costing Chapter 2



Defining Projects for Costing



Objectives



Agenda



Overview of Projects and Tasks

Overview of Projects and Tasks

You can create a project with one structure defined for workplan management purposes and another defined for financial management purposes, or you can use one structure for both purposes:

• Workplan Management - The workplan management functionality helps project managers and team members

deliver projects on time. • Financial Management

- Financial management functionality helps project and financial administrators and managers track billing, costs, budgets, and other financial information for projects.

You can use three predefined project classes that track the following types of information: • Indirect projects - Track overhead activities and costs. • Capital projects - Track asset development activities and costs, and costs are capitalized

as one or more assets. • Contract projects - Contract projects track cost, revenue, and billing.



Project Classes and Project Types

Project Classes and Project Types

Oracle Project Foundation predefines project classes, but you define project types as part of your implementation. The project type controls how Oracle Project Foundation creates and processes projects, and is a primary classification for the projects your business manages. You must set up at least one project type to create projects. You must set up project types for each operating unit.



Overview of Project Templates

Overview of Project Templates

You use project templates to create new projects. When you create a project from a project template or an existing project, Oracle Project Foundation copies the financial structure from the source project or template. Project templates belong to only one operating unit. You can maintain and copy project templates within an operating unit. However, project template numbers are unique across operating units. A project template number cannot duplicate any project or project template number within the installation. For additional information, see the course titled "R12.x Project Foundation Fundamentals."



Organizing a Project Structure

Organizing a Project Structure

A project financial structure is a task tree showing the organization of project work. It can be as simple or detailed as you want it to be. There are no limits in width or levels. The position of the task in the hierarchy determines what you can do with it:

• Top Task - A task whose parent is the project. - For example, use top tasks for budgeting and rollup reporting.

• Middle Task - A task that is not a top task or a lowest task. - For example, use middle tasks for rollup reporting.

• Lowest Task - A task that is at the bottom of the structure, without any child tasks. A top task can

also be considered a lowest task, if the task does not have any child tasks. - For example, use lowest tasks for transaction entry, budgeting, and override entry.

Expenditures are always charged to a lowest task.



Basic Project Information

Basic Project Information

• Project Name - A short and descriptive name of a project. Use this name to find and identify a project.

• Long Name - A longer, unique descriptive name for the project. It can be up to 240 characters long. The default value is the short name (Name).

• Project Number- A unique identification number of a project. You use this number to find and identify the project. You can manually enter a project number, or let the system automatically generate one for you. For audit trail purposes, you cannot modify a project number after you charge expenditure items, requisitions, purchase orders, or supplier invoices to the project. If project numbering is automatic, then you cannot modify the number at any point.

• Project Organization - The managing or owning organization of a project. Use the organization for reporting and AutoAccounting purposes.

• Project Type - The project type determines how Oracle Project Costing processes costs (expenditure items) for a project and provides defaults and controls for project entry and processing. For audit trail purposes, you cannot change a project type after you charge expenditure items, requisitions, purchase orders, or supplier invoices to the project.



• Project Status - Indicates the current status of a project. • Description - A description of the project. • Public Sector - Use the Public Sector check box to indicate whether a project is a private

or public sector project. Use this for reporting and AutoAccounting purposes. • Access Level - Access levels control who can search for and view a project. You can

specify one of the following access level values for a project: - Secured - Enterprise

• Location - Use project location information to match resource location to work site location (the location of the project). Location includes three attributes:

- City - Region - Country



Quiz

Answer: a



Quiz

Answer: b



Agenda



Burden Schedules for Costing

Burden Schedules for Costing

Costing Burden Schedules The default costing burden schedule for a project comes from its project type. You can enter the following information in the Costing Burden Schedules window:

• Burden Schedule - Enter the burden schedule you want to use for this project or task.

• Burden Hierarchy - Enter the burden hierarchy you want to default to each burden schedule version.

• Fixed Date - Enter a fixed date for the burden schedule if you want all expenditure items to be

burdened with the multipliers in effect as of that date. For additional discussion regarding burden schedules, see the lesson titled “Implementing Burden Costing.”



Organization Overrides

Organization Overrides

You can reassign an employee’s or an entire organization’s costs and revenue to a different organization for a particular project. When you enter an organization distribution override, the new organization you enter overrides the expenditure organization Oracle Project Costing uses in AutoAccounting and in burdening. For AutoAccounting processing, if an organization distribution override exists, the destination organization of the override is substituted for the actual expenditure organization. You can enter the following information in the Organization Overrides window:

• Source Organization - Enter the source organization whose costs and revenue you want to assign to a different organization.

• Employee Name/Number - Enter the name and number of the employee for this project whose costs and revenue you want to assign to a different organization.

• Expenditure Category - The expenditure category for the costs you want to assign to a different organization.

• Destination Organization - The new organization to which you want to reassign costs and revenue.



Project Currency

Project Currency

You define a project currency for each project. This currency can differ from the functional currency of the operating unit that owns the project. You can select any active currency defined in Oracle General Ledger. In a multinational business environment, employees from locations across the world can report to one operating unit. Therefore, an operating unit can own projects being managed and implemented from various remote sites. The project managers of these projects need the ability to report project costs and revenues in the local currencies of the countries where the work is being performed. To accomplish this, you have the ability to define a project currency that differs from the functional currency of the operating unit owning the project.



Currencies and Expenditures

Currencies and Expenditures

Transaction amounts are stored in the following currencies: • Transaction Currency

- The currency in which a project transaction occurs. • Expenditure Functional Currency

- The functional currency of the expenditure operating unit. • Project Functional Currency

- The functional currency of the operating unit that owns the project. • Project Currency

- The user–defined project currency. When you enter transactions in a currency that is different from functional currency or project currency, Oracle Project Costing must convert the transaction amount to the functional and project currencies. To convert transaction currencies, Oracle Project Costing must first determine the exchange rate type and exchange rate date.



Costing Currency Options

Costing Currency Options

When you create a new project, the system copies the default value for the project currency code from the functional currency defined in the Implementation Options for the project-owning operating unit. You can override the default currency code and enter default conversion attributes for the project in the Costing tab of the Currency window. Oracle Project Costing displays the attributes you select as the default values during expenditure entry, and also uses the values for imported transactions. Project Currency Attribute Hierarchy To convert transaction currencies to functional and project currencies, Oracle Project Costing must first determine the exchange rate type and exchange rate date. Each attribute is determined separately. If Oracle Project Costing finds a rate type in step one, but no rate date is present at that level, then it uses the rate type and then follows the logic to the next level to determine the rate date. During project and task setup, Oracle Project Costing copies the values you enter to all the underlying tasks in the financial structure.



Quiz

Answer: b



Agenda



Controlling Expenditures Overview

Controlling Expenditures Overview

Oracle Project Costing provides you with many levels of charge controls: • Project Status - You can use the project status to control whether any charges are allowed

for the project. • Task Chargeable Status - You can specify a lowest task as chargeable or non–chargeable

to control whether any charges are allowed for the task. • Transaction Dates -You can specify the transaction dates of a lowest task to record the

date range for which charges are allowed for the task. You can also specify transaction dates at the project-level.

• Transaction Controls - You can define transaction controls to specify the types of transactions that are chargeable or non–chargeable for the project and tasks.



Project Statuses

Project Statuses

When you define a status, the Status Controls region contains a list of actions that are allowed or restricted for each status. To allow charges on a project, you must assign the project a status with the status control Create New Transactions enabled. To allow users to adjust transaction on a project, you must assign the project a status with the status control Adjust Transactions enabled. For additional discussion regarding defining project statuses, see the course titled “R12.x Project Foundation Fundamentals.” Note: The Create New Transactions status control only affects new transactions. It does not prevent reversals that Oracle Project Costing creates when you adjust transactions. In addition, it does not prevent you from splitting transactions. For example, if you change the project status to a status that does not allow new transactions and transfer an existing expenditure item to another project, then Oracle Project Costing still creates the reversing expenditure item on the original project and task.



Task Chargeable Status

Task Chargeable Status

The Allow Charges check box controls whether or not you can charge new expenditure items to a task. The default setting is to allow charges for all new tasks. Disable the Allow Charges check box if you want to prevent new charges to a task. Note: This task-level control only affects new transactions. It does not prevent reversals. For example, if you disable the option for a task and transfer an existing expenditure item from that task to a new task, then Oracle Project Costing still creates the reversing expenditure item on the original task.



Transaction Dates

Transaction Dates

Project Transaction Dates The transaction start date and finish date control which transactions you can charge to the project. You cannot charge an expenditure item to a project if the expenditure item date falls outside the project-level transaction dates. You must enter a start date to enter a finish date. Task Transaction Dates Task transaction dates must be within the corresponding project dates and within the dates of the parent task. The transaction start and finish dates control the transactions that can be charged to the task. You cannot charge an expenditure item to a task if the expenditure item date falls outside the task dates. Default values for task transaction dates are the project transaction dates (for top tasks) or the parent task’s transaction dates (for subtasks).



Transaction Controls

Transaction Controls

Use transaction controls to configure your projects and tasks to allow only charges that you expect or plan. You can also define which items are billable and non-billable on your contract projects. For capital projects, you can define which items are capitalizable and non-capitalizable. This proactive means to control charges to projects enables you to better manage your projects. You enter transaction controls in the Project Options and Task Options windows. You must specify either an employee or an expenditure category for each record. You can specify a non-labor resource for usage expenditure types. Employee Transaction Controls Transaction controls that you define for people (employees and contingent workers) do not apply to transactions that are not associated with people. This includes supplier cost transactions entered for a supplier not associated with a person, and usage items incurred by an organization and not a person. If you define transaction controls to list people who can charge to your project, then Oracle Project Costing allows transactions incurred by those people. It also allows any supplier cost transactions and usage items incurred by an organization, and any other transactions that do not require an employee number.



When you enter expense reports in Oracle Payables using suppliers associated with employees, Oracle Project Costing validates the transaction using the person associated with the supplier. For example, if you specify that Donald Gray cannot charge to the project, and you enter an expense report item for the supplier GRAY, DONALD who is associated with the person Donald Gray, Oracle Project Costing does not allow you to charge the item to the project, because it validates the transaction controls that you have defined. Scheduled Expenditures Only Controls When Oracle Project Resource Management is installed, you can specify that only employees with scheduled work assignments are allowed to charge labor and expense report transactions. Specifying Billable and Capitalizable Transactions You can control what transactions for contract projects are non-billable and what transactions for capital projects are non-capitalizable when you set the Billable/Capitalizable field. You can choose between the options of No or Task Level. Select No if you want the charges to be non-billable or non-capitalizable. Select Task Level if you want the billable or capitalizable status to default from the task to which the item is charged. Workplan Resources Only Controls You can control charges to tasks based on the people assigned to the workplan tasks. For information about the validation rules for timecards and expense reports when the Workplan Resources Only control is set with the other transaction control attributes, see the Oracle Project Costing User Guide. Person Type Control You can select no value, Employee Only, or Contractor Only from the list in the Person Type field. You can use this control to specify whether transactions incurred by only employees, only contractors (contingent workers), or both are chargeable. For additional information, see the Oracle Project Costing User Guide. Specifying Effective Dates for Transaction Controls You can enter an Effective From and Effective To date for each transaction control record to define transactions as chargeable for a given date range. You must specify an Effective From date. The default Effective From date is the start date of the project or task. The Effective To date is optional. Validating Expenditures Against Transaction Controls Oracle Project Costing checks all levels of transaction controls when you try to charge a transaction to a project. Oracle Project Costing checks the control when you:

• Enter an online or pre-approved expenditure item • Copy a pre-approved timecard item • Transfer an expenditure item to a new project or task • Enter a project-related requisition or purchase order distribution in Oracle Purchasing • Enter a project-related requisition distribution in Oracle iProcurement • Enter a project-related invoice distribution in Oracle Payables • Enter a project-related expense report in Oracle Internet Expenses • Run the concurrent program PRC: Transaction Import to import expenditures



Exclusive and Inclusive Transaction Controls

Exclusive and Inclusive Transaction Controls

Exclusive Transaction Controls Exclusive transaction controls allow all expenditures except those that are specified as non–chargeable in the transaction controls. Exclusive transaction controls is the default setting. When you use exclusive transaction controls, you specify the non-chargeable criteria. Disable the Limit to check box on the Transaction Controls window to make your transaction controls exclusive. Inclusive Transaction Controls Inclusive transaction controls limit charges to only those expenditures that meet the specified transaction control criteria. Oracle Project Costing rejects any expenditure that are not listed as chargeable in the transaction controls. When you use inclusive transaction controls, by default, nothing is chargeable. You must specify the chargeable criteria. Enable the Limit to check box on the Transaction Controls window to make your transaction controls inclusive.



Allowable Charges for Each Transaction Control

Allowable Charges for Each Transaction Control

You can use transaction controls to specify whether to allow charges, further controlling the allowable charges. You usually select Chargeable when you use inclusive transaction controls. Transaction Control Extension To define more complex rules for implementing company-specific expenditure entry policies, you can use the transaction control extension. Some examples of rules that you may define are:

• You cannot charge new transactions to projects for which the work is complete. You can only transfer items to these projects.

• All entertainment expenses are non-billable.



Determining if an Item is Chargeable

Determining if an Item is Chargeable

Oracle Project Costing checks all levels of chargeability control when you try to charge a transaction to a project. If the expenditure item passes the first three chargeability controls, then Oracle Project Costing checks the transaction controls.



Quiz

Answer: c



Summary


Overview of Budgetary Controls, Budget Integration and Core Budgeting Chapter 3 - Page 1

Overview of Budgetary Controls, Budget Integration and Core Budgeting Chapter 3



Overview of Budgetary Controls, Budget Integration and Core Budgeting



Objectives



Agenda



Overview of Budgetary Controls

Overview of Budgetary Controls

You can enforce budgetary controls against a GL budget and a project cost budget. Budgetary controls enable you to monitor and control expense commitment transactions. Expense commitment transactions are transactions for non-inventory items. Oracle Project Costing enforces budgetary controls for:

• Project-related purchase requisitions and purchase orders entered in Oracle Purchasing • Contingent worker purchase orders entered in Oracle Purchasing • Supplier invoices entered in Oracle Payables • Project-related prepayments not matched to a purchase order and the application of

unmatched prepayments to supplier invoices Note: Budgetary controls are not enforced for project-related expense reports entered in Oracle Payables because you generally enter expense reports after costs are already incurred. Therefore, you should ensure that your procedures for approving expense report expenditures include verification of available funds according to your business requirements.



Budgetary Control Settings: Time Intervals


A time interval defines the budget amounts and the transactions included in the available funds calculation. Time interval settings identify the beginning and the ending periods included in the calculation. The amount type identifies the beginning period and a boundary code identifies the ending period. The budgetary control process determines available funds by summing the budget amounts and subtracting actual and committed transaction amounts for a time interval. If the budget is time-phased by GL period, then the GL period is used. Alternatively, if the budget is time-phased by PA period, then the PA period is used. The Amount Type defines the start of a time interval to determine funds availability:

• Period To Date - From the start of the period in which the expenditure item date falls • Year To Date - From the start of the year in which the expenditure item date falls • Project To Date - From the start of the project

The Boundary Code determines the end of a time interval to determine funds availability: • Period - To the end of the period that includes the expenditure item date • Year - To the end of the year in which the expenditure item date falls • Project - To the end of the project





Only certain combinations of amount type and boundary code are valid.



Budgetary Control Settings: Control Levels

Budgetary Control Settings: Control Levels

You use budgetary control levels to set the degree of control the system imposes on project commitment transactions. You can enter default control levels at the project type, project template, and project levels. You can also define default values for resource lists. Select from the following control levels:

• Absolute - The transaction is rejected if sufficient funds are not available. • Advisory - The transaction is accepted when sufficient funds are not available, but the

system issues a warning notification that available funds are exceeded. • None - The transaction is accepted without budgetary control validation.

When control levels are either Absolute or Advisory, the budgetary control process first tests the lowest budget level to determine the availability of funds. If funds are available for a transaction at the lowest level, then the validation tests the next level in the budgetary control hierarchy. The process continues until the transaction passes all levels or fails at any level. If a transaction fails budgetary control at a level with a control level of Absolute, the process is discontinued. However, if the control level is Advisory, an insufficient funds warning notification is generated and the budgetary control process continues to the next level.



Example: Budgetary Control Rollup

Example: Budgetary Control Rollup

The diagram illustrates an example of a budgetary control rollup that reflects budget amounts at all budget levels, including resource, resource group, lowest task, top task, and project. At the resource level, the available funds for resources roll up into the available funds for the resource groups. The available funds for the resource groups roll up into the available funds for the lowest tasks. The available funds for the lowest tasks then roll up into the available funds for the top tasks. Finally, the available funds for the top tasks roll up into the available funds for the project. For example, as illustrated for Top Task 2, Resource B1 and Resource B2 each have total available funds of $10. Combined, the total funds of Resource B1 and B2 roll up into the available funds of $20 for Resource Group B. The total available funds of Resource Group B and Resource Group C roll up into the available funds for Lowest Task 2.1, which equals $40. The total available funds for top task 2.1 roll up into the available funds for Top Task 2, which equals $40. The total available funds of Top Task 2, $40, plus the total available funds of Top Task 1, $20, roll up into the available funds for Project 1, which equals $60.



Entering Budget Amounts for Controlled Budgets

Entering Budget Amounts for Controlled Budgets

Budget Amounts for Resources If the budgetary control level for resources or resource groups is Absolute or Advisory, and no budget amount is entered for a resource or resource group, then Oracle Project Costing treats the budget amount as zero. Transactions that map to resources with no budget amounts fail budgetary control at an Absolute level and pass budgetary control with a warning at an Advisory level. A budget entry category called Unclassified is available at the resource list level. This category enables you to enter one budget amount for a group of resources. You can selectively control costs for some resources within a resource group by entering specific budget amounts for those resources. You can then use the Unclassified category to budget for the remaining resources within the resource group. The Unclassified category serves as a budget line for any resource for which a specific budget line does not exist. Burden Cost Amounts If burdening is enabled for a project, then all budgetary control is performed using the transaction burdened cost. Oracle Project Costing provides the following methods of accounting for burden costs:



• Same Expenditure Item - When you account for burden cost on the same expenditure item as raw costs, the

budgetary control process calculates the burden cost amounts for a transaction and adds them to the raw cost amount. The process then maps the burdened transaction amount to a budget line and performs the necessary budgetary control validation.

- When you use the Same Expenditure Item method of accounting for burden costs, enter budget amounts for the burdened transaction costs.

• Separate Expenditure Item - When you account for burden costs as separate expenditure items, the budgetary

control process calculates the burden cost amounts for each burden cost component and separately maps each burden amount and the raw cost amount to a budget line. Individual budgetary control validations are performed for each component. If any component fails validation, then the entire transaction is rejected.

- When you use the Separate Expenditure Item method of accounting for burden costs and you are not using a resource list for budget entry, enter budget amounts for the burdened transaction costs. The burden costs and the raw cost are mapped to budget lines using the same mapping rules and are therefore mapped to the same line.

- When you use this burden accounting method and you are budgeting using a resource list, the burden costs are not mapped using the resource for the raw cost. You must ensure that each burden cost component maps to a budget line with the desired budgetary control setting. To do this, define your burden cost components as resources on your resource list and then use these resources to enter budget amounts for burden costs. This enables you to enter a budgetary control setting for each burden cost component and a control setting for budget lines defined for raw costs. If you do not want to impose budgetary controls on burden cost amounts, then you can assign a control setting of None for all budget lines for burden component resources.

- An alternative to defining resources on your resource list for burden cost components is to use the Unclassified budget entry category to budget for burden cost amounts. If a budget line cannot be found for the burden cost components and an Unclassified budget line exists, then the budgetary control process maps the burden costs to the Unclassified line.



Budget Definition Strategies

Budget Definition Strategies

Oracle Project Costing budgetary controls only apply to expense commitment transactions. Budgetary controls do not apply to other project-related transactions such as timecards, expense reports, or inventory item purchases. Therefore, when you enable budgetary controls for a project, it is recommended that you use one of the following strategies for defining cost budget amounts:

• Strategy 1: Define Two Budgets - Define an overall project cost budget. The overall cost budget tracks all project costs. Do not enable budgetary controls for the Approved Cost Budget type. Define a separate budget for expense commitment transactions. It is recommended that you create a user-defined budget type for the commitment budget. Enable budgetary controls for this budge type.

• Strategy 2: Define One Cost Budget - The second approach uses one cost budget for all anticipated project costs. The budget includes separate budget lines for expense commitment transactions and all other project costs. When you define a project, enable budgetary controls using this budget type. It is recommended that a control setting of None be entered for all other budget lines.



Transaction Processing with Controlled Budgets

Transaction Processing with Controlled Budgets

Initiating Budgetary Control Validation in Oracle Purchasing and Oracle Payables In Oracle Purchasing and Oracle Payables, budgetary control processes are activated when you select the Check Funds option for a transaction, and also during the transaction approval. Funds Check Activation in Oracle Project Costing In Oracle Project Costing, budgetary controls only apply to expense commitment transactions. You interface project-related expense commitment transactions from Oracle Purchasing and Oracle Payables to Oracle Project Costing as supplier costs. After you interface supplier costs to Oracle Project Costing, you can adjust the expenditure items in Oracle Project Costing. You run the program PRC: Distribute Supplier Cost Adjustments to process the adjusted supplier cost expenditure items. This program uses AutoAccounting in Oracle Project Costing to determine the default expense account for the adjustments. This program also performs a budgetary control validation for transactions meeting all of the following criteria:

• The supplier cost originated in Oracle Purchasing or Oracle Payables • The transaction is charged to a project with budgetary controls enabled • The transaction is an expense item



When you change a burden multiplier, you must run one of the following programs to initiate budgetary control validation for the changed burden amounts. The program you run depends on the burdening method for the project.

• PRC: Distribute Total Burdened Costs - Run this program if the project is set up to account for total burdened costs.

• PRC: Create and Distribute Burden Transactions - Run this program if the project is set up to account for burden costs by burden cost component.

If funds are available for the adjusted expenditure amounts, then the adjustment item is cost distributed. If funds are not available for an item, then the item is not distributed and an exception is reported. Oracle Project Costing also performs budgetary control validation for contingent worker labor costs related to a purchase order when you run the program PRC: Distribute Labor Costs or PRC: Distribute Labor Costs for a Range of Projects. If an item is not cost distributed as a result of a budgetary control failure, then you must perform one of the following actions and rerun the distribution program:

• Increase budget amounts so funds are available for the expenditure item. • Decrease the budgetary control level from Absolute to Advisory or None for the budget

level causing the budgetary control failure. • For an adjusted item, undo the change that increased the expenditure item amount. For

example, if you increased a burden cost rate, then set the rate back to its original value. • For a transferred item, transfer the item to a task within the same project, or to another

project or project task that has sufficient funds available or that does not have budgetary controls enabled.



Overview of the Budgetary Control Process Flow

Overview of the Budgetary Control Process Flow

The following activities take place during budgetary control validation: 1. Source subledger applications generate accounting events. For example, both Oracle

Purchasing and Oracle Project Costing generate accounting events when you check funds for a purchase order when top-down budgeting and burdening is enabled for the project.

2. Source subledger application calls the budgetary control API. 3. Budgetary control API calls the Oracle Subledger Accounting Online Process. 4. Oracle Subledger Accounting Online Process processes the accounting events to create

accounting entries and calls the Oracle Subledger Accounting Validation Routine. 5. Oracle Subledger Accounting Validation Routine populates the GL_BC_PACKETS table

with the accounting entries and calls the PSA/GL funds check API. 6. PSA/GL funds check API first calls the Projects funds check API. 7. If a project-related transaction is being validated, then Projects funds check API checks

for funds availability and returns status to PSA/GL funds check API. 8. If Projects funds check API returns a success value, then PSA/GL funds check API

processes the transaction for GL funds availability.



9. PSA/GL funds check API and Projects funds check API coordinate status information. 10. Success and failure statuses are updated in GL_BC_PACKETS table. 11. The accounting entries are committed as final or draft, depending on the status returned

from the Oracle Subledger Accounting Validation Routine and on whether reserve funds (final) or check funds (draft) was invoked.



Viewing Budgetary Control Results

Viewing Budgetary Control Results

After the transaction is validated against the project budget, you can view the results from the Funds Check Results window. The window displays budgetary control results for transactions. Note: You can also view the budgetary control results from the source application after the funds validation action is performed. The results are displayed in an XDO report format. Funds Check Results Window To review transaction budgetary control results, perform the following steps:

1. Navigate to the Find Funds Check Details window. 2. Enter selection criteria. 3. Choose the Find button to display the Funds Check Results window. 4. Select a budget level tab to view information for a specified budget level.

For a list of budgetary control results messages, see the Oracle Project Management User Guide.



Maintaining Budgetary Control Balances

Maintaining Budgetary Control Balances

Oracle Project Costing maintains budgetary control balances for all projects that use budgetary controls. For each budget line, the budget amount, the commitment transactions total, and the total actuals related to commitment transactions are maintained. The system also calculates available funds for each budget category and budget period. When you create a baseline from the original budget version, the system creates initial balances. When you run PRC: Maintain Budgetary Control Balances, the program updates the balances. The updated balances are displayed in the Budget Funds Check Results window. To determine how often to schedule the program, consider the number of project-related commitments your business creates each day as well as your online inquiry business needs. The Budget Funds Check Results window displays budget, actuals, commitments, and available funds balances for each budget level. The window includes a tabbed region for each project budget level. The levels can include the following: project, top task, task, resource group, and resource. You can use the window to review project-to-date transactions and to plan future expenditures. You can also use the information in this window, along with the Transaction Funds Check Results window, to troubleshoot budgetary control failures.



Budgetary Controls Cross Charge Restriction

Budgetary Controls Cross Charge Restriction

A transaction is subject to the budgetary controls defined for only the ledger in which the transaction originates. Therefore, when you enable budgetary controls for a project, you cannot enter cross charge transactions that cross ledgers. The following scenario illustrates the need for this restriction:

• Two ledgers are defined in an installation of Oracle Applications. • In Ledger One (L1), budgetary controls are enabled in Oracle General Ledger and Oracle

Payables. • In Ledger Two (L2), budgetary controls are not enabled in any application.

Project A is defined in L1 and budgetary controls are enabled for the project. If you enter a commitment transaction in L2 for Project A, the transaction does not undergo budgetary control validation, because budgetary controls are not enabled in L2.



Quiz

Answer: a



Quiz

Answer: d



Quiz

Answer: b



Agenda



Overview of Budget Integration

Overview of Budget Integration

Top-Down budget integration enables financial managers to maintain centralized control of organization spending while still granting project managers flexibility in managing their individual projects. An organization-level budget defines overall spending limitations. Project budgets consume funds from the organization-level budget and are used to control spending for individual projects. Bottom-Up budget integration enables you to create centralized organization-level budgets from defined project budgets. The organization-level budget amounts are an accumulation of project budget amounts and may also include budget amounts from other sources. Financial managers use the organization-level budgets to view budgeted figures for the organization as a whole, while project managers maintain independent budgets to monitor spending and revenue generation for each project. Non-integrated budgets with budgetary controls enable you to control spending against your project budget without sending budget-related accounting entries to Oracle General Ledger.



Generating Accounting for Integrated Budgets

Generating Accounting for Integrated Budgets

Oracle Project Costing uses the Project Budget Account Generation workflow to generate default accounts for budget lines. The budgets that you define in Oracle General Ledger are account-level budgets (by account and GL period). Therefore, when you enter project budget amounts for integrated budget types, you must use a budget entry method that is time-phased by GL period, and you must assign an account to each project budget line. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing generates using the Project Budget Account Workflow. You run the program PRC: Transfer Journal Entries to GL to transfer the final subledger journal entries from Oracle Subledger Accounting to Oracle General Ledger. Important: If you update account derivation rules for budgets in Oracle Subledger Accounting, then you must carefully consider the affect of the updates on existing integrated budgets. The baseline process fails if a revised account derivation rule overwrites accounts for budget lines that are associated with transactions. For top-down budget integration, Oracle Project Costing generates accounting events to create project budget encumbrance accounting entries. Oracle Project Costing generates the



accounting events and initiates the process to create accounting in final mode in Oracle Subledger Accounting in the following circumstances:

• When you run the process PRC: Year End Budget Rollover to transfer year-end balances for top-down integrated project budgets to the next fiscal year

• When you create a baseline version for a top-down integrated project budget For bottom-up budget integration, Oracle Project Costing generates accounting events to create budget accounting entries. Oracle Project Costing generates the accounting events and initiates the process to create the subledger accounting in final mode when you create a baseline version for a bottom-up integrated project budget. In addition, when you initiate the Check Funds action for an integrated budget, Oracle Project Costing creates accounting in draft mode in Oracle Subledger Accounting.



Accounting Event Model Overview


Oracle Project Costing predefines the Budgets event entity to use for integrated budgets. An event entity enables Oracle Subledger Accounting to handle the accounting for similar business events in a consistent manner. In addition, Oracle Project Costing predefines the Budget event class and two event types Budget Year End Rollover and Budget Baseline, for the Budgets accounting event entity. An event class represents a category of business events for a particular transaction type or document. An event type represents a business operation that you can perform for an event class. Oracle Projects generates accounting events for the Budget event class when you enable either top-down or bottom-up budget integration for a project budget.





Oracle Project Costing also predefines event classes and event types for the Requisition, Purchase Order, and Release accounting event entities in Oracle Purchasing, and for the AP Invoices accounting event entity in Oracle Payables. These event classes and event types are for encumbrance accounting for burden cost on project-related commitments in Oracle Purchasing and Oracle Payables. Oracle Project Costing creates project encumbrance entries when you enable top-down budget integration for a project. Oracle Project Costing provides this setup in Oracle Purchasing and Oracle Payables so that these applications can create encumbrance for burden costs. Oracle Purchasing and Oracle Payables create encumbrance journals whenever any funds related action is performed for a document. For example, when you perform a Check Funds action for document, the encumbrance accounting events are processed to create the encumbrance journals in draft mode. When you perform a Reserve Funds action for a document, the encumbrance accounting events are processed to create the encumbrance journals in final mode and the funds balances are updated. After processing is complete, you can review the updated funds balances.



If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Purchasing or Oracle Payables derives using the Account Generator. For a list of the predefined event classes and event types, see the Oracle Projects Implementation Guide.



Budget Check Funds Processing Overview

Budget Check Funds Processing Overview

You can choose to perform a budget check funds before you submit the budget for baseline processing. The following processing occurs during a budget check funds:

1. Oracle Project Costing determines the default accounts using the Project Budget Account Generation Workflow.

2. Oracle Project Costing validates funds. - For top-down integrated budgets, Oracle Project Costing validates existing approved

transaction amounts (at resource, resource group, task, top task and project levels) against the project budget.

3. Oracle Project Costing generates accounting events. 4. Oracle Subledger Accounting creates accounting entries in draft mode for the accounting

events. 5. Oracle Project Costing validates funds.

- For bottom-up budget integration, Oracle Project Costing validates the budget amounts against an organization-level Oracle General Ledger budget.



- For top-down integrated budgets, Oracle Project Costing validates budget amounts against the General Ledger Funding Budget and then validates existing approved transaction amounts (at account level) against the project budget.

6. Oracle Project Costing updates the budget lines with the accounting information from Oracle Subledger Accounting and the budget check funds result status.



Creating a Baseline for an Integrated Budget

Creating a Baseline for an Integrated Budget

When you create a baseline version for an integrated project budget, the baseline process performs the following activities:

1. Validates the submitted budget version. 2. Creates a baseline for the new budget version. 3. Validates funds.

- For top-down integrated budgets, the baseline process validates existing approved transaction amounts (at resource, resource group, task, top task and project levels) against the project budget.

- Note: When you use the PA: Budget Workflow to control budget status changes, Oracle Project Costing performs funds validation only after the budget is approved.

4. Generates accounting events to reverse the accounting for the most recent baseline version, if one exists, and to create accounting for the new baseline version.

- For bottom-up budget integration, the baseline process generates accounting events to create budget journal entries.



- For top-down integrated budgets, the baseline process generates accounting events to create encumbrance journal entries.

5. Creates accounting in final mode for the accounting events in Oracle Subledger Accounting.

6. Validates funds. - For bottom-up budget integration, the baseline process validates the budget amounts

against an organization-level Oracle General Ledger budget. - For top-down integrated budgets, the baseline process validates budget amounts

against the General Ledger Funding Budget and then validates existing approved transaction amounts (at account level) against the project budget.

- Note: If the budget fails funds validation, then the baseline process removes the accounting entries it created from Oracle Subledger Accounting and updates the submitted budget version to Rejected status.

You run the program PRC: Transfer Journal Entries to GL to transfer the journal entries to Oracle General Ledger. When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose to have the program post the journal entries. Otherwise, you can manually post the journal entries in Oracle General Ledger. The baseline program updates funds balances in Oracle General Ledger. The program PRC: Transfer Journal Entries to GL does not affect funds balances. For non-integrated budgets with budgetary controls, the baseline process validates the submitted budget version, creates baseline version, and validates existing transaction amounts against the project budget. The baseline process does not generate and process accounting events for non-integrated budgets.



Budget Integration Workflow

Budget Integration Workflow

When a project uses budgetary controls, the budget baseline process launches the PA: Budget Integration workflow to perform the baseline processing tasks.



Reviewing and Overriding Budget Account Details

Reviewing and Overriding Budget Account Details

You can review and optionally override default accounts, or an account segment, generated by the Project Budget Account Generation workflow. Note: Do not update the account for the budget line if the budget line is associated with transactions. Updating the account causes the baseline process to fail. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing generates using the Project Budget Account Generation workflow. If no transactions exist for a budget line, then Oracle Project Costing updates the budget line with the new account when you manually update accounts on the Budget Accounts Details window and when you define account derivation rules in Oracle Subledger Accounting to overwrite accounts.



Viewing Encumbrance and Budget Subledger Accounting

Viewing Encumbrance and Budget Subledger Accounting

You can use the subledger accounting events drill-down and inquiry menu options in Oracle Project Costing, Oracle Payables, and Oracle Purchasing to view information about budget and encumbrance journal entries. You can:

• Perform an inquiry on accounting events, journal entries and journal entry lines based on multiple selection criteria.

• View information about an accounting event or journal entry error. • View detailed information about the subledger journal entry headers for a given

accounting event. • Compare subledger journal entry information for any two journal entries. • View subledger journal entry lines for a number of different documents or transactions. • View subledger journal entry in T-account format.



Quiz

Answer: a



Agenda



Top-Down Budget Integration

Top-Down Budget Integration

When enterprises use top-down budgeting, top management defines spending limits for each organization. Budgetary controls are set to enforce the limits, and encumbrance accounting creates reservations for planned expenditures. The reservations ensure that funds will be available when project costs are incurred, and provide a complete picture of funds available for future use.



Top-Down Budget Integration Procedures

Top-Down Budget Integration Procedures

Defining General Ledger Funding Budgets Before you can define budget integration, you must define an organization-level funding budget or budgets in Oracle General Ledger. To set an organization's spending limits, you enter funding budget balances for the accounts assigned to each budget organization. Defining Budget Integration To reserve funds in General Ledger funding budgets for anticipated project costs, define budget integration using the Budgetary Controls option from the Projects, Templates window. When you define integration for your project, use the budget type you plan to use for your commitment budget and select the Encumbrance balance type. You must define Integration before you create a baseline version for the project budget and before you enter any project transactions. See the section of this lesson titled "Implementation Steps." Entering Budget Amounts and Generating Accounts When you define a commitment budget for controlling expense-type commitment transactions and create a baseline version, the system generates encumbrance entries to create a project encumbrance against the funding budget. The project encumbrance reserves funds for the



anticipated project commitment costs. When project-related expense commitment transactions are approved, the project encumbrance is reduced and new commitment encumbrances created. When you define integration using the Encumbrance balance type, the system automatically enables budgetary controls for the project. The Project control level is automatically set at Absolute and cannot be changed. Oracle Project Costing uses budgetary controls to ensure that the project commitment total for expense transactions never exceeds the project commitment budget and the amounts reserved in the General Ledger funding budget. Creating a Baseline Budget Version When a project is set up to use top-down integration, the process to create a baseline version varies depending on whether you use workflow to control budget status changes.

• If you do not use workflow to control budget status changes, then Oracle Project Costing calls the PA: Budget Integration Workflow.

• If you use workflow to control budget status changes, then Oracle Project Costing changes the budget version status to In Progress and calls the budget approval workflow. After the budget is approved, baseline processing continues for the budget version. Oracle Project Costing displays any rejections encountered during baseline processing in the budget approval notification.

When you submit a top-down integrated budget, Oracle Project Costing: • Validates the submitted budget version. • Creates a baseline version • Validates existing approved transaction amounts (at resource, resource group, task, top

task and project levels) against the project budget. • Generates accounting events • Creates encumbrance journal entries in final mode for the accounting events in Oracle

Subledger Accounting • Validates budget amounts against the General Ledger Funding Budget • Validates existing approved transaction amounts (at account level) against the project

budget. If the baseline version is the initial baseline version for the budget, then Oracle Project Costing creates and validates encumbrance journal entries for this budget version. If a prior baseline version exists, then Oracle Project Costing creates and validates reversal encumbrance journal entries for the most recent baseline version and new encumbrance journal entries for the new baseline version. Transferring Budget Journals to Oracle General Ledger You run the program PRC: Transfer Journal Entries to GL to transfer encumbrance journal entries from Oracle Subledger Accounting to Oracle General Ledger. Posting Encumbrance Journals When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose to have the program post the journal entries. Otherwise, you can manually post the journal entries in Oracle General Ledger. The baseline process updates funds balances in Oracle General Ledger. The program PRC: Transfer Journal Entries to GL does not affect funds balances.



Encumbrance Accounting Example


You enter a top-down integrated budget for a project. The budget entry method must use GL periods for budgeting. In this example, the budget entry method uses a resource list that is grouped into resource groups (expenditure organizations in this example). Each resource group is broken down into resources (expenditure categories in this example).





The Account Generator creates GL accounts for each budget line. The baseline process validates the submitted budget version, creates a baseline version, validates existing approved transaction amounts (at resource, resource group, task, top task and project levels) against the project budget, generates accounting events, creates encumbrance journal entries in final mode for the accounting events in Oracle Subledger Accounting, validates budget amounts against the General Ledger Funding Budget, and validates existing approved transaction amounts (at account level) against the project budget.





The Finance Department submits the program PRC: Transfer Journal Entries to GL and selects Yes for the parameter Post in General Ledger. The program transfers encumbrance journal entries from Oracle Subledger Accounting to Oracle General Ledger and posts the journal entries in Oracle General Ledger. Note: The account 01-000-1280-000 is defined as the Reserve for Encumbrance Account in Oracle General Ledger.



Creating Project Budgets for Top-Down Budget Integration

Creating Project Budgets for Top–Down Budget Integration

When you define top-down budget integration for a project, it is recommended that you create a commitment budget for tracking and controlling the project's expense commitment transactions. Keep in mind the following considerations:

• Budgetary Controls are automatically enabled when top-down integration is defined. • General Ledger accounts must be assigned to all budget lines for integrated budget types. • When you create a budget for an integrated budget type, you must use a budget entry

method that is time phased by GL period. • You must create a budget line for each budget category and budget period for which

commitment transactions are expected. • The process to create a baseline version varies depending on whether you use workflow to

control budget status changes. • Additional validations occur when you create a baseline for an integrated project budget.

Note: For top-down budget integration, you also need to enable encumbrance accounting in Oracle Purchasing and Oracle Payables and budgetary control in Oracle General Ledger. See the section of this lesson titled "Implementation Steps."



Maintaining the Project Budget

Maintaining the Project Budget

When you modify a top-down integrated budget, the baseline process performs the following tasks for the new budget version:

• Validates the budgetary controls defined for the project budget • Validates the budgetary controls defined for the funding budget • Validates the General Ledger period statuses • Updates the project encumbrance against the funding budget

Project Budgetary Controls The system validates budgetary controls when budget amounts are deleted or decreased or when the budget entry method is changed. When budget amounts are reduced, the baseline process performs budgetary control validations to ensure that existing transaction totals do not exceed available funds calculated using the new budget amounts. When the budget entry method is changed and a budget version is created using new budget categories, the baseline process maps all existing transactions in open GL periods to a budget line in the new budget version. Budgetary control validations are then performed for each transaction that uses budgetary controls defined for the new budget lines. If any transaction generates a budgetary control failure, the baseline process fails. If the baseline process fails, you can troubleshoot by



viewing the rejected budget version in the Budget Funds Check Results window. You can also use the Funds Check Results window to view the rejection reason for the particular transaction that failed during the baseline process. Funding Budget Controls and GL Period Statuses When budget amounts are increased or new budget lines are entered, additional funds must be reserved in the funding budget. Therefore, the baseline process performs a budgetary control validation against the funding budget to ensure that funds are available for the additional project budget amounts. If any budgetary control failures are returned, the baseline process fails. Project Encumbrance Maintenance When a baseline is successfully created for a revised budget, the project encumbrance against the funding budget is adjusted. If new budget lines are added or existing budget line amounts are increased, then additional funds are reserved in the funding budget. If budget lines are decreased or deleted, then project encumbrances are liquidated, reducing the project reservation. The Accounted Amount column on the By Account tab of the Budget Accounts Details window displays the encumbrance adjustment amounts. Positive values reserve additional funds and negative values reduce the current reservation.



Year-End Processing

Year-End Processing

When budgeted funds for a fiscal year are not used by the end of the year, many businesses move the available amounts to the next year. Organizations that operate under budget do not lose the budgeted amounts. Instead, their spending limits for the next year are increased. The PRC: Year End Budget Rollover program transfers year-end balances for top-down integrated project budgets to the next fiscal year. The program performs budget rollover functions for all selected top-down integrated budgets. The program calculates transfer amount for each project budget line by subtracting the total actual and commitment balances from the budgeted amounts. The program then adds the transfer amount for each project budget line to the budget amount for the first period of the next fiscal year. When the program PRC: Year End Budget Rollover is complete, you run the program PRC: Transfer Journal Entries to GL to transfer the encumbrance journal entries to Oracle General Ledger. When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose to have the program post the journal entries. Otherwise, you can manually post the journal entries in Oracle General Ledger.



Agenda



Bottom-Up Budget Integration

Bottom-Up Budget Integration

When enterprises use bottom-up budgeting, they build organization-level budgets by consolidating budget amounts from lower-level sources. When you define budget integration for a project, the project budget can be consolidated automatically.



Bottom-Up Budget Integration Procedures

Bottom-Up Budget Integration Procedures

Defining an Organization-Level Budget You must define your organization-level budget or budgets in Oracle General Ledger. In Oracle General Ledger, budgets contain estimated cost or revenue amounts for a range of accounting periods. Budget organizations define the departments, cost centers, divisions, or other groups for which budget data is maintained. You assign accounts to each budget organization. You create organization budget balances by entering budget amounts for the assigned accounts. Defining Budget Integration You define budget integration using the Budgetary Control option from the Projects, Templates window. You can use any project budget type to define bottom-up budget integration. You must define Integration before you create a baseline version for the project budget and before you enter any project transactions. See the section of this lesson titled "Implementation Steps." Entering Budget Amounts and Generating Accounts Next, you enter your budget and generate accounts in Oracle Project Costing.



Creating a Baseline Budget Version When a project is set up to use bottom-up integration, the process to create a baseline version varies depending on whether you use workflow to control budget status changes.

• If you do not use workflow to control budget status changes, then Oracle Project Costing calls the PA: Budget Integration Workflow.

• If you use workflow to control budget status changes, then Oracle Project Costing changes the budget version status to In Progress and calls the budget approval workflow. After the budget is approved, baseline processing continues for the budget version. Oracle Project Costing displays any rejections encountered during baseline processing in the budget approval notification.

The budget baseline process validates the submitted budget version, creates a baseline version, generates accounting events, creates budget journal entries for the accounting events in Oracle Subledger Accounting, and validates the budget amounts against an organization-level Oracle General Ledger budget. If the baseline version is the initial baseline version for the budget, then the baseline process creates and validates budget journal entries for this budget version. If a prior baseline version exists, the baseline process creates and validates reversal budget journal entries for the most recent baseline version and new budget journal entries for the new baseline version. Transferring Budget Journals to Oracle General Ledger After you create a baseline version for an integrated project budget, you run the program PRC: Transfer Journal Entries to GL to transfer the journal entries to Oracle General Ledger and initiate the program Journal Import in Oracle General Ledger. If the baseline version is the initial baseline version for the budget, then the program transfers the budget journal entries it creates for this version. If a prior baseline version exists, then the program transfers reversal budget journal entries for the most recent baseline version and new budget journal entries for the new baseline version. The baseline process updates funds balances in Oracle General Ledger. The program PRC: Transfer Journal Entries to GL does not affect funds balances. Posting Budget Journals When you submit the program PRC: Transfer Journal Entries to GL, you can optionally choose to have the program post the journal entries. Otherwise, you can manually post the journal entries in Oracle General Ledger. You can review and post the entries using the General Ledger Post Journals window.



Agenda



Non-Integrated Budgets with Budgetary Controls Procedures

Non-Integrated Budgets with Budgetary Controls Procedures

You can set up your project to use budgetary controls with a non-integrated budget. Oracle Project Costing does not generate and process accounting events for non-integrated budgets. Defining Non-Integrated Budgets with Budgetary Control You define budget integration using the Budgetary Control option from the Projects, Templates window. See the budgetary control discussion in the section of this lesson titled "Implementation Steps." Creating a Baseline Budget Version When you create the baseline budget version, the baseline process:

1. Validates the submitted budget version. 2. Creates baseline version. 3. Validates existing approved transaction amounts against the project budget.

Note: A project-related document in Oracle Purchasing or Oracle Payables is independently validated against the GL budget and the project budget.



Agenda



Budgeting Implementation Steps



Define Additional Core Budgeting Setup

Define Additional Core Budgeting Setup

You can define additional core budgeting setup as needed. This setup includes budget change reasons, budget types, and budget entry methods.

• Budget Change Reasons - You can select a budget change reason for budget versions and for individual budget lines. You can define your own change reasons.

• Budget Types - Budget types define the different types of budgets that you plan for when you want to create budgets that use budgetary controls and budget integration features.

• Budget Entry Methods - Budget entry methods specify and control the following options:

- The level of the work breakdown structure at which you enter a budget. - The time phase that you use to enter budget amounts, if any. - Whether you enter amounts that are categorized by resources. - The amounts that you can enter.

For additional information, see the "Implementing Oracle Project Management" section of the Oracle Projects Implementation Guide.



Implementing Budgetary Controls



Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting

Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting

To use budgetary controls, you must enable budgetary control for the ledger in Oracle General Ledger and enable encumbrance accounting in Oracle Payables or Oracle Purchasing. Encumbrance accounting automatically creates encumbrances for requisitions, purchase orders, and invoices. For additional details, see information about encumbrance financials options in the Oracle Payables Implementation Guide. Note: The budgetary control process uses the following predefined encumbrance types:

• Projects for top-down integrated budgets in Oracle Project Costing • Commitment for requisitions • Obligation for purchase orders • Invoices for Oracle Payables documents

Important: After you enable budgetary control for the ledger in Oracle General Ledger and encumbrance accounting in Oracle Payables or Oracle Purchasing, you must not disable it. Modifying these options can result in data corruption in funds-related tables and cause failures during funds validation processing.



Budgetary Controls: Define Profile Options

Budgetary Controls: Define Profile Options

• PA: Enable Budget Integration and Budgetary Control Feature - To enable budgetary control for your projects, you must set this profile option to Y (Yes).

• PA: Days to Maintain BC Packets - Specify the number of days budgetary control results are maintained. The default value is 3. Increasing this value may slow the performance of the budgetary control process. Use the Funds Check Results window to view budgetary control results for transactions that are not older than the number of days that you specify. The budgetary control results for transactions that pass budgetary control are available for online viewing in the Funds Check Results window only until any of the following events occurs: - You run the concurrent program PRC: Maintain Budgetary Control Balances. - You create a baseline version for any project with budget integration. - The transaction is older than the number of days specified for profile option.

• PSA: Budgetary Control Report Template – You can set this profile option at the site, application, responsibility, and user levels. You must select Budgetary Control Results Template to view budgetary control results from Oracle Purchasing and Oracle Payables.



Budgetary Controls: Define Control Levels and the Time Interval

Budgetary Controls: Define Control Levels and the Time Interval

Define budgetary controls for non-integrated budgets and for top-down integrated budgets. You can define budgetary controls for project types, project templates, and projects. Values that you define for a project type are the default values for project templates. Values that you define for project templates are the default values for projects. When you define a project type, indicate whether or not the default values for budgetary controls can be changed at the project level. Non-Integrated Budgets: Defining Budgetary Controls for Project Types

1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level - Check this box to allow users to modify the settings at

the project level. 3. Budget Type - Select a project cost budget type. 4. Control Flag - Enable the Control Flag check box. 5. Balance Type - Leave blank. 6. Non-Project Budget - Leave blank. 7. Levels - Select a default control level for each budget level.



8. Time Phase - Select an Amount Type and Boundary Code to be used when the system calculates available funds.

Non-Integrated Budgets: Defining Budgetary Controls for Project Templates and Projects

1. Navigate to the Budgetary Control option of the Projects, Templates window. 2. Budget Type - Select a project cost budget type. 3. Balance Type - Leave blank. 4. Non-Project Budget - Leave blank. 5. Levels - Select a default control level for each budget level. 6. Time Phase - Select an Amount Type and Boundary Code to be used when the system

calculates available funds. For information about defining budgetary control setup for top-down integrated budgets, see the information in this section about implementing top-down integration.



Budgetary Controls: Create an Initial Budget

Budgetary Controls: Create an Initial Budget

When you enable budgetary controls for a project, you must create a baseline version for your project cost budget before you enter commitment transactions. If a baseline version does not exist when you approve a commitment transaction, then the transaction fails and you receive an error message: No baseline budget version exists for this project. For a project that uses burdening, use a budget entry method that enables you to enter burdened cost amounts. Oracle Project Costing uses burdened cost amounts to enforce budgetary controls. If you enter only raw cost amounts for a project budget with a budget entry method that allows the entry of burdened cost amounts, then Oracle Project Costing automatically copies the raw cost amounts to the burdened cost fields. These amounts are then used to enforce budgetary controls for your project.



Budgetary Controls: Adjust Default Control Levels

Budgetary Controls: Adjust Default Control Levels

When you create a baseline for a project budget for the first time, Oracle Project Costing creates default budgetary control level settings for each budget level based on the values in the Budgetary Controls option. You can override the default control level values for the baseline budget version. When you create subsequent baselines for the project budget, Oracle Project Costing uses the revised budgetary control level settings and not the default settings. For example, if you override the budgetary control level for a task, Oracle Project Costing does not reset the task to the default value the next time that you create a baseline for the budget. If you add new tasks to the project or new resource groups or resources to the resource list assigned to the budget, the next time you create a baseline for the budget, Oracle Project Costing automatically creates default budgetary control settings for the new tasks, resource groups, or resources. You can override the default control level values for the baseline budget version. To adjust budgetary control levels, perform the following steps:

1. Navigate to the Budgets window. 2. Query your project cost budget. 3. Choose the History button to view the budget version history.



4. Select Budgetary Controls from the Tools menu. 5. Change control level values as required. 6. If you are budgeting using a resource list, then choose the Resources button on the

Budgetary Control window to override the default values for resource groups and resources.

7. Save your work. Important: You can select the Reset Defaults button on the Budgetary Control window to restore the default budgetary control settings for the project. When you select the Reset Defaults button, Oracle Projects resets all budgetary control settings to the default values, including any settings that you have manually overridden. Default Budgetary Controls and Changing the Budget Entry Method You can change the budget entry method for a budget after you create a baseline version. If the budget entry level for the new budget entry method is different from the budget entry level for the current budget entry method, Oracle Project Costing resets to the budgetary controls to the default budgetary control level settings when you create the next budget baseline. For example, if the budget entry level of the current budget entry method is Top Tasks and the budget entry level for the new budget entry method is Lowest Tasks, Oracle Project Costing resets the budgetary controls to the default budgetary control level settings when you create the next budget baseline.



Implementing Budget Integration


When you integrate project budgets with non-project budgets, you use either top-down integration or bottom-up integration.



Budget Integration: Define the Project Budget Account Generation Workflow

Budget Integration: Define the Project Budget Account Generation Workflow

Oracle Project Costing uses the Project Budget Account Generation workflow process to generate default accounts when a project budget is integrated with a non-project budget. You must customize the Project Budget Account Generation workflow process to generate accounts according to your business needs. This workflow runs when one of the following events occurs:

• You manually select the Generate Budget Accounting option from the Tools menu of the Budgets window.

• You submit an integrated budget and it creates a baseline version. • You run the year-end rollover program for a top-down integrated budget to carry forward

the unspent project budget encumbrance amount from the year that is ending into the next year.

When you activate the workflow from the Tools menu, an account is generated or regenerated for all the defined budget lines. When the workflow is activated during budget submission, accounts are only generated for budget lines that do not already have an assigned account.



Note: Do not update the account for the budget line if the budget line is associated with transactions. Updating the account causes the baseline process to fail. You must customize the Project Budget Account Generation workflow to generate accounts based on your business needs. Oracle Project Costing provides predefined parameters to simplify the customization process. You can use the predefined parameters to derive accounts based on project organizations, expenditure organizations, and tasks, or based on the resource groups and resources used for budget entry. Oracle Project Costing predefines setup in Oracle Subledger Accounting to accept default accounts from Oracle Project Costing without change. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using the Project Budget Account Generation workflow. For additional details, see the Oracle Projects Implementation Guide.



Budget Integration: Define Profile Options

Budget Integration: Define Profile Options

• PA: Allow Override of Budget Accounts - This profile option enables you to control whether you can manually override accounts generated by the Project Budget Account Generation workflow process.

• PA: Enable Budget Integration and Budgetary Control Feature - To enable budget integration for your projects, you must set this profile option to Y (Yes).

• PA: Days to Maintain BC Packets - This profile option specifies the number of days budgetary control results are maintained. For more information, see the discussion in this section about implementing budgetary controls.

• PSA: Budgetary Control Report Template – You can set this profile option at the site, application, responsibility, and user levels. You must select Budgetary Control Results Template to view budgetary control results from Oracle Purchasing and Oracle Payables.



Budget Integration: Implement Top-Down Integration

Budget Integration: Implement Top-Down Integration

Defining Top-Down Budget Integration for Project Types: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level - Enable this box to allow users to modify the default

budget integration settings at the project level. 3. Budget Type - Select a project cost budget type to be integrated. You can enable top-down

integration for cost budget types only. 4. Control Flag - Enable the Control Flag check box. Budgetary controls must be enabled for

top-down integration. 5. Balance Type - For top-down integration, the Balance Type must be Encumbrance. 6. Non-Project Budget - Select General Ledger Funding Budget. 7. Levels - Select a default control level for each budget level. For top-down budget

integration, the system imposes absolute control at the project level for all encumbered accounts.




Note: The project budget controls you set must be compatible with the funding budget controls. The project budget controls must not allow a transaction to pass budgetary control if the transaction will fail budgetary control validation against the funding budget. In general, the project budget controls must be equal to or more restrictive than the funding budget controls. Defining Top-Down Budget Integration for Project Templates and Projects:

1. Navigate to the Budgetary Control option of the Projects, Templates window. 2. Budget Type - Select a project cost budget type to be integrated. 3. Balance Type - Select Encumbrance. 4. Non-Project Budget - Select General Ledger Funding Budget. 5. Levels - Select a default control level for each budget level. For top-down budget

integration, the system imposes absolute control at the project level for all encumbered accounts.




Budget Integration: Implement Bottom-Up Integration

Budget Integration: Implement Bottom-Up Integration

Defining Bottom-Up Budget Integration for Project Types: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level - Check this check box to allow users to modify the

default budget integration settings at the project level. 3. Budget Type - Select a project budget type to be integrated. 4. Balance Type - For bottom-up integration, the Balance Type must be Budget. 5. Non-Project Budget - Select a General Ledger budget from the list of values.

For Bottom-Up Budgeting, all other budgetary control fields must be blank. Defining Bottom-Up Budget Integration for Project Templates and Projects:

1. Navigate to the Budgetary Control option of the Projects, Templates window. 2. Budget Type - Select a project budget type to be integrated. 3. Balance Type - For bottom-up integration, the Balance Type must be Budget. 4. Non-Project Budget - Select a General Ledger budget from the list of values.

For Bottom-Up Budgeting, all other budgetary control fields must be blank.



Quiz

Answer: a



Summary


Entering Expenditures Chapter 4 - Page 1

Entering Expenditures Chapter 4



Entering Expenditures



Objectives



Agenda



Costing Flow: Enter Expenditures

Costing Flow: Enter Expenditures

You can use pre-approved batches to enter project-related expenditures directly into Oracle Project Costing.



Expenditures Overview


An expenditure is a group of expenditure items, or transactions, that an employee or an organization incurs for an expenditure period. You charge expenditures to a project to record actual work performed or cost incurred. Oracle Project Costing uses these terms for expenditures:

• Expenditure batch - A user-defined name used to track a batch of pre-approved expenditures, such as

timecards and expense reports. - You can enter the following classes of pre-approved expenditure batches in Oracle

Project Costing: Timecards, Usages, Miscellaneous Transaction, Inventory, Work in Process, and Burden Transaction.

• Expenditure - A group of expenditure items incurred by an employee or organization for an

expenditure period. • Expenditure item

- The individual transactions charged to a specific project and task combination.



Multiple Organization Access Control (MOAC)

Multiple Organization Access Control

The multiple organization access control (MOAC) feature allows you to enter and process pre-approved batches in two or more operating units without switching responsibilities.





You enter: • Expenditure Item Date - The date on which work is performed or a cost is incurred and

is charged to a project and task. • Project Number - A unit of work that requires resources to produce measurable results. A

project can be broken down into one or more tasks. You can charge costs to a project. • Task Number - A subdivision of project work. You can charge costs to lowest-level

tasks. • Assignment Name - When Oracle Project Resource Management is installed, you can

associate labor and expense report expenditures to scheduled work assignments. • Work Type - A classification of work. You use work types to classify both actual and

scheduled work. You can also use work types to classify work to determine the billability of expenditure items, classify cross charge amounts into cost, and revenue for cross-charged work, and assign attributes for utilization reporting. Work types roll up to resource and organization utilization categories. This field is required when the PA: Require Work Type Entry for Expenditures profile option has a value of Yes.



• Expenditure Type - A classification of cost that you assign to each expenditure item. You can choose any expenditure type within the expenditure type class that you select for the expenditure batch.

• Non-Labor Resource and Non-Labor Organization - If the expenditure type class for the batch is Usages, enter the non-labor resource and its owning organization. This enables you to track use of company-owned assets.

• Currency Fields - You can optionally display and enter the currency fields. You can use folder tools to display to display currency fields. When your cursor is positioned in the Expenditure Items regions of the Expenditures window, select Show Field from the Folder menu and then select the field that you want to display.

• Quantity - The quantity of units. The expenditure type determines the unit of measure. For example, on a timecard, you enter the quantity for professional labor in hours.

• Comment - Optionally, enter a free text Comment.



Currency Fields for Expenditures

Currency Fields for Expenditures

The currency fields include: • Functional Currency - The functional currency of the expenditure operating unit. • Project Currency - The common currency into which all transactions for a particular

project are converted. • Transaction Currency - The currency in which a cost transaction is incurred.

Note: You must use folder tools to display additional currency fields.



Pre-Approved Batch Expenditure Entry Flow Overview

Pre-Approved Batch Expenditure Entry Flow Overview

To enter a pre-approved expenditure batch: 1. Enter batch-level information. 2. Enter an expenditure. 3. Enter expenditure items. 4. Enter additional expenditures and expenditure items as needed. 5. Submit the batch for review. 6. As needed, rework the batch. 7. Release the batch for processing.



Statuses for Pre-Approved Expenditure Batches

Statuses for Pre-Approved Expenditure Batches

Pre-approved expenditure batches can have one of three statuses: • Working - The expenditure batch is not ready for review. You can enter transactions and

modify their expenditures and expenditure items. • Submitted - The batch is awaiting review. You can return the batch to Working status

(rework) to make corrections. • Released - The expenditure batch is released for cost distribution. You can reverse

incorrectly entered expenditure items within the batch.



Enter Pre-Approved Batches

Enter Pre-Approved Batches

1. Navigate to the Expenditure Batches window. 2. Select the operating unit the operating unit that incurred the cost. 3. Enter a unique batch name to identify this set of expenditures. 4. Enter the expenditure ending date for the batch. If you enter a date that is not the last day

of an expenditure week, the system automatically updates the date to the next valid week ending date.

5. Choose the expenditure type class for this batch. 6. Optionally, enter a description. 7. Optionally, enable the Reverse Expenditures in a Future Period check box to

automatically reverse the batch. The expenditure type class must be Miscellaneous Transaction to create an automatically reversing expenditure batch. For more information regarding this feature, see the section in this lesson titled “Automatically Reversing Expenditure Batches.”



8. Optionally, enter a control total and control count in the Amounts region. Use the Running Totals and Counts and the Difference columns to verify actual versus entered totals.

9. Select the Expenditures button to enter the batch. The status of a new batch is always Working.

10. In the Expenditures window, enter the employee or organization that incurred the cost. 11. Optionally enter the total units of measure in the Control Total field. When you have

entered all the expenditure items, you can compare the Control Total with the Running Total, to verify your entries.

12. Enter the expenditure items in the Expenditure Items region. 13. When you have completed the expenditure batch, submit the batch for review.



Submitting an Expenditure Batch

Submitting an Expenditure Batch

Verifying Control Totals and Control Counts Oracle Project Costing verifies control totals and control counts when you submit a batch. If the running total or running count does not equal your control totals, then you cannot submit the expenditure batch until your totals match. If you do not enter control totals, then Oracle Project Costing does not validate control totals. Reviewing and Releasing Expenditure Batches Releasing a batch is a second level of review after entry. You can use function security to remove the release capability from the entry person’s Oracle Project Costing responsibility. You can edit expenditure batches before release. The status must be Working to make changes. Release makes expenditures ready for cost distribution. Release is synonymous with Approval. Releasing a batch automatically releases all the expenditures and expenditure items in the batch.



Reversing an Expenditure Batch

Reversing an Expenditure Batch

The Reverse button is enabled only if the current batch is released. You can reverse imported expenditure batches only if the transaction source of the batch allows reversals. When you reverse an expenditure batch, Oracle Project Costing reverses all the expenditure items except for:

• Related items • Expenditure items that are already reversed • Reversing items (net zero adjusted items) • Expenditure items created as a result of a transfer adjustment



Correcting Expenditure Batches

Correcting Expenditure Batches

After you submit a batch, you can rework the batch to add, delete, and revise expenditures and expenditure items. You also must correct a batch if your supervisor rejects and returns a submitted batch to you. If the batch has a status of Submitted, locate the batch, click the Rework button to return its status to Working, and change the expenditure or expenditure item before resubmitting the batch. If the batch has a status of Released, you can correct individual expenditure items by reversing the full amount of the original item and then entering the correct information. For example, if you entered six hours on a timecard expenditure item when the correct number of hours is four, then you can create a reversing item equal to a negative six hours and add a new expenditure item of four hours. To correct a released expenditure item:

1. Create a new batch for the correction items. - The Expenditure Ending date must match the week that includes the expenditure item

you are reversing.



- Optionally check the All Negative Transactions Entered As Unmatched check box if you want to enter transactions with negative amounts and do not want Oracle Project Costing to search for corresponding existing transactions.

2. In the Expenditure Items window, select the Reverse Original button. - Instead of choosing the Reverse Original button, you can enter a negative amount in

the Quantity field. Precede negative amounts with a minus (–) sign. If the All Negative Transactions Entered as Unmatched check box is not enabled, then Oracle Project Costing searches for a matching expenditure item and alerts you if it is unable to find a match.

3. In the Reverse Expenditure Items window, specify the items that you want to reverse. 4. Select the Reversal button.

- Oracle Project Costing inserts a reversing (negative) expenditure item into the batch. 5. Finish entering the batch and submit the batch as usual.

- Expenditure batches can contain both positive and negative expenditure items.



Copying an Expenditure Batch

Copying an Expenditure Batch

If you frequently enter similar groups of expenditures, you can copy data from one week to the next. The Copy function copies all expenditures and, optionally, all expenditure items from a specified source batch. You need to revise only the items that are different in the new batch. Copying your expenditure batches can reduce your manual data entry requirements when you enter similar groups of expenditures. Note: You cannot copy expenditure items from a reversed expenditure batch.



Reviewing Project Expenditures


Two expenditure inquiry modes are available in Oracle Project Costing: • Project - You can view expenditure items for a single project across operating units. If

your system uses project security, then you can select only projects that you are allowed to see. The expenditure items that you view can cross operating units, but you must have security access to an operating unit to view those expenditure items. For example, a project has expenditure items associated with operating units A, B, C, and D. If your responsibility only gives you access to operating units B and C, then you can view and adjust only the expenditure items from operating units B and C.

• All - You can view expenditure items across projects and structure your query to retrieve information across projects within a single operating unit. If you have access to more than one operating unit, then you must select the operating unit that you want to query. If you have access to only one operating unit, then that operating is the default value. No project security is enforced. Oracle Project Costing shows only the expenditure items that correspond to the current operating unit. If a project has expenditure items that are charged across operating units, then you cannot view these expenditure items. In this case, use the Find Project Expenditure Items window to query these expenditure items.





To view expenditure items (perform an expenditure inquiry): 1. Navigate to the Find Project Expenditure Items or Find Expenditure Items window. 2. Enter your search criteria. You can enter search criteria for a large number of attributes

and on multiple tabs at the same time to limit the results of the query. • Note: For a detailed discussion of the available search criteria, see the Oracle

Project Costing User Guide. 3. Choose Find to execute the search, or choose Mass Adjust to process mass adjustment of

expenditures. For information about mass adjustments, see the lesson titled "Performing Cost Adjustments."

4. From the Expenditure Items window, you can: • Select the Run Request button and then select which set of predefined programs to

run. • Select the Totals button to view the totals for the expenditure items returned based

on your search criteria.



• Note: This window does not display events. If your project uses event-based or cost-to-cost revenue accrual or invoice generation, use the Events window to view the total project revenue and bill amounts.

• Select the Item Details button to review the details of this expenditure item. You can then choose one of the following options:

- Cost Distribution Lines - View individual transactions and the default debit and credit GL accounts for each expenditure item that Oracle Project Costing derived using AutoAccounting. You can also view other information about the cost distribution lines, such as PA and GL period, accounting event generation status, and the rejection reason if the generation of the accounting event was not successful. The Cost Distribution Lines window does not display the credit account for supplier invoice expenditure items interfaced from Oracle Payables.

- Revenue Distribution Lines - View the revenue transactions generated for a specific expenditure item. The window displays the default revenue account that Oracle Project Billing derived using AutoAccounting. You can also see the GL and PA posting period for the revenue, accounting event generation status, and the rejection reason if the generation of the accounting event was not successful.

- AP Invoice - Drill down to the Invoice Overview window in Oracle Payables. If the invoice is matched to a purchase order, then you can drill down to the purchase order from the Invoice Workbench. This option is enabled for expenditure items whose expenditure type class is either Supplier Invoices or Expense Reports.

- PO Receipt -- Drill down to the Receipt Transaction Summary window in Oracle Purchasing. You can also drill down to the related purchase order from the Receipt Transaction Summary window. This option is enabled for expenditure items for receipt accrual transactions in Oracle Purchasing.

- Purchase Order Details - Drill down to the purchase order details for contingent worker labor costs. This option is enabled for expenditure items for contingent worker labor costs that are associated with a purchase order.

• Important: If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. In this case, the default accounts displayed on the Cost Distribution Lines and Revenue Distribution Lines windows may not be the same as final accounts that Oracle Subledger Accounting transfers to Oracle General Ledger. To view the final subledger accounting, use the View Accounting option from the Tools menu.



Viewing Accounting Lines

Viewing Accounting Lines

You can use the View Accounting option from the Tools menu to review accounting entries for expenditure items. You must create accounting in final mode for the accounting events associated with the expenditure item to view accounting entries. If an expenditure item has multiple cost distribution lines, then you can view accounting for each cost distribution line that is accounted in Oracle Subledger Accounting. Similarly, if you adjust an expenditure item and do not create accounting for the adjustments in Oracle Subledger Accounting, then the View Accounting window only shows the accounted cost distribution lines. If you create accounting in draft mode, then you can either review the output from the create accounting program or use Subledger Accounting Inquiry to view the draft accounting. Note: The View Expenditure Accounting window displays final accounting entries from Oracle Subledger Accounting. It does not display default accounts that Oracle Project Costing derives using AutoAccounting. Note: For both historical (prior to Release 12) expenditure items not migrated to Oracle Subledger Accounting, and transactions accounted in an external system and interfaced into Oracle Project Costing, the View Accounting option displays accounts from the cost distributions table in Oracle Project Costing.



Quiz

Answer: a



Quiz

Answer: b



Agenda



Automatically Reversing Expenditure Batches

Automatically Reversing Expenditure Batches

You can create automatically reversing expenditure batches to record cost accruals in Oracle Project Costing. Frequently, you receive items and services in one accounting period, which are then invoiced in another period. You can use automatically reversing expenditure batches to accrue cost in the period in which it is incurred. To enter an automatically reversing batch, you must use the Miscellaneous Transactions expenditure type class. When you release the batch, Oracle Project Costing creates reversing entries that are accounted in the next General Ledger period. As you add expenditure items and save the batch, Oracle Project Costing determines the GL date for each transaction and stores it as an expenditure item attribute called Accrual Date. Oracle Project Costing determines the accrual date as follows:

• If Expenditure Item Date Accounting is used, then the accrual date is the expenditure item date.

• If Period-End Date Accounting is used, then the accrual date is the period ending date of the General Ledger period that includes the expenditure item date.



Releasing the Batch

Releasing the Batch

When you release an expenditure batch with the Reverse Expenditures In a Future Period checkbox enabled, Oracle Project Costing automatically reverses each expenditure item included in the batch. Oracle Project Costing determines the GL date for the reversing expenditure items when it creates the reversing entries and it stores the date in the Accrual Date attribute. Oracle Project Costing determines the GL date as follows:

• If Expenditure Item Date Accounting is used, then the accrual date of the reversing item is the first day of the GL period that follows the GL period that includes the accrual date of the original expenditure item.

• If Period-End Date Accounting is used, then the accrual date of the reversing item is the last day of the GL period that follows the GL period that includes the accrual date of the original expenditure item.

• If the accrual dates for the reversing items fall in a period with a closed status in Oracle General Ledger, then the release process fails and an error message appears.



GL Periods for the Expenditure Items

GL Periods for the Expenditure Items

Oracle Project Costing assigns the original expenditure items to the current GL period and the reversing expenditure items to the next GL period.



Agenda



Upload Expenditure Batches from Microsoft Excel


You can enter and upload pre-approved expenditure batches using Microsoft Excel spreadsheets. You can connect to the database to validate records during entry, or you can create the spreadsheet offline and allow validation to occur during the transaction upload. Note: If you choose to create the spreadsheet offline, then only mandatory fields associated with a list of values are validated during transaction upload. The transaction upload calls the Transaction Import program, where additional transaction validations take place. Download an Entry Template You must first download an entry template from Oracle Project Costing. All fields marked with an asterisk are mandatory. If List-Text appears under the column name, then a list of values is available. To access the list of values, double-click in the column or select List of Values from the Oracle menu located at the top of the spreadsheet template.





Once the batch is ready, you can upload the data to the Oracle Project Costing transaction import interface table. From here, the concurrent program PRC: Transaction Import brings the expenditure batch into Oracle Project Costing. Upload Batch Select Upload from the Oracle menu located at the top of the spreadsheet template. Optionally, select the Parameters button to select upload options. After viewing the Parameters window, you must select Close or Proceed to Upload to return to the Upload window. Select Upload to launch the upload process. The upload process updates the message column for each record in the spreadsheet to indicate whether the upload was successful. Transaction Import The upload process populates the transaction import table. Run the PRC: Transaction Import program to import the transactions into the Expenditure Items table. You can optionally use the upload parameter to run the transaction import program automatically.



Upload Contingent Worker Timecards

Upload Contingent Worker Timecards

You can enter contingent worker timecard batches in Microsoft Excel and upload the batches to Oracle Project Costing:

• Each timecard line is related to a project and purchase order line. • A amount check is performed against the purchase order during transaction import. • Oracle Project Costing uses the cost rates stored on the purchase order to calculate

contingent worker labor costs. • The supplier must submit an invoice. You match the invoice to the purchase order to

reduce outstanding balances. • You interface additional cost, such as non-recoverable tax or invoice price variances, to

Oracle Project Costing from the supplier invoice in Oracle Payables. • You can bill contingent worker costs as labor.

To use this integration, you must enable the Import Contingent Worker Timecards with Purchase Order Integration implementation option. You can optionally set up AutoAccounting function transactions to determine default credit and debit accounts for contingent worker labor costs that are different from the default accounts for employee labor costs.



Note: When contingent workers are allowed to enter timecards that are not related to a purchase order, you must ensure that the purchase order is not related to a project. Otherwise, the cost for the contingent work will be recorded in Oracle Project Costing twice, once as labor and once as supplier cost. Entering Contingent Worker Timecards with Oracle Purchasing Integration

1. Enter a project-related purchase order for the contingent worker labor in Oracle Purchasing. Associate the purchase order and purchase order line to the contingent worker assignment in Oracle HRMS.

2. Consolidate contingent worker project-related timecards and enter a timecard batch in Microsoft Excel. Assign a purchase order and purchase order line to each timecard line.

3. Upload the timecards and run the program PRC: Transaction Import to import the timecards into Oracle Project Costing. An amount check takes place against the purchase order during import.

4. Process contingent worker timecards in Oracle Project Costing: a. Run PRC: Distribute Labor Costs. The program retrieves cost rates from purchase

order. b. Run PRC: Generate Cost Accounting Events (for the process category Labor Cost). c. Run PRC: Create Accounting (for the process category Labor Cost).

5. Process in Oracle Payables: a. Supplier submits an invoice. b. Match supplier invoice to the purchase order to reduce outstanding balances. c. Process and pay supplier invoice in Oracle Payables. d. Run PRC: Interface Supplier Costs in Oracle Project Costing to interface any

additional costs, such as non-recoverable tax or invoice price variances. For information about entering contingent worker in Oracle Time & Labor, see the lesson titled "Integration with Oracle Time & Labor."



Quiz

Answer: a



Agenda



Expenditure Batch Reports

Expenditure Batch Reports

This slide describes the concurrent programs used to generate expenditure batch reports. • AUD: Expenditure Batch Status - With this report you can identify expenditure batches

that are ready for release. Use this report to ensure that none of your expenditure batches go unprocessed.

• AUD: Pre-Approved Expenditures Entry Audit - Use the AUD: Pre-Approved Expenditures Entry Audit report to review pre-approved expenditures. After you enter all expenditures for an expenditure batch, submit this report and use it to verify that the entered data is correct before you submit your expenditure batch. This report provides a summary for each expenditure batch that displays the total amounts for each expenditure type in the expenditure batch.



Quiz

Answer: b, c



Agenda



Costing Flow: Import Transactions

Costing Flow: Import Transactions

Oracle Project Costing provides a single open interface, called Transaction Import, to enable you to load transactions from external cost collection systems into Oracle Project Costing. Transaction Import creates pre-approved expenditure items from transaction data entered in external cost collection systems. Examples of external cost collection systems are:

• Timecard entry systems • Supplier invoice entry systems • Electronic data collection systems for asset usage (computer, printer, phone, etc.) • Payroll systems

You can use the Review Transactions window to view and correct transactions that were rejected during import. Note: You can use Transaction Import to import project-related expense reports into Oracle Project Costing from third-party systems. Expense reports that you import into Oracle Project Costing must be fully accounted. Oracle Project Costing does not generate accounting events to create accounting in Oracle Subledger Accounting for these imported costs.



Overview of Transaction Sources

Overview of Transaction Sources

When you submit Transaction Import, you must identify the source of the transactions that you want to import. To import 3rd party transactions, use your import utility to enter this transaction source in the TRANSACTION_SOURCE column of the PA_TRANSACTION_ INTERFACE_ALL table. You then select the transaction source name in the Submit Request window when you want to import transactions from this source. For additional information about transaction sources, see the lesson titled "Implementing Expenditures."



Overview of Transaction Import

Overview of Transaction Import

When you import transaction information from external cost collection systems, Oracle Project Costing records the transaction details and the source of the imported transactions during transaction import. The PRC: Transaction Import program (also referred to as Transaction Import) validates the transaction information, reports any exceptions, and creates transactions for all of the valid transactions. To import transactions, you first must load transactions for external systems into the PA Transaction Interface Table. Your implementation team must determine the method for populating the table. After you populate the interface table, you use the Submit Request window to run PRC: Transaction Import to import transactions into Oracle Project Costing. The program selects all pending transactions that satisfy the selection criteria of the request and validates each transaction. If a transaction is valid, the program creates expenditure records in Oracle Project Costing. For additional information, see the online course titled "R12 Oracle Projects Advanced - Transaction Import."



Resolving Import Exceptions

Resolving Import Exceptions

If any one expenditure item in an expenditure fails validation, then Oracle Project Costing rejects the entire expenditure and updates each expenditure item in the expenditure with a status of R (Rejected). However, only the expenditure item that was rejected appears on the exception report. Other expenditure items attached to the rejected expenditure do not appear on the report. The remainder of the expenditures in the batch interface to Oracle Project Costing. Note: The transaction import validation logic is different when you run the program PRC: Interface Supplier Costs to import transactions from Oracle Purchasing and Oracle Payables. The program uses predefined supplier cost transaction sources to import expenditure items and it rejects only the expenditure items that fail validation. The program imports the valid expenditure items in the expenditure.



Quiz

Answer: d



Correcting Rejected Transactions within Oracle Project Costing

Correcting Rejected Transactions within Oracle Project Costing

To make changes to the source information because of invalid data, you can delete the rejected rows from the interface table, correct the rejected transactions in the feeder system, and reload them from the feeder system. You can also correct the transaction in the interface table using the Review Transactions window. Oracle Project Costing automatically updates the status of corrected items and all other transactions in the same expenditure to P (Pending). The original and updated values for corrected transactions are stored in the audit table. You can also use the Review Transactions window to create one or more new transactions without loading them from the feeder system. This window was designed to expedite minor additions to expenditure batches. Review Transactions Window: Currency-Related Fields The Review Transactions window is a folder-type window. Many of the currency fields are not displayed in the default folder. You can create folders that display these fields. Review Transactions Window: Expenditure Item Dates for Supplier Costs The program PRC: Interface Supplier Costs validates expenditure item dates for supplier costs that you interface from Oracle Purchasing and Oracle Payables. If the expenditure item date for an expenditure item fails validation, then the program rejects the transaction and leaves it in the



interface table. You must either change the date setup in Oracle Project Costing or change the date for the expenditure item. You can use the Review Transactions window to change the date for a rejected expenditure item. Oracle Project Costing picks up the revised date for the rejected transaction the next time that you run the program PRC: Interface Supplier Costs. To update the expenditure item date in the Review Transactions window, the Allow Interface Modifications option must be enabled for the transaction source.



Summary


Implementing Expenditures Chapter 5 - Page 1

Implementing Expenditures Chapter 5



Implementing Expenditures



Objectives



Expenditures Implementation Steps



Agenda



Expenditure Categories

Expenditure Categories

Oracle Project Costing uses expenditure categories to group expenditure types for costing. An expenditure category describes the source of your organization’s costs. For example, an expenditure category with a name such as Labor refers to the cost of labor. You use expenditure categories when you define organization overrides, for budgeting, and for transaction controls. In addition, you can use expenditure categories in your AutoAccounting rules and for reporting. Use the Expenditure Categories window to define an expenditure category. For each expenditure category, enter a unique name for the expenditure category and a description.



Define Revenue Categories

Define Revenue Categories

A revenue category describes a source of your organization’s revenue. For example, a revenue category with a name such as Labor refers to labor revenue. Use the Revenue Category Lookups window to define new revenue categories. Revenue categories are used for grouping expenditure types and event types for revenue and billing. You can use revenue categories for budgeting, for reporting purposes, and in your AutoAccounting rules. For additional discussion regarding event types, see the course “R12.x Project Billing Fundamentals.”



Define Units

Define Units

A unit of measure records quantities or amounts of an expenditure item. You assign a unit to each expenditure type. For example, to calculate the cost of computer services using the amount of time a user uses a computer, you can define an expenditure type for computer services and assign it the unit Hours. Use the Unit Lookups window to define units.



Expenditure Type Classes

Expenditure Type Classes

An expenditure type class tells Oracle Project Costing how to process an expenditure item. Oracle Project Costing predefines all expenditure type classes. Oracle Project Costing uses the following expenditure type classes to process labor costs:

• Straight Time - Labor cost calculated using a base cost rate multiplied by hours • Overtime - Labor cost calculated using a premium cost rate multiplied by hours.

Oracle Project Costing uses the following expenditure type classes to process non-labor project costs:

• Expense Reports – Expense reports from Oracle Payables or Oracle Internet Expenses. You cannot enter expense reports directly into Oracle Project Costing. Expense reports that you import into Oracle Project Costing must be fully accounted prior to import.

• Usages - You must specify the non-labor resource for every usage item you charge to a project. For each expenditure type classified by a Usage expenditure type class, you also define non-labor resources and organizations that own each non-labor resource.

• Supplier Invoices - Supplier invoices, discounts, and payments from Oracle Payables or an external system, and receipt accruals from Oracle Purchasing.



• Miscellaneous Transaction - Miscellaneous Transactions are used to track miscellaneous project costs. Examples of uses for miscellaneous transactions are:

- Fixed assets depreciation - Allocations - Interest charges

• Burden Transaction - Burden transactions track burden costs that are calculated in an external system or calculated by Oracle Project Costing as separate, summarized transactions. These costs are created as a separate expenditure item that has a burdened cost amount, but has a quantity and raw cost value of zero. You can adjust burden transactions that are not system-generated.

• Work In Process – You use this expenditure type class for Oracle Project Manufacturing WIP transactions that you interface from Manufacturing to Oracle Project Costing. You can also use this expenditure type class when you import other manufacturing costs via Transaction Import or when you enter transactions via pre-approved batch entry.

• Inventory - This expenditure type class is used for the following transactions: - Oracle Project Manufacturing transactions that you import from Manufacturing or

Oracle Inventory. - Oracle Inventory Issues and Receipts that you import from Oracle Inventory in a

manufacturing or non-manufacturing installation. - You can also use this expenditure type class when you import other manufacturing

costs via Transaction Import or when you enter transactions via pre-approved batch entry.



Define Expenditure Types

Define Expenditure Types

An expenditure type is a classification of cost that you assign to each expenditure item you enter in Oracle Project Costing. Defining expenditure types is a key aspect of your implementation of Oracle Project Costing. Enter the following information to define an expenditure type:

• Name - A unique name for the expenditure type. • Expenditure Category - The expenditure category you want to associate with this

expenditure type. • Revenue Category - The revenue category you want to associate with this expenditure

type. • Unit of Measure (UOM) - The unit of measure to use when Oracle Project Costing

calculates the cost for this expenditure type. You must enter Hours for labor expenditure types.

• Tax Classification Code - Optionally, click Tax Classification Code and select the tax classification code for customer invoice lines for this expenditure type and operating unit. Oracle Project Costing uses this code as the default tax classification code based on the Application Tax Options hierarchy that you define in Oracle E-Business Tax for the



combination of Oracle Project Costing and the specified operating unit. For more information on setting up taxes and the hierarchy of tax options for an application and operating unit, see the Oracle E-Business Tax User Guide.

• Rate Required - If this expenditure type requires a cost rate, then enable the Rate Required check box. Select the Cost Rate button to navigate to the Expenditure Cost Rates window, select an operating unit, and then enter a cost rate and its effective dates. If this expenditure type does not require a cost rate, then do not enable the Rate Required check box. If you create a non-labor expenditure type without checking the Rate Required check box, you cannot subsequently require and enter a cost rate for that expenditure type. Instead, you must disable the expenditure type and create a new one that requires a cost rate and has a unique name. If you enable the Rate Required check box when you create a non-labor expenditure type, then you can change the cost rate at any time.

For supplier invoice expenditure types, if you specify that a rate is required, Oracle Project Costing requires you to enter a quantity in Oracle Payables for invoice distributions using that expenditure type. When you interface the invoice distribution to Oracle Project Costing, Oracle Project Costing copies the quantity and amount to the expenditure item and calculates the rate. If you define a supplier invoice expenditure type with the Rate Required option disabled, then the quantity of the expenditure item is set to the amount you enter in Oracle Payables.

• Description and Dates - On the Description, Dates tab, enter a description and an effective from date for the expenditure type. You can optionally enter an effective to date for the expenditure type.

• Expenditure Type Classes - In the Expenditure Type Class region, select the expenditure type class or classes for this expenditure type.

Attention: After you create and save an expenditure type, you cannot subsequently update the following attributes for the expenditure type:

• Name • Expenditure Category • Revenue Category • Unit of Measure • Rate Required check box

Instead, you must enter an end date for the expenditure type and create a new one that has a unique name. When you enter an end date for an expenditure type, the end date has no affect on existing transactions. Oracle Project Costing uses the old expenditure type to report on and process existing transactions. You cannot use the old expenditure type for new transactions that have an expenditure item date after the end date.



Multiple Expenditure Type Classes Per Expenditure Type

Multiple Expenditure Type Classes Per Expenditure Type

You can assign multiple expenditure type classes to an expenditure type. This feature allows you to use a single expenditure type to classify as many different costs as you require. You can use the same expenditure type for expenditures that have different origins (and therefore different accounting), but which should otherwise be grouped together for costing, budgeting, or summarization purposes. For example, an expenditure item with the expenditure type Materials can have the expenditure type class Supplier Invoice if it originated in Oracle Payables, and the expenditure type class Inventory if it originated in Oracle Inventory. This ability enables you to easily group these costs together for reporting and budgeting purposes, because the cost rolls up into the same expenditure type, regardless of the source of the individual transaction.



Quiz

Answer: b



Quiz

Answer: c



Agenda



Transaction Control Extension

Transaction Control Extension

The transaction control extension enables you to define your own rules to implement company-specific expenditure entry policies. You can validate any transaction entered into Oracle Project Costing, including transactions from other Oracle Applications and from external systems. The transaction control extension is called during expenditure entry. In addition, the program PRC: Transaction Import calls the transaction control extension to validate transactions before they are loaded into Oracle Project Costing. Some examples of rules that you may define are:

• You cannot charge new transactions to projects for which the work is complete. You can only transfer items to these projects.

• You can charge labor hours for a future date. The transaction control extension validates expenditure items one at a time. All validation is done for each expenditure item. Oracle Project Costing checks each expenditure item during data entry and the transaction is validated before it commits the transaction to the database. Oracle Project Costing processes the transaction control extension after the standard validation performed for expenditure entry, and after validating any transaction controls entered at the project or task level.



Quiz

Answer: a



AutoApproval Extension

AutoApproval Extension

Use the AutoApproval Extension to define conditions under which expense reports in Oracle Internet Expenses or timecards in Oracle Time & Labor are approved automatically. You can configure this extension to meet your needs. For additional information, see the Oracle Projects API's, Client Extensions, and Open Interfaces Reference.



Agenda



Define Transaction Sources

Define Transaction Sources

Transaction sources identify the source of transactions imported into Oracle Project Costing using Transaction Import. The transaction source determines how Transaction Import processes transactions. The transaction source is used to identify transactions in the PA_TRANSACTION_INTERFACE_ALL table. When you run the concurrent program PRC: Transaction Import, you must enter the transaction source for the transactions that you want to import into Oracle Project Costing. The Transaction Import program selects all eligible pending transactions in the PA_TRANSACTION_INTERFACE_ALL table that satisfy the selection criteria of the program request and determines the validity of each transaction. Oracle Project Costing predefines some transaction sources, and you can create others to fit your business needs. When you create a transaction source, you select the transaction source options to control the Transaction Import processing. For details about each of the transaction source options, see the Oracle Projects Implementation Guide and the online course titled "R12 Oracle Projects Advanced - Transaction Import."



Example Predefined Transaction Sources

Example Predefined Transaction Sources

Oracle Projects predefines a set of transaction sources to import cost from Oracle sources. Do not use these transaction sources to import transactions from non-Oracle sources. For a complete list of predefined transaction sources, see the Oracle Projects implementation Guide.



Example Predefined Transaction Sources: Manufacturing and Inventory

Example Predefined Transaction Sources: Manufacturing and Inventory

Oracle Project Costing predefines transaction sources to import transactions from Oracle Project Manufacturing and Oracle Inventory. Do not use these transaction sources to import transactions from non-Oracle sources. For a complete list of predefined transaction sources, see the Oracle Projects implementation Guide. For the transaction sources for Inventory, WIP, and WIP Straight Time transactions, the GL Posting Option in the Project Manufacturing Parameters window determines whether Oracle Project Manufacturing or Oracle Project Costing generates accounting events and creates accounting for the transactions in Oracle Subledger Accounting as follows:

• If the posting option is Manufacturing, then Oracle Project Manufacturing creates accounting for the transactions in Oracle Subledger Accounting.

• If the posting option is Projects, then Oracle Project Costing creates accounting for the transactions in Oracle Subledger Accounting. The value that you select for the Account Option determines the source of the default accounting as follows:



- If the option is set to Use AutoAccounting, then Oracle Project Costing uses the transaction sources with No Accounts to import the transactions with no accounts. Oracle Project Costing then uses AutoAccounting to derive the default accounts.

- If the option is set to Send Accounts to PA, then Oracle Project Costing uses the transaction sources with Accounts to import the transactions and the default accounting from Oracle Project Manufacturing.



Quiz

Answer: a



Agenda



Listings

Listings

Use the following concurrent programs to document expenditure setup information: • IMP: Expenditure Types Definition - Use IMP: Expenditure Types Definition Listing to

review expenditure types. You can print a listing for one or all expenditure categories and for a specified effective date. If an effective date is specified for the report, then the report lists only expenditure types that are active as of the date you enter.

• IMP: Revenue Categories - Use the IMP: Revenue Categories Listing to review revenue categories. For each revenue category listed, this report prints all the associated expenditure types and their corresponding expenditure categories. To limit the report to only one revenue category, enter the revenue category. Otherwise, leave this field blank.

• IMP: Units Definition - Use the IMP: Units Definition Listing to review all units of measure.



Summary


Performing Cost Processing Chapter 6 - Page 1

Performing Cost Processing Chapter 6



Performing Cost Processing



Objectives



Agenda



Overview of Costing

Overview of Costing

Costing includes the following major steps: 1. Enter and approve expenditures through the Oracle Project Costing user interface, or

import transactions. You can use Transaction Import to import unaccounted and accounted transactions. If you import unaccounted transaction, then you must run the costing programs for the transactions. If you import accounted transactions, then no additional processing is needed.

2. Distribute costs and derive default accounting. Cost distribution is the act of calculating the cost and determining the cost accounting for an expenditure item. Oracle Project Costing has a set of cost distribution programs that you run, depending upon the type of expenditure. Some imported expenditures are already cost distributed when you import them and do not require further cost distribution processing.

3. Generate cost accounting events. The program PRC: Generate Cost Accounting Events collects cost distribution lines in Oracle Project Costing and uses AutoAccounting to determine the default liability accounts for raw and burden costs. It also generates cost accounting events for Oracle Subledger Accounting.



Overview of Costing

Overview of Costing

4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. You run the concurrent program PRC: Create Accounting in Oracle Project Costing to create accounting entries for accounting events. Depending on the parameter values you select, the program performs the following tasks: - Creates subledger accounting entries for unprocessed accounting events. If you

define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting.

- Transfers accounting entries to the Oracle General Ledger interface tables. In Oracle Project Costing, you can optionally run a separate program named PRC: Transfer Journal Entries to GL to transfer accounting entries to Oracle General Ledger.

- Initiates the journal import program in Oracle General Ledger. - Initiates posting of journal entries in Oracle General Ledger.



Overview of Costing

Overview of Costing

In Oracle General Ledger, the Journal Import program takes the summary interface information stored in the Oracle General Ledger interface tables and automatically creates journal entries for posting in Oracle General Ledger. Journal Import creates a journal entry batch for your journal entry records in your ledger and accounting period. For each journal entry category in a batch, Journal Import creates a journal entry header. For each header in a journal entry batch, Journal Import creates one or more journal entry lines that correspond to the journal entry records you transfer from Oracle Subledger Accounting to Oracle General Ledger. When you run the program PRC: Create Accounting and you select Yes for the parameter Transfer to General Ledger, the create accounting program transfers the final accounting from Oracle Subledger Accounting to Oracle General Ledger and runs the Journal Import program. When you submit the program PRC: Create Accounting, and you choose to transfer to Oracle General Ledger, or alternatively when you submit the program PRC: Transfer Journal Entries to GL, you can optionally set the parameter Post in General Ledger to Yes to enable the program to automatically post successfully imported journal entries in Oracle General Ledger.



Costing Concepts

Costing Concepts

Raw Cost - Cost directly attributable to work performed. Examples of raw cost are salaries and travel expenses.

• Burden Cost - Cost of doing business that supports raw cost and cannot be directly attributed to work performed. Examples of burden cost are fringe benefits, office space, and general and administrative costs.

• Total Burdened Cost - The total cost. It consists of raw cost plus any burden cost.



Overview of Encumbrance Accounting

Overview of Encumbrance Accounting

Budgetary controls are set to enforce limits, and encumbrance accounting creates reservations for planned expenditures. The reservations ensure that funds will be available when project costs are incurred, and provide a complete picture of funds available for future use. Oracle Project Costing creates project encumbrance entries when you enable top-down budget integration for a project. Budgetary Controls Budgetary controls enable you to monitor and control expense commitment transactions entered for a project based on a project cost budget. Expense commitment transactions are transactions for non-inventory items. Oracle Project Costing enforces budgetary controls for:


unmatched prepayments to supplier invoices



Note: Budgetary controls are not enforced for project-related expense reports entered in Oracle Payables because you generally enter expense reports after costs are already incurred. Therefore, you should ensure that your procedures for approving expense report expenditures include verification of available funds according to your business requirements. Budget Integration Oracle Project Costing budget integration features enable you to integrate project budgets with non-project budgets in Oracle General Ledger. Integration is defined in order to perform bottom-up or top-down budgeting. For additional information, see the lesson titled "Appendix B: Budgetary Controls And Budget Integration."



Quiz

Answer: b



Agenda



Costing Flow: Distribute Costs

Costing Flow: Distribute Costs

After you enter or import expenditures, the next step is to distribute the costs.



Cost Distribution Processing Flow

Cost Distribution Processing Flow

Distribution programs perform the following tasks: • Calculate raw cost (quantity x rate) in transaction currency • Calculate burden and burdened cost • Create and distribute raw cost distribution lines • Convert all transaction currency amounts to functional currency and project cost currency

amounts • Create and distribute burden and burdened cost distribution lines • Determine default accounting using AutoAccounting (debit account for raw cost and

burden cost, debit and credit accounts for total burdened cost) Note: If you are not performing burdening, then you can skip the programs that create and distribute burden and burdened cost. See the lesson titled "Implementing Burden Costing."



Determining Costs

Determining Costs

Calculating labor cost: • Raw cost is the result of multiplying hours by a rate. • Burden cost is the result of multiplying raw cost by a burden multiplier. • Burdened cost is the sum of raw cost and burden cost. • For employees and contingent workers, you can maintain labor cost rate schedules by

employee (includes contingent workers) or by job. You also have the option of overriding labor cost rates for individual employees and contingent workers. In addition, you can define a unique labor costing algorithm using the Labor Costing Extension.

• For contingent worker timecards with Oracle Purchasing integration, when you run the program PRC: Distribute Labor Costs, Oracle Project Costing uses rates from the related purchase order to calculate the costs.

• Oracle Project Costing determines costs for labor transactions with the following programs:

- PRC: Distribute Labor Costs - PRC: Distribute Labor Costs for a Range of Projects



Calculating cost for usages and miscellaneous transactions: • Raw cost is equal to quantity (if quantity is in currency, for example, a currency amount),

or alternatively, raw cost is the result of multiplying quantity by a rate (if quantity is not in currency). You can define cost rates for usage and miscellaneous costs as follows:

- Cost rates by expenditure type - Cost rates by non-labor resource and owning organization for usages to override the

expenditure type cost rate • Burden cost is the result of multiplying raw cost by a burden multiplier. • Burdened cost is the sum of raw cost and burden cost. • Oracle Project Costing determines costs for usage and miscellaneous costs with the

following program: - PRC: Distribute Usage and Miscellaneous Costs

Determining supplier cost: • For supplier cost interfaced from Oracle Payables, raw cost for each expenditure item is

equal to the supplier invoice distribution line amount (accrual basis accounting) or the payment distribution amount (cash basis accounting) in Oracle Payables.

• For receipt accrual cost interfaced from Oracle Purchasing, raw cost is equal to the receipt transaction amount in Oracle Purchasing.

• Burden cost is the result of multiplying raw cost by a burden multiplier. • Burdened cost is the sum of raw cost and burden cost. • Oracle Project Costing determines costs for supplier invoice transactions with the

following programs: - PRC: Interface Supplier Costs - PRC: Distribute Supplier Cost Adjustments - PRC: Distribute Supplier Costs Adjustments for a Range of Projects

Determining expense report cost: • Raw cost for each expenditure item is equal to the expense report invoice distribution line

amount (accrual basis accounting) or the payment distribution amount (cash basis accounting) in Oracle Payables.

• Burden cost is the result of multiplying raw cost by a burden multiplier. • Burdened cost is the sum of raw cost and burden cost. • Receipt amount is the expenditure amount in the receipt currency. • Note: When you split a receipt in Oracle Payables across multiple expenditure items,

Oracle Project Costing does not divide the receipt amount among the expenditure items. As a result, each expenditure item is associated with the full receipt amount.

• Oracle Project Costing determines costs for expense reports with the following programs: - PRC: Interface Expense Reports from Payables - PRC: Distribute Expense Report Adjustments



Quiz

Answer: a, c



Burden Cost Calculations

Burden Cost Calculations

Oracle Project Costing calculates burden cost by multiplying raw cost by a burden multiplier. This calculation is represented in the following formula:

• Burden Cost = Raw Cost x Burden Multiplier Oracle Project Costing calculates total burdened cost by adding burden cost to the raw cost amount. This calculation is represented in the following formula:

• Total Burdened Cost = Raw Cost + Burden Cost You use the burden multiplier to derive the total amount of the burden cost. For additional discussion regarding burdening, see the lesson titled “Implementing Burden Costing.”



AutoAccounting: Distribution Programs

AutoAccounting: Distribution Programs

You create rules in AutoAccounting to specify the default accounts that the distribution programs generate. Oracle Project Costing creates many different accounting transactions throughout its business cycle. You use AutoAccounting to specify how to determine the correct account for each cost distribution line. See the lesson titled “Accounting for Costs.”



Cost Distribution Concurrent Programs

Cost Distribution Concurrent Programs

Oracle Project Costing provides the following cost distribution concurrent programs • PRC: Create and Distribute Burden Transactions - Summarizes burden cost and

creates expenditure items for burden transactions. The program creates burden transactions for projects, depending on the method you use to store burden costs. See the lesson titled “Implementing Burden Costing.”

• PRC: Distribute Borrowed and Lent Amounts - Distributes all transactions identified for Borrowed and Lent accounting. The program determines the transfer price amount for each transaction and generates the default borrowed and lent accounting entries. You run this program in the provider operating unit. See the lesson titled "Cross Charge."

• PRC: Distribute Expense Report Adjustments - Computes the burden costs associated with adjusted expense report expenditure items and determines the account to which to post the raw costs. The program also identifies if a transaction is cross-charged and, if so, determines the processing it requires.

• PRC: Distribute Labor Costs for a Range of Projects & PRC: Distribute Labor Costs - Computes the labor costs for timecard hours and determines the default GL account to



which to post the cost. The program also identifies if a transaction is cross-charged and determines the processing it requires.

• PRC: Distribute Supplier Cost Adjustments & PRC: Distribute Supplier Cost Adjustments for a Range of Projects - Processes adjustments made in Oracle Project Costing to supplier costs, such as supplier invoices, receipt accruals, supplier payments, and discounts. This program determines the default GL account for supplier cost adjustments.

• PRC: Distribute Total Burdened Costs - Creates total burdened cost distribution lines for all transactions on a burdened project. The program also identifies and processes any cross-charged transactions. The program creates default accounts for credit and debit distribution lines for burdened cost. See the lesson titled see the lesson titled “Implementing Burden Costing.”

• PRC: Distribute Usage and Miscellaneous Costs - Computes the costs and determines the default GL account to which to post cost for expenditure items with the following expenditure type classes: Usages, Burden Transactions, Miscellaneous Transactions, and Inventory and WIP transactions not already costed or accounted. The program also identifies if a transaction is cross-charged and, if so, determines the processing it requires.



Agenda



Costing Flow: Create Accounting

Costing Flow: Create Accounting

After you distribute costs, the next step is to create the accounting for the costs. Creating accounting consists of four main steps:

1. Generating cost accounting events. 2. Creating accounting for accounting events in Oracle Subledger Accounting. 3. Transferring final subledger accounting to Oracle General Ledger. 4. Importing and posting the journal entries in Oracle General Ledger.



Integration with Oracle Subledger Accounting


Oracle Project Costing fully integrates with Oracle Subledger Accounting so that you can create accounting for your project-related transactions. Oracle Project Costing generates accounting events and creates the subledger accounting entries for the accounting events. Oracle Project Costing predefines setup for Oracle Subledger Accounting so Oracle Subledger Accounting accepts the default accounting information from Oracle Project Costing without change. Next, Oracle Subledger Accounting transfers the final accounting to Oracle General Ledger. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting.



Generating Cost Accounting Events

Generating Cost Accounting Events

The program PRC: Generate Cost Accounting Events collects cost distribution lines in Oracle Project Costing and uses AutoAccounting to determine the default liability account. The value you select for the parameter Process Category determines the type of costs that the program processes. The program also creates accounting events for the costs in Oracle Subledger Accounting. If the program is able to successfully generate an accounting event, then it updates the status of the cost distribution line to Accepted. If the program cannot successfully determine a liability account or is unable to generate an accounting event, then it updates the status of the cost distribution line to Rejected.



AutoAccounting: Generate Accounting Events

AutoAccounting: Generate Accounting Events

When you run program PRC: Generate Cost Accounting Events, Oracle Project Costing uses AutoAccounting to determine the credit side of the accounting for each cost distribution line. See the lesson titled “Accounting for Costs.”



Creating and Transferring Accounting

Creating and Transferring Accounting

The program PRC: Create Accounting creates draft or final accounting entries in Oracle Subledger Accounting for unprocessed accounting events. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. You can run this program in either draft mode, if you want to review the results before you create the final accounting, or final mode. You can optionally choose to transfer final journal entries to Oracle General Ledger, initiate the Journal Import program, and post the journal entries in Oracle General Ledger. If you do not choose to have the program transfer final journal entries to Oracle General Ledger, then you can run the program PRC: Transfer Journal Entries to GL to transfer final journal entries from Oracle Subledger Accounting to Oracle General Ledger. This program transfers final subledger accounting journal entries from Oracle Subledger Accounting to Oracle General Ledger and initiates the program Journal Import in Oracle General Ledger. Optionally, you can choose to have the program post journal entries in Oracle General Ledger.



Oracle General Ledger Journal Import

Oracle General Ledger Journal Import

Use Journal Import to import accounting entries into Oracle General Ledger. Journal Import is an Oracle General Ledger program that creates journal entries from transaction data stored in the Oracle General Ledger GL_INTERFACE table. The program creates and stores journal entries in the following tables: GL_JE_BATCHES, GL_JE_HEADERS, and GL_JE_LINES. You post these journal entries in Oracle General Ledger to update your account balances.



Quiz

Answer: c



Agenda



Streamline Processes

Streamline Processes

Streamline processes submit and monitor a series of concurrent programs that must be run sequentially to complete a function. For example, distributing labor costs, generating cost accounting events, creating accounting in Oracle Subledger Accounting, and transferring the costs to Oracle General Ledger requires that you submit several programs. Instead of running the individual programs one at a time, you can choose to submit the program PRC: Submit Interface Streamline Processes and select the streamline option DXL: Distribute and Interface Labor Costs to GL. The streamline process then submits and monitors the progress of each separate program in sequence until all programs complete. Oracle Project Costing provides three streamline processes:

• PRC: Submit Interface Streamline Processes - Combines programs that send information from Oracle Project Costing to other Oracle applications.

• PRC: Submit Project Streamline Processes - Combines programs that distribute costs, interface supplier costs, generate revenue, and generate invoices for a single project. Generally, you submit a project streamline request after you make expenditure or invoice adjustments.



• PRC: One-Step Interface Streamline Processes to GL - Generates accounting events for transactions, creates accounting in Oracle Subledger Accounting, transfers subledger journal entries to Oracle General Ledger, runs the program Journal Import, and posts the journal entries in Oracle General Ledger. The streamline options for the program PRC: One-Step Interface Streamline Processes to GL are similar to the streamline options for the program PRC: Interface Streamline Processes. In addition, you can choose the streamline option All Streamline Processes to GL to process all distributed cost transactions and released revenue transactions.

Note: For the program PRC: Create Accounting, the interface streamline processes automatically set the Mode parameter to Final, the Transfer to General Ledger parameter to Yes, and the Post in General Ledger parameter to Yes.



Submitting Streamline Processes

Submitting Streamline Processes

To submit a streamline process: 1. Navigate to the Submit Request window. 2. For Name, choose one of the three streamline processes. For details about each of the

streamline options and the programs that each option initiates, see Oracle Projects Fundamentals.

3. Choose the Streamline Option you want to submit. 4. (Optional) Enter the Reschedule Interval, Reschedule Time of Day, and Stop

Rescheduling Date. 5. Choose the Submit button. Oracle Project Costing submits your streamline request. The

Streamline Processing Report lists the name, the concurrent request ID, and the completion status of each child programs monitored by the streamline process.



Agenda



Overview of Period Processing

Overview of Period Processing

Project Accounting Periods A project accounting period is an implementation-defined period against which you can measure project performance. Project accounting periods are also referred to as PA periods. PA Periods and GL Periods To report project information more frequently than your Oracle General Ledger accounting periods (GL periods) allow, you can define PA periods that are shorter than your GL periods. For example, you can define weekly PA periods and monthly GL periods. You can also create PA periods that match existing GL periods. However, defining PA periods that overlap your GL periods can create the need for numerous adjustments and journal entries if you wish to reconcile Oracle Project Costing with Oracle General Ledger. For additional information, see the course titled "R12.x Project Foundation Fundamentals."



Control of GL Period Statuses for Project Transactions

Control of GL Period Statuses for Project Transactions

You can control the status of GL periods for transaction processing in Oracle Project Costing, without closing the period in Oracle General Ledger. This feature enables you to open and close GL periods for project transactions independent of the closing processes for the other subledgers. The status of a GL period for project transactions in Oracle Project Costing can differ from the same GL period’s status in Oracle General Ledger. Enabling the Maintain Common PA and GL Periods Implementation Option If your PA periods and GL periods are identical, you can enable the Maintain Common PA and GL Periods implementation option. When this option is enabled, the system automatically maintains PA period statuses as you maintain the GL period statuses. To use this method, you must define identical PA periods and GL periods.



Transaction Accounting Methods

Transaction Accounting Methods

To give you greater control over when your transactions are accounted, you can enable the profile option PA: Enable Enhanced Period Processing to use expenditure item date accounting.



Period End Date Accounting

Period End Date Accounting

With period end date accounting, you maintain PA periods in Oracle Project Costing and GL periods in Oracle General Ledger. Oracle Project Costing derives the PA date for a transaction from the expenditure item date and sets the PA date to the PA period ending date. The period must be in either Open or Future status. Next, Oracle Project Costing derives GL dates from PA dates and sets the accounting date to the end date of the corresponding GL accounting period. Period End Date Accounting Example In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP-2010. This expenditure item date falls within the SEP-10 PA period and because the SEP-10 PA period is open, Oracle Project Costing sets the PA date to 30-SEP-10, the last day of the period. Next, Oracle Project Costing uses the PA date (30-SEP-10) to derive the GL date. The PA date falls into the open SEP-10 GL period. The derived GL date is 30-SEP-2010, the end date of the SEP-10 GL period.

Date Derivation Project Accounting Date (PA Date)



• Timecard, Usage, Miscellaneous, Supplier Cost Adjustments, and Expense Report Adjustments

- The PA date is set to the end date of the earliest PA period that includes or follows the transaction expenditure item date and has a status of Open or Future.

• Supplier Costs Interfaced from Oracle Purchasing and Supplier Costs and Expense Reports Interfaced from Oracle Payables

- The PA date is determined based on the relationship of the transaction expenditure item date to the GL date entered in Oracle Purchasing or Oracle Payables.

- If the expenditure item date is less than or equal to the GL date, then the PA date is set to the end date of the earliest PA period that includes or follows the GL date and has a status of Open or Future.

- If the expenditure item date is greater than the GL date, then the PA date is set to the end date of the earliest PA period that includes or follows the expenditure item date and has a status of Open or Future.

Oracle General Ledger Accounting Date (GL Date) • Timecard, Usage, Miscellaneous, Supplier Cost Adjustments, and Expense Report

Adjustments - The GL date is set to the end date of the earliest GL period that includes or follows

the PA date of the cost distribution line and has a status of Open or Future according to the period status in Oracle General Ledger.


- When you interface supplier costs from Oracle Purchasing and supplier costs and expense reports from Oracle Payables, Oracle Project Costing copies the GL date for each distribution line from the GL date entered for the distribution in Oracle Purchasing or Oracle Payables.



Expenditure Item Date Accounting

Expenditure Item Date Accounting

With expenditure item date accounting, you maintain both PA periods and GL period statuses for project transactions in Oracle Project Costing. Oracle Project Costing derives PA dates and GL dates independently, and does not set the accounting dates to the end date of the corresponding accounting period. Expenditure Item Date Accounting Example In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP-2010. The expenditure item date falls into the open SEP-10 PA period. The PA date is set to the expenditure item date of 08-SEP-2010. The GL period SEP-10 is also open for Oracle Project Costing. Oracle Project Costing sets the GL date to expenditure item date of 08-SEP-2010.


• Timecard, Usage, Miscellaneous, Supplier Cost Adjustments, and Expense Report Adjustments



- The PA date is set to the transaction expenditure item date if that date falls in a PA period with a status of Open or Future. If the expenditure item date falls in a closed PA period, then the PA date is set to the start date of the earliest open or future enterable PA period that follows the expenditure item date.


- The PA date is set to the transaction expenditure item date if that date falls in a PA period with a status of Open or Future. If the expenditure item date falls in a closed PA period, then the PA date is set to the start date of the earliest open or future enterable PA period that follows the expenditure item date.

Oracle General Ledger Accounting Date (GL Date) • Timecard, Usage, Miscellaneous, Supplier Cost Adjustments, and Expense Report

Adjustments - The GL date is set to the transaction expenditure item date if that date falls in a GL

period with a status of Open or Future according to the period status in Oracle Project Costing. If the expenditure item date falls in a closed GL period, then the GL date is set to the start date of the earliest open or future enterable GL period that follows the expenditure item date.


- When you interface supplier costs from Oracle Purchasing and supplier costs and expense reports from Oracle Payables, Oracle Project Costing copies the GL date for each cost distribution line from the GL date entered for the distribution line in Oracle Purchasing or Oracle Payables.



Expenditure Item Date Accounting with Common Accounting Periods

Expenditure Item Date Accounting with Common Accounting Periods

This method uses expenditure item date accounting and date derivation features with the Maintain Common PA and GL Periods implementation option. You maintain GL period statuses for project transactions in Oracle Project Costing and the system automatically maintains PA Periods. To use this method, you must define identical PA periods and GL periods. Oracle Project Costing derives a GL date for each transaction and copies the value to the PA date. Expenditure Item Date Accounting with Common Accounting Periods Example In the example on the slide, you enter a transaction with an expenditure item date of 08-SEP-2010. The expenditure item date falls into the SEP-10 GL period. While SEP-10 is still open in Oracle General Ledger, the GL period for project transactions status is Closed in Oracle Project Costing. Because this GL period is closed for project transactions, Oracle Project Costing sets the GL date to 01-OCT-2010, the start date of the OCT-10 GL period. OCT-10 is the earliest open or future enterable GL period for project transactions that follows the expenditure item date. It then copies the PA date from the GL date.




• Oracle Project Costing copies the PA date from the GL date. Oracle General Ledger Accounting Date (GL Date)

• Oracle Project Costing uses the Expenditure Item Date Accounting logic.



Sweeping Transaction Accounting Events

Sweeping Transaction Accounting Events

During the period-end closing cycle, you can choose to close the period without accounting for all accounting events. The program PRC: Sweep Transaction Accounting Events enables you to move accounting events that are in a closed GL period, and have errors or are not fully accounted, to the next open GL period so that you can complete closing without accounting for these transactions. This program changes the date on unaccounted transaction accounting events to the first day of the next open GL period without accounting for them. After the program sweeps the transaction accounting events, it also changes the GL date on the cost and revenue distribution lines associated with the accounting events to the first day of the next open GL period. When budgetary control is enabled for a project, this program also updates unaccounted project-related commitment transaction accounting events for project-related documents in Oracle Purchasing and Oracle Payables. The program updates the GL date that the system uses when it creates the reversing encumbrance accounting entries. The following conditions can cause a transaction to become eligible for sweeping:

• The transaction has accounting events with errors.



• The transaction has been accounted in draft mode but not in final mode in Oracle Subledger Accounting.

• The transaction has unprocessed accounting events. When you submit the program, you can choose to run it in either review mode or update mode. Use review mode to view all transactions with exceptions and the reasons for the exceptions. At this point, you can address the exceptions and run the program PRC: Create Accounting in final mode to complete the accounting for the transaction. Alternatively, if you do not want to correct the exceptions at this time, run the sweep transaction accounting events program in update mode to change the dates on the unaccounted accounting events to the first day of the next open GL period. Upon completion, the sweep transaction accounting events program generates an output report that shows the results of the program. Note: If you sweep revenue transactions, and you use Project Status Inquiry, Project Performance Reporting, or Oracle Daily Business Intelligence for Projects, then you must run the appropriate refresh or update programs so that reporting tool accurately reports the GL period. For additional information, see Oracle Projects Fundamentals. Note: Before you sweep transaction accounting events, consider the impact on other related processing such as burden cost accounting, asset capitalization, allocations, and non-CIP assets. For example, if the raw cost for a transaction is successfully accounted and the transaction accounting event for the burden cost is in error, then when you sweep transaction accounting events to the next period, you can end up with the raw cost posted to one period and burden cost posted to the following period.



Quiz

Answer: a



Summary


Accounting for Costs Chapter 7 - Page 1

Accounting for Costs Chapter 7



Accounting for Costs



Objectives



Agenda



Overview of Accounting for Costs

Overview of Accounting for Costs

Oracle Project Costing creates accounting transactions throughout its business cycle. You can use AutoAccounting to specify how to determine the correct account for each transaction. Oracle Project Costing generates accounting events and creates accounting for the accounting events in Oracle Subledger Accounting. Oracle Project Costing predefines setup in Oracle Subledger Accounting so that the create accounting program accepts default accounts from AutoAccounting without change. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables and Oracle Purchasing use the Account Generator to determine the default account code combinations for purchasing requisitions, purchase orders, supplier invoices, and expense reports based on the project information entered. AutoAccounting, the Account Generator, and Oracle Subledger Accounting each provide functionality to create accounting for project-related supplier costs and expense reports. When you implement Oracle Purchasing and Oracle Payables integration with Oracle Project Costing, carefully consider how to set up the account derivation logic in each location.



AutoAccounting

AutoAccounting

When you implement AutoAccounting, you define the rules governing which general ledger accounts Oracle Project Costing uses under which circumstances. Oracle Project Costing uses the rules you define whenever it performs an accounting transaction. The AutoAccounting feature requires that you allow dynamic insertion of new account combinations. You must define your Accounting Flexfield structure with the Allow Dynamic Inserts options enabled. Note: If you set up your own rules in Oracle Subledger Accounting, then you still set up AutoAccounting so that Oracle Project Costing can determine valid default accounts. The AutoAccounting setup enables programs, such as programs that distribute costs and generate cost accounting events, to determine the default accounts that Oracle Project Costing sends to Oracle Subledger Accounting. For example, if use total burdened cost accounting and set up your own rules in Oracle Subledger Accounting, then you also need to define AutoAccounting for total burdened costs so Oracle Project Costing can minimally determine a default debit and credit accounts.



AutoAccounting Rules

AutoAccounting Rules

AutoAccounting rules are formulas (or methods) that you use to derive each segment within your account structure based on the type of transaction. Each rule can use one of three intermediate value sources to derive the account segment:

• Constant value - Supply a single valid segment value.

• Parameter - Context-sensitive intermediate value that requires a lookup set.

• SQL select statement - Execute an SQL select statement to retrieve a value; make the rule dependent on

multiple values and conditional statements. To implement AutoAccounting, you define AutoAccounting rules to generate account combinations. You then assign a set of rules to each AutoAccounting transaction you want to use for your company.



AutoAccounting Rule Mapping

AutoAccounting Rule Mapping

Each AutoAccounting rule you define supplies one Accounting Flexfield segment value at a time. Thus, you need to specify one AutoAccounting rule for each segment in your Accounting Flexfield, for each AutoAccounting transaction you want to use. Some of the AutoAccounting rules you define can be quite simple, such as always supplying a constant company code or natural account. Others can draw upon context information (parameters), such as the expenditure type of an expenditure item or the organization that owns a particular non-labor resource. You can use multiple parameters to provide a segment value. You can reuse the same AutoAccounting rules for many different functions and their transactions. For each rule that you define, only one segment value within the entire account structure is supplied at a time. Thus, you specify one AutoAccounting rule for each segment in your account structure for each AutoAccounting transaction.



Constant Value

Constant Value

Use a constant value when you always supply a particular intermediate value (usually an Accounting Flexfield segment code). If you specify Constant as the rule intermediate value source, then enter the value that you want Oracle Project Costing to supply as the intermediate value.



Parameter Value

Parameter Value

When you define an AutoAccounting rule, you can use a predefined parameter as an input value. Examples of parameters that you can use as context information include the project-owning organization or the expenditure type of an expenditure item. Oracle Project Costing predefines the available parameters. AutoAccounting enables you to use the AutoAccounting parameters as inputs for your AutoAccounting rules. Not all of the parameters are available for all functions. The Customer ID and the Customer Name parameters are available for cross charge functions only. Submit the AutoAccounting Functions Listing for a complete listing of all of the parameters available for each function.



SQL Select Statement Value

SQL Select Statement Value

A SQL select statement value enables you to execute a SQL select statement to retrieve an intermediate value. You can make the rule dependent on multiple values and conditional statements. SQL statements are intended to process rules that depend on more than one parameter. You can define rules to read any value by using a SQL select statement. You should consider the performance implications of using SQL statements. For example:

IF the project type is overhead, THEN use the expenditure organization parameter. ELSE use the project organization parameter.

Although many companies have implemented AutoAccounting SQL statement rules in a production environment, you should tune your SQL statement and test the AutoAccounting setup against volume data to check their performance quality before implementation. AutoAccounting rules with SQL statements are intended to process rules that are dependent on more than one parameter. They are not intended to derive additional parameters using SQL that accesses application tables. This type of use can affect processing performance and may not be supported based on the AutoAccounting function.



Lookup Sets

Lookup Sets

A lookup set is an implementation-defined list that corresponds to the account segments. To define a lookup set, you specify pairs of values. For each intermediate value, you specify a corresponding account segment value. One or more related pairs of intermediate values and segment values form a lookup set. When you define lookup sets, lists of values are not available. You need to define a lookup set before you can use it in a rule. However, if you prefer to define your rules before completing your lookup sets, you can define each lookup set’s name and description and then define the intermediate values and segment values later. If AutoAccounting does not find a matching intermediate value in the lookup set, then it provides an error message (Incomplete AutoAccounting Rules) to notify you that it could not build an Accounting Flexfield combination. You must correct your AutoAccounting setup and resubmit the program that triggered the AutoAccounting error. If AutoAccounting does not find a matching segment value in the lookup set, then it provides an error message (Invalid Accounting Flexfield) to notify you that it could not build a valid Accounting Flexfield combination. You must correct your AutoAccounting setup and resubmit the program that triggered the AutoAccounting error.



Descriptive Flexfields on Setup Entities You can use the descriptive flexfield attributes to store values used in AutoAccounting instead of maintaining lookup sets for entities. These entities include:

• Agreement types • Budget entry methods and budget types • Class categories and class codes • Compensation rule sets • Event types • Expenditure categories and expenditure types • Burden cost codes • Lookup sets • Non-labor resources and non-labor resource organizations sources • Project role types • Transaction sources



Selecting a Segment Value Source

Selecting a Segment Value Source

After you specify an intermediate value, you specify one of the following segment value sources to indicate whether the intermediate value is already a valid segment value or whether AutoAccounting needs to translate it into a segment value using a lookup set:

• Intermediate Value - Supply the intermediate value as a segment value; do not use a lookup set.

• Segment Value Lookup Set - Look up the intermediate value in a lookup set; translate the intermediate value into

the corresponding segment value. You do not always need to use a lookup set when you write an AutoAccounting rule. If you define a simple constant rule, then you do not need to use a lookup set to supply a segment value because you generally supply a valid segment value as the constant.



Assign Rules

Assign Rules

Function For each accounting transaction, you define rules to determine the appropriate account to charge. Each accounting transaction is identified by an AutoAccounting function. AutoAccounting functions are components of programs that you submit to generate accounting entries. Function Transactions When you are assigning rules to an AutoAccounting function, you can assign different rules to different conditions. For example, you can account for indirect projects using one set of rules, and use two different sets of rules for billable items and non-billable items on contract projects. Oracle Project Costing provides function transactions for each function which identify commonly used conditions. You can assign rules to function transactions for each AutoAccounting function. Complete the following steps to assign AutoAccounting rules to AutoAccounting functions and function transactions:

• Enable each function transaction you want to use. • For each function transaction you enable, specify an AutoAccounting rule for each

segment of your Accounting Flexfield.



Assign rules to function transactions to tell Oracle Project Costing which AutoAccounting rules to use under which circumstances. In cases where an AutoAccounting function consists of several distinct function transactions, you assign rules to each function transaction that you want to use. These rule assignments determine which account AutoAccounting uses to process that function transaction. Oracle Project Costing attempts to use the most appropriate function transaction. If you have not enabled that function transaction, then it tries to use the next most appropriate transaction. Oracle Project Costing continues this process until it finds an enabled function transaction. Segment Rule Pairings After you enable a function transaction, you match each segment in your Accounting Flexfield with the appropriate AutoAccounting rule. For example, if you have a two-segment Accounting Flexfield containing a Company segment and an Account segment, you assign one rule to the Company segment and one rule to the Account segment. You use the Assign AutoAccounting Rules window to enable AutoAccounting function transactions and assign rules to them.



Quiz

Answer: b



Agenda



AutoAccounting for Costs Implementation Steps

AutoAccounting for Costs Implementation Steps

Oracle Project Costing uses AutoAccounting to generate default accounting for cost transactions. When you implement AutoAccounting, you define rules that determine accounts that Oracle Project Costing assigns to transactions to meet your business requirements. You can optionally define your detailed accounting rules in Oracle Subledger Accounting. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. Note: If you set up your own rules in Oracle Subledger Accounting, then you still set up AutoAccounting so that Oracle Project Costing can determine valid default accounts. The AutoAccounting setup enables programs, such as programs that distribute costs and generate cost accounting events, to determine the default accounts that Oracle Project Costing sends to Oracle Subledger Accounting. For example, if use total burdened cost accounting and set up your own rules in Oracle Subledger Accounting, then you also need to define AutoAccounting for total burdened costs so Oracle Project Costing can minimally determine a default debit and credit accounts.



Accounting for Labor Costs

Accounting for Labor Costs

Oracle Project Costing uses the Labor Cost Account and the Labor Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Straight Time and Overtime expenditure type classes. Labor Cost Account Function When you run PRC: Distribute Labor Costs or PRC: Distribute Labor Costs for a Range of Projects, Oracle Project Costing calculates labor cost amounts based upon employee labor cost overrides and labor costing rules. After calculating labor costs, Oracle Project Costing uses the Labor Cost Account transactions to debit a default expense account for raw labor costs. Labor Cost Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Labor Cost process category, the program credits a default payroll clearing liability account to balance the labor expense account. The program also generates cost accounting events in Oracle Subledger Accounting. You can assign different sets of rules to and enable the Contingent Worker Labor and Employee Labor function transactions to generate a different default clearing account based on the person type. Alternatively, you can assign rules to and enable only the All Labor function transaction to use the same rules for employees and contingent workers.



Accounting for Expense Report Costs

Accounting for Expense Report Costs

Oracle Project Costing uses the Expense Report Cost Account function to determine the expense default debit account for transactions associated with the Expense Reports expenditure type class. Expense Report Cost Account Function When you run PRC: Distribute Expense Report Adjustments, Oracle Project Costing calculates and distributes costs originating from expense report adjustments, and uses the Expense Report Cost Account function transactions to determine which default expense account to debit for expense report costs. Expense Report Adjustment Liability Account When you run PRC: Generate Cost Accounting Events for the Supplier Cost process category, the program credits a default supplier cost liability account to balance the supplier cost expense account. If you specify a default account in Oracle Project Costing implementation options, then the program uses the Default Supplier Cost Credit Account. Otherwise, you must set up Oracle Subledger Accounting to derive the account. The program also generates cost accounting events in Oracle Subledger Accounting.



Accounting for Usage Costs

Accounting for Usage Costs

Oracle Project Costing uses the Usage Cost Account and the Usage Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Usages expenditure type class. Usage Cost Account Function When you run PRC: Distribute Usage and Miscellaneous Costs, Oracle Project Costing uses the Usage Cost Account transactions to debit a default expense account for raw usages costs. Usage Cost Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Usage Cost process category, the program credits a default asset usages liability account to balance the usages expense account. The program also generates cost accounting events in Oracle Subledger Accounting.



Accounting for Miscellaneous Costs

Accounting for Miscellaneous Costs

Oracle Project Costing uses the Misc Trans Cost Account and the Misc Trans Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Miscellaneous Transaction expenditure type class. Miscellaneous Transaction Cost Account Function When you run PRC: Distribute Usage and Miscellaneous Costs, Oracle Project Costing uses the Misc Trans Cost Account transactions to debit a default expense account for raw miscellaneous costs. Miscellaneous Transaction Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Miscellaneous Cost process category, the program credits a default miscellaneous cost liability account to balance the miscellaneous cost expense account. The program also generates cost accounting events in Oracle Subledger Accounting.



Accounting for Burden Transactions

Accounting for Burden Transactions

Oracle Project Costing uses the Burden Cost Account and the Burden Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Burden Transaction expenditure type class. Burden Cost Account Function When you run PRC: Create and Distribute Burden Transactions, Oracle Project Costing uses the Burden Cost Account transactions to debit a default expense account for the burden costs. Burden Cost Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Burden Cost process category, the program credits a default burden cost liability account to balance the burden cost expense account. The program also generates cost accounting events in Oracle Subledger Accounting.



Accounting for Total Burdened Cost

Accounting for Total Burdened Cost

Oracle Project Costing uses the Total Burdened Cost Debit and the Total Burdened Cost Credit functions to determine the default cost accounting for total burdened costs. Total Burdened Cost Debit/Credit When you run PRC: Distribute Total Burdened Cost, Oracle Project Costing creates two burdened cost distribution lines for the total burdened cost. One distribution line holds the default account for the burdened cost debit and the other distribution line holds the default account for the burdened cost credit. Oracle Project Costing creates these two distributions for all expenditure items charged to projects which are defined to burden costs. The Total Burden Costs Debit/Credit function consists of the following functions:

• Total Burdened Cost Debit • Total Burdened Cost Credit



Accounting for WIP and Inventory Costs

Accounting for WIP and Inventory Costs

Oracle Project Costing uses the WIP Cost Account and the WIP Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Work in Process (WIP) expenditure type class. In addition, Oracle Project Costing uses the Inventory Cost Account and the Invent. Cost Clearing Account functions to determine the default cost accounting for transactions associated with the Inventory expenditure type class. WIP Cost Account Function When you run PRC: Distribute Usage and Miscellaneous Costs, Oracle Project Costing uses the WIP Cost Account transactions to debit a default expense account for raw work in process costs. WIP Cost Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Work in Process Cost process category, the program credits a default work in process cost liability account to balance the work in process expense account. The program also generates cost accounting events in Oracle Subledger Accounting.



Inventory Cost Account Function When you run PRC: Distribute Usage and Miscellaneous Costs, Oracle Project Costing uses the Inventory Cost Account transactions to debit a default expense account for raw inventory costs. Invent. Cost Clearing Account Function When you run PRC: Generate Cost Accounting Events for the Inventory Cost process category, the program credits a default inventory cost liability account to balance the inventory expense account. The program also generates cost accounting events in Oracle Subledger Accounting.



Accounting for Supplier Cost Adjustments


When you enter project-related supplier invoices in Oracle Payables or receipt accruals in Oracle Purchasing, Oracle Payables or Oracle Purchasing invokes the Account Generator in real time. The Account Generator derives the Accounting Flexfield values based on project information in much the same way that AutoAccounting works in Oracle Project Costing programs. After you interface supplier costs to Oracle Project Costing, you can adjust the supplier cost expenditure items in Oracle Project Costing. Oracle Project Costing processes these supplier invoice adjustments using the Supplier Invoice Cost Account AutoAccounting function. Supplier Invoice Cost Account Function Oracle Project Costing uses the Supplier Invoice Cost Account function to debit the appropriate default expense account for supplier cost adjustments (includes adjustments to expenditure items from invoices, receipts, and payments). When you run PRC: Distribute Supplier Cost Adjustments or PRC: Distribute Supplier Cost Adjustments for a Range of Projects, Oracle Project Costing uses the Supplier Invoice Cost Account function to debit a default expense account for raw supplier costs.



Supplier Cost Adjustment Credit Account When you run PRC: Generate Cost Accounting Events for the Supplier Cost process category, the program credits a default supplier cost liability account to balance the supplier cost expense account. If you specify a default account in Oracle Project Costing implementation options, then the program uses the Default Supplier Cost Credit Account. Otherwise, you must set up Oracle Subledger Accounting to derive the account. The program also generates cost accounting events in Oracle Subledger Accounting.



Listings

Listings

• IMP: AutoAccounting Functions - For each function, this report displays all of the possible parameters that AutoAccounting rules use to derive key flexfield segment values. The report also shows you all of the transactions related to the AutoAccounting function and whether each transaction is enabled or disabled.

• IMP: AutoAccounting Lookup Sets - For each AutoAccounting lookup, this report prints each possible intermediate value and its corresponding segment value.

• IMP: AutoAccounting Rule Definitions - For each AutoAccounting rule, this report displays the type of its intermediate source and the corresponding value for that source. If the intermediate value source is a SQL statement, this report displays the text of that statement. This listing also includes the segment value source that maps an intermediate value to the final segment value. If the segment value source is a lookup set, then this report displays the name of that lookup set.

• IMP: AutoAccounting Segment Rule Pairings - For each function, this report displays each of the function’s transactions. It also lists the AutoAccounting rule and key flexfield segment pairings for each transaction. This report also displays the function’s transactions without paired segments and rules.



Quiz

Answer: d



Agenda



Account Generator

Account Generator

The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables and Oracle Purchasing use the Account Generator to determine the default account code combinations for purchasing requisitions, purchase orders, supplier invoices, and expense reports based on the project information entered. You define functions and processes to derive the Accounting Flexfield combinations. You can optionally customize the Account Generator for each set of defined ledgers. Oracle Purchasing Oracle Purchasing uses item types to generate account numbers for all requisitions and purchase orders, whether they are project-related or not. Oracle Purchasing provides a set of default account generator processes for the accounts it needs to build. Oracle Purchasing provides default account generator processes. To derive the accounts based on project information, you must change the default processes so that they use the project information. For more information, see the “Oracle Purchasing User’s Guide.” Oracle Payables



How the Account Generator generates default charge accounts for invoices and expense reports depends on whether you are entering an invoice or expense report that contains project and task information:

• Supplier invoices - Oracle Payables (Invoices window) calls the Project Supplier Invoice Account

Generator. • Oracle Internet Expenses and Oracle Payables expense reports

- Oracle Internet Expenses or Oracle Payables calls the Project Expense Report Account Generator.

PA: Allow Override of PA Distributions in AP/PO You use the profile option PA: Allow Override of PA Distributions in AP/PO to control whether users can override the account number that the Account Generator derives for project-related distributions. Settings for this profile options are:

• Yes - User is allowed to update and override the generated Account. • No - User is not allowed to update and override the generated Account. • (No Value) - Equivalent to Yes.

For more information regarding the Account Generator and Oracle Project Costing, see the Oracle Projects Implementation Guide.



Account Generator Terminology

Account Generator Terminology

The Account Generator uses Oracle Workflow to derive default account code combinations. AutoAccounting determines default account combinations for all other project-related transactions.



Implementing Accounting for Project-Related Supplier Costs and Expense Reports

Implementing Accounting for Project-Related Supplier Costs and Expense Reports

AutoAccounting, the Account Generator, and Oracle Subledger Accounting each provide functionality to create accounting for project-related supplier costs and expense reports. When you implement Oracle Purchasing and Oracle Payables integration with Oracle Project Costing, you must carefully consider how to set up the account derivation logic in each location.

• Oracle Purchasing Account Generator (required) - Oracle Purchasing uses the Account Generator to derive default debit accounts for project-related purchasing documents.

• Project Supplier Invoice Account Generator (required) - Oracle Payables uses the Account Generator to derive default debit accounts for project-related supplier invoices that are not matched to a purchase order.

- Oracle Payables always uses the Account Generator for project-related invoices. You must set up the Account Generator to generate a default account, even if the profile option PA: Allow Override of PA Distributions in AP/PO. option is set to Yes.



- In addition, Oracle Project Costing uses the Account Generator to derive a default debit account for supplier cost and expense report adjustments that you perform in Oracle Project Costing. Oracle Project Costing uses this information to determine whether to allow the adjustment when you enable Automatic Offsets in Oracle Payables. Oracle Project Costing also uses this information to determine whether an adjustment can potentially affect tax recoverability.

• Project Expense Report Account Generator (required) - Oracle Internet Expenses and Oracle Payables (Invoices window) use the Account Generator to derive default debit accounts for project-related expense reports. You set up the Account Generator when you implement Oracle Payables.

• Supplier Invoice Cost Account AutoAccounting Function (required) - Oracle Project Costing uses this AutoAccounting function to derive default debit accounts for supplier cost adjustments that you perform in Oracle Project Costing.

• Expense Report Cost AutoAccounting Function (required) - Oracle Project Costing uses this AutoAccounting function to derive default debit accounts for expense report adjustments that you perform in Oracle Project Costing.

• Default Supplier Cost Credit Account Implementation Option (optional) - The program PRC: Generate Cost Accounting Events uses the specified account as the default credit account for supplier cost and expense report adjustments that you perform in Oracle Project Costing.

• User-defined Setup in Oracle Subledger Accounting for Supplier Cost Adjustments (optional) - Oracle Project Costing predefines setup in Oracle Subledger Accounting so that the create accounting program accepts the accounting for supplier cost and expense report adjustments from Oracle Project Costing without change. You can optionally define your own detailed accounting rules in Oracle Subledger Accounting.

- If you allow adjustments to supplier costs in Oracle Project Costing and you do not define a default supplier cost credit account in Oracle Project Costing implementation options, then you must set up Oracle Subledger Accounting to derive the credit account for supplier cost adjustments.



Quiz

Answer: a



Agenda



Encumbrance Accounting and Project Budgets

Encumbrance Accounting and Project Budgets

Oracle Projects creates project encumbrance entries when you enable top-down budget integration for a project. Oracle Purchasing and Oracle Payables create encumbrance entries to relieve the existing encumbrances and to create new encumbrance accounting entries. Oracle Projects provides this setup in Oracle Purchasing and Oracle Payables so that these applications can create encumbrance for burden costs. Oracle Purchasing and Oracle Payables create encumbrance journals whenever any funds related action is performed for a document. For example, when you perform a Check Funds action for document, the encumbrance accounting events are processed to create the encumbrance journals in draft mode. When you perform a Reserve Funds action for a document, the encumbrance accounting events are processed to create the encumbrance journals in final mode and the funds balances are updated. After processing is complete, you can review the updated funds balances. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Purchasing or Oracle Payables derives using the Account Generator.



Project Budget Account Generation Workflow

Project Budget Account Generation Workflow

Oracle Project Costing uses the Project Budget Account Generation workflow process to generate default accounts when a project budget is integrated with a non-project budget. You must customize the Project Budget Account Generation workflow process to generate accounts according to your business needs. For additional information, see the lesson titled "Appendix B: Budgetary Controls and Budget Integration."



Quiz

Answer: b



Agenda



Overview of Oracle Subledger Accounting

Overview of Oracle Subledger Accounting

Oracle Subledger Accounting is an intermediate step between each of the subledger applications and Oracle General Ledger. Oracle Subledger Accounting creates the final accounting for subledger journal entries and transfers the accounting to Oracle General Ledger. It stores a complete and balanced subledger journal entry in a common data model for each business event that requires accounting. Oracle Subledger Accounting provides a uniform approach to accounting and a common set of tools that enable you to configure accounting rules for applications that require accounting. It includes a common user interface and a set of programs that can generate accounting for Oracle and non-Oracle applications. When you set up rules in Oracle Subledger Accounting, you can define the types of lines, descriptions, and accounts to store on journal entries. Oracle Subledger Accounting partitions data by subledger application, while storing the information in a common model.





Oracle Project Costing fully integrates with Oracle Subledger Accounting so that you can create accounting for your project-related transactions. Oracle Project Costing generates accounting events and creates the subledger accounting entries for the accounting events. Oracle Project Costing predefines setup for Oracle Subledger Accounting so Oracle Subledger Accounting accepts the default accounting information from Oracle Project Costing without change. Oracle Subledger Accounting transfers the final accounting to Oracle General Ledger. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting, or the Project Budget Account Generation workflow for integrated budgets.





Oracle Project Costing generates accounting events for the business events that it processes and then creates subledger accounting entries for the accounting events. For example, a business event takes place when an employee charges time to a project. After you distribute costs for the labor expenditure items, you run PRC: Generate Cost Accounting Events to generate accounting events. Next, you run PRC: Create Accounting to create accounting entries for the accounting events in Oracle Subledger Accounting.





As the foundation of the event model, Oracle Project Costing predefines event entities. An event entity enables Oracle Subledger Accounting to handle the accounting for similar business events in a consistent manner. The three event entities are Expenditures, Budgets, and Revenue (Oracle Project Billing). Each event entity is associated with one or more event classes. An event class represents a category of business events for a particular transaction type or document. Event classes group similar event types and enable the sharing of accounting definitions. An event type represents a business operation that you can perform for an event class. An accounting event has both an event class and an event type that affect the subledger accounting entries. Event types provide the lowest level of detail for storing accounting definitions. Oracle Project Costing provides a predefined set of event classes and event types for each accounting event entity. Oracle Project Costing also predefines accounting event class options for each event class to specify the detailed information about the event class. For example, the accounting event class options specify the general ledger journal category and the balance type (actual, encumbrance, or budget) for each event class.



Quiz

Answer: a



Agenda



Oracle Subledger Accounting for Costs Implementation Steps

Oracle Subledger Accounting for Costs Implementation Steps

You can optionally set up your own accounting rules in Oracle Subledger accounting. For additional information, see the Oracle Subledger Accounting Implementation Guide.



Oracle Subledger Accounting for Costs Implementation Steps (continued)

Oracle Subledger Accounting for Costs Implementation Steps (continued)

You can optionally set up your own accounting rules in Oracle Subledger accounting. For additional information, see the Oracle Subledger Accounting Implementation Guide.



Sources and Custom Sources

Sources and Custom Sources

Oracle Project Costing predefines a set of sources. Sources are pieces of information that Oracle Subledger Accounting uses to determine how to create accounting for an accounting event. Oracle Project Costing assigns the predefined sources to accounting attributes. Accounting attributes are values that Oracle Subledger Accounting needs to successfully create subledger journal entries. For example, for the event class Labor Cost, Oracle Project Costing assigns the source Raw Cost to the accounting attribute Entered Amount. The program PRC: Create Accounting uses the raw cost value from the labor cost distribution line to determine the entered amount for the subledger accounting journal entry. You can optionally define custom sources to extend the list of sources available to application accounting definitions. To create custom sources, you write PL/SQL functions that use the predefined sources and constant values as parameters. For example, if you capture the geographic region to which each organization belongs in a descriptive flexfield segment, then you can create a custom source to use the information in your application accounting definitions. You use the expenditure organization (a predefined source) as a parameter in the definition of the custom source. For information about how to define custom sources, see the Oracle Subledger Accounting Implementation Guide.



Journal Entry Methods and Definitions

Journal Entry Methods and Definitions

Oracle Project Costing provides predefined accounting setup for Oracle Subledger Accounting. If you use the predefined setup, then Oracle Subledger Accounting accepts the default accounts from Oracle Project Costing without change. You can optionally define your own detailed subledger accounting rules. Many different components come together to form the subledger accounting setup:

• Subledger Accounting Method: A group of common application accounting definitions that determines how Oracle Subledger Accounting processes accounting events. The subledger accounting method groups application accounting definitions from subledger applications such as Oracle Project Costing, Oracle Payables, Oracle Purchasing, and Oracle Receivables. This grouping capability enables you to assign a set of application accounting definitions collectively to a ledger.

• Application Accounting Definitions: Application accounting definitions are collections of setup components for a subledger application that determine how Oracle Subledger Accounting processes accounting events to create subledger and general ledger journal entries. Application accounting definitions assign journal lines definitions to event class and event type combinations.



• Journal Lines Definitions: Journal lines definitions group journal line types, account derivation rules, and journal entry descriptions into a complete set of journal line types within an event class or event type.

• Journal Line Types: Journal line types determine the characteristics of subledger journal entry lines for an event class. These characteristics determine whether the line is used to create actual, budget, or encumbrance entries, whether the line is a debit or a credit, whether matching lines are merged, and whether data is transferred to the general ledger in summary or detail form.

• Account Derivation Rules: Account derivation rules determine the Accounting Flexfield values for subledger journal entries. You can define account derivation rules in Oracle Subledger Accounting that generate either a value for a single Accounting Flexfield segment or a complete Accounting Flexfield account code combination.

• Mapping Sets: Mapping sets enable you to assign a specific output value to an Accounting Flexfield or Accounting Flexfield segment. You use mapping sets when you set up account derivation rules. Account derivation rules determine the Accounting Flexfield values for subledger journal entries.

• Journal Entry Description: The journal entry description determines both the content and sequence in which the elements of the description appear. You assign journal entry descriptions to headers and lines in the application accounting definition. Oracle Subledger Accounting assigns the descriptions to the journal header and lines when it creates the draft or final accounting.

For additional information, see the Oracle Subledger Accounting Implementation Guide.



Associating Subledger Accounting Methods and Ledgers

Associating Subledger Accounting Methods and Ledgers

You must assign a subledger accounting method to a ledger. Assigning different subledger accounting methods to different ledgers enables you to create multiple accounting representations of transactions.



Post-Accounting Programs

Post-Accounting Programs

Subledger applications use post-accounting programs to transfer transaction data between subledgers based on the accounting generated from the transaction data. Oracle Subledger Accounting uses accounting classes to classify journal entry lines. The post-accounting programs distinguish journal lines for processing based on the accounting class assigned to each journal entry line. Oracle Project Costing provides two post-accounting programs, one for debits and one for credits, to obtain final accounting information from Oracle Subledger Accounting because the accounting that Oracle Project Costing creates using AutoAccounting may not be the same as the final accounting that Oracle Subledger Accounting transfers to Oracle General Ledger. Oracle Project Costing uses post-accounting programs to determine which journal entry lines to retrieve from Oracle Subledger Accounting when Oracle Project Costing performs the following activities:

• Groups asset lines on capital projects • Generates audit reports



• Creates a reversing entry for expenditure items that you imported into Oracle Project Costing from other applications, such as Oracle Purchasing, Oracle Payables, or Oracle Inventory

• Creates a reversing entry for expenditure items when you split an expenditure item, transfer an expenditure item, or change transaction attributes for an expenditure item (for example, change whether the expenditure item is billable or capitalizable)

The predefined setup for the post-accounting programs consists of the program code and a list of the accounting classes assigned to each respective program. If you modify the accounting class for a journal line type, or add a new accounting class and journal line type pair, then you must also update the accounting classes assigned to each of the predefined post-accounting programs. This update ensures that the asset generation program, audit reports, and expenditure item splits and transfers in Oracle Project Costing continue to work accurately. Important: Do not add the same accounting class to both the debit and the credit journal line types. Important: Oracle Project Costing predefines post-accounting program assignments for the PA Postaccounting Debit program and the PA Postaccounting Credit program. Do not remove the predefined accounting classes even if you define your own journal lines definitions and add accounting class assignments to the programs. In this case, Oracle Project Costing uses the predefined accounting classes to process and report on existing historical journals and new user-defined accounting classes that you add to process and report on new journals.



Cross-Entity Balancing Rules

Cross-Entity Balancing Rules

Oracle Subledger Accounting uses intracompany balancing rules to create balancing lines on journal entries between balancing segment values. You set up this functionality in the Accounting Setup Manager in Oracle General Ledger. The Accounting Setup Manager centralizes the common setup steps for the Oracle financial applications. For example, if you define accounting rules for project costs that use the operating unit to derive the account for your balancing segment, then transactions can have unbalanced entries when you create transactions between two different operating units. To address this situation, Oracle Project Costing sends the unbalanced entries to Oracle Subledger Accounting and Oracle Subledger Accounting automatically creates debit and credit accounting lines to balance the subledger journal entries by balancing segment. Oracle Subledger Accounting uses the balancing accounts that you define for the ledger in the Accounting Setup Manager. You must select the Enable Intracompany Balancing option in the ledger definition to enable the application of the balancing rules. You also must set up the accounts to ensure that Oracle Subledger Accounting generates the balancing journal entries. For information about cross-entity balancing rules, including examples, see the Oracle Financials Implementation Guide.



Oracle Subledger Accounting Inquiries

Oracle Subledger Accounting Inquiries

You can query accounting events, journal entries, and journal entry lines based on multiple selection criteria. You can use subledger accounting inquiries to:

• View information about an accounting event or journal entry error. • View detailed information about the subledger journal entry headers for an accounting

event. • Compare subledger journal entry information for any two journal entries. • View subledger journal entry lines for multiple documents or transactions. • View subledger journal entry in a t-account format. • View transactions for an accounting event or journal entry.

When you view a transaction for a cost accounting event, Oracle Subledger Accounting drills down to Oracle Project Costing and automatically opens and queries information in expenditure inquiry. Similarly, you can drill down to other subledger applications to view transaction information for the accounting events that originated in those applications.



Audit Reports

Audit Reports

The Project Subledger Audit Reports print cost distribution lines related to projects. The reports enable you to drill down from a GL account balance in the trial balance to the individual project-related transactions.

• AUD: Project Subledger Summary - This report prints a summary of cost distribution lines by project. The report includes subtotals for GL Account, Project Number, Manufacturing-Related, and Expenditure Type Class.

• AUD: Project Subledger Detail by Project - This report shows cost distribution lines for a single project by task.

• AUD: Project Subledger Detail by Expenditure Type - This report shows project subledger detail across projects for one expenditure type.



Summary


Implementing Non-Labor Costing Chapter 8 - Page 1

Implementing Non-Labor Costing Chapter 8



Implementing Non-Labor Costing



Objectives



Agenda





When you charge a usage expenditure item to a project, your must specify the non-labor resource utilized and the non-labor resource organization that owns the resource. When you define non-labor resources, you can choose only expenditure types with the Usages expenditure type class.



Non-Labor Costing Implementation Steps



Defining Non-Labor Resources

Defining Non-Labor Resources

1. In the Non-Labor Resources window, enter the name, description, effective dates. Select an expenditure type for each non-labor resource entered.

2. In the Organizations region, select the organizations to which the resource is assigned and enter the effective dates. The organizations include any organization from your organization hierarchy, regardless of whether the organization has the Project Expenditure/Event Organization classification enabled and regardless of the effective dates for the organization.



Non-Labor Cost Rates

Non-Labor Cost Rates

An expenditure type cost rate is a currency amount that Oracle Project Costing multiplies by the expenditure type unit to calculate cost. In the Expenditure Types window, select an expenditure type and choose the Cost Rates button to enter a cost rate for it. When you define an expenditure type, you specify whether cost rates are required. You can only select the Cost Rates button for the expenditure type if you enable the Rate Required option. You cannot change this setting after you save the expenditure type. Instead, you must create a new expenditure type with a unique name and set the Rate Required option for it. In a multi-organization environment, you set up expenditure types once and they are shared across all operating units. However, the cost rates for expenditure types are specific to each operating unit. You must define cost rates for each operating unit. For additional discussion regarding defining expenditure types, see the lesson titled “Implementing Expenditures.”



Non-Labor Cost Rate Overrides

Non-Labor Cost Rate Overrides

You define cost rate overrides in the Non-Labor Resources window. When you define non-labor resources, you assign each non-labor resource an expenditure type. The cost rates you define for an operating unit for the expenditure type apply to all non-labor resources with that expenditure type. You can optionally define non-labor cost rate overrides for non-labor resources. You define each cost rate override by operating unit for a specific non-labor resource and organization combination. In a multi-organization environment, you set up non-labor resources once and share them across all operating units, while you define cost rate overrides by operating unit.



Agenda



Listings

Listings

Use the following concurrent programs to document non-labor resource setup information: • IMP: Expenditure Cost Rates - Use the IMP: Expenditure Cost Rates listing to review

the non-labor expenditure cost rates. You can print a listing for one or all expenditure categories, one or all expenditure types, or for a specified effective date. If an effective date is specified for the report, then the report lists only expenditure cost rates that are active as of the date you enter.

• IMP: Non-Labor Resources by Organization - Use the IMP: Non-Labor Resources by Organization listing to review all non-labor resources associated with a particular organization, expenditure category, or expenditure type. For each organization listed, this report displays the organization’s non-labor resources and the corresponding expenditure types and expenditure categories.



Quiz

Answer: a, c



Quiz

Answer: b



Summary


Implementing Labor Costing Chapter 9 - Page 1

Implementing Labor Costing Chapter 9



Implementing Labor Costing



Objectives



Agenda



Labor Costing Implementation Steps

Labor Costing Implementation Steps

When you import or enter labor costs into Oracle Project Costing as a quantity of hours, the cost distribution program determines how to calculate the raw cost of the labor. To accomplish this, within Oracle Project Costing you can maintain labor cost rate schedules by employee or by job or use a labor costing extension to calculate the cost. You also have the option of overriding labor cost rates for individual employees. When you run the program PRC: Distribute Labor Costs or the program PRC: Distribute Labor Costs for a Range of Projects, the program uses the cost rates to determine the raw cost for each uncosted labor expenditure item. You can also define a method for calculating overtime cost.



Define Labor Costing Multipliers

Define Labor Costing Multipliers

A labor costing multiplier is a value by which Oracle Project Costing multiplies an employee’s labor cost rate to calculate the employee’s overtime premium cost rate:

• Labor Cost Rate * Labor Cost Multiplier = Overtime Premium Labor Cost Rate Oracle Project Costing then multiplies this overtime premium labor cost rate by the number of overtime hours an employee works to calculate the overtime premium for that employee:

• Overtime Premium Labor Cost Rate * OT Hours = Overtime Premium You define a labor cost multiplier for each kind of overtime your business uses, such as double time, or time and a half. For example, if you pay an employee double time for all overtime hours, then define a labor cost multiplier of 1.0. You multiply the employee’s labor cost rate by 1.0 to calculate the employee’s overtime premium labor cost rate. If you pay an employee time and a half for all overtime hours, then define a labor cost multiplier of 0.5 to calculate the employee’s overtime premium labor cost rate. An employee’s total labor cost is the overtime premium plus the total number of hours that employee worked multiplied by the employee’s labor cost rate:

• Overtime Premium + (Total Hours x Labor Cost Rate) = Total Labor Cost



Quiz

Answer: a



Labor Costing Rules

Labor Costing Rules

You define a labor costing rule for each pay type your business uses. For example, you can define a labor costing rule for pay types such as exempt, non-exempt, uncompensated, compensated, or hourly. When an employee charges time to a project, Oracle Project Costing processes the labor hours according to the employee’s labor costing rule. To define a labor costing rule:

1. Enter a unique rule name and select a costing method. - Costing methods determine how Oracle Project Costing calculates labor costs:

- Rates: When you select Rates, Oracle Project Costing calculates the labor costs for entered hours using hourly cost rates.

- Extension: When you select Extension, labor costs are calculated by the labor costing extension. When you use this option, you are not required to maintain hourly cost rates in Oracle Project Costing.

2. If the overtime calculation extension creates overtime hours, then you can select the Overtime Trans Defaults button and specify a default project and task by operating unit for system-generated expenditure items.



3. Enter the Effective Dates during which the labor costing rule is valid. 4. Assign cost multipliers to overtime expenditure types.

- Enter this information if your employees enter overtime hours manually. When you select a costing method of Rates and a transaction is charged to an expenditure type that has an assigned multiplier, then the distribution program applies the multiplier as it calculates labor costs.



Quiz

Answer: b, c



Rate Schedules

Rate Schedules

You can define rate schedules for both billing and costing. A cost rate schedule maintains hourly cost rates for employees or jobs. No system attribute exists to distinguish between a bill rate schedule and a cost rate schedule. For labor cost rate schedules, specify one of the following schedule types for each rate schedule you define:

• Employee - Use this type of rate schedule to define standard hourly rates or percentage markups

for billing by employee. • Job

- Use this type of rate schedule to define standard hourly rates by job title. When you enter a job-based rate schedule, you enter a job group to indicate which jobs are used to determine rates. When a project uses a job-based bill rate schedule, the job group on the schedule must match the project’s billing job group.

In a multi-organization environment, you can share rate schedules across different operating units, or have different rates for the same resource in different operating units.



To define a rate schedule: 1. Specify the operating unit to which your organization and rate schedule belongs. When

you have access to only one operating unit, that operating unit appears as a default value in this field.

2. Specify the organization that maintains the schedule. - The organization you enter can be any organization from your organization hierarchy,

regardless of whether the organization has the Expenditure Organization classification, and regardless of the start and end dates for the organization.

3. In the Rate Schedules window, enter a schedule name and a description of the schedule. 4. Specify a currency for the schedule. 5. Optionally, enable the Share Across Operating Units check box.

- This optional enables other operating units to use this schedule. 6. Select a schedule type. 7. Specify rates or markups for employees or for job titles.



Assign Costing Rules and Rate Schedules

Assign Costing Rules and Rate Schedules

Use the Organization Labor Costing Rules window to: • Assign costing rules and rate schedules to operating units, parent organizations, and

specific expenditure organizations. The costing rule and rate schedules assigned to an organization apply to all employees in the organization.

• Specify currency rate attributes to calculate labor costs if the currency of the cost rate schedule is different from the currency of the operating unit in which the timecard is entered.

• Define default overtime projects and tasks for organizations using the overtime calculation extension to generate overtime transactions.

When you assign a costing rule and a rate schedule to an organization, Oracle Project Costing applies the following rules in the order presented to determine the costing rule for each transaction:

• If an assignment exists for the transaction expenditure organization, then the corresponding costing rule and rate schedule are used to calculate labor costs.

• If an assignment does not exist for the expenditure organization, Oracle Project Costing uses the Expenditure Organization Hierarchy and searches for an assignment for the parent



organization that owns the expenditure organization. If an organization has multiple parents and a rule is assigned to each, then the rule assigned to the lowest level parent organization is applied.

• If an assignment does not exist for a parent organization, then Oracle Project Costing searches for an assignment for the expenditure-operating unit.

To assign costing rules and rate schedules: 1. Select an Operating Unit, Organization or both.

- If you do not select an operating unit, then Oracle Project Costing displays all organizations that are part of any Expenditure/Event Organization Hierarchy.

- If you select an operating unit, then Oracle Project Costing displays only those organizations that are in the Expenditure/Event Organization Hierarchy for the selected operating unit. An organization does not have to be classified as Project Expenditure/ Event Organization to appear on the list.

2. Select a labor costing rule. - If the labor costing rule has a costing method of Rates, then select the cost rate

schedule that defines the hourly cost rates for employees in the selected organization. - If you assign an organization labor costing rule to an organization that is not

classified as a Project Expenditure/Event Organization, then the rule applies to organizations that are below it in the hierarchy, unless you assign a rule to an organization at a lower level in the hierarchy. For example, a hierarchy has three organizations: Organization 1, Organization 11, and Organization 111. Organization 1 is the parent of Organization 11. Organization 11 is the parent of Organization 111. Organization 111 is the only Project Expenditure/Event Organization. If you assign organization labor costing rules only to Organization 1 and Organization 11, then the rule that you assign to Organization 11 takes precedence for Organization 111.

3. Enter a default job rate schedule. - This schedule is used to forecast costs for unstaffed positions.

4. Enter the effective dates. 5. Optionally, enter a default project and task for system-generated transactions.

- Enter this information if you use the overtime calculation extension, 6. Enter the currency conversion attributes in the Currency Conversion Attributes region.

- Enter this information if your cost rate schedule currency is different from your operating unit currency.

- If you do not specify currency attributes, then Oracle Project Costing applies the rate attributes defined in the Implementation Options window.



Labor Costing Overrides

Labor Costing Overrides

For individual employees, you can enter labor costing overrides. You can override the assigned costing rule, override the assigned cost rate schedule, or enter an overriding cost rate. To override labor costing:

1. In the Labor Costing Overrides window, find any existing labor costing overrides. - Select either the Employee Name or Employee Number from the list of values. - Select the operating unit from the list of values. - Select the Find button.

2. Optionally, select a labor costing rule. 3. Choose an override type to specify whether to override the assigned rate schedule or enter

an overriding cost rate: - Schedule - Enter the overriding rate schedule in the Cost Rate Schedule field. - Rate - Enter an overriding rate. Optionally, select a new currency code and define

currency conversion attributes. 4. Enter effective dates.



Labor Costing Extension

Labor Costing Extension

Use the labor costing extension to implement a unique costing method for labor transactions. The standard method calculates raw cost using the number of hours multiplied by the employee’s hourly cost rate. The labor costing extension enables you to derive raw cost amounts for individual labor transactions. Examples uses of the extension include:

• Standard cost rate by job • Capped labor cost rates • Multiple cost rates per employee

You can use the labor costing extension to implement unique costing methods other than the standard method, which calculates raw cost using the number of hours multiplied by the employee’s hourly cost rate. Processing Oracle Project Costing processes the labor costing extension during labor cost distribution before calculating standard raw cost amounts. If Oracle Project Costing encounters a labor costing extension that derives the raw cost amount of a labor transaction, then it skips the standard raw cost calculation section for that transaction.



Labor Transaction Extension

Labor Transaction Extension

The labor transaction extension enables you to create additional transactions for individual labor items charged to projects:

• Create overtime premium transactions for overtime hours based on company overtime policies.

• Create fringe benefit transactions that are charged to the same project as the source labor. • Create additional transactions for hazardous work performed for every labor transaction

charged to certain projects. You can create additional transactions for straight time labor transactions and overtime labor transactions. You create additional labor transactions based on the source labor transactions that you enter on timecards. Related Transactions Additional transactions created for labor transactions are referred to as related transactions. All related transactions are associated with a source transaction and are attached to the expenditure item ID of the source transaction. You can identify and process the related transactions by referring to the expenditure item ID of the source transaction.



You create related transactions to process a raw cost amount separately than the source transaction raw cost amount. Related transactions can be burdened, billed, and accounted for independently of the source transaction. Processing Oracle Project Costing processes the labor transaction extension during labor cost distribution. When you distribute labor costs, the program processes the labor transaction extension after it calculates the raw cost of the source transactions. This sequence enables you to derive the cost of the related transaction from the cost of the source transaction. You also use the labor transaction extension to calculate new cost amounts for related transactions if the source transaction is recosted.



Implement Overtime Processing

Implement Overtime Processing

Complete the following steps to implement an indirect project to collect overtime premium costs:

• Implement the Oracle Project Costing Overtime Calculation extension. • Define overtime expenditure types. • Define labor cost multipliers.

- For each type of overtime your business uses, define a corresponding labor cost multiplier. You assign the appropriate labor cost multiplier to each overtime task.

• Enter an overtime project. - You can define one indirect project to hold all of your company’s overtime costs, or

you can define many indirect projects to make it easier to enter and report overtime by group or office.

- If you decide to use more than one indirect project to hold your company’s overtime costs and you are using automatic overtime calculation, then you must include logic in your Overtime Calculation extension to charge the overtime hours to the appropriate overtime project.



• Define overtime tasks. - For each overtime project, you must define a task for each type of overtime your

business uses. Different types of overtime use different labor cost multipliers to calculate overtime costs.

- If you are using automatic overtime calculation, then you must include the logic in your Overtime Calculation extension to charge overtime hours to the appropriate overtime task.

• Define labor costing rules. - If you charge overtime costs to an indirect project, then you can use Oracle Project

Costing to record the premium your business pays employees for overtime hours they work.

• Assign a labor cost multiplier for each overtime task. • Implement AutoAccounting.

For additional discussion regarding how to implement overtime calculations, see the Oracle Projects Implementation Guide.



Overtime Calculation Extension

Overtime Calculation Extension

You can specify how to use the Overtime Calculation extension in the Implementation Options window. The overtime calculation extension enables you to define your own rules to implement company-specific overtime calculation policies. The extension calculates overtime costs and charges them to an indirect project other than the project where the labor was charged. To charge overtime to the project where the labor was charged, consider creating items via the labor transaction extension. Oracle Project Costing provides a template Overtime Calculation extension. You can use the template to understand the extension, and then make appropriate changes to meet your business needs. If you use both the Labor Transaction Extension and the Overtime Calculation program, then you must define conditions so that only one of these options processes each transaction.



Quiz

Answer: a



Agenda



Listings

Listings

• IMP: Labor Cost Multipliers - Report to review all labor cost multipliers. • IMP: Labor Cost Rates Listing - Report to review all employees and their cost rates, job

level, job discipline, or labor costing rule. For each employee listed, this report displays the employee’s active organization and job assignments, the assigned labor costing rule, and the hourly cost rate.

• IMP: Labor Cost Rates Listing by Organization - Report to review all employees and their cost rates, job level, job discipline, or labor costing rule. This report starts at a specified organization and reports down the organization hierarchy listing employees and their labor cost rates. You cannot print a listing for a single organization using this report unless the organization is at the lowest level of the hierarchy.

• IMP: Labor Costing Rules Listing - Report to review labor costing rules.



Summary


Implementing Burden Costing Chapter 10 - Page 1

Implementing Burden Costing Chapter 10



Implementing Burden Costing



Objectives



Agenda



Overview of Burdening

Overview of Burdening

Burdening, also known as cost plus processing, is a method of applying one or more burden cost components to the raw cost amount of each individual transaction to calculate burden costs. You can choose to account for the individual burden cost components to either track the overhead absorption or to account for the total burdened costs. You can write custom reports using standard views to report all burden cost components for each detail transaction. The objective of burdening is to provide you with a buildup of raw and burden costs, so you can accurately represent the total cost of doing business. You can choose to calculate total burdened costs as a buildup of costs using a precedence of multipliers. Taking the raw cost, Oracle Project Costing performs a buildup of burden costs on top of raw costs to provide you with a true representation of costs. You provide the multiplier that Oracle Project Costing uses to calculate the cost. Oracle Project Costing performs the buildup for each detailed transaction.



Burden Costing Terminology

Burden Costing Terminology

• Burden Cost Code - An implementation-defined classification of overhead costs that represents the type of burden cost to apply to raw cost.

• Burden Costs - Legitimate costs of doing business that support raw costs and cannot be directly attributed to work performed.

• Burden Multiplier - A numeric multiplier associated with an organization for burden schedule revisions, or with burden cost codes for projects or tasks.

• Burden Schedule - An implementation-defined set of burden multipliers that you maintain to use across projects.

• Burden Structure - Determines how cost bases are grouped and what types of burden costs are applied to the cost bases. A burden structure defines relationships between cost bases and burden cost codes and between cost bases and expenditure types.

• Burdened Cost - The cost of an expenditure item, including raw cost and burden costs. • Cost Base - The grouping of raw costs to which burden costs are applied. • Raw Costs - Costs that are directly attributable to work performed. Examples of raw costs

are salaries and travel expenses.



Storing Burden Cost Calculations

Storing Burden Cost Calculations

Storing Burden Cost on the Same Expenditure Item You can choose to store the total burdened cost as a value along with the raw cost on each expenditure item. You can view the total burdened cost and the raw cost of each item. Oracle Project Costing displays the raw and burdened costs on windows and reports. Storing Burden Costs as a Separate Expenditure Item on the Same Project or on a Separate Project You can choose to hold the burden cost components as separate expenditure items on the same project. Alternatively, you can show burden cost as summarized expenditures on a separate project that you assign in the Project Types window. The expenditure items storing the burden cost components have a different expenditure type that is classified by the expenditure type class Burden Transaction. Oracle Project Costing summarizes the burden cost components to create the burden transactions. The summarization is by project, lowest task, expenditure organization, expenditure classification, supplier, PA period, and burden cost code. You can also use the Burden Resource Extension to specify the attributes that Oracle Project Costing uses when it groups summary burden transactions. The link to the original expenditure item is maintained, but is not visible when you look at the summarized expenditures.



Accounting for Burden Costs

Accounting for Burden Costs

Accounting for Burden Costs by Burden Cost Component You can account for the individual burden cost components when you want to track the burdening in Oracle Subledger Accounting and Oracle General Ledger. The program PRC: Create and Distribute Burden Transactions summarizes the burden costs and creates the expenditure items for the burden transactions. You can create the burden transactions on the same project as the raw cost transactions or on a separate project. Accounting for Total Burdened Cost You may choose to account for the total burdened cost of the items, without distinguishing the amounts by burden cost components. You can use this approach to track the total burdened cost in a cost asset or cost WIP (work in process) account. This method is also sometimes referred to as project inventory. Storing Burden Costs with No Accounting Impact You can choose to calculate the burden costs for project transactions for management reporting without an accounting impact. If you store burden costs as a value on the expenditure item, then you have no extra setup to perform and no accounting programs to run on the burden costs, as long as you do not enable Total Burdened Accounting for any project types.



If you store burden costs as separate, summarized expenditure items and perform the accounting in Oracle Project Costing (rather than importing the accounting), then you must set up AutoAccounting to derive the same default GL account for both the debit and the credit account. You must generate cost accounting events for the cost distribution lines for these expenditure items, create the final accounting in Oracle Subledger Accounting, and transfer the subledger accounting to Oracle General Ledger.



Project Types and Burdening

Project Types and Burdening

Use the Costing Information tab on the Project Types window to define default settings for burdening and processing for projects:

• Burdened - Indicates whether to burden raw costs charged to projects using this project type.

• Schedule - The burden schedule to use as the default cost burden schedule. You enter a schedule only if the project type is burdened. If the project type is burdened, then this field is required.

• Allow Schedule Override - Indicates whether you can override the default cost burden schedule when entering and maintaining projects and tasks. Deselect the check box if you want to ensure that all projects of a project type use the same schedule. Check the box to allow updates to the cost burden schedule on the projects and tasks. You can enter this only if you enabled the Burdened check box.

• Burden Cost on same expenditure item - Select if you want to store the burden amount in the same expenditure item, and then optionally select a project and task to account for the expenditure item.



• Account for Burden Cost components: Select this option to store the burden amount in the same expenditure item, and additionally to show the burden cost on separate, summarized expenditures on a separate project. Select a project and (optional) task that accounts for the expenditure item.

• Burden Cost as separate expenditure item - Select this option to account for burden amounts as a separate expenditure item.

• Enable Accounting for Total Burdened Costs - Select this option to generate accounting for the total burdened cost.

- Note: If you store burden costs as a value on the same expenditure item for reporting purposes only, and you do not want to generate accounting for total burdened cost, then do not enable this option.



Quiz

Answer: b



Agenda



Burden Costing Implementation Steps

Burden Costing Implementation Steps

Complete the setup steps listed on the slide to implement burden costing.



Cost Bases and Cost Base Types

Cost Bases and Cost Base Types

Cost bases refer to groups of raw costs that you use for applying burden costs. You assign cost bases to burden structures, and then specify the types of raw costs that are included in the cost base along with the types of burden costs that are applied to the cost base. Cost base types refer to the use of cost bases. Oracle Project Costing predefines the cost base types Burden Cost and Other. You use cost bases with the type Burden Cost in burden calculations. Oracle Project Costing does not include cost bases with a type other than Burden Cost in burden calculations. You use these cost bases for grouping expenditure types for different purposes, such as for billing extension calculations.



Burden Cost Codes

Burden Cost Codes

Burden cost codes represent the types of costs to allocate to raw costs. You can use burden cost codes for costing, revenue generation, and billing. You can also use burden cost codes to report and account for on burden cost recovery components in Oracle Project Costing. Define an expenditure type for burden cost codes that Oracle Project Costing processes as separate, summarized burden transactions. You must assign the Burden Transaction expenditure type class to the expenditure type.



Burden Structures

Burden Structures

You define the cost buildup using a burden structure. A burden structure determines how you group cost bases and establishes the method of applying burden costs to raw costs. Expenditure types classify raw costs and burden cost codes classify burden costs. The relationship between expenditure types and burden cost codes within each cost base determines what burden costs Oracle Project Costing applies to specific raw costs, and the order in which Oracle Project Costing applies the burden costs. Each expenditure type can belong to only one cost base having a type of Burden Cost within each burden structure. This setup ensures that Oracle Project Costing does not burden an expenditure types more than once. If you do not assign an expenditure type to a cost base, then Oracle Project Costing does not burden transactions with that expenditure type. The burdened cost for these transactions equals the raw cost of the transaction. Example The diagram on this page illustrates a burden structure with the following cost bases:

• Labor - Includes the expenditure types Professional, Clerical, and Sales.



- Is assigned the burden cost codes Fringe, Overhead, and General and Administrative (G&A).

• Material - Includes the expenditure types Supplies and Construction Materials. - Is assigned the burden cost codes Handling and General and Administrative (G&A).

• Expense - Includes the expenditure types Travel, Meals, and Airfare. - Is assigned the burden cost code General and Administrative (G&A).

Copying Burden Structures When you copy a burden structure, Oracle Project Costing copies the following assignments from the existing (From) structure to the new (To) structure:

• Cost base assignments • Burden cost codes • Expenditure types

To copy an existing burden structure to a new burden structure, first enter header information for the new burden structure.



Burden Structures

Burden Structures

Create an Additive burden structure to apply each burden cost code assigned to a cost base using the same precedence when calculating burden costs. Additive schedules automatically provide a default precedence value of 1 to each burden cost code in the structure.



Burden Structures

Burden Structures

Create a Precedence burden structure to specify the order in which each burden cost code in a cost base is applied to raw costs. Enter the precedence in which you want to apply each burden cost code to raw costs within the cost base.



Burden Schedule Types and Burden Schedules

Burden Schedule Types and Burden Schedules

Two types of burden schedules exist that you can use in Oracle Project Costing: • Firm - Use firm schedules if you do not expect your multipliers to change. Generally, you

use firm schedules for costing or commercial billing schedules. Firm schedules can have multiple versions, but never more than one version for an effective date range.

• Provisional - Because you do not always know burden multipliers at the time that you calculate total burdened costs, you can use provisional multipliers. Provisional multipliers are generally estimates based on a company’s forecast budget for the year. When you determine the actual multipliers that apply to costs, then you replace the provisional multipliers with the actual multipliers. Oracle Project Costing processes the adjustments from provisional to actual changes for costing, revenue, and billing.

You define schedule versions for a burden schedule to record the date range within which multipliers are effective. You can have an unlimited number of versions for each burden schedule, but you can have only one active version at a given point in time. The profile option PA: Default Burden Schedule Type indicates the default burden schedule type when entering a standard burden schedule using the Burden Schedules window.



Assigning Burden Multipliers

Assigning Burden Multipliers

When you create burden schedules, you assign a multiplier to an organization and burden cost code. The multiplier specifies the amount by which Oracle Project Costing multiplies the raw cost to obtain the burden cost amount. When you cost the expenditure items, Oracle Project Costing looks at the expenditure organization on the expenditure item to determine what multiplier to use for burden calculation. Burden Multiplier Hierarchy Effective multipliers cascade down the Project Burdening Hierarchy, starting with the parent organization. If Oracle Project Costing finds a level in the hierarchy that does not have a multiplier defined, then it uses the multipliers entered for the parent organization. Therefore, an organization multiplier schedule hierarchy is really a hierarchy of exceptions. You define the multipliers for an organization only to override the multipliers of its parent organization. Suggestion for Organizations that Have No Burden You can set up special procedures for organizations that have no burden. For example, your company can use contractors that do not have a particular type of burden cost (such as fringe) applied to their raw cost. To implement this scenario, first set up a new expenditure organization for contractors. Then, assign that organization to the burden schedule and use a



multiplier of zero for the burden cost of Fringe to create a zero burden cost amount. Each time that burden cost for Fringe is calculated for the contractor’s organization, Oracle Project Costing multiplies the contractor’s raw cost multiplier by zero, resulting in a burden cost amount of zero, which reflects the true representation of the raw cost and burden multipliers. Adding a New Organization If you add a new expenditure organization after you have compiled schedule revisions, you must ensure that the new organization is included in the schedules:

• If the organization has its own multipliers, then add multipliers to appropriate schedule revisions and recompile.

• If the organization uses parent organization multipliers, then run the concurrent program PRC: Add New Organization Burden Compiled Multipliers.



Defining Burden Schedules

Defining Burden Schedules

• In the Burden Schedules window, enter the name and description of the burden schedule you are defining.

• Enter the default burden structure for this schedule. You can see the structure of a particular revision when you review revision details. You can change the default structure of the schedule at any time. Oracle Project Costing uses the new default structure for any new revisions that you create. You can update the default structure to create revisions that use a different burden structure for a given burden schedule.

• Choose the burdening hierarchy for this schedule. - The burden hierarchy you enter for the burden schedule is the default hierarchy for

the latest version. The burden hierarchy information is displayed in the Burden Schedule Version Details window and can be overridden at this level.

• Choose the Type of schedule, either Firm or Provisional. Versions

• In the Versions region, define revisions. You can have many different revisions of a particular schedule. For example, you can have a schedule revision for each quarter in



your fiscal year. You also create schedule revisions when you want to use a new burden structure, enter new burden multipliers, or apply actual rates to provisional multipliers.

• The start and end dates for revisions in a provisional schedule must match GL periods. For firm schedules, Oracle Project Costing provides you with the flexibility to use any date as the start or end date.

• Whenever you create a new schedule revision, Oracle Project Costing automatically closes the previous open revision. The end date defaults to the date preceding the start date of the new revision.

• Enable the Hold check box to hold this schedule revision from compiling. • Choose the Details button to review the details of a particular revision. • Choose Actual if you want to apply actual multipliers to provisional revisions.

Multipliers • In the Multipliers region, enter multipliers for a schedule revision. • You also use this region to compile burden multipliers. • Choose the Copy button to copy multipliers from one schedule revision to a new revision.

You must create and save the Copy To revision before you can copy multipliers to the new revision. If you have a responsibility with the Project Burden Schedule Copy function assigned to it, then you can copy multipliers across schedules and schedule revisions. Otherwise, you can only copy multipliers between revisions that use the same burden structure.

• When you modify the multipliers on a burden schedule and recompile, Oracle Project Costing identifies the existing expenditure items affected by the changes and marks the items for retroactive reprocessing. If you want to change the multipliers and only use them for expenditure items moving forward, then end date the current version of the schedule and create a new version with the revised multipliers. Oracle Project Costing uses the new version to calculate burden amounts for expenditure items with expenditure item dates that fall within the dates for the new burden schedule version.

Compiling • After you have completed entry of all multipliers and saved your work, choose the

Compile button to compile new multipliers. When you compile a schedule, Oracle Project Costing automatically submits PRC: Compile All Burden Schedule Revisions.

• You can also run PRC: Compile All Burden Schedule Revisions to compile multiple schedules at one time.



Assigning Burden Schedules

Assigning Burden Schedules

You can assign burden schedules to project types, projects, and tasks. When you assign schedules to a project type, the schedules are the default schedules for projects and tasks that use the project type. Assigning burden schedules to project types allows you to implement company policies. For example, you can implement a policy that requires all projects of a particular project type to maintain the same multipliers for costing purposes. You can change the default schedule for a project or task. You can use burden schedule overrides to override default schedules at the project and task levels. Burden schedule overrides generally reflect multipliers that have been negotiated specifically for a particular project or task. You can change the default burden schedules for a project or task. If you change the burden schedule for a lowest level task that has items processed, then Oracle Project Costing does not automatically mark the items for reprocessing. Only new items that you charge to the task use the new burden schedule. You can mark the items for recalculation in the Expenditure Inquiry window. Marking the items causes Oracle Project Costing to use the new burden schedule assigned to the task to reprocess the items. Once you assign a burden schedule to a project, you can use the View Burdened Costs window to test your burden structure and burden schedule implementation.



Burden Costing Extension

Burden Costing Extension

Use the Burden Costing client extension to override the burden schedule ID and assign a different burden schedule to an expenditure item. Oracle Project Costing calls the Burden Costing extension during cost distribution processing. You can modify the extension to satisfy your business rules for assigning burden schedules. For additional information, see the Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.



Reporting Separate Burden Transactions with Source Resources

Reporting Separate Burden Transactions with Source Resources

You can set the PA: Report Separate Burden Transactions with Source Resources profile option to have Oracle Project Costing assign summary burden transaction expenditure items to the same resource class as their source raw cost expenditure items. This option enables you to assign both burden costs and their source raw costs to the same resource class for reporting purposes. For example, for timecards, if you set the profile option to Yes, then Oracle Project Costing assigns both the labor raw cost expenditure items and the related summarized burden transaction expenditure items to the People resource class. Alternatively, if you set this profile option to No, then Oracle Project Costing assigns the raw cost expenditure items to the People resource class and the related summarized burden transaction expenditure items to the Financial Elements resource class. These assignments takes place because labor raw cost expenditure items have an expenditure type class of Straight Time and burden transaction expenditure items have an expenditure type class of Burden Transaction. This profile option only affects transactions charged to projects where the Burden Cost as Separate Expenditure Item option is enabled for the project type.



Burden Resource Extension If you set this profile option to Yes, then you must modify the Burden Resource Extension to specify the attributes that Oracle Project Costing uses when it groups summary burden transactions. For additional information about this extension, see Burden Resource Extension, Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.



Accounting for Cost Adjustments Resulting from Burden Schedule Revisions

Accounting for Cost Adjustments Resulting from Burden Schedule Revisions

When you modify burden schedules and recompile burden multipliers, Oracle Project Costing identifies the existing transactions affected by the changes and marks the items for reprocessing. When accounting for the adjusted cost, you can choose to reverse the original accounting entries and generate new ones for the adjusted cost, or you can choose to generate new accounting lines for the difference between the original and new burden cost amounts. To select the accounting option that best fits your business needs, enable or disable the profile option PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation. See the following pages for examples of how this profile option affects adjustment accounting. Adjustments from the Expenditure Inquiry Window Setting the profile option to Yes does not affect raw and burden cost recalculation adjustments that you make from the Expenditure Inquiry window. Although burden cost recalculation does not affect raw cost amounts and accounts, Oracle Project Costing always accounts for burden cost recalculation adjustments from this window with a full reversing and rebooking accounting entry that includes both the raw cost and burden cost amounts.



Accounting for Cost Adjustments Example 1: Total Burdened Costs without Incremental Transactions


When you set the PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation profile option to No, Oracle Project Costing reverses the original accounting entries and creates new entries for the adjusted cost amounts. Oracle Project Costing reverses the raw accounting lines and generates new adjusted lines even though the raw cost amount does not change. Accounting Example 1 Assumptions The following assumptions are made in this accounting example:

• Transaction Raw Cost = $100 • Original Total Burdened Cost = $300 • Adjusted Total Burdened Cost = $400



Accounting for Cost Adjustments Example 2: Total Burdened Costs with Incremental Transactions


When you set the PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation profile option to Yes, Oracle Project Costing does not reverse the original accounting entries. Instead, Oracle Project Costing creates new accounting entries for the difference between the original and new burden cost amounts. Accounting Example 2 Assumptions The following assumptions are made in this accounting example:




Accounting for Cost Adjustments Example 3: Summarized Burden Cost Components without Incremental Transactions


When you set the PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation profile option to No, Oracle Project Costing reverses the original accounting entries for the raw cost. Oracle Project Costing then creates new raw cost entries and burden entries for the difference between the original and new burden cost amounts. Accounting Example 3 Assumptions The following assumptions are made in this accounting example:




Accounting for Cost Adjustments Example 4: Summarized Burden Cost Components with Incremental Transactions


When you set the PA: Create Incremental Transactions for Cost Adjustments Resulting from a Burden Schedule Recompilation profile option to Yes, Oracle Project Costing does not reverse the original accounting entries. Instead, Oracle Project Costing creates new burden entries for the difference between the original and new burden cost amounts. Accounting Example 4 Assumptions The following assumptions are made in this accounting example:




Quiz

Answer: b



Quiz

Answer: a



Quiz

Answer: a, b, d



Agenda



Burden Calculation in Costing Programs


The calculation of burden cost includes the following processing logic and calculations: 1. The program selects expenditure items with a raw cost amount for processing. 2. The program determines whether the related project type of the expenditure item is

defined for burdening. - If Yes (the project type is defined for burdening), then the program determines which

burden schedule to use. - If No (the project type is not defined for burdening), then the program does not

burden the item. The program assumes the burden multiplier is zero (burden cost is zero, thus burdened cost equals raw cost).





3. To determine which burden multiplier to use, the program determines if there is a burden schedule override for the expenditure: - The program uses the task burden schedule override on the associated task, if such

an override exists. - If no task burden schedule override exists on the associated task, then the program

uses the project burden schedule override on the associated project. 4. If no burden schedule override exists, then the program determines which standard

burden schedule to use for burden cost calculations in the following order: 1. Standard task burden schedule 2. Standard project burden schedule





5. After the program determines which schedule to use, it verifies whether the expenditure item’s expenditure type is found in any of the cost bases of the selected burden schedule revision. - If an expenditure type is excluded from all cost bases in the burden structure, then

the program does not burden the expenditure items that use that expenditure type (burden cost equals zero, thus burdened cost equals raw cost).

- Otherwise, the program uses burden multipliers from the appropriate burden schedule revision. If a schedule ID override exists, then the program uses that revision.

6. The program calculates burden cost and total burdened cost amounts according to the following calculation formulas: - Burden cost equals raw cost multiplied by a burden multiplier - Total burdened cost equals the sum of raw cost and burden cost



Concurrent Programs: Total Burdened Cost Accounting

Concurrent Programs: Total Burdened Cost Accounting

1. PRC: Distribute Total Burdened Costs - Creates the total burdened cost distribution lines for all transactions charged to burdened projects, even if the transaction is not burdened, to account for the total project costs in the cost WIP account.

2. PRC: Generate Cost Accounting Events - Generates accounting events for total burdened cost distribution lines. If you select Total Burdened Cost for the Process Category parameter, then the program generates accounting events only for total burdened costs.

3. PRC: Create Accounting - Creates draft or final accounting entries in Oracle Subledger Accounting for the accounting events. When you run the program in final mode, you can optionally choose to automatically transfer the final accounting to Oracle General Ledger, initiate the journal import program, and post the journal entries in Oracle General Ledger. If you select Total Burdened Cost for the Process Category parameter, then the program creates accounting only for total burdened cost accounting events.



Concurrent Programs: Account for Summarized Burden Cost Components

Concurrent Programs: Account for Summarized Burden Cost Components

1. PRC: Create and Distribute Burden Transactions - Summarizes the burden costs, creates the expenditure items for the burden transactions, and runs the distribution program. The burden transactions are created on different projects depending on the method you use to store burden costs.

2. PRC: Generate Cost Accounting Events - Generates accounting events for burden transactions. If you select Burden Cost for the Process Category parameter, then the program generates accounting events only for burden costs.

3. PRC: Create Accounting - Creates draft or final accounting entries in Oracle Subledger Accounting for the accounting events. When you run the program in final mode, you can optionally choose to automatically transfer the final accounting to Oracle General Ledger, initiate the journal import program, and post the journal entries in Oracle General Ledger. If you select Burden Cost for the Process Category parameter, then the program creates accounting only for burden cost accounting events.



Maintenance Concurrent Programs

Maintenance Concurrent Programs

• PRC: Add New Organization Compiled Burden Multipliers - Adds burden multipliers to burden schedules for an organization when you add a new organization to your organization hierarchy. If you do not add the organization to a specific schedule revision, then this program compiles rates for the organization in all burden schedule revisions using the rates of the parent organization as defined in the organization hierarchy. A burden schedule revision must already be compiled for this program to add the organization rate. Run this program after you create the organization and before you charge transactions using this organization as the expenditure organization.

Note: Run this program for the parent organization before you run it for the child organization.

• PRC: Compile All Burden Schedule Revisions - Compiles all burden schedule revisions that are not compiled and are not on hold.



Quiz

Answer: a, c



Summary


Performing Cost Adjustments Chapter 11 - Page 1

Performing Cost Adjustments Chapter 11



Performing Cost Adjustments



Objectives



Agenda



Adjusting Expenditure Items

Adjusting Expenditure Items

Oracle Project Costing provides powerful features that allow you to: • Adjust expenditure items on your projects • Report the audit trail of the adjustments

See also: • For discussion regarding Cross Charge related adjustments, see the lesson titled “Cross

Charge.” • For discussion regarding adjustments to supplier costs, see the lesson titled "Integration

with Oracle Purchasing and Oracle Payables." • For discussion regarding Capital Project specific adjustments, see the lesson titled “Asset

Capitalization.” • For discussion regarding Contract Project specific adjustments, see the course titled

“R12.x Project Billing Fundamentals.”



Adjustments to Imported Transactions

Adjustments to Imported Transactions

The Allow Adjustments option for a transaction source controls what types of adjustments you can make to expenditure items associated with the transaction source. Allow Adjustments Option - Enabled If you enable this option, then you can adjust imported transactions in Oracle Project Costing after you load them via Transaction Import. Enabling this option enables you to make adjustments and changes that can result in a new GL account or cost amounts for an item. For example, you can make the following types of adjustments:

• Transfer an item to another project or task • Split an item into two or more items • Recalculate raw and burden costs (Raw cost values for transactions that were already

costed when loaded into Oracle Project Costing are not changed if you mark the item for cost recalculation.)

• Reclassify an item as billable or nonbillable • Reclassify an item as capitalizable or noncapitalizable • Change the work type of an item



Note: If you enable this option, Oracle Project Costing allows adjustments even if you disable the Interface Costs to GL options in the Implementation Options. Note: If Burden Transaction is the default expenditure type class for a transaction source, then you cannot enable the Allow Adjustments option for the transaction source. Important: If you enable the Allow Adjustments option for a predefined transaction source for supplier costs, you must complete at least one of the following setup steps:

• Specify the default supplier cost credit account for supplier cost adjustments in the Implementation Options for each operating unit.

• Define a rule in Oracle Subledger Accounting to determine the supplier cost credit account.

This setup is required for the program PRC: Create Accounting to successfully create accounting for supplier cost adjustments. Allow Adjustments Option - Disabled If the option is disabled, then you can still perform the following adjustments:

• Apply a billing hold • Apply a one-time billing hold • Release billing hold • Recalculate burden cost - You can recalculate burden costs only if the Import Burdened

Amounts transaction source option is not enabled. • Recalculate revenue • Change comment • Reprocess cross charge • Mark for no cross charge processing • Change transfer price currency attributes • Change the work type (only if the change does not affect the billable status or capitalizable

status of the expenditure item) - Note: The profile option PA: Transaction Billability derived from Work Type controls

whether the work type determines the billable status of an expenditure item. If you do not allow users to adjust imported transactions in Oracle Project Costing, then you can adjust the transactions in the originating external system. After you adjust the transactions, you import adjustments into Oracle Project Costing.



Project Status and Adjustments

Project Status and Adjustments

To adjust the expenditure items for a project, the project status must allow adjustments. You use the Status Controls region of the Statuses window to define actions that are allowed or restricted for each project status. Enable the Adjust Transactions status control to allow adjustments for projects with that status.



Recalculate Burden Cost

Recalculate Burden Cost

You can recalculate the burden cost of an expenditure item if you find that the burdened cost amount is incorrect. To produce correct recalculation results, you must correct the source of the problem before redistributing the items.

• When you select Recalculate Burden Cost for a burden transaction, no recalculation of the burden amount takes place.

• You can recalculate the burden cost of an invoice line. To Recalculate Burden Costs:

• Make the appropriate changes by either selecting another burden cost schedule or changing the AutoAccounting setup.

• Identify and mark appropriate items for burden cost recalculation. • Oracle Project Costing reprocesses the items the next time that you run the costing

programs.



Recalculate Raw Cost

Recalculate Raw Cost

You can recalculate the raw cost of an expenditure item if you find that the raw cost amount is incorrect. To produce correct recalculation results, you must correct the source of the problem before redistributing the item. For imported expenditure items, you can recalculate raw cost only if the Allow Adjustments transaction source option is enabled on the transaction source that is associated with the expenditure item. Note: You can recalculate the raw cost of expenditure items imported as costed to generate a new debit account; however, the cost amount does not change. To Recalculate Raw Costs:

• Make the appropriate changes to the rates or AutoAccounting. • Identify and mark appropriate items for raw cost recalculation. • Oracle Project Costing reprocesses the items with new rates and accounting rules the next

time that you run the costing programs.



Change Work Type

Change Work Type

You can change the work type of an item. You can use this adjustment to reclassify an item for reporting and billing purposes. Note: To change the work type, you must set the profile option PA: Require Work Type Entry for Expenditures to Yes. Note: If you set the profile option PA: Transaction Billability Derived from Work Type to Yes, then changes to the work type can affect whether a transaction is billable and therefore follow the same rules as changes to the billable status for an expenditure item. For imported expenditure items, you can change the work type if the Allow Adjustments transaction source option is enabled on the transaction source that is associated with the expenditure item. If the Allow Adjustments transaction source option is not enabled, then you can change the work type only if the change does not affect the billable status or capitalizable status of the expenditure item.



Change Comment

Change Comment

You can edit the expenditure comment of an item. You can use this adjustment to make the expenditure comment clearer if you are including the comment on an invoice backup report.



Split Item

Split Item

You can split an item into two items so that you can process the two resulting split items differently. The resulting split items are charged to the same project and task as the original item. When you split an expenditure item charged to a contract project, you can select whether each resulting split item is billable. When you split an expenditure item charged to a capital project, you can select whether each resulting split item is capitalizable. For imported expenditure items, you can split an item into two items only if the Allow Adjustments transaction source option is enabled on the transaction source that is associated with the expenditure item.



Transfer Item

Transfer Item

You can transfer an item from one project and task to another project and task. • Oracle Project Costing provides security as to which employees can transfer items

between projects. Cross-project users can transfer to all projects. Key members can transfer to projects to which they are assigned. Oracle Project Costing performs a standard validation on all transferred items.

• Oracle Project Costing also ensures that you only transfer items which pass the charge controls of the project and task to which you are transferring. If the items you are transferring do not pass the new project and task's charge controls, then you cannot transfer the item.

• For imported expenditure items, you can transfer an item only if the Allow Adjustments transaction source option is enabled on the transaction source that is associated with the expenditure item.



Change Currency Attributes

Change Currency Attributes

You can change the functional or project currency attributes of multi-currency transactions. When you select Change Functional Currency Attributes or Change Project Currency Attributes from the Reports menu, Oracle Project Costing displays a window where you can enter changes in the following fields: Rate Type, Rate Date, and Exchange Rate.

• The window displays the project or functional currency, depending on which currency you have selected, as well as the transaction currency.

• You can also change currency attributes for expenditure items using the Mass Adjustments feature.

• If the project currency and the functional currency for an expenditure item are the same, then you can select only the Functional Currency Attributes option. Oracle Project Costing copies any changes you make to the functional currency attribute to the project currency attributes.



Adjustments to Multi-Currency Transactions

Adjustments to Multi-Currency Transactions

When you adjust multi-currency transactions, Oracle Project Costing must determine currency attributes for the transactions that result. The following rules apply:

• The original expenditure item is reversed, with all the same amounts and currency attributes as the original item.

• The new expenditure items are created and treated as new transactions, following the standard default logic for currency attributes.

• For reversals and splits, the reversing and new items have the same currency attributes as the original transaction.

• For a transfer, the reversing item has the same currency attributes as the original transaction. For the new item, the cost distribution program uses the conversion rules for a new transaction, taking the default currency attributes from the destination project.



Adjustments to Supplier Costs

Adjustments to Supplier Costs

You can make adjustments to supplier costs in Oracle Project Costing, Oracle Purchasing, and Oracle Payables. In Oracle Project Costing, you can make the following adjustments to supplier cost and expense report cost expenditure items:

• Transfer an expenditure item to another project or task • Split an expenditure item • Reclassify the billable or capitalizable status • Place a billing hold or one-time hold • Release a billing hold • Recalculate burden costs • Recalculate raw costs

- Note: For supplier costs, Oracle Project Costing does not recalculate the cost amount. It only re-derives the default debit account.

• Recalculate revenue • Change comment



• Change project functional currency attributes • Reprocess cross charge transactions • Mark for no cross charge processing • Change transfer price currency attributes

In Oracle Purchasing and Oracle Payables, you can adjust the project-related information such as the invoice amount, supplier, project, task, expenditure type, expenditure organization and expenditure item date. Restrictions to Supplier Cost Adjustments Oracle Project Costing restricts the types of adjustments that you can make to supplier cost expenditure items in Oracle Project Costing. The restrictions apply to supplier costs interfaced to Oracle Project Costing from Oracle Purchasing and Oracle Payables, and to expense report costs interfaced from Oracle Payables. For a discussion of these restrictions, see the lesson titled “Integration with Oracle Purchasing and Oracle Payables.”



Mass Adjustments

Mass Adjustments

Use the Find Expenditure Items window or the Find Project Expenditure Items window to process a mass adjustment of expenditures. The mass adjustment feature provides faster performance when you adjust a large number of expenditures. If you use the Find Project Expenditure Items window, you can mass adjust expenditure items for a single project across operating units. The expenditure items that you adjust can cross operating units, but you must have security access to an operating unit to view and adjust those expenditure items. For example, a project has expenditure items associated with operating units A, B, C, and D. If your responsibility only gives you access to operating units B and C, then you can view and adjust only the expenditure items from operating units B and C. If you use the Find Expenditure Items window, you can mass adjust expenditure items across projects, within a single operating unit. If you have access to more than one operating unit, then you must select the operating unit. If you have access to only one operating unit, then that operating is the default value. Oracle Project Costing adjust only the expenditure items that correspond to the current operating unit. To perform mass adjustment of expenditures:

1. Navigate to the Find Project Expenditure Items or Find Expenditure Items window.



2. Enter your search criteria. 3. Choose Mass Adjust. 4. From the Mass Adjust list, select the adjustment to perform on the selected expenditures. 5. Choose the processing method for the adjustments. You can choose to either process

adjustments online or submit a concurrent program to process the adjustments. If you choose to submit the concurrent program to process the adjustments, then Oracle Project Costing submits the PRC: Adjust Expenditure Items concurrent program.

6. Review the results. When you process adjustments online, Oracle Project Costing displays a message when the adjustment program is complete. If you process adjustments using a concurrent program, you can review the output report when the program is complete.



Correct Approved Expenditure Items

Correct Approved Expenditure Items

When correcting approved expenditure items: • Reverse the original item and then create a new item using the correct information. • You can also select the Transfer adjustment action to change the project and task

assignment of an expenditure item. • For supplier cost expenditure items, you cannot correct the amount, expenditure type, or

supplier in Oracle Project Costing. You must correct these attributes in the source application: Oracle Payables or Oracle Purchasing. You can use the Review Transactions window to update the expenditure item date in Oracle Project Costing only if the date fails validation when you run the program PRC: Interface Supplier Costs.

• You must correct expenditure items imported from Oracle Inventory or Oracle Manufacturing in their respective systems except for the transactions with transaction source Inventory Misc. You cannot reverse or correct expenditure items from these applications in Oracle Project Costing.

To correct an approved expenditure item: 1. Create a new batch for the correction items.



- The Expenditure Ending date must match the week that includes the expenditure item you are reversing.

- Optionally check the All Negative Transactions Entered As Unmatched check box if you want to enter transactions with negative amounts and do not want Oracle Project Costing to search for corresponding existing transactions.

2. In the Expenditure Items window, select the Reverse Original button. - Instead of choosing the Reverse Original button, you can enter a negative amount in

the Quantity field. Precede negative amounts with a minus (–) sign. If the All Negative Transactions Entered as Unmatched check box is not enabled, then Oracle Project Costing searches for a matching expenditure item and alerts you if it is unable to find a match.

3. In the Reverse Expenditure Items window, specify the items that you want to reverse. 4. Select the Reversal button.

- Oracle Project Costing inserts a reversing (negative) expenditure item into the batch. 5. Finish entering the batch and submit the batch as usual.

- Expenditure batches can contain both positive and negative expenditure items.



Processing Adjustments


After you perform adjustment actions, run the appropriate programs to process the adjustments: 1. Distribute Costs - Run the appropriate cost distribution programs to process the

adjustments. For example, if you adjust timecard expenditure items on a project that uses total burdened accounting, then you run PRC: Distribute Labor Costs and PRC: Distribute Total Burdened Costs.

2. Generate Accounting Events - Next, run PRC: Generate Cost Accounting Events to derive the default credit accounts as needed and generate accounting events for the adjustments in Oracle Subledger Accounting. You can either run the program separately for each type of cost (select appropriate process category) or once for all unprocessed cost distribution lines (leave the Process Category parameter blank).

3. Create Accounting - Finally, run PRC: Create Accounting to create subledger accounting entries in Oracle Subledger Accounting for the accounting events. You can set the Transfer to General Ledger parameter to Yes to enable the program to automatically transfer the final accounting to Oracle General Ledger and run the Journal Import program. If you choose to transfer to Oracle General Ledger, then you can also set the parameter Post in General Ledger to Yes to enable the program to automatically post



successfully imported journal entries in Oracle General Ledger. Otherwise, you can run PRC: Transfer Journal Entries to GL to transfer the final subledger journal entries from Oracle Subledger Accounting to Oracle General Ledger. You can either run the programs separately for each type of cost (select appropriate process category) or once for all unprocessed cost distribution lines (leave the Process Category parameter blank).

Alternatively, you can also choose the Run Request button on the Expenditure Items window or Project Expenditure Items window to initiate a streamline process. In addition, you can submit project and interface streamline processes from the Submit Request window.



Results of Adjustment Processing

Results of Adjustment Processing

After you run the appropriate programs to recalculate the adjusted expenditure items, you can review the results of the adjustments. When you process an adjustment, a cost adjustment results if one or more of the following attributes is different from the original value:

• Raw cost amount • Burden cost amount • Account to which the cost is charged • Billable/Capitalizable status of the item

Corrections to Pre-Approved Expenditure Items, Transfers, and Splits When processing a reversing item which resulted from a correction of a pre-approved expenditure item, a transfer, or a split, the cost distribution programs use the same cost rate as the original item to ensure that the cost nets to zero for the original and reversing item. The program charges the reversing item to an account based on the original distribution line. The program processes the new positive item resulting from a transfer just as a new expenditure item is processed. To process new items for a split the same way that a new expenditure item is processed, you must mark the item for recalculation.



Accounting for Cost Adjustments When a cost distribution program encounters an item that requires a cost adjustment, the program updates the expenditure item with the new raw and burden cost rates and amounts, and creates new cost distribution lines. The program creates a reversing cost distribution line and a new cost distribution line. These lines form the audit trail of cost adjustments. As a result of adjustment processing, the following two different sets of account code combinations exist:

• The original cost account code combination and original cost clearing account code combination.

• The adjustment cost account code combination and adjustment cost clearing account code combination.

Oracle Project Costing copies the account code combination IDs (CCIDs) from the original transaction to the reversing transaction and assigns the cost adjustment lines to the earliest open or future GL period. For additional information, see the Oracle Project Costing User Guide.



Quiz

Answer: a



Quiz

Answer: c



Quiz

Answer: b



Quiz

Answer: a



Agenda



Audit Reporting for Expenditure Adjustments

Audit Reporting for Expenditure Adjustments

Oracle Project Costing provides an audit trail of all adjustments performed on an expenditure item. The audit trail records the following information about the adjustment:

• The name of the user who performed the adjustment. • The type of adjustment action performed. • The date and time that the adjustment was performed. • The window from which the adjustment action was performed.

Run audit report concurrent programs to produce reports for review: • AUD: Project Expenditure Adjustment Activity - Use this report to review all

adjustments users made to expenditure items of a particular project. Your accounting department can submit this report regularly to audit the kinds of expenditure adjustments being made for a project. For example, they can use this report to identify any expenditure adjustments that are unauthorized or against company policy.

• AUD: Supplier Cost Audit Report - Use this report to audit transactions between Oracle Project Costing, Oracle Purchasing, Oracle Payables, Oracle Subledger Accounting, and Oracle General Ledger. This report lists all supplier cost transactions in Oracle Project



Costing for a selected operating unit. When you run the report, you can specify an adjustment type to limit the transactions that you want to include in the report.

• MGT: Transfer Activity - Use this report to review the expenditure item transfers into and out of a particular project. You can use this report as an audit tool to control project costs by identifying incorrect or unauthorized transfers for a project. You can also use this report to verify any expenditure item transfers that you perform. For each specified project, this report shows you the expenditure items transferring into or out of the project and the transfer history of each of these expenditure items. For each expenditure item listed, this report displays the item’s cost amount, its quantity, and either the destination project and task numbers or the originating project and task numbers, depending on the expenditure item’s transfer direction.



Summary


Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 1

Integration with Oracle Purchasing and Oracle Payables Chapter 12



Integration with Oracle Purchasing and Oracle Payables



Objectives



Agenda



Overview of Supplier Costs

Overview of Supplier Costs

Oracle Project Costing fully integrates with Oracle Purchasing and Oracle Payables and enables you to enter project-related documents using those products. You can use both Oracle Purchasing and Oracle Payables, or just Oracle Payables. In addition, you can use Oracle iProcurement to enter project-related requisitions. When you enter project-related transactions in Oracle Purchasing and Oracle Payables, you enter project information on your source document. Oracle Purchasing, Oracle Payables, and Oracle Project Costing carry the project information through the document flow: from the requisition to the purchase order in Oracle Purchasing, to the supplier invoice in Oracle Payables, and to the project expenditure in Oracle Project Costing. The accounting method for your ledger determines when you can interface supplier costs to Oracle Project Costing. Note: You can use Transaction Import in Oracle Project Costing to import accounted supplier invoices directly into Oracle Project Costing from 3rd party systems. Note: For information about project-related contingent worker timecards with purchase order integration see lessons titled "Entering Expenditures" and "Integration with Oracle Time and Labor."



Oracle Purchasing and Oracle Payables (Accrual)

Oracle Purchasing and Oracle Payables (Accrual)

When the primary accounting method is accrual basis accounting, you interface perpetual receipt accruals, invoice variances, invoice distributions, and payment discounts to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Purchasing In Oracle Purchasing, you can enter project information for requisition distribution lines to associate cost commitments with projects. You can also enter project information on requisitions in Oracle iProcurement. When you autocreate a purchase order, Oracle Purchasing copies the distribution lines from the requisition to the purchase order. You can also create a purchase order without first entering a requisition. In this case, you enter project information for the purchase order distribution lines to associate cost commitments with projects. For a blanket purchase order, you enter project information when you create a release. You can optionally enable the Accrue at Receipt check box when you enter a purchase order shipment to make it eligible for receipt accrual processing. After you enter a receiving transaction for an accrue-on-receipt purchase order shipment, you create subledger accounting



for the receiving transaction. Next, you interface the costs associated with the receipt to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Payables In Oracle Payables, you can match a supplier invoice to an existing purchase order or receiving transaction. Oracle Payables automatically copies the project information from the purchase order distribution lines when you perform the match. You can also create non-matched supplier invoices in Oracle Payables and enter invoice distributions to charge invoice costs to projects. After you validate the invoice and create accounting for it in final mode, you interface project-related invoice distributions to Oracle Project Costing as actual costs. In addition, this program sends any supplier invoice cost variances from receipt accruals to Oracle Project Costing. Project-Related Prepayment Invoices Oracle Project Costing summarizes prepayment invoices that are not matched to purchase orders as cost commitments, not as actual costs, and displays the commitments in the Project Status Inquiry window or the Project Performance page, depending on the summarization model you use. Oracle Project Costing tracks only prepayment invoices not matched to purchase orders as commitments because Oracle Project Costing tracks commitments for prepayment invoices matched to purchase orders as purchase order commitments. The unmatched prepayment invoice commitment amount is the outstanding unapplied amount of the prepayment invoice. Oracle Project Costing calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount. Project-Related Payment Discounts You can set up Oracle Payables to apply discounts to payments. After you enter a payment with discounts, you interface the discounts to Oracle Project Costing to adjust the previously interfaced supplier costs. When the program PRC: Interface Supplier Costs interfaces discount amounts to Oracle Project Costing, the interface program creates an expenditure item for each discount line. If you pay an invoice before you interface the invoice distribution lines to Oracle Project Costing, and you set the parameters for the program PRC: Interface Supplier Costs to interface both supplier invoices and discounts, then the interface program creates the invoice distribution expenditure items and invoice discount expenditure items at the same time. Interfacing Supplier Costs to Oracle Project Costing You run the program PRC: Interface Supplier Costs to interface actual costs to Oracle Project Costing from Oracle Purchasing and Oracle Payables. This program uses Transaction Import to move the costs into the expenditures table in Oracle Project Costing. Each distribution line becomes a separate expenditure item in Oracle Project Costing.



Oracle Purchasing and Oracle Payables (Cash)

Oracle Purchasing and Oracle Payables (Cash)

When the primary accounting method in Oracle Payables is cash basis accounting, you interface payments to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Purchasing In Oracle Purchasing, you can enter project information for requisition distribution lines to associate cost commitments with projects. Oracle Project Costing tracks project-related supplier costs in Oracle Purchasing as commitments. You can also enter project information on requisitions in Oracle iProcurement. When you autocreate a purchase order, Oracle Purchasing copies the distribution lines from the requisition to the purchase order. You can also create a purchase order without first entering a requisition. In this case, you enter project information on purchase order distribution lines to associate cost commitments with projects. For a blanket purchase order, you enter project information when you create a release. You enter receiving transactions for purchase order lines in Oracle Purchasing. With cash basis accounting, you do not flag purchase order lines to accrue at receipt and you cannot interface receipts to Oracle Project Costing as actual costs.



Managing Project-Related Supplier Costs in Oracle Payables In Oracle Payables, you can match a supplier invoice to an existing purchase order or receiving transaction. Oracle Payables automatically copies the project information from the purchase order distribution lines when you perform the match. You can also create non-matched supplier invoices in Oracle Payables and enter invoice distributions to charge invoice costs to projects. You cannot interface costs from Oracle Payables to Oracle Project Costing as actual costs until you pay the invoice. After you enter payments for a supplier invoice, you interface payments to Oracle Project Costing as actual costs. Oracle Payables allocates payment amounts to invoice distributions. You can interface partially paid invoices to Oracle Project Costing. If you void a payment in Oracle Payables, then Oracle Payables automatically reverses the project-related costs when you interface the reversing items to Oracle Project Costing. Project-Related Prepayment Invoices Oracle Projects summarizes prepayment invoices that are not matched to purchase orders as cost commitments, not as actual costs, and displays the commitments in the Project Status Inquiry window or the Project Performance page, depending on the summarization model you use. Oracle Projects tracks only prepayment invoices not matched to purchase orders as commitments because Oracle Projects tracks commitments for prepayment invoices matched to purchase orders as purchase order commitments. The unmatched prepayment invoice commitment amount is the outstanding unapplied amount of the prepayment invoice. Oracle Projects calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount. In addition, you cannot interface discounts related to prepayments to Oracle Projects as actual costs. Project-Related Payment Discounts You can set up Oracle Payables to apply discounts to payments. If you set up Oracle Project Costing to interface discounts, then the interface program creates an expenditure item for the amount of the payment, minus the discount amount. If you set up Oracle Project Costing so that the interface program does not interface discounts, then interface program creates the two expenditure items. One expenditure item is for the payment amount minus the discount, and the other expenditure item is for the amount of the discount. Together, the two expenditure items total to the full amount of the cost. Interfacing Supplier Costs to Oracle Project Costing You run the program PRC: Interface Supplier Costs to interface supplier costs to Oracle Project Costing from Oracle Payables as actual costs. This program uses Transaction Import to move the costs into the expenditures table in Oracle Project Costing. Each distribution line becomes a separate expenditure item in Oracle Project Costing. Note: The parameter Interface AP Discounts does not apply to cash basis accounting.



Quiz

Answer: a



Agenda



Entering Project-Related Information

Entering Project-Related Information

When you enter requisitions, purchase orders, and supplier invoices, you specify the following project-related information:

• Project number - The project incurring the charge. • Task Number - The lowest level task incurring the charge • Expenditure Type - A classification of the cost. The expenditure type must have an

expenditure type class of Supplier Invoices or Expense Reports. • Expenditure Organization - The organization that is ordering or has ordered the goods or

services, which can be different from the project owning organization. The organization you specify in the profile option PA: Default Expenditure Organization in AP/PO is the default value for the expenditure organization.

• Expenditure Item Date - The date that you expect to incur the expense for the goods or services that you are requesting for a requisition or purchase order, or the date that you incur the charge for an invoice. This date is used during online validation using project transaction controls, and becomes the expenditure item date on the expenditure item in Oracle Project Costing.



Oracle Payables uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process to determine the default expenditure item date for supplier invoice distribution lines. Oracle Payables also uses the profile option to determine the default expenditure item date when you enter supplier invoice distribution lines for unmatched invoices. Oracle Project Costing uses this profile option when you run the program PRC: Interface Supplier Costs to determine the expenditure item date for Oracle Purchasing receipts, invoice payments, and discounts.

• Project Quantity - The quantity of goods or services for which you are charged. You can enter data in this field only in Oracle Payables, as this field is applicable for invoice lines and distributions only.

If the Rate Required option for the selected expenditure type is enabled in Oracle Project Costing, then you must enter a quantity. When you interface the invoice distribution to Oracle Project Costing, Oracle Project Costing copies the quantity and amount to the expenditure item and calculates the rate. If Rate Required option for the selected expenditure type is disabled, then the quantity of the expenditure item is set to the amount you enter in Oracle Payables.

You do not enter the Projects Quantity for documents in Oracle Purchasing because you do not know the quantity for which you will be invoiced. Oracle Payables automatically sets the Projects Quantity field to the quantity invoiced of the invoice distribution line when you match an invoice to a purchase order or receipt.



Validating Project Information

Validating Project Information

When you enter project information and either save or move to the next distribution line, the information is validated against the project transaction control information in Oracle Project Costing. This validation ensures that you can charge the type of expenditure to the project and task on the expenditure item date that you specified. If the information that you entered does not pass, then you must enter valid chargeable project information based on the transaction controls in Oracle Project Costing before you can continue. If you cannot determine valid project information that is chargeable, you can delete the values and close the window. When you create a distribution set in Oracle Payables, the project information for a distribution set line is not validated against the project transaction control information in Oracle Project Costing, because you do not enter an expenditure item date which is required for transaction control validation. When you create the distribution set lines, Oracle Payables validates the project and task number. When you enable enhanced period processing in Oracle Project Costing, Oracle Payables gives you a warning message during data entry if a project-related supplier invoice distribution falls into a GL period with a status other than Open or Future in Oracle Project Costing. Oracle Payables notifies you if a project-related invoice has a distribution that fails validation.



Budgetary Control Activation

Budgetary Control Activation

In Oracle Purchasing and Oracle Payables, you can activate budgetary control validation when you select the Check Funds option for a transaction, and also during the transaction approval process. You can enforce budgetary controls against a GL budget and a project cost budget. When you select the Check Funds option, a successful budgetary control result does not update budgetary control balances. You use the Check Funds option to verify available funds for a transaction before requesting approval for the transaction. During the transaction approval processes, a validation of budgetary controls is automatically performed. If the validation is successful, the transaction is approved and budgetary control balances are updated. You can enforce budgetary controls against a project budget. Budgetary controls enable you to monitor and control expense commitment transactions entered for a project, based on a project cost budget. Expense commitment transactions are transactions for non-inventory items. For additional information, see the lesson titled "Appendix B: Budgetary Controls and Budget Integration."



Commitment Reporting

Commitment Reporting

You can report the total cost of a project by reporting the committed cost along with the actual cost. You can report the flow of committed cost, including associated nonrecoverable tax amounts, through Oracle Purchasing and Oracle Payables. These committed costs can include:

• Open requisitions (unpurchased requisitions). • Open purchase orders (uninvoiced and non-delivered). • Prepayment invoices that are not matched to a purchase order, and not yet applied to a

supplier invoice. - Note: The unmatched prepayment invoice commitment amount is the outstanding

unapplied amount of the prepayment invoice. Oracle Project Costing calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount.

• Unmatched pending invoices (supplier invoices not yet interfaced to Oracle Project Costing to be included in project costs).

Oracle Project Costing shows prepayment invoices that are not matched to purchase orders as invoice commitments. The matched prepayment invoice does not appear as a separate commitment.



Both unapproved and approved open requisitions and purchase orders show as commitments after you run the concurrent program to update project summary amounts. When you drill-down to view commitment details, if the Approved check box is enabled, then the requisition or purchase order associated with the commitment has been approved. You can report summary committed cost amounts for your projects and tasks, and can also review detail requisitions and purchase orders that backup the summary amounts. Note to students: You will view committed and actual supplier costs on your project in upcoming practices.



Accounting Transactions

Accounting Transactions

Oracle Purchasing and Oracle Payables use the Account Generator to determine the default accounting for each project-related distribution line based on the project information that you enter. Oracle Purchasing builds the account number for the charge, accrual, and variance distribution accounts based on the Account Generator assignments that you define during implementation. You can define your Account Generator processes so that project-related requisitions and purchase orders use project-related information in the Account Generator assignments and non-project-related documents use the Account Generator assignments predefined by Oracle Purchasing. If you use encumbrance accounting, you can also define assignments for the budget account based on project information. In Oracle Payables, the Account Generator builds the default expense account number for project-related invoices using assignments that you define during implementation. You must enter the account number for non-project-related invoices. The Account Generator determines the default liability account for all invoices based on the liability account defaults provided by Oracle Payables.



When you create subledger accounting for the distributions lines, Oracle Subledger Accounting uses the predefined setup that Oracle Purchasing, Oracle Payables, and Oracle Project Costing provide so that the create accounting program accepts the default accounts without change. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites the default account.



Quiz

Answer: a



Agenda



Integration with Oracle Purchasing

Integration with Oracle Purchasing

When you enter project-related transactions in Oracle Purchasing and Oracle iProcurement, you only need to enter project information on the source document; either the requisition or the purchase order. Entering Requisitions You enter project-related purchase requisitions using the Requisitions window in Oracle Purchasing. A requisition can have a combination of project-related and non-project-related distribution lines. In addition, you can use the Buyer WorkCenter in Oracle Purchasing to review requisitions. You can also use Oracle iProcurement to enter project-related purchase requisitions. Using AutoCreate When you automatically create purchase orders from project-related requisitions in the AutoCreate Documents window, Oracle Purchasing copies the project information and the accounting information from the requisition to the purchase order. You do not need to enter any additional project-related information on your purchase order when you use this feature. You can change the project information on the purchase order that was copied from the requisition, though in this case, the project information on the requisition is not updated.



Entering Purchase Orders If your company does not use online requisitions or the AutoCreate feature, you can enter project-related information directly on your standard purchase orders. The Account Generator automatically creates the account information, based on the project-related information you enter. You can also use the Buyer WorkCenter in Oracle Purchasing to enter project-related purchase orders. Entering Releases You enter project-related releases against blanket purchase agreements and planned purchase orders. If the release distribution line is project-related, then you can specify project information. Recording Receipts and Delivery When a purchase order shipment is flagged to accrue at receipt and the purchased goods are delivered to an expense destination, you enter a receiving transaction for the purchase order in Oracle Purchasing. Next, you interface receipt accruals to Oracle Project Costing as actual transactions. This feature enables you to recognize the cost to your project in the period in which it is incurred rather than in the period in which it is invoiced. Note: You must create subledger accounting for receiving transactions in final mode before you can:

• View accounting for receipt accrual expenditure items in Oracle Project Costing. • Create accounting for adjustments made in Oracle Project Costing to receipt accrual

expenditure items.



Documents in Oracle Purchasing

Documents in Oracle Purchasing

You enter project information for distribution lines in Oracle Purchasing: • Requisitions have three levels: the requisition header, requisition lines, and requisition

distributions. • Releases have three levels: the release header, release lines, and release distributions. • Purchase orders have four levels: the purchase order header, purchase order lines,

purchase order shipments, and purchase order distributions. You can create project-oriented folders at the distribution line level to make it easier and faster to enter project-related information. For information about entering requisitions, releases, and purchase orders, see the Oracle Purchasing User's Guide.



Agenda



Supplier Costs and Accounting Methods

Supplier Costs and Accounting Methods

When you define a ledger, you can enable an option for the ledger to use cash basis accounting. Otherwise, the ledger uses accrual basis accounting.

• Accrual basis accounting - Oracle Payables creates accounting entries for invoices and payments. If you use accrual basis accounting, then you can set up Oracle Purchasing to accrue expense items at receipt.

• Cash basis accounting - Oracle Payables accounts only for payments and does not record liability information for invoices.

When you define a primary ledger, you can optionally assign one or more secondary ledgers to it. The primary ledger acts as the main record-keeping ledger. The secondary ledger is an optional, additional ledger that is associated with the primary ledger. For example, one ledger can use accrual basis accounting and the other can use cash basis accounting. This approach is also known as combined basis accounting. Oracle Payables records invoice accounting entries in both ledgers. The accounting method of the primary ledger, cash basis or accrual basis, determines the flow of actual costs to Oracle Project Costing. When you make supplier cost adjustments in Oracle Project Costing, Oracle Project Costing does not create accounting entries for a secondary ledger if the accounting basis differs from the primary ledger.



Integration with Oracle Payables (Accrual)

Integration with Oracle Payables (Accrual)

When the primary accounting method is accrual basis accounting, you interface perpetual receipt accruals, invoice variances, invoice distributions, and payment discounts to Oracle Project Costing as actual costs. Matching Invoices If you use Oracle Purchasing and have already associated project-related information to a purchase order, then you can match the invoice to a purchase order or receipt using the Invoices window. Oracle Payables automatically copies the project information to the invoice. You cannot change the project information that is copied from the purchase order to the invoice, with the exception of the expenditure item date. Oracle Payables uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process to determine the default expenditure item date for supplier invoice distribution lines. You can override the default expenditure item date for invoice distribution lines on the Invoice Workbench in Oracle Payables. Entering Invoices You can enter project-related invoices directly in Oracle Payables. You can enter project-related information at the invoice level, which populates the project-related information at the



invoice line level. You can override these default values at the invoice line level. The project-related information that you enter at the invoice line level populates the invoice distributions for the line. You can override this default information at the invoice distribution line level. An invoice can have both project-related and non-project-related distributions. Importing Invoices You can import projects-related invoices through the Payables Open Interface tables. For example, you can import expense report invoices from Oracle Internet Expenses. Tracking Commitments You can track project-related invoices as commitments in Oracle Project Costing before you interface them as actual costs. Posting Invoices If you use accrual basis accounting, then you must validate the invoice and create subledger accounting for it in final mode in Oracle Payables before you can interface the invoice to Oracle Project Costing.



Integration with Oracle Payables (Cash)

Integration with Oracle Payables (Cash)

When the primary accounting method in Oracle Payables is cash basis accounting, you interface payments to Oracle Project Costing as actual costs. You cannot interface costs from Oracle Payables to Oracle Project Costing as actual costs until you pay the invoice. You can interface partially paid invoices to Oracle Project Costing. Entering Invoices As with accrual basis accounting, you can match invoices to purchasing documents, manually enter a supplier invoice, and import supplier invoices from an external source. Tracking Commitments You can track project-related invoices as commitments in Oracle Project Costing.



Invoices in Oracle Payables

Invoices in Oracle Payables

Invoices in Oracle Payables have three levels: the invoice header, invoice lines, and invoice distributions. You can create project-oriented folders at all three levels to make it easier and faster to enter project-related information for your invoices. For information about entering invoices, invoice lines, and invoice distributions, see the Oracle Payables User's Guide.



Quiz

Answer: a



Agenda



Interfacing Supplier Costs

Interfacing Supplier Costs

You run the program PRC: Interface Supplier Costs to bring project-related supplier costs into Oracle Project Costing from Oracle Purchasing and Oracle Payables. The interface process groups the items into expenditure batches by transaction source.

• For accrual basis accounting, this program interfaces receipt accruals from Oracle Purchasing and supplier invoice-related costs, receipt accrual price variances, and discounts from Oracle Payables to Oracle Project Costing as actual costs. You must validate invoices and create accounting for them before you can interface the costs to Oracle Project Costing.

• For cash basis accounting, this program interfaces payments and discounts from Oracle Payables to Oracle Project Costing as actual costs.

If you make adjustments to project-related supplier costs in Oracle Purchasing or Oracle Payables, then this program interfaces the adjusting distribution lines to Oracle Project Costing. The program selects transactions based on the parameter values that you enter. It first retrieves all eligible accounted, project-related supplier costs. The program then interfaces the amounts



to Oracle Project Costing. The program groups the items into expenditure batches by transaction source. Each time you run the program PRC: Interface Supplier Costs, Oracle Project Costing generates reports you can use to track the interfaced costs, as well as those invoice lines and receipt accruals that the process rejected during interface. Import and Expenditure Item Dates For receipt accruals, payments, and discounts, the program uses the profile option PA: Default Expenditure Item Date for Supplier Cost to determine the expenditure item date. The program validates expenditure item dates for supplier costs. If the expenditure item date for an expenditure item fails validation, then the program rejects the transaction and leaves it in the Oracle Project Costing interface table. You must either change the date setup in Oracle Project Costing or change the date for the expenditure item. You can use the Review Transactions window to change the date for a rejected expenditure item and validate the new date. If the new date passes validation, then Oracle Project Costing marks it as pending so that PRC: Interface Supplier Costs interfaces the transaction the next time you run the program. Note: To update the expenditure item date in the Review Transactions window, the Allow Interface Modifications option must be enabled for the transaction source.



Payment Control

Payment Control

Payment Control enables project managers to manage supplier payment for their projects. It integrates with Oracle Purchasing and Oracle Payables to create supplier invoices with automatic payment hold in Oracle Payables for purchase orders with complex payment terms of Pay When Paid and a deliverables schedule. Further, on interface of these supplier invoices from Oracle Payables to Oracle Projects as expenditure items, draft customer invoices generated on these expenditure items are automatically linked to these supplier invoices. You can also manually link supplier invoices to draft invoices from the Supplier Workbench or when reviewing invoices. In addition, you can manually review hold conditions and release holds from the Supplier Workbench. Payment Control provides the Send AR Notification workflow to enable project managers track receipts applied to customer invoices in Oracle Receivables. You can customize the workflow to send notifications to recipients other than the default recipient of project manager. If you enabled AR Receipt Notification for your projects and the notification includes receipts applied to customer invoices that are linked to supplier invoices on payment hold, you can manually review these invoices and release holds on supplier invoices from the Supplier Workbench.



Predefined Transaction Sources

Predefined Transaction Sources

Oracle Project Costing predefines transaction sources to import supplier costs from Oracle Purchasing and Oracle Payables and expense reports from Oracle Payables.

• You can define preprocessing and post-processing extensions to customize the predefined supplier cost transaction sources. See: Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.

• The program PRC: Interface Supplier Costs only rejects the expenditure items that fail validation. The program interfaces the remaining expenditure items to Oracle Projects. This functionality only applies to predefined transaction sources for supplier costs.

Important: Do not use these transaction sources to import transactions from non-Oracle sources. These transaction sources are intended only for use by the Oracle Project Costing processes that import supplier costs and expense report costs from Oracle Purchasing and Oracle Payables. Note: You run the program PRC: Interface Expense Reports from Payables to interface expense report costs to Oracle Project Costing.



Predefined Transaction Sources (continued)

Predefined Transaction Sources (continued)

You must enable the Allow Interface Modifications option for predefined supplier cost transaction sources to use the Review Transactions window to modify the expenditure item date for expenditure items that fail date validation during import. If you enable the Allow Adjustments option for a predefined transaction source for supplier costs, then you must complete at least one of the following setup steps to create accounting for supplier cost adjustments:

• Specify the default supplier cost credit account for supplier cost adjustments in Oracle Projects implementation options for each operating unit.

• Set up Oracle Subledger Accounting to determine the supplier cost credit account.



Supplier Cost Audit Report

Supplier Cost Audit Report

Run the program AUD: Supplier Cost Audit in Oracle Project Costing to generate the Supplier Cost Audit Report. You can use this report to track supplier cost transactions in Oracle Project Costing. This report lists all supplier cost transactions in Oracle Project Costing for a selected operating unit.

• For accrual basis accounting, the report includes raw costs associated with unmatched invoices, PO-matched or receipt-matched invoices, accrued receipts, and payments associated with discounts.

• For cash basis accounting, the report includes payments and prepayment applications associated with invoices.

When you submit the report, you can enter values for parameters such as From Project Number, To Project Number, Supplier, Transaction Type, From GL Period, To GL Period, and Adjustment Type to restrict the supplier cost transactions that the program includes on the report. For a complete list of the parameters, see: Supplier Cost Audit Report, Oracle Projects Fundamentals.



Expenditure Inquiry

Expenditure Inquiry

You can use the Find Project Expenditure Items window or the Find Expenditure Items window in Oracle Project Costing to query supplier cost expenditure items. You can select a combination of find criteria to limit the search. For example, you can enter find criteria specific to supplier costs on the Supplier tab to query the expenditure items for a specific supplier invoice, payment, or receipt. After you query the expenditure items, you use the Expenditure Items window or Project Expenditure Items window to review them. You can use folder tools to add additional columns that provide supplier cost-specific information. You can review the item details for supplier cost expenditure items. For supplier costs from supplier invoices, you can choose AP Invoice to drill down to the invoice overview in Oracle Payables. If the invoice is matched to a purchase order, then you can drill down to the purchase order from the Invoice Workbench. For expenditure items from receipt accrual transactions, you can choose PO Receipt to drill down to the receipt transaction summary in Oracle Purchasing. You can also drill down to the related purchase order from the Receipt Transaction Summary window. For expenditure items from purchase order-related contingent worker labor costs, you can choose Purchase Order Details to drill down to the purchase order details in Oracle Purchasing.



Viewing Project Adjustments from the Invoice Workbench

Viewing Project Adjustments from the Invoice Workbench

To view project adjustments from the Invoice Workbench:

1. Position your cursor at the invoice, invoice line, or invoice distribution level.

2. Select View Project Adjustments from the Tools menu. 3. Select the Find button on the Find Expenditure Items

window. You can access Expenditure Inquiry from the Invoice Workbench in Oracle Payables to view

adjustments to supplier costs in Oracle Project Costing. The adjustments are to supplier costs that you previously interfaced to Oracle Project Costing and then adjusted in Oracle Project Costing. You can use this option to help reconcile costs between Oracle Payables and Oracle Project Costing because you do not interface adjustments that users make in Oracle Project Costing back to Oracle Payables.



On the Invoice Workbench in Oracle Payables, select the View Project Adjustments option from the Tools menu to open the Find Expenditure Items window. This option is context-sensitive; Oracle Payables automatically enters find criteria based on the position of your cursor. When your cursor is on the invoice header or an invoice line, you can optionally revise the find criteria before you search for the expenditure items.



Agenda



Managing Subcontractor Payments

Managing Subcontractor Payments

If Oracle Services Procurement has been licensed and implemented, then you can take advantage of additional features for procuring complex services. Complex services can include consulting, advertising, construction, research and development, and professional services, and they typically require negotiated contracts with complex terms and payment arrangements. Oracle's Complex Work feature streamlines all aspects of the acquisition process for complex services including:

• Negotiation of service contracts with emphasis on terms related to contract financing and progress payment arrangements.

• Tracking of work progress against an agreed schedule in the contract. • Processing of payment requests.

The role that Oracle Purchasing plays is primarily in the authoring and monitoring portion of the Complex Work flow. In addition, the purchase order styles that dictate which of the complex payment attributes are available are created in Oracle Purchasing. Complex payment attributes include:

• Progress Payments - For partial payments during performance of the contract. For example, progress payment pay items include:



- Milestone - Payments based on progress events. - Rate - Payment amount is pro-rated based on the percentage of work completed. - Lump Sum - Payment amount is a fixed amount based on the percentage of work

completed. • Advances - For advance payments (prepayments). • Retainage - To withhold a portion of the payment until all work under a contract is

accepted is to be allowed. Oracle's Complex Work feature provides a streamlined process for contractors to report progress and request payments using either a Work Confirmation Request or an Invoice, each of which can then be electronically routed for approval. You can optionally track the progress of project-related work against project deliverables that you define in Oracle Project Management. When the work is complete, multiple methods exist for submitting a Work Confirmation Request:

• The contractor can create and submit a Work Confirmation Request in Oracle iSupplier Portal.

• The project manager can create a Work Confirmation request on behalf of the contractor in iProcurement.

• The buyer can create and submit a Work Confirmation on behalf of the contractor. The buyer or contract administrator can then confirm the progress. For additional information about procuring complex services, see the Oracle Purchasing User's Guide and the course titled "R12.x Oracle Purchasing Fundamentals."



Managing Financing and Advances

Managing Financing and Advances

You assign financing terms that allow prepayments to a purchase order header in the Buyer WorkCenter in Oracle Purchasing. Oracle Payables imports prepayment invoices that Oracle Purchasing generates based on information from the purchase order financing terms. You cannot interface project-related prepayment invoices to Oracle Project Costing as actual costs. Prepayment invoices appear as commitments in Oracle Project Costing as follows:

• A project-related prepayment invoice that is not matched to a purchase order appears as separate commitment. Once you apply the prepayment invoice to a standard invoice, Oracle Project Costing relieves the cost commitment for the prepayment invoice.

• A project-related prepayment invoice that is matched to a purchase order appears as a purchase order commitment, not as an invoice commitment.

With accrual basis accounting, you interface the actual cost from the standard invoice, and not the prepayment, to Oracle Project Costing. With cash basis accounting, after you apply the prepayment invoice to a standard invoice, you interface the actual cost from the standard invoice to Oracle Project Costing. The actual cost amount that you interface to Oracle Project Costing is equal to the amount of the prepayment applied to the standard invoice.



Managing Retainage

Managing Retainage

Retainage is an agreed upon amount, typically a percentage, that you withhold from a subcontractor until the subcontractor makes predetermined progress for a particular scope of work. Retainage is also known as retention or contractual withholds. With Oracle's Complex Work feature, contract administrator can negotiate retainage terms with the contractor and capture these as part of the contract. For example, the contract can specify that you will retain 20 percent from all payments until 25 percent of work is complete. Therefore, whenever the subcontractor sends you an invoice, you retain 20 percent of each payment until the overall progress reaches 25 percent. Oracle Payables automatically calculates the retainage amount for a supplier invoice based on the retainage rate and maximum retainage amount that you specify on the purchase order header in the Buyer WorkCenter in Oracle Purchasing. It stores the retainage amount as a separate distribution line with a distribution line type of Retainage. Oracle Payables has one retainage account it uses for each operating unit. Oracle Project Costing does not report on or interface project-related retainage distribution lines as commitments or actual costs. Instead, Oracle Project Costing captures the full amount of the expense as a commitment and, when applicable, for budgetary control. Later, the full



amount of the expense is interfaced to Oracle Project Costing as an actual cost. Retainage is related to the payment of the invoice and it ultimately does not impact the overall project cost. Retainage Release The contractor can submit a Retainage Release Invoice for release of retainage withheld. If the contractual clauses or other conditions governing the release of the retainage are met, then the buyer can release the applicable retainage. For additional information, see the Oracle Purchasing User's Guide and the Oracle Payables User's Guide.



Quiz

Answer: a



Agenda



Supplier Cost Adjustments Overview

Supplier Cost Adjustments Overview

You can make adjustments to supplier costs in Oracle Project Costing, Oracle Purchasing, and Oracle Payables. In Oracle Project Costing, you can make the following adjustments to supplier cost and expense report cost expenditure items:

• Transfer an expenditure item to another project or task • Split an expenditure item • Reclassify the billable or capitalizable status • Place a billing hold or one-time hold • Release a billing hold • Recalculate burden costs • Recalculate raw costs • Recalculate revenue • Change comment • Change project functional currency attributes



• Reprocess cross charge transactions • Mark for no cross charge processing • Change transfer price currency attributes

In Oracle Purchasing and Oracle Payables, you can adjust the project-related information such as the invoice amount, supplier, project, task, expenditure type, expenditure organization and expenditure item date.



Restrictions to Supplier Cost Adjustments in Oracle Project Costing

Restrictions to Supplier Cost Adjustments in Oracle Project Costing

Oracle Project Costing restricts the types of adjustments that you can make to supplier cost expenditure items in Oracle Project Costing. The restrictions apply to supplier costs interfaced to Oracle Project Costing from Oracle Purchasing and Oracle Payables, and to expense report costs interfaced from Oracle Payables. Allow Adjustments Option for Supplier Cost Transaction Sources If your implementation team does not enable the Allow Adjustments check box for predefined supplier cost transaction sources in the Transaction Sources window, then Oracle Project Costing restricts the types of adjustments that you can perform in Oracle Project Costing. The default value for this option is No. Automatic Offsets in Oracle Payables If you enter invoices in Oracle Payables for more than one balancing segment, then you can use the Automatic Offsets feature to keep your Oracle Payables transaction accounting entries balanced. When you use Automatic Offsets, Oracle Payables automatically creates balancing accounting entries for your transactions. When Automatic Offsets is enabled in Oracle



Payables, you can make adjustments to supplier cost expenditure items in Oracle Project Costing under the following conditions:

• When the Automatic Offset Method is Balancing, you can make an adjustment in Oracle Project Costing if the adjustment does not cause a change in the balancing segment value.

• When the Automatic Offset Method is Account, you can make an adjustment in Oracle Project Costing if the adjustment only affects the value of the natural account segment. If the adjustment affects the value of any other accounting segment, then you cannot make the adjustment.

Combined Basis Accounting With combined basis accounting, if you make supplier cost adjustments in Oracle Project Costing, then Oracle Project Costing does not create accounting entries for a secondary ledger if the accounting basis differs from the primary ledger. If you enter adjustments in Oracle Payables, then the adjustment activity updates both the primary ledger and the secondary ledger. You must make supplier cost adjustments in Oracle Payables if you want all adjustment activity to update both ledgers. Your implementation team can disable the Allow Adjustments check box for the predefined supplier cost transaction sources in the Transaction Sources window in Oracle Project Costing to prevent users from adjusting supplier cost expenditure items in Oracle Project Costing. Adjustments that Affect Tax Recoverability When you attempt to adjust a supplier cost expenditure item in Oracle Project Costing, if the adjustment has a potential impact on the tax recoverability, then Oracle Project Costing does not allow the adjustment. This restriction ensures the integrity of tax information stored in Oracle E-Business Tax. You must make the adjustment in the source application (Oracle Purchasing or Oracle Payables). Adjustments to Historical (Prior to Release 12) Prepayment Invoices You cannot adjust expenditure items for historical (prior to Release 12) prepayment invoices in Oracle Project Costing. You must make these adjustments in Oracle Payables. Adjustments to Canceled Supplier Invoices If you cancel a supplier invoice, then you cannot make further adjustments to expenditure items associated with the invoice in either Oracle Payables or Oracle Project Costing. Adjustments to Receipt Accruals and Exchange Rate Variance If you allow users to make adjustments in Oracle Project Costing to expenditure items that represent receipts, receipt nonrecoverable tax, or exchange rate variances, then Oracle Project Costing does not perform accounting for adjustments in the following ledgers:

• Reporting currency ledgers • Secondary ledgers if the secondary ledger currency differs from the primary ledger

currency During implementation, you set the profile option PA: Allow Adjustments to Receipt Accruals and Exchange Rate Variance to specify whether you can adjust receipt, receipt nonrecoverable tax, and exchange rate variance expenditure items in Oracle Project Costing when exchange rate variance exists and you convert journals to another currency.



Adjusting Project-Related Documents in Oracle Purchasing

Adjusting Project-Related Documents in Oracle Purchasing

Requisition Adjustments You can update project information on a requisition only if it is not approved and before it is included on a purchase order. The Account Generator builds a new default account number value when you change the project information. The new project information is used in commitment reporting. If encumbrance accounting is enabled for the project, and the requisition is reserved, then you cannot change any of the project attributes. If you unreserve the requisition, then Oracle Purchasing reverses all encumbrance accounting entries and you can modify the project attributes. Purchase Order Adjustments You can update project information on a purchase order, even after it is approved and invoiced. However, you cannot update project information if there has been any accounting activity on the purchase order (for example, if it is encumbered, or if it is accrued on receipt and the distribution has been received or billed). If the purchase order is invoiced before you update the project information, the invoice is not updated with the new project information. If the



purchase order line is invoiced on a new invoice after you change the project information, then Oracle Payables copies the new project information to the new invoice. To update the project information on a purchase order, you must first return all goods that you have received for the purchase order. In addition, if you have previously interfaced receipts and returns for the purchase order to Oracle Project Costing, then you must interface all receipts and returns to Oracle Project Costing before you update project information. If you have not previously interfaced receipts or returns for the purchase order to Oracle Project Costing, then you do not have to interface receipts and returns before you update project information. The Account Generator builds a new default account number when you change the project information. The new project information is used in commitment reporting. If encumbrance accounting is enabled for the project, and the purchase order is reserved, then you cannot change any of the project attributes. If you unreserve the purchase order, then Oracle Purchasing reverses all encumbrance accounting entries and you can modify the project attributes.



Writing Off Receipt Accruals in Oracle Purchasing

Writing Off Receipt Accruals in Oracle Purchasing

After you enter receipt transactions and match and approve your invoices, you can run the AP and PO Accrual Reconciliation Report in Oracle Purchasing to identify any differences between your Oracle Purchasing receipts and Oracle Payables invoices. After you identify the entries you want to write off, you create a manual journal entry to write off the transactions. When you write off a receipt accrual in Oracle Purchasing, you must manually adjust the cost in Oracle Project Costing. Because the receipt accrual write-off is recorded as a manual journal entry, Oracle Purchasing does not interface write-off adjustments to Oracle Project Costing. For additional information on receipt accruals and receipt accrual write-offs, see the discussion about receiving in the Oracle Purchasing User's Guide.



Adjusting Project-Related Documents in Oracle Payables

Adjusting Project-Related Documents in Oracle Payables

Matched Invoices If you match an invoice to a purchase order, then you cannot directly change any of the project information copied from the purchase order, with the exception of the expenditure item date. Oracle Project Costing uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process in Oracle Payables to determine the default expenditure item date for supplier invoice distribution lines. You can override the default expenditure item date for invoices on the Invoice Workbench in Oracle Payables. If you accidentally matched to the wrong purchase order document (purchase order, shipment, distribution, or receipt), you can reverse matched distributions and create new distributions by matching to new purchase order shipments or distributions of the same purchase order or of another purchase order. If you add or reverse invoice distributions, then you must also change the scheduled payment amounts to match the new invoice total, or Oracle Payables places holds on the invoice during validation. Note: If you use the Retroactive Pricing of Purchase Orders feature in Oracle Purchasing, and change project information on an invoice, you must update the same project information on any subsequent purchase order price adjustment or adjustment documents.



Manually Entered, Unvalidated Invoices You can change the project information before an invoice is validated. The Account Generator derives a new default account number based on the new project information that you enter. Manually Entered, Validated Invoices You cannot directly change any project information on a validated invoice. You must reverse the distribution line and create a new distribution line with the new project information using the Distributions window in Oracle Payables.



Adjusting Supplier Costs for Non-Capital Assets

Adjusting Supplier Costs for Non-Capital Assets

You can enter invoices for asset items in Oracle Payables and run the Mass Additions Create concurrent program in Oracle Payables to transfer the specified asset item distributions to the interface table in Oracle Assets. You then create assets from the distributions in Oracle Assets. If the invoice distributions are associated with a project, then you also interface the invoice distributions from Oracle Payables to Oracle Project Costing as supplier costs. When you adjust supplier cost expenditure items in Oracle Project Costing that affect non-capital assets, Oracle Project Costing provides the adjustment information to the Mass Additions Create concurrent program in Oracle Payables. This program transfers the adjustment information to Oracle Assets. Adjustment costs in Oracle Project Costing are eligible for interface to Oracle Assets when the following conditions are met:

• The final account type in Oracle Subledger Accounting for the charge account for the cost adjustment is Asset.

• You successfully generate accounting events for the adjustment and create the final accounting in Oracle Subledger Accounting.

Oracle Project Costing sends adjustments to the Mass Additions Create concurrent program in transaction, ledger, and reporting currencies.



Manually Adjusting Unmatched Reversing Expenditure Items

Manually Adjusting Unmatched Reversing Expenditure Items

Typically, when Oracle Purchasing or Oracle Payables sends a reversing expenditure item to Oracle Project Costing, Oracle Project Costing accepts the reversal, associates it with the original expenditure item, and marks both expenditure items so that they are not eligible for further adjustments in Oracle Project Costing. Two scenarios exist in which Oracle Project Costing cannot automatically create the appropriate adjustment transactions, when you:

• Cancel a historical (prior to Release 12) supplier invoice. • Perform a partial return or partial correction of a receipt.

The program PRC: Interface Supplier Costs interfaces the unmatched reversing expenditure items from Oracle Payables or Oracle Purchasing to Oracle Project Costing. These items do not contain a reference to other expenditure items. You must manually adjust these unmatched reversing expenditure items in Oracle Project Costing. You must also separately adjust any related expenditure items, such as invoice price variance, exchange rate variance, and tax. You can run the Supplier Cost Audit Report to research the unmatched reversing expenditure items. You can also enable the Unmatched Reversing Items that Require Adjustment check box on the Supplier tab of the Find Expenditure Items or Find Project Expenditure Items window to query unmatched reversing expenditure items.





To Process Adjustments to Supplier Costs or Expense Reports in Oracle Project Costing: 1. Perform the adjustment in Oracle Project Costing. 2. Process the adjustment by running either PRC: Distribute Supplier Cost Adjustments,

PRC: Distribute Supplier Cost Adjustments for a Range of Projects, or PRC: Distribute Expense Report Adjustments.

3. Run PRC: Generate Cost Accounting Events. Optionally, you can select Supplier Cost for the Process Category parameter to process only supplier cost and expense report adjustments.

4. Run PRC: Create Accounting to create the accounting for the accounting events in Oracle Subledger Accounting. Run the program in final mode to complete the processing. Optionally, you can select Supplier Cost for the Process Category parameter to process only supplier cost and expense report adjustments. When you run the program in final mode, you can also choose to transfer the final subledger accounting to Oracle General Ledger and to post the journal entries.





To Process Adjustments to Supplier Costs or Expense Reports in Oracle Payables: 1. Perform the adjustment in Oracle Payables. 2. Validate the new invoice distribution lines. 3. Run Create Accounting in Oracle Payables to create the accounting for the invoice in

Oracle Payables. Run the program in final mode to complete the processing. When you run the program in final mode, you can also choose to transfer the final subledger accounting to Oracle General Ledger and to post the journal entries.

4. Interface the adjustment to Oracle Project Costing: - Run PRC: Interface Supplier Costs in Oracle Project Costing to interface the

adjustment to Oracle Project Costing. - Run PRC: Interface Expense Reports from Payables in Oracle Project Costing to

interface the adjustment to Oracle Project Costing. For information about other methods you can use to validate supplier invoices and create accounting in Oracle Payables, see the Oracle Payables User's Guide.



Prioritizing Supplier Costs Adjustments


You can make adjustments to supplier costs in Oracle Project Costing or in the source system (Oracle Payables and Oracle Purchasing). Adjustments that you make in the source system take precedence over adjustments that you make in Oracle Project Costing. The following pages present an example of the accounting.





First, you create a supplier invoice in Oracle Payables. You charge $10 USD to Project A, Task 1. In Oracle Payables, you validate the invoice and the create accounting in final mode in Oracle Subledger Accounting. In Oracle Project Costing, you run the program PRC: Interface Supplier Costs to interface the invoice to Oracle Project Costing.





You transfer the expenditure item in Oracle Project Costing from Project A, Task 1 to Project B, Task 1. When you make the adjustment, Oracle Project Costing, creates a reversing expenditure item for $10 USD for Project A, Task 1 and a new $10 USD expenditure item for Project B, Task 1. You generate cost accounting events for the transfer and create accounting in final mode in Oracle Subledger Accounting.





Oracle Payables has no knowledge of the adjustments that you made and accounted for in Oracle Project Costing. Next, you make an adjustment to the original invoice distribution in Oracle Payables to move the cost to Project C, Task 1. You reverse the original distribution line for $10 USD for Project A, Task 1 and create a new distribution line for $10 USD for Project C, Task 1. In Oracle Payables, you revalidate the invoice and the create accounting for the adjustments in final mode in Oracle Subledger Accounting. The following table shows you the resulting distribution lines in Oracle Payables.





You run the program PRC: Interface Supplier Costs to interface the adjustments to Oracle Project Costing. The program interfaces the reversing expenditure item for $10 for Project A, Task 1 and the new expenditure item for $10 USD for Project C, Task 1 to Oracle Project Costing. When the interface program receives reversals and adjustments from a source system after you have made adjustments in Oracle Project Costing, the program automatically reverses both the last entry recorded in Oracle Project Costing and the reversing entry recorded by the source system. In this example, the program reverses both the new expenditure item from the adjustment you made in Oracle Project Costing to transfer $10 USD to Project B, Task 1, and the expenditure item from reversing invoice distribution in Oracle Payables. This second reversal is necessary because Oracle Project Costing previously reversed the original expenditure item for Project A, Task 1 when you performed the transfer in Oracle Project Costing. You generate cost accounting events for the two reversing expenditure items that the interface program created and create accounting in final mode in Oracle Subledger Accounting.





After you adjust supplier cost or expense report cost expenditure items in Oracle Project Costing, you must process the adjustment to create accounting entries in Oracle Subledger Accounting. The program PRC: Generate Cost Accounting Events sorts transactions to process reversals before the new transactions. For additional information about Oracle Subledger Accounting, see the lesson titled "Accounting for Costs" and the Oracle Subledger Accounting Implementation Guide. If multiple adjustments exist for the same transaction within the same processing batch, then Oracle Project Costing processes them in the order they were made. Oracle Project Costing generates accounting events for only the most recent adjustment if the GL date is the same for all adjustments. If the GL date is not the same for all adjustments, then Oracle Project Costing generates accounting events for all adjustments. If the program rejects one of the adjustments in the sequence, it also rejects all subsequent adjustments. Once you correct the original failure, Oracle Project Costing attempts to generate accounting events for the failed adjustment and all subsequent adjustments. The following pages present an example of the accounting. For additional information, see the Oracle Project Costing User Guide.





First, you create a supplier invoice in Oracle Payables. The Account Generator in Oracle Payables generates the default accounting for the supplier invoice. The default credit account comes from the account that is assigned to the invoice supplier site. After you validate the invoice and the create accounting in final mode, you interface the supplier costs to Oracle Project Costing. The interface program interfaces the default debit account, but not the default credit account. The following table shows the default accounting for the transaction.





In this example, you have set up your own user-defined rules for Oracle Payables in Oracle Subledger Accounting. As a result, Oracle Subledger Accounting overwrites the default accounts from Oracle Payables when you create the subledger accounting in final mode.





You adjust the supplier cost expenditure item in Oracle Project Costing and run the program PRC: Distribute Supplier Cost Adjustments. This program uses AutoAccounting in Oracle Project Costing to determine the default expense account for the new expenditure item. Next, you run the program PRC: Generate Cost Accounting Events to generate accounting events for the adjustments. This program uses the default supplier cost credit account from Oracle Projects implementation options for the operating unit to determine the default liability account for the reversal and the new expenditure item. Note: If your implementation team does not specify a default supplier cost credit account in Oracle Projects implementation options, then your implementation team must define a rule in Oracle Subledger Accounting to determine the account.





Next, you run the program PRC: Create Accounting in final mode to create the subledger accounting for the accounting events. The program copies the expense account for the reversal from the original accounting entry in Oracle Subledger Accounting. No override is allowed for this account. In this example, you have set up your own user-defined rules in Oracle Subledger Accounting. As a result, Oracle Subledger Accounting overwrites the default accounts from Oracle Project Costing when it creates the final accounting for the reversal liability account, and the new transaction expense and liability accounts. For information about setting up rules in Oracle Subledger Accounting, see the Oracle Subledger Accounting Implementation Guide.



Quiz

Answer: a, b, c



Quiz

Answer: b



Agenda



Oracle Purchasing and Oracle Payables Integration Implementation Steps



Implementing Oracle Purchasing and Oracle Payables Integration

Implementing Oracle Purchasing and Oracle Payables Integration

Oracle Purchasing Install and implement Oracle Purchasing to use Oracle Purchasing to enter project-related requisitions, releases, and purchase orders, and then report outstanding committed costs of requisitions and purchase orders on your projects. You can also interface project-related receipt accruals from Oracle Purchasing to Oracle Project Costing as actual supplier costs. Oracle Payables Install and implement Oracle Payables to perform any of the following activities:

• Enter project-related expense reports in Oracle Payables in the Invoice Workbench. To enter project-related expense reports for an employee in the Invoice Workbench, you must first associate a supplier with the employee. Note that the entry of contingent worker expense reports in the Invoice Workbench is not supported.

• Enter project-related expense reports in Oracle Internet Expenses and import them into Oracle Payables.

• Use supplier and invoice information in Oracle Payables to create expenditure items for projects in Oracle Project Costing.



Set Profile Options for Project-Related Documents

Set Profile Options for Project-Related Documents

Set the following profile options for project-related documents: • PA: Allow Adjustments to Receipt Accruals and Exchange Rate Variance - Specify

whether you can adjust receipt, receipt nonrecoverable tax, and exchange rate variance expenditure items in Oracle Project Costing when exchange rate variance exists and you convert journals to another currency.

• PA: Allow Override of PA Distributions in AP/PO - Specify whether Oracle Purchasing and Oracle Payables pass user-entered account segment values to the Account Generator workflow. To enable users to override generated accounts, you must set this profile option to Yes and also set the Replace Existing Value attribute in the Account Generator workflow to False. The default value for the Replace Existing Value is False.

• PA: AP Discounts interface start date (mm/dd/yyyy) - Specify when Oracle Project Costing retrieves and interfaces payment discounts from Oracle Payables. The system assigns a default start date of 01/01/2051. You can enter a different date to override the default system value. Oracle Project Costing allows you to enter either a historical date or future date. If you enter a historical date, then the system will retroactively retrieve discount amounts from the specified date forward the next time you run the PRC:



Interface Supplier Costs grogram. If you specify a future date, the program will begin interfacing discount amounts as of that date.

• PA: Default Expenditure Item Date for Supplier Cost - Specify the source for the expenditure item date. Oracle Project Costing uses this profile option when you run the program PRC: Interface Supplier Costs to determine the expenditure item date for Oracle Purchasing receipts, invoice payments, and discounts. In addition, Oracle Payables uses this profile option during the invoice match process, and when you enter unmatched invoices, to determine the default expenditure item date for supplier invoice distribution lines.

• PA: Default Expenditure Organization in AP/PO - Specify the default expenditure organization for project-related information in Oracle Payables and Oracle Purchasing.

• PA: Expense Report Invoices Per Set - Specify the number of expense report invoices (entered in Oracle Internet Expenses or Oracle Payables) for the program PRC: Interface Expense Reports from Payables to process in each set.



Define the Supplier Invoice Account Generator

Define the Supplier Invoice Account Generator

The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables use the Account Generator to determine the default account code combinations for supplier invoices and expense reports based on the project information entered. You define functions and processes to derive the Accounting Flexfield combinations. You can optionally customize the Account Generator for each set of defined ledgers. For details about each workflow, see the Oracle Projects Implementation Guide.



Defining a Project-Related Purchasing Transactions Account Generator

Defining a Project-Related Purchasing Transactions Account Generator

Oracle Purchasing uses item types to generate account numbers for all requisitions and purchase orders, whether they are project-related or not. Oracle Purchasing provides a set of default account generator processes for the accounts it needs to build. To derive the accounts based on project information, you must modify the default processes to use project information. The Account Generator workflows in Oracle Purchasing generate the following accounts:

• Purchase Order Charge Account • Purchase Order Budget Account • Purchase Order Variance Account • Purchase Order Accrual Account • Requisition Charge Account • Requisition Budget Account • Requisition Variance Account • Requisition Accrual Account



Specify a Default Supplier Cost Credit Account

Specify a Default Supplier Cost Credit Account

Specify a default supplier cost credit account in Oracle Projects implementation options. The program PRC: Generate Cost Accounting Events uses the specified account as the default account for supplier cost adjustments and expense report cost adjustments that you perform in Oracle Project Costing. If you allow adjustments to supplier cost expenditure items in Oracle Project Costing, then you must either specify a default supplier cost credit account in Oracle Project Costing or set up a rule to derive the account in Oracle Subledger Accounting.



Define Project-Related Distribution Sets

Define Project-Related Distribution Sets

In the Distribution Sets window of Oracle Payables, you can define project-related distribution sets. When you assign a project-related distribution set to an invoice you are entering, Oracle Payables automatically creates project-related invoice distributions for the invoice. For more information, see: Distribution Sets, Oracle Payables Implementation Guide.



Define Oracle Payables Descriptive Flexfields and Related Profiles

Define Oracle Payables Descriptive Flexfields and Related Profiles

• PA: Transfer DFF with AP - Specifies whether the program PRC: Interface Supplier Costs and the program PRC: Interface Expense Reports from Payables interface descriptive flexfield segments from Oracle Payables to Oracle Project Costing.

• PA: Transfer DFF with PO - Specifies whether the program PRC: Interface Supplier Costs interfaces descriptive flexfield segments from Oracle Purchasing to Oracle Project costing. This profile option only applies to receipt accruals.



Summary


Integration with Oracle Internet Expenses Chapter 13 - Page 1

Integration with Oracle Internet Expenses Chapter 13



Integration with Oracle Internet Expenses



Objectives



Agenda



Oracle Internet Expenses

Oracle Internet Expenses

With Oracle Internet Expenses, employees and contingent workers can enter and submit expense reports using a standard Web browser or a Web-enabled mobile device. Oracle Workflow automatically routes expense reports for approval and enforces reimbursement policies. Oracle Internet Expenses integrates with Oracle Payables to provide quick processing of expense reports for payment. You can create project-related expense reports using Oracle Internet Expenses. You send expense reports entered in Oracle Internet Expenses to Oracle Payables and then to Oracle Project Costing. Note: You can enter expense reports containing project and task information in Oracle Internet Expenses or Oracle Payables. Additionally, you can import fully-accounted project-related expense reports into Oracle Project Costing from third-party systems using Transaction Import.



Expense Report Flow

Expense Report Flow

Enter and Submit Project-Related Expense Reports You can enter and submit project-related expense reports in Oracle Internet Expenses. Approve and Audit Expense Reports You approve and audit expenses report in Oracle Internet Expenses to enforce policies. Run Expense Report Export After an expense report is approved and audited in Oracle Internet Expenses, you run the program Expense Report Export from an expense report audit responsibility to send this information to the Oracle Payables invoice tables. Oracle Payables identifies invoices created from Oracle Internet Expenses expense reports with a source of Oracle Internet Expenses. Validate and Process Invoices For accrual basis accounting, you must validate the expense report invoice and create subledger accounting in final mode before you can interface expense reports to Oracle Project Costing. For cash basis accounting, you must pay the invoice before you can interface expense reports to Oracle Project Costing. You can interface partially paid expense report invoices.



Expense Report Flow

Expense Report Flow

Interface Expense Reports from Oracle Payables In Oracle Project Costing you run the program PRC: Interface Expense Reports from Payables to interface project-related expense report costs to Oracle Project Costing. This information initially goes to the interface tables. The program continues and automatically calls Transaction Import to import the transactions to the Expenditure Items table with a source of Oracle Payables Expense Reports. You run this program for expense reports that you create in Oracle Internet Expenses (and for expense reports that you enter directly into Oracle Payables). The program generates a report that lists the interfaced and rejected invoice distribution lines, as well as a summary of the total number and cost of the distribution lines. You can use either Oracle Project Costing or Oracle Payables to adjust expense reports that you entered in Oracle Internet Expenses or Oracle Payables. If you make adjustments in Oracle Project Costing, then you run programs in Oracle Project Costing to distribute the expense report adjustments, generate cost accounting events, and create accounting for the adjustments in Oracle Subledger Accounting. If you make adjustments in Oracle Payables, then you revalidate the invoices and create final subledger accounting in Oracle Payables, and run the program PRC: Interface Expense Reports from Payables in Oracle Project Costing.



Deriving Project Data from Expense Reports

Deriving Project Data from Expense Reports

When you create expense reports in Oracle Internet Expenses, you directly enter some of the project-related information. This information includes the project and lowest task that is associated with each receipt line. Oracle Internet Expenses derives other project-related information from other data associated with the expense report. The derived information includes the expenditure type, expenditure organization, expenditure item date, and quantity. Note: The profile option PA: Default Expenditure Item Date for Supplier Cost does not apply to expense reports.



Disconnected Expense Reporting Process

Disconnected Expense Reporting Process

Employees who are traveling or do not have access to the company’s intranet can create expense reports using the disconnected expense reporting process. The disconnected expense reporting process involves entering expenses in a Microsoft Excel spreadsheet on a personal computer or laptop and then importing this spreadsheet into Oracle Internet Expenses. Oracle Internet Expenses provides a Microsoft Excel expense spreadsheet template to create a disconnected expense report. You can configure this spreadsheet template to meet the needs of your enterprise. For additional information regarding the template, see the Oracle Internet Expenses Implementation and Administration Guide.



Adjusting Expense Reports

Adjusting Expense Reports

Alternatively, you can make adjustments in Oracle Payables, create subledger accounting for the adjustments, and interface the adjustments to Oracle Project Costing. You can adjust expense reports that you enter in Oracle Internet Expenses in both Oracle Project Costing and Oracle Payables. When you make adjustments to expense report costs in Oracle Project Costing, you run the following processes to distribute the costs, create cost accounting events for the adjustments, and create accounting for the accounting events in Oracle Subledger Accounting:

• PRC: Distribute Expense Report Adjustments • PRC: Generate Cost Accounting Events • PRC: Create Accounting

When you make adjustments to expense report invoices in Oracle Payables, you revalidate the invoice and create accounting for it in Oracle Payables. You then run the process PRC: Interface Expense Reports from Payables in Oracle Projects to interface the adjustments to Oracle Project Costing.



Adjustments to project-related expense reports follow the same logic as adjustments to project-related supplier costs. For a detailed discussion about supplier cost adjustments, see the lesson titled "Integration with Oracle Purchasing and Oracle Payables."



Quiz

Answer: c



Quiz

Answer: a



Agenda



Integration with Oracle Internet Expenses Implementation Steps



Install and Implement Oracle Internet Expenses

Install and Implement Oracle Internet Expenses

To use integration with Oracle Internet Expenses, you must first implement Oracle Internet Expenses. For details, see the setup steps in the Oracle Internet Expenses Implementation and Administration Guide.



Set Profile Options for Project-Related Expense Report Entry

Set Profile Options for Project-Related Expense Report Entry

• PA: Allow Project-Related Entry in Oracle Internet Expenses - Specify whether you can enter project-related information on expense reports. If you set this option to Yes, then you must set the OIE: Enable Projects profile option to Yes or Required.

• OIE: Enable Projects - Specify whether you can enter project-related information on expense reports in Oracle Internet Expenses. If you set this option to Yes or Required, then you must set PA: Allow Project-Related Entry in Oracle Internet Expenses profile option to Yes. Select one the following values:

- Yes - Enables the entry of project information. - No - Disables the entry of project information. - Required - Requires the entry of project information.



Set Profile Options for Project-Related Expense Report Approval

Set Profile Options for Project-Related Expense Report Approval

• PA: AutoApprove Expense Reports - Specify whether to automatically approve project-related expense reports submitted in Oracle Internet Expenses. If you set the profile option PA: AutoApprove Expense Reports to Yes, then Oracle Internet Expenses does not use the approver specified on the expense report, even if you set the profile option OIE: Approver Required is set to Yes or Yes with Default. Instead, Oracle Internet Expenses approves the expense report without management involvement.

• OIE: Enable Approver - Specify whether to enable the Approver field in Oracle Internet Expenses. When you set this profile option to Yes, the Approver field is available for you to specify a different employee to approve your expense report. When this profile option is set to No, the Approver field is hidden.

• OIE: Approver Required - Specify whether you must designate an approver for your expense reports. Select one the following values:

- Yes - You must always designate an approver. - Yes with Default - You must always designate an approver and an employee's

supervisor, as defined in Oracle HRMS, is the default value in the Approver field. - No - You are not required to designate an approver.



Note: If you set the OIE: Approver Required profile option to Yes or Yes with Default, do not set the OIE: Enable Approver profile option to No. If you do, the Approver field does not appear on the General Information page, but users receive a message that the field is required.



Define the Project Expense Report Account Generator

Define the Project Expense Report Account Generator

The Project Expense Report Account Generator is an Oracle Project Costing workflow process that determines the default account for each project-related expense line created in Oracle Internet Expenses. When you submit a projects-related expense report, the Expense Report workflow process uses the Project Expense Report Account Generator to assign the proper accounting to each project-related expense line on the expense report. The default logic of this process returns the CCID (Code Combination ID) of the employee who incurred the project-related expenses. You can define the Project Expense Report Account Generator to meet your requirements. Note: When you adjust expense report expenditure items in Oracle Project Costing, Oracle Project Costing uses AutoAccounting (not the employee's default expense account) to determine the default expense report cost account. See the lesson titled "Accounting for Costs." For additional discussion regarding the account generator and Oracle Project Costing, see the Oracle Projects Implementation Guide.



Define a Project-Related Expense Report Template

Define a Project-Related Expense Report Template

In the Expense Report Templates window in Oracle Payables, define project-related expense report templates. You must define at least one project-related template to submit project-related expense reports using Oracle Internet Expenses. To define an expense report template for project-related expense reports:

• Enable the template for Oracle Internet Expenses. • Assign an Oracle Project Costing expenditure type to each expense item.

- Note: If you want the expense types that appear in the Expense Type list of values in Oracle Internet Expenses to match the names of the expenditure types in Oracle Project Costing, then you can define an expense report template where you name each expense item with the same name as its associated expenditure type.

Instruct users who enter project-related expense reports in Oracle Internet Expenses to use this template. For additional information about defining expense report templates, see the Oracle Payables Implementation Guide.



Quiz

Answer: b



Quiz

Answer: a, c



Summary


Integration with Oracle Time & Labor Chapter 14 - Page 1

Integration with Oracle Time & Labor Chapter 14



Integration with Oracle Time & Labor



Objectives



Agenda



Oracle Time & Labor Overview

Oracle Time & Labor Overview

Oracle Time & Labor integrates with Oracle Project Costing to enable employees and contingent workers to enter and submit project-related timecards. Employees and contingent workers enter their own time, which you can subject to an approval process according to your business rules. You can transfer approved timecards to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you import the timecards into Oracle Project Costing, you cost the timecards and derive the default accounting using AutoAccounting. During cost processing, the raw cost and any additional burden cost is calculated. Finally, you generate cost accounting events and create accounting for the timecards in Oracle Subledger Accounting. Oracle Time & Labor integration includes:

• Entry of project information on timecards • Validation of time against chargeable projects, tasks, and expenditure types and against

transaction controls that you may have implemented • Transfer of project-related timecards to both Oracle Project Costing and Oracle Payroll • Automatic population of timecards with projects and expenditure types from your

resource assignments when you use Oracle Project Resource Management



Disconnected Time Entry

Disconnected Time Entry

You can record your time when away from the office using a spreadsheet and then upload the spreadsheet to Oracle Time & Labor for review and submission. Once you save the template as a spreadsheet, you can enter your time for the week. You can add or update existing line items as desired. You can scroll down within the saved file to view the valid list of projects and tasks. This feature allows you to select and enter the correct project and task information on the timecard. When you have entered all the time data, save your work and upload to Oracle Time & Labor.



Collecting and Processing Project-Related Timecards

Collecting and Processing Project-Related Timecards

The following steps outline the procedure for collecting project-related timecards in Oracle Time & Labor and processing project-related timecards in Oracle Project Costing:

1. Enter and submit timecards - Employees and contingent workers enter and submit project-related timecards. People assigned to projects managed through Oracle Project Resource Management can use the Autopopulate template to automatically record their projects, tasks, and expenditure types.

2. Approve timecards - During implementation, you define approval and routing rules using Oracle Workflow. You can set up Oracle Time & Labor to automatically approve timecards, or require management review and approval.

3. Transfer time to Oracle Project Costing and import transactions - Oracle Human Resources, Oracle Payroll, and Oracle Project Costing can retrieve timecards from Oracle Time & Labor. In Oracle Time & Labor, you assign an application set and retrieval rule group to employees and contingent workers. The application set determines which applications can retrieve the timecards for an employee or contingent worker and the retrieval rule group determines the retrieval rules for each application. The retrieval rules specify which approval processes must be complete for a timecard before another



application can retrieve the data. For information about defining application sets, retrieval rule groups, and retrieval rules, see the Oracle Time & Labor Implementation and User Guide.

When the timecards are ready for retrieval, you run the program PRC: Transaction Import to transfer timecards from Oracle Time & Labor to Oracle Project Costing. This program transfers timecards that belong to employees and contingent workers with Oracle Project Costing in their application set and retrieval rule group, and that meet the retrieval rules for Oracle Project Costing. When you submit PRC: Transaction Import, select Oracle Time and Labor for the Transaction Source parameter and leave the Batch Name parameter blank.

4. Distribute labor costs - In Oracle Project Costing, run the program PRC: Distribute Labor Costs or the program PRC: Distribute Labor Costs for a Range of Projects. The program computes the labor costs for timecard hours and determines the default GL cost account.

5. Generate cost accounting events - Run the program PRC: Generate Cost Accounting Events for the Labor Costs process category to derive a default cost clearing account using AutoAccounting and to create accounting events in Oracle Subledger Accounting.

6. Create accounting and transfer to GL - Run the program PRC: Create Accounting for the Labor Costs process category to create accounting for the timecards in Oracle Subledger Accounting. When you run the process in final mode, you can choose to transfer the final journal entries to Oracle General Ledger and to post the journal entries in Oracle General Ledger.

For additional discussion regarding costing processes, see the lesson titled “Performing Cost Processing.”



Editing Timecards in Oracle Time & Labor

Editing Timecards in Oracle Time & Labor

A retro adjustment is a change made to a timecard in Oracle Time & Labor after you have transferred it to other applications. The preference Timecard Status Allowing Edits in Oracle Time & Labor controls whether you can edit existing timecards. The preference specifies whether you can only edit new, working, and rejected timecards, or can also edit submitted, approved, or even processed timecards in Oracle Time & Labor. The preference also specifies the age of the oldest timecard that you can edit, and how far in advance you can enter timecards. Note: If you made any changes to the original timecard data in Oracle Project Costing, then you cannot edit the timecard in Oracle Time & Labor. You receive an error when you try to submit the adjusted timecard.



Contingent Worker Timecards with PO Integration

Contingent Worker Timecards with PO Integration

Contingent workers can enter project-related timecards in Oracle Time & Labor with Oracle Purchasing integration:

• Each timecard line is related to a project and purchase order line. • The contingent worker must enter a timecard line for each type of work performed (for

example, regular and overtime). • An amount check is performed against the purchase order during timecard approval. • You interface approved timecards to Oracle Purchasing and Oracle Project Costing. • Oracle Project Costing uses the cost rates stored on the purchase order to calculate

contingent worker labor costs. • You interface additional cost, such as nonrecoverable tax or invoice price variances, to

Oracle Project Costing from the supplier invoice in Oracle Payables. • You can bill contingent worker costs as labor.

To use this integration, you must enable the Import Contingent Worker Timecards with Purchase Order Integration implementation option. You can optionally set up AutoAccounting



function transactions to determine default credit and debit accounts for contingent worker labor costs that are different from the default accounts for employee labor costs. Note: When contingent workers are allowed to enter timecards that are not related to a purchase order, you must ensure that the purchase order is not related to a project. Otherwise, the cost for the contingent work will be recorded in Oracle Project Costing twice, once as labor and once as supplier cost. Entering Contingent Worker Timecards with Oracle Purchasing Integration

1. Enter a project-related purchase order for the contingent worker labor in Oracle Purchasing. Associate the purchase order and purchase order line to the contingent worker assignment in Oracle HRMS.

2. Contingent worker enters project-related timecards in Oracle Time & Labor and assigns a purchase order and purchase order line to each timecard line.

3. Contingent worker submits timecard for approval. An amount check takes place against the purchase order during approval processing.

4. Manager approves timecard. 5. Process contingent worker timecards in Oracle Project Costing:

a. Run PRC: Transaction Import for the transaction source Oracle Time and Labor. b. Run PRC: Distribute Labor Costs. The program retrieves cost rates from purchase

order. c. Run PRC: Generate Cost Accounting Events (for the process category Labor Cost). d. Run PRC: Create Accounting (for the process category Labor Cost).

6. Process contingent worker timecards in Oracle Purchasing and Oracle Payables: a. Run the program Retrieve Time from OTL in Oracle Purchasing to automatically

generate purchase order receipts from approved timecards. b. Match supplier invoice to the receipt to reduce outstanding balances. c. Process and pay supplier invoice in Oracle Payables. d. Run PRC: Interface Supplier Costs in Oracle Project Costing to interface any

additional costs, such as nonrecoverable tax or invoice price variances. For information about uploading contingent worker timecards using Microsoft Excel, see the lesson titled "Entering Expenditures."



Quiz

Answer: a



Quiz

Answer: a, c, d



Agenda



Integration with Oracle Time & Labor Implementation Steps



Install and Implement Oracle Time & Labor

Install and Implement Oracle Time & Labor

Some implementation considerations to review for project-related timecards: • Timecard layouts - Using the Timecard Layout preference, assign timecard layouts to

people who will submit timecards. The layout determines the fields that they can enter, how the fields are arranged on the page, and the instruction text that they see. Oracle Time & Labor provides a predefined layout for project-related timecards.

• Timecard templates - A template stores timecard data for reuse. Oracle Time & Labor predefines a dynamic template named Oracle Project Resource Management Assignments. This template generates time and labor entries from the project, type, and hours information held in Oracle Project Resource Management for the person’s assignments. Optionally, you can enable users to create their own private templates.

• Override approvers - The predefined Oracle Project Costing timecard layout has an Override Approver field. You can restrict the availability and use of this field. You can also define and apply a custom Override Approval Style segment and not use the predefined Oracle Project Costing Override Approver.

For details, see the Oracle Time & Labor Implementation and User Guide.



Set Profile Options for Project-Related Timecards

Set Profile Options for Project-Related Timecards

Set the following profile options related to project-related timecards in Oracle Time & Labor: • PA: Allow Time Entry of Negative Hours - Determines whether you can enter negative

hours on timecards in Oracle Time & Labor. • PA: AutoApprove Timesheets - Indicates whether to automatically approve timecards

submitted in Oracle Time & Labor. If you set this profile option to yes, then you do not need to route or review your timecards.

• PA: Enable Business Messages on Time Entry - Indicates whether Oracle Time & Labor displays a business message. If you set this profile option to Yes, then Oracle Time & Labor calls the Business Message Display client extension. For information about the Business Message Display client extension, see Oracle Time & Labor Implementation and User Guide.

• PA: Override Approver - Indicates whether you can enter an overriding approver for timecards in Oracle Time & Labor.



Implement Client Extensions to Route and Approve Timecards

Implement Client Extensions to Route and Approve Timecards

You can modify the AutoApproval client extensions to route and approve timecards according to your requirements and to enforce business rules. The AutoApproval Extensions contain procedures to define conditions under which timecards are approved automatically.

• AutoApproval Profile Options Extension - This procedure performs custom validation for all the expenditure items in an expenditure.

• Expenditure Summary AutoApproval Extension - This procedure contains default logic to read the values of the PA: AutoApprove Timesheets profile option.

• Timecard AutoApproval Extension - Use this procedure to incorporate additional approval logic for timecards.

• AutoApproval Routing Extension - Use this procedure to define rules for routing timecards for approval.

• Timecard Entry AutoApproval Extension - Use this procedure to define validations during entry and approval of timecards in Oracle Time & Labor.

For information, see: Oracle Projects APIs, Client Extensions, and Open Interfaces Reference and Oracle Time & Labor Implementation and User Guide.



Quiz

Answer: a



Summary


Allocations and AutoAllocations Chapter 15 - Page 1

Allocations and AutoAllocations Chapter 15



Allocations and AutoAllocations



Objectives



Agenda



Overview of Allocations

Overview of Allocations

The allocations feature can distribute amounts between and within projects and tasks, or to projects in other organizational units. For example, you can distribute amounts such as salaries, administrative overhead, and equipment charges across several projects and tasks. Your allocations can be as simple or elaborate as you like. You identify the amounts to allocate (source) and then define the targets, the projects and tasks to which you want to allocate the source amounts. Optionally, you can offset the allocations with reversing transactions. Oracle Project Costing gathers source amounts into a source pool, and then allocates to the targets using the basis method that you specify in the allocation rule. When you allocate amounts, you create expenditure items whose amounts are derived from one or more sources:

• Existing summarized expenditure items in Oracle Project Costing • A fixed amount • Amounts in an Oracle General Ledger account balance



Allocation Terminology

Allocation Terminology

• Allocation - An allocation distributes existing amounts between and within projects and tasks.

• Allocation Rule - A set of attributes that describes how to allocate amounts in a source pool to specified target projects and tasks.

• Autoallocation Set - A group of allocation rules that you can run in a sequence that you specify (step-down allocations) or at the same time (parallel allocations).

• Basis Method - How you use an allocation rule to allocate the amounts from a source pool to target projects. The basis methods include options to spread the amounts evenly, allocate by percentage, or prorate amounts based on criteria you specify.

• Full Allocation - An allocation method that distributes the total amounts in the specified source pool. Use a full allocation to process an allocation rule only once in a run period.

• GL Allocation Batch - Allocation batches created in Oracle General Ledger. For example, GL allocation batches include Mass Allocation, Recurring Journals, and Mass Budget.

• Incremental Allocation - An allocation method that creates expenditure items based on the difference between the transactions processed from one allocation to the next. This



method is generally suitable if you want to use an allocation rule in allocation runs several times in a given run period.

• Offsets - Reversing transactions that you can use to balance allocation transactions with the source or other project.

• Source Pool - A combination of all allocation rule defined source amounts. These costs can be comprised of summarized projects costs, posted Oracle General Ledger balances, or fixed amounts.

• Target - The projects and tasks that receive allocation amounts. Allocation rules specify the targets.



Difference between Allocation and Burdening

Difference between Allocation and Burdening

Allocation uses existing amounts to generate expenditure items, which you can then assign to specified projects. Burdening uses a set percentage to increase the total cost amount of expenditure items. This set percentage is an estimate of the overhead. Whether your company uses allocations, burdening, or both in a particular situation depends on how your company works and how you have implemented Oracle Project Costing.



Allocation Rules Implementation Steps

Allocation Rules Implementation Steps

Steps to define an allocation rule: 1. Name the allocation rule and define the basic allocation rule information. 2. Define the sources. 3. Define the targets. 4. Define the offset. (optional) 5. If the basis method is Prorate, then specify how to prorate the amounts.



Allocation Rules

Allocation Rules

Allocation rules define how Oracle Project Costing generates allocation transactions: • The source of the amounts you are allocating. • The targets - the projects and tasks to which to allocate amounts. • How much of the source pool you want to allocate, and if you want to include a fixed

amount, GL balance, or client extension (or any combination of these). • The time period during which the rule is valid.

You can create as many rules as needed, and use them in as many allocation runs as needed. You can leave the original expenditure amounts in the source project, or offset the amounts with reversing transactions. In most cases, the reversing transactions decrease the project balance by the amount of the allocation. Each allocation rule belongs to an operating unit and cannot be shared with other operating units. Allocation rule source projects must be from the same operating unit. When cross-charge is enabled, depending on the Targets Selection, you can allocate to target projects that are in different operating units, legal entities, or business groups from the source project operating unit. Offset projects must always be in the same operating unit as source projects.



Basis Method

Basis Method

The basis method defines how the rule divides amounts in the source pool among the targets. • Spread Evenly - This method is the most simple and direct. The rule divides the source

pool amount equally among all the chargeable target tasks included in the rule. • Target % and Spread Evenly - Specify the percentage of the source pool to allocate to

each target line. The rule calculates the amount to allocate to the line, and then spreads the results evenly among the tasks.

• Prorate and Target % and Prorate - These two proration basis methods provide precise control over how the rule distributes the source pool. The rule uses the attributes set in the Basis window to derive the rate at which the source pool amount is apportioned among the target projects and tasks. For the Prorate basis method, the rule uses the basis attributes to apportion the source amount among all the tasks defined by the rule. For the Target % and Prorate method, the rule first uses the target percentage to calculate the amount to allocate to the line, and then goes on to apportion the results among all the tasks.

• Use Client Extension Basis - Another way to define percentages and a basis is to use the Allocation Basis extension. If you use this extension, then you cannot use the Basis window.



Basis Method - Spread Evenly

Basis Method - Spread Evenly

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the spread evenly basis method, the allocation program divides the total amount of the source pool evenly among all chargeable tasks.



Basis Method - Target Percent and Spread Evenly

Basis Method - Target Percent and Spread Evenly

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the target percent and spread evenly basis method, the allocation program first multiplies the source pool amount by the target line percentage. Within each target line, the allocation program then divides the source pool amount evenly among the chargeable tasks.



Basis Method - Prorate

Basis Method - Prorate

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the prorate basis method, the allocation program prorates the costs based on the total labor hours for each chargeable target task. For example, because project 1, task A has 10% of the labor hours (40 hours out of 400 hours), it receives 10% of the source pool allocation ($100 out of $1000). Note that while this example uses labor hours, you can use other options for the proration basis.



Basis Method - Target Percentage and Prorate

Basis Method - Target Percentage and Prorate

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the target percentage and prorate basis method, the allocation program first multiplies the source pool amount by the target line percentage that you assign to each project. Within each target line, the allocation program then prorates the source pool amount among the chargeable tasks based on the total labor hours for each chargeable target task. Note that while this example uses labor hours, you can use other options for the proration basis.



Allocation Rule Definition

Allocation Rule Definition

1. Select the operating unit that owns the allocation rule. 2. Enter a unique rule name and optional description, and specify the effective dates. 3. Select a basis method. 4. For Allocation Method, select Full or Incremental:

- To use the rule only once within the same GL or PA run period, select Full. - Full allocations distribute all the amounts in the specified projects in the

specified amount class. - If you generate allocation transactions using a full allocation rule more than

once in a run period, then you will create duplicate transactions in your target projects. If this happens, then you can reverse the duplicates.

- To use the rule several times within the same GL or PA run period, select Incremental.

- Incremental allocations create expenditure items based on the difference between the transactions processed in the previous and current run.

5. For Allocation Period Type, select GL or PA.



- This field specifies if you want to identify amounts based on the Oracle General Ledger (GL) fiscal calendar or the Oracle Projects (PA) calendar.

6. Specify the attributes that you want to associate with this rule: - Target Selection

- Select Operating Unit, Legal Entity, Business Group, or All. The last three options require cross-charge setup.

- The option you select determines the available project when you select targets on the Targets window.

- Auto Release - Enable this option to release the allocation transactions automatically. If this

option is not enabled, then you must release the transactions in a separate step. - Allow Duplicate Targets (Available only if the rule uses the full allocation method.)

- Enable this option to be able to allocate an amount to a chargeable task two or more times.

- If you do not allow duplicates, then the rule creates one transaction per target project and task, even if an allocation run returns a particular target project and task several times.

7. Select the Allocation Transaction Attributes - Expenditure Organization - Expenditure Type Class - Expenditure Type



Source Definition

Source Definition

The rule accumulates the amounts for the source pool during a specific period of time. The end date of that time period is based on the amount class. The amount class is the period or periods during which the amounts are accumulated. The allocation period type and the amount class determine the start date. You must define at least one source. All source projects and tasks must be open and from the same operating unit. The exception report for the allocation run lists any duplicate projects. If you are using projects as sources, then the results can change each time you run the allocation if project statuses change. To define sources:

1. In the Allocation Pool % field, enter a percentage to specify how much of the source pool to allocate. The default value is 100%.

2. (Optional) In the Fixed Source Amount field, enter an amount to include in the source pool.

3. For Amount Class, select from the list of values. Depending on the allocation period type you selected in the Allocation Rule window, PA or GL precedes the field name.



4. To use projects as sources, go to Step 5. To use only GL accounts as sources, skip to Step 7.

5. For Amount Type, select from the list of values. 6. Specify the projects whose amounts you want to include in the allocation pool.

- Client extension - To use projects designated in the Allocation Source client extension, enable the

use Client Extension Sources check box. - Designate one or more projects

- For Line Num, enter a number greater than 0. You can enter project information in the following fields: Project Org, Project Type, Class Category, Class Code, Project, and Task. To exclude a line, select the Exclude check box on the appropriate line. If you do not enter a task, then the rule uses the amounts for all the tasks on the source line. You can add columns (Project Name, Service Type, Task Name, and Task Org) to the Sources window.

- Limit the resources that are part of the designated projects (optional) - If you do not limit the resources, the rule uses all the resource types in the

specified project in the source pool amount. Select the Resources button. In the Resources window, enter a name for the resource list. In the Resource field, you can enter the resource or resource group and the percent you want to include. To exclude a specific resource, select Exclude on the appropriate line.

- If you exclude a resource, then Oracle Project Costing excludes the entire amount for that resource regardless of the specified percentage.

7. (Optional) One or more GL accounts whose amounts you want to include in the allocation pool in the GL Sources region:

- For Line Num, enter an integer greater than 0. Then select from the list of values for Account and Description.

- You cannot select or enter GL summary accounts (also known as accounts that contain a parent segment value).

- In the % field, enter the percentage of the account balance that you want to include. - To subtract the amount in the GL summary account from the source amount, select

Subtract.



Target Definition

Target Definition

Targets are the projects and tasks to which the allocation distributes amounts. You specify the projects and tasks either in the Target window or with the Allocation Target client extension. You must define at least one target. Target projects must be open and target tasks must be chargeable. How the Target Interacts with the Basis The rule charges allocation transactions to the target projects and tasks according to the basis method. The rule first allocates the specified percentage of the source pool to each target line, and then uses the information in the Basis window to prorate the allocated amount across the tasks on each line. Duplicate Target Projects You can include the same project on multiple lines in the Target window. For example, you can enter Project Y in the Project field on one line, and then specify a project organization that includes Project Y on a different line. If you include the same project on multiple lines, then the Allow Duplicate Targets option in the Allocation Rule window affects the way the rule behaves:



• If you allow duplicate targets, then the rule allocates amounts to the project as many times as it appears in the transactions the PRC: Generate Allocations Transactions program generates.

• If you do not allow duplicate targets, then the rule allocates amounts only to the project with the lowest line number.

To define targets: To use projects designated in the Allocation Target client extension, enable the Use Client Extension Targets option. Specify one or more open projects to which to distribute the amounts in the allocation pool:

• Enter a number in the Line Num field, and then select from the list of values to enter project information in the Project Org, Project Type, Class Category, Class Code, Project, and Task fields.

• If you do not enter a task, then the rule distributes the allocation to all the chargeable tasks in the proportion specified by the basis method.

• You can add columns (Billable/Capitalizable, Service Type, Task Name, and Task Org) to the Targets window.

• (Optional) If you selected one of the target percentage basis methods in the Allocation Rule window (Target % and Spread Evenly or Target % and Prorate), then enter a value in the % field. The value is the percentage of the source pool to allocate to the line. The total percentage for included targets must equal 100.

• To exclude a project from the target definition, select Exclude on the appropriate line. To exclude a specific task within a project, enter the project on two lines: on one line, leave the Task field blank; on the other line, enter the task that you want to exclude and select Exclude.



Offset Definition

Offset Definition

Offsets are reversing transactions that you can use to balance the allocation transactions with the source or other project. All projects and tasks to which you apply offsets must be open and chargeable. Do not specify an offset to the source project if you do not want to change the total amount in the source project. All offset projects and tasks must be open and chargeable, and in the same operating unit as the source projects. The rule creates the offset transactions for the offset project and task when you run PRC: Generate Allocations Transactions.

To define the offset: 1. Select an offset method. If the source is an Oracle General Ledger account and you want to create offsetting

transactions, then select the offset method Use Client Extension for Project and Task or Specific Project and Task.

- None - The rule does not create any offset transactions. - Source Project and Task - The rule creates reversing transactions for the source

projects and tasks.



- Source Project, Use Client Extension for Task - The rule creates reversing transactions in specific tasks in the source project. Specify the tasks in the Allocation Offset Tasks client extension.

- Use Client Extension for Project and Task - The rule creates reversing transactions in projects and tasks as specified in the Allocation Offset Projects and Tasks client extension.

- Specific Project and Task - The rule creates reversing transactions in one project and one of its tasks, as specified in the Project and Task fields.

2. For the fields in the Offset Transaction Attributes region, select from the list of values: - Expenditure Organization - Expenditure Type Class - Expenditure Type



Prorated Basis Method Definition

Prorated Basis Method Definition

1. In the Allocation Rule window, select the Basis button. 2. Enter the Basis information:

- Basis Category - Select Budget (to use the estimated amounts from the project budget) or Actual (to use the actual amounts in the project).

- Relative Period - Enter a number to denote the current (0) or earlier (less than 0) period. For example, to use the period preceding the current one, enter -1.

- Budget Type (Available only if the basis category is Budget) - Select from the list of budget types. The list of values displays only cost (non-revenue) budget types. The allocation program uses the latest budget baseline to compute the basis.

3. For Resource List, choose from the list of values those resources to include in the basis computation.

4. In the Resources area, choose resources and resource groups from the list of values. To exclude a specific resource or resource group, select Exclude on the appropriate line.

- If you include a resource group, then you cannot also include a resource that is a member of that group. However, you can exclude the resource.



Copy Allocation Rules

Copy Allocation Rules

Copy a rule to use an existing rule as a template. You can copy rules only within the same operating unit. For example, the definition of a set of rent allocation rules can be basically the same; with only a few differences from rule to rule (such as identifying a different set of target projects). Create the first rule and then copy it to create other similar rules. To copy an allocation rule:

1. In the Allocation Rule window, find an existing rule that you want to use as a template. 2. Select the Copy To button. 3. Enter a new name and optional description, and then choose OK.

- You see the new rule in the Allocation Rule window. 4. Change the attributes of the rule as needed.



Deleting or Modifying Allocation Rules

Deleting or Modifying Allocation Rules

If an allocation run exists for a rule, you cannot: • Delete the rule. • Modify the allocation method. • Modify the basis method, allocation period type, source amount class, source amount type,

or offset method for an incremental rule. • Delete or modify source lines.

Error messages notify you of other restrictions as you work with an allocation rule.



Client Extensions for Allocations

Client Extensions for Allocations

• Allocation Source Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Sources check box in the Source window. Use the Allocation Source extension to include or exclude projects or tasks temporarily when creating a source pool.

• Allocation Target Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Targets check box in the Targets window. Use the Allocation Targets extension to include or exclude projects or tasks temporarily when allocating amounts to target projects and tasks.

• Allocation Offset Tasks Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension for Task check box in the Offsets window. Use the Allocation Offset Tasks extension to offset some source tasks but not others.

• Allocation Offset Projects and Tasks Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension for Project and Task check box in the Offsets window. Use this extension to specify more or different projects and tasks than are defined in the Sources window.



• Allocation Basis Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Basis check box in the Allocation Rule window. During the allocation run, the program calls the procedure to get the basis amount for each target project and task. Use the Allocation Basis extension to use amounts other than target costs to calculate the basis rate for target projects and tasks.

• Allocation Descriptive Flexfields Extension - Use this extension to define descriptive flexfields to use when you when define allocation rules. The allocation program can use the descriptive flexfields when it creates allocation and offset transactions.

• Allocation Dependencies Extension - Use this extension to verify compliance with the business rules of your choice. For example, you can verify that certain projects or tasks are never included in a source pool, or that the previous allocation run used a particular rule.



Quiz

Answer: a



Quiz

Answer: b



Quiz

Answer: d



Quiz

Answer: a



Agenda



Allocating Costs

Allocating Costs

After you define a rule for allocating costs, you can use the rule in an allocation run. Processing the rule generates allocation transactions and (if specified) offset transactions in a draft. The draft is a trial allocation run that you can review and evaluate. If the draft allocation fails or does not produce the results you expect, then you can delete the draft, change the rule parameters, and then create another draft. You can create, review, and delete draft runs until you are satisfied with the results. However, you cannot create a draft if another draft exists for the same rule. When you are satisfied with the draft run and its status is Draft Success, you can release the allocation run. Although you can run the program to generate allocations at any time, it is a good practice to interface supplier costs and expense reports, run all costing programs, and run summarization programs to prepare for the allocation to ensure that the allocation run includes all relevant amounts.



Creating Allocation Runs

Creating Allocation Runs

When you submit the concurrent program PRC: Generate Allocation Transactions, specify the following parameters:

• Rule Name - Enter the name of the allocation rule to use in this allocation run. • Period Name - Select the period from which the program will accumulate the source

amount. • Expenditure Item Date - Enter the expenditure item date for the generated allocation

transactions. The default value is the system date.



Allocation Run Statuses

Allocation Run Statuses

• In Process - The program is not yet complete. • Draft Success - The program created draft transactions that are ready for release. Oracle

Project Costing does not create the transactions for the target and (if specified) offset projects and tasks until you release the draft.

• Draft Failure - The program encountered issues and could not create draft transactions. • Release Success - Oracle Project Costing created the transactions for the target and offset

projects and tasks. • Release Failure - Oracle Project Costing did not create the transactions, perhaps because

projects or tasks included in the draft run were deleted or closed after the program created the draft. Delete the run, fix the problem, and then run the generate program again.



Deleting Allocation Runs

Deleting Allocation Runs

During review, if you determine that the allocation is not correct, then you can delete the draft allocation run for the allocation rule that you specify. To delete an allocation run:

1. Navigate to the Allocations Runs window. 2. Select the allocation run to delete. The status of the run must be Draft Success, Draft

Failure, or Release Failure. 3. Select the Delete button.

- Initiates the program PRC: Delete Allocations Transactions.



Releasing Allocation Runs

Releasing Allocation Runs

To allocate the transactions to the targets, you release the run. You can release a draft run after the effective dates of the rule. To release an allocation run:

1. Navigate to the Allocations Runs window. 2. Select the allocation run to release. The status of the run must be Draft Success. 3. Select the Release button.

- Initiates the program PRC: Release Allocations Transactions. - After you release the run, the status changes to Release Success or Release Failure. - You can also use the Submit Request window to submit PRC: Release Allocations

Transactions to release the run.



Reversing Allocation Runs

Reversing Allocation Runs

You can reverse any successful allocation run (the status is Release Success). The reversal creates reversing expenditure items. If you transferred or split expenditure items before reversal, then Oracle Project Costing reverses the transferred or split items. Oracle Project Costing creates reversal entries in the allocation history, so that generate allocations program considers the reversed amounts for the next incremental allocation. Reversing the allocation run reverses all of the transactions and you cannot reverse individual transactions. You cannot reverse an allocation run if any of the target projects in the run cannot accept new transactions. To reverse an allocation run:

1. Navigate to the Review Allocation Runs window. 2. Select an allocation run that has a status of Release Success. 3. Select the Reverse button. 4. In the Reverse an Allocation Run window, enter the parameters. 5. Select the OK button.



Quiz

Answer: a, b, d



Agenda



Overview of AutoAllocations


AutoAllocations provide the ability to generate allocations more efficiently. You can group processes and run them in a specified sequence or at the same time. AutoAllocations is an Oracle General Ledger and Oracle Project Costing feature. In Oracle General Ledger, the allocation definition is called a batch. In Oracle Project Costing, the allocation definition is called a rule. From an Oracle Project Costing responsibility, you can create AutoAllocation sets that contain project allocation rules. If Oracle Project Costing is integrated with Oracle General Ledger, then you can also include GL allocation batches. You can also view AutoAllocation sets that you create using an Oracle Project Costing responsibility. From an Oracle General Ledger responsibility, you can create AutoAllocation sets that contain only Oracle General Ledger batches. You can also view AutoAllocation sets that you create using an Oracle General Ledger responsibility.





Each rule or batch has a different effect when you run the autoallocation set, depending on the set type:

• Step-down allocations - Use the results of each step in subsequent steps of the AutoAllocation set. Oracle Workflow controls the flow of the AutoAllocations set.

• Parallel allocations - Carry out the specified rules all at once.



AutoAllocation Rules Implementation Steps



AutoAllocation Set Definition

AutoAllocation Set Definition

1. Using an Oracle Project Costing responsibility, navigate to the AutoAllocation Workbench window.

2. For Allocation Set, enter a unique name for the set. 3. Select the operating unit that owns the set. 4. (Optional) For Description, enter a set description. 5. For Allocation Set Type, select Step-Down or Parallel.

- After you save the allocation set, you cannot change the allocation set type. - If you create a step-down allocation that contains an Oracle Project Costing allocation

rule, then you cannot roll back any allocations transactions that you generate. You can, however, choose View Status to see which steps are complete and which failed.

6. Complete the remaining fields: - Default Contact (Available only for step-down AutoAllocations) - Select the user ID

for the person that you want to approve or notified about the status of the process. - Step - Enter a step number. The program carries out the steps in numerical order,

although you can enter the steps in any order.



- Type - Select the type of allocation to include in the set. - Batch/Rule - Select a GL allocation batch (if Oracle General Ledger is installed and

integrated) or a project allocation rule from the list of values. Items available in the list of values depend on the selection in the Type field.

- Contact (Available only for step–down AutoAllocations) - Select the user ID (or accept the default) for the person to notified about the status of the process for this rule.

- Allocation Method (For GL batches) - Select Incremental or Full. - Allocation Method (Displayed only for project allocation rules) - The system

displays the allocation method of the selected rule. 7. You can view information about the set or the steps within the set:

- The status of a submitted AutoAllocation set. - Choose the View Status button.

- Information about the allocations rule or batch for a step. - Select a step, and then choose the button in the lower-left corner of the

AutoAllocations Workbench window. The window that you see depends on the type of batch or rule that you select. If you select a project allocation rule, then you see the Allocations Rules window. If you select a batch, then you see the appropriate Oracle General Ledger window.



Implementing Workflow and Client Extensions for AutoAllocations

Implementing Workflow and Client Extensions for AutoAllocations

You can implement Workflow and client extensions to expand the capabilities of AutoAllocations. Implementing Workflow for AutoAllocations The PA Step Down Allocations workflow (item type) automates the execution of step-down autoallocation sets. For more information, see the Oracle Projects Implementation Guide. Implementing the Allocation Extension You can use the allocation extension to expand the capabilities of the AutoAllocations feature. For more information, see the Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.



Quiz

Answer: a



Agenda



Submitting an AutoAllocation Set

Submitting an AutoAllocation Set

1. Using an Oracle Project Costing responsibility, navigate to the AutoAllocation Workbench.

2. In the Allocation Set field, find the set to submit. 3. Choose Submit or Schedule. 4. Enter information for this AutoAllocation set. The fields displayed vary depending on

whether the allocation set contains GL batches, project allocation rules, or both. - GL batches: Name, Period, and Budget (if your allocation uses budget amounts)

Note: If your set contains Oracle General Ledger batches and your Oracle General Ledger uses an average balance ledger, then enter a Journal Effective Date, Calculation Effective Date, and Usage (Standard Balances or Average Balances).

- Project allocation rules: GL Period or PA Period and Expenditure Item Date 5. Select the Submit button or the Schedule button.



Viewing the Status of AutoAllocation Sets

Viewing the Status of AutoAllocation Sets

1. Using an Oracle Project Costing responsibility, navigate to the View AutoAllocation Statuses window.

2. Select the set to view and then choose a Find or Query command from the View menu. - To see the Allocation Workbench for this set, select the Allocation Workbench

button. - You can see more information about a step by selecting the step, and then selecting an

option: - To see more information about a step, select the Step Detail button. - To see more information about the workflow process for the step, select the

Monitor Workflow button.



Summary


Asset Capitalization Chapter 16 - Page 1

Asset Capitalization Chapter 16



Asset Capitalization



Objectives



Agenda



Overview of Asset Capitalization


Using capital projects, you can define capital assets and capture construction-in-process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets you are building, installing, or acquiring. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work-in-process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.





Using Capital Projects to Create Capital Assets You define and build capital assets in capital projects using information specified in the project work breakdown structure (WBS). You define asset grouping levels and assign assets to the grouping levels to summarize the CIP costs for capitalization. You can review and adjust capital project costs before and after capitalization. For example, you can allocate costs collected under common tasks to multiple CIP assets before you place them in service. You can also account for additional costs incurred after capitalization, because Oracle Project Costing allows you to place assets in service before completion of a project. When you are ready to place a CIP asset in service, you send the capital project amounts to Oracle Assets as asset lines. Oracle Assets places the asset lines in a holding area where your fixed assets department can post the capital costs in Oracle Assets as fixed assets. You can review detail transactions associated with the asset lines in Oracle Project Costing and Oracle Assets. Using Capital Projects to Process Retirement Costs You capture retirement costs in a capital project by recording cost of removal and proceeds of sale amounts to a task that is designated as a retirement cost task



To distinguish cost of removal and proceeds of sale amounts, you must enter proceeds of sale amounts using expenditure types that you define to specifically classify these amounts. Oracle Project Costing automatically classifies amounts for all other expenditure types as cost of removal. To associate retirement costs with a group asset in Oracle Assets, you create a retirement adjustment asset in the capital project and identify it with a specific group asset. As with capital assets, you define asset grouping levels and assign retirement adjustment assets to the grouping levels to summarize the retirement cost amounts for posting to Oracle Assets. When retirement activities are complete, you generate asset lines for the retirement cost amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group assets. To communicate notice of an asset retirement to Oracle Assets, you can optionally initiate retirement requests in Oracle Project Costing that are automatically passed to Oracle Assets.



Project-Related Asset Processing Flow

Project-Related Asset Processing Flow

You charge expenditures to capital projects in Oracle Project Costing. You collect supplier costs in Oracle Purchasing and Oracle Payables and run the program PRC: Interface Supplier Costs in Oracle Project Costing to interface project-related receipt accrual cost from Oracle Purchasing and supplier costs from Oracle Payables to Oracle Project Costing. Oracle Project Costing, Oracle Purchasing, and Oracle Payables create accounting entries for CIP, RWIP, and expensed cost in Oracle Subledger Accounting. In addition, Oracle Project Costing creates accounting in Oracle Subledger Accounting for supplier cost adjustments in Oracle Project Costing. Oracle Subledger Accounting transfers accounting entries to Oracle General Ledger. Oracle Payables uses the Mass Additions Create program to send non-CIP assets to Oracle Assets. If the non-CIP asset is associated with a capital project, then Oracle Project Costing interfaces the asset and associated costs from Oracle Payables. In this case, Oracle Project Costing interfaces the non-CIP asset and asset cost to Oracle Assets. When you place a CIP asset in service, you interface the asset and associated CIP asset lines to Oracle Assets. When you retire an asset, you interface the retirement adjustment asset and associated RWIP asset lines to Oracle Assets. Oracle Assets creates accounting in Oracle Subledger Accounting to clear the CIP and RWIP accounts and to post asset costs to the appropriate asset or group depreciation reserve account.



Accounting Example

Accounting Example

In this example, you create a capital project to capture the costs of building a new clean room and installing air quality monitors. As part of this project, you are removing several air quality monitors from an existing clean room that is being designated for other uses and retiring them.



Accounting Example



Accounting Example

Accounting Example

In this example, after you transfer the final accounting for the adjustment to Oracle General Ledger, the total amount in Oracle General Ledger for the CIP-Clean Room account is 9,205.00.



Accounting Example

Accounting Example

Each asset line created by the program to generate asset lines has an associated general ledger account. After you post the asset lines in Oracle Assets, you can create accounting in Oracle Subledger Accounting to relieve the CIP or RWIP account, and transfer the amount to the appropriate asset cost or group depreciation reserve account. Oracle Subledger Accounting transfers the final accounting entries to Oracle General Ledger.



Accounting Example

Accounting Example

As the final step in the process of accounting for the asset transactions illustrated in this example, you initiate an asset retirement transaction in Oracle Assets for the air quality monitors that you removed from the clean room that you are taking out of service. You then create journal entries to account for the retirement of the group asset cost associated with these monitors. For more information on processing retirement transactions, see: Asset Retirements, Oracle Assets User Guide.



Quiz

Answer: a



Quiz

Answer: c



Agenda



Project Types for Asset Capitalization

Project Types for Asset Capitalization

When you create a capital project, you must copy a project template or existing project that is associated with capital class project type. You cannot change the class (capital, contract, or indirect) of a project. Capitalization Information specified for a project type:

• Cost Type - Specifies whether to capitalize costs at their burdened or raw cost amount. • Require Complete Asset Definition - Specifies whether you must complete an asset

definition in Oracle Project Costing before you can interface costs to Oracle Assets. If you select this option, then you do not need to enter information for the imported asset line in the Prepare Mass Additions window in Oracle Assets. The interface program places asset lines with complete definitions directly into the Post queue.

• Override Asset Assignment - This field interacts with the assignment status of the asset to either call or disregard the Asset Assignment client extension.

• Asset Cost Allocation Method - You can select one of several predefined allocation methods to automatically distribute indirect and common costs across multiple assets. Options include Actual Units, Current Cost, Client Extension, Estimated Costs, None, Standard Cost, and Spread Evenly.



• Event Processing Method - You can specify a capital event processing method to control how assets and costs are grouped over time. You can choose to use either periodic or manual events.

• Grouping Method Specify how to summarize asset lines. You can choose from the following options:

- All (highest level of summarization) - CIP Grouped by Client Extension - Expenditure Category - Expenditure Category, Nonlabor Resource - Expenditure Type - Expenditure Type, Nonlabor Resource

• Group Supplier Invoices - Select to consolidate the expenditure items on a supplier invoice into one asset line according to the method specified in the Grouping Method field. Deselect to interface the lines to Oracle Assets as separate mass addition lines.

• Interface Supplier Invoices - If you choose not to group supplier invoices, then you select a grouping option:

- As New Mass Additions - Interfaces each expenditure item on a supplier invoice line to Oracle Assets as a separate Mass Addition line. Each line has the status NEW.

- As Merged Mass Additions - Interfaces each supplier invoice line to Oracle Assets as a separate Mass Addition line with the status MERGED.

• Capitalized Interest Default Schedule - Use this field to specify a default interest rate schedule for capitalized interest.

• Capitalized Interest Allow Override - Select this check box to allow override of the default capitalized interest rate schedule at the project level.

For additional information regarding Capitalized Interest, see the lesson titled “Capital Projects: Capitalized Interest.” For additional information regarding implementing project types, see the course titled “R12.x Project Foundation Fundamentals.”



Quiz

Answer: a



Agenda



Asset Processing Flow

Asset Processing Flow

Creating and processing capital projects consists of a series of steps: 1. Create a new capital project and Work Breakdown Structure using a project template

whose project type is set up for a capital project. Update project and task details if necessary. You can also create assets when you copy an existing capital project. Assets associated with the existing project or project template are copied to the new project.

2. Update the transaction controls to determine which transactions to capitalize. 3. Collect CIP, RWIP, and expensed costs for your capital project and make adjustments if

necessary. 4. Define CIP and retirement adjustment assets as needed. You can define assets manually

or using project asset APIs. 5. Specify asset grouping levels and grouping level types within the Work Breakdown

Structure. You can then associate assets with the various grouping levels. 6. Specify the date in service for completed CIP assets or the date retired for retirement

adjustment assets



7. Optionally, define capital events to control how assets and costs are grouped, and placed in service or retired.

8. Generate asset lines. 9. Review asset cost lines and make any necessary adjustments. 10. Run the program to interface assts to Oracle Assets. 11. Run the program to tieback asset lines from Oracle Assets.



Specifying Costs

Specifying Costs

Specifying Capital Asset Transactions to Capitalize For capital assets, you must specify whether to capitalize or expense each transaction charged to a capital project. You can use project-level and task-level transaction controls to indicate which kinds of expenditures are allowable for capitalization. You can disable the Capitalizable check box for a lowest level task on a capital project to indicate that all transactions charged to the task will be classified as non-capitalizable. Retirement Cost You can select Retirement Cost check box for a task on a capital project to indicate that the task is for retirement cost processing. When you enable this option, all expenditure items charged to a task are designated as cost of removal or proceeds of sale amounts that pertain to retirement adjustment assets. A task identified for processing retirement cost cannot also be capitalizable. You cannot make an election on how to account for retirement costs you record to a retirement adjustment asset. Oracle Project Costing automatically classifies retirement costs as cost of removal or proceeds of sale amounts based on the expenditure type. You define expenditure types for the PROCEEDS_OF_SALE_EXP_TYPES lookup type. Oracle Project Costing



classifies all amounts you enter for the expenditure types defined in this lookup as proceeds of sale amounts. Conversely, when you enter amounts for a retirement cost task and specify an expenditure type that is not defined in the PROCEEDS_OF_SALE_EXP_TYPES lookup type, Oracle Project Costing automatically classifies the amounts as cost of removal.



Defining Assets for Capital Projects

Defining Assets for Capital Projects

After you create a capital project, you can create capital assets for assets you want to place in service as fixed assets. You can also create retirement adjustment assets to collect retirement costs for assets you want to retire that are associated with a group asset in Oracle Assets. You can define capital assets and retirement adjustment assets separately in different projects or together in the same project. You can create multiple assets for one project. However, assets cannot be created for multiple projects. Creating a Capital (CIP) Asset

• You create capital assets and accumulate costs for fixed assets you are building, installing, or acquiring. You define an asset in Oracle Project Costing for each capital asset you want to place in service. To interface a capital asset to Oracle Assets, you must specify an actual date in service for the asset in Oracle Project Costing.

Creating a Retirement Adjustment Asset • You create retirement adjustment assets to collect cost of removal and proceeds of sale

amounts for assets associated with a group asset in Oracle Assets you are retiring, removing, abandoning, or otherwise disposing that are associated with a group asset in Oracle Assets.



• When you define a retirement adjustment asset in Oracle Project Costing, you must specify a valid Oracle Assets group asset identifier as the target asset. You can create retirement adjustment assets and interface retirement costs to Oracle Assets only for fixed assets that are associated with group assets in Oracle Assets. To interface a retirement adjustment asset to Oracle Assets, you must specify a retirement date for the asset in Oracle Project Costing.

• You can initiate a retirement request in Oracle Project Costing to identify one or more assets that you are retiring from service. Retirement requests serve as an advice that you can use to notify your fixed asset department about assets that need to be retired in Oracle Assets.

For descriptions of the asset attributes, see the Oracle Project Costing User Guide.



Streamlining Asset Creation

Streamlining Asset Creation

Create and Assign Assets Using API’s The project asset API’s enable you to create, update, and delete project assets and project asset assignments. This feature enables you to integrate with external asset management systems. Copying Assets To streamline the definition of multiple project assets that have similar attributes, you can use the Copy Asset option on the Assets and Asset Details windows to copy assets within a project.



Asset Grouping Levels

Asset Grouping Levels

You can group by project, top task, lowest level task or mixed task levels. When grouping at mixed task levels, you can group assets at either the top task or at the lowest task levels, but not at both levels on the same top-task branch. For example, if you group at the project level, Oracle Project Costing summarizes all capitalizable costs at all task levels into asset lines at the project level. If you group at a top task level, Oracle Project Costing summarizes all tasks below that top task into asset lines for that top task. Grouping level types determine whether you can associate assets with the grouping level:

• Specific Assets - Select this option to associate assets with the project or task. • Common Costs - Select this option to group projects or tasks that capture costs you want

to allocate to multiple assets. You cannot associate assets with this grouping level type. You can change the grouping level type at any time. If you change a grouping level type from Specific Assets to Common Costs, then Oracle Project Costing deletes existing asset assignments from the grouping level. Changing the grouping level after you interface assets does not affect the asset lines that you previously sent to Oracle Assets.



Asset Cost Allocation Methods

Asset Cost Allocation Methods

You can specify an asset allocation method to enable Oracle Project Costing to automatically allocate unassigned asset lines and common costs across multiple assets. Unassigned asset lines typically occur when more than one asset is assigned to an asset grouping level. To specify an asset allocation method for a project, select an allocation method in the Capital Information window for the project. Optionally, you can override the asset cost allocation method when defining capital events. You can select one of the following asset allocation methods based on:

• Actual Units - The number of actual units specified for each asset in the Assets window. • Client Extension - The Asset Allocation Basis extension. • Current Cost - The grouped CIP cost of each asset. • Estimated Cost - The estimated cost in the Assets window. • Standard Unit Cost - A standard unit cost defined for the asset book and category in the

Project Assets Standard Unit Cost window. • Spread Evenly - The number of assets being capitalized for the project or the event.



Specifying an Actual Date in Service or a Retirement Date

Specifying an Actual Date in Service or a Retirement Date

Placing a Capital Asset in Service When a capital asset is complete, you place it in service. If your project has more than one capital asset, then you can place each asset in service as it is completed. You do not have to complete the entire project to place an asset in service. You place an asset in service by entering the actual date in service for the asset. The actual date in service can be a past, current, or future date. After you enter the date, generate asset lines and interface the asset lines to Oracle Assets. When you enter a past actual date in service, Oracle Assets will calculate and record how much depreciation should have been taken for the asset, if any. Specifying a Retirement Date for Retirement Adjustment Assets When the activities associated with retiring, removing, abandoning, or disposing of an asset are complete, you can specify a retirement date for the retirement adjustment asset to signify the retirement of the asset. Specifying a retirement date enables you to generate asset lines for the retirement costs captured in Oracle Project Costing. You can then interface the retirement asset lines to Oracle Assets for posting to the accumulated depreciation accounts for the associated group asset. If your project has more than one retirement adjustment asset, then you can retire each asset as retirement activities are completed.



Capital Events

Capital Events

You can create periodic and manual capital events to control how Oracle Project Costing interfaces capital project assets and costs to Oracle Assets over time. You use capital events to group assets and costs before you generate asset lines for capitalization and retirement cost processing. You can specify a default event processing method for a capital project type and override it at the project level. Oracle Project Costing supports the following event processing methods:

• None - Defined groupings are valid for the life of the project • Periodic Event Creation - Cost and assets are grouped periodically by grouping level • Manual Event Creation - Cost and assets are grouped manually by the user

When you submit the program PRC: Generate Asset Lines for a Single Project or PRC: Generate Asset Lines for a Range of Projects for a capital project that uses capital events, Oracle Project Costing automatically generates asset lines for all defined, unprocessed capital events.



Periodic Events When you use periodic event processing, you submit the concurrent program PRC: Create Periodic Capital Events to select unprocessed assets and cost amounts for a project based on the actual date in service and expenditure item date you specify in the process parameters. The program PRC: Create Periodic Capital Events enables you to create periodic capital events to group project assets and costs for capitalization and retirement cost processing. You enable periodic capital event processing for a project by setting the event processing option in the Capital Information window to Periodic. When you submit this program, Oracle Project Costing selects unprocessed assets and costs for capital projects based on the actual date in service, expenditure item date, and project values you specify in the process parameters. The process then associates the assets and costs with the event period you specify in the process parameters. You can then submit the program to generate asset lines for the selected assets and costs. Manual Events When you use manual event processing, you can specify the assets and costs that you want to include in the event, as well as the actual date in service and expenditure item date. You create capital events from the Capital Projects window:

1. Navigate to the Capital Projects window. 2. Find the capital project for which you want to define a capital event in the Find Capital

Projects window. 3. Choose the capital project you want and choose the Capital Events button. 4. In the Capital Events window, select either the Capital Project Assets Workbench or the

Retirement Adjustment Assets Workbench. 5. Insert a new row to derive the (next) sequential event number, an event name, and

optionally select a different asset allocation method. 6. Save your work. 7. To select assets for the event, choose the Assets button to open the Event Assets window

and choose Attach New Assets. 8. In the Attach New Asset window, enter selection criteria to find one or more assets to

attach to the event and choose OK to return to the Event Assets window. 9. Save your work and close the Event Assets window to return to the Capital Events

window. 10. To select costs for the event, choose the Costs button to open the Event Costs window

and choose Attach New Costs. 11. In the Attach New Costs window, enter selection criteria to find costs to attach to the

event and choose OK to return to the Event Costs window. 12. Save your work and close the Event Costs window to return to the Capital Events

window. 13. To generate asset lines for the event, choose Generate. You can view the status of the

request in the Events window. Note: You can optionally reverse all assets for the event by choosing the Reverse button.



Generating Summary Asset Lines

Generating Summary Asset Lines

Run PRC: Generate Asset Lines for a Single Project or PRC: Generate Asset Lines for a Range of Projects to generate summary asset lines. Prerequisites Before you generate asset lines, perform the following steps:

1. Cost the transactions by running the following programs: - PRC: Distribute Labor Costs or PRC: Distribute Labor Costs for a Range of Projects - PRC: Distribute Usage and Miscellaneous Costs - PRC: Interface Supplier Costs - PRC: Interface Expense Reports from Payables - PRC: Distribute Supplier Cost Adjustments - PRC: Distribute Expense Report Adjustments - PRC: Distribute Total Burdened Costs (required if you are capitalizing burdened

costs and you capture burden cost on the same expenditure item) - PRC: Create and Distribute Burden Transactions (required if you are capitalizing

burdened costs and you capture burden as a separate expenditure item)



- PRC: Generate Cost Accounting Events Note: You must run this program for each process category for which you have costs. Alternatively, you can leave the Process Category parameter blank to generate accounting events for all costs.

- PRC: Create Accounting Note: You must run this program for each process category for which you have costs. Alternatively, you can leave the Process Category parameter blank to create accounting events for all costs. Important: You must run the program PRC: Create Accounting in final mode for the expenditure items before you generate asset lines. The generate asset lines program does not create asset lines for the costs if the corresponding expenditure items are not successfully accounted in final mode.

2. Run the program to update project summary amounts so you can see the total expense and CIP/RWIP amounts in the Capital Projects Summary window.

3. If you use periodic or manual capital events to group project assets and costs, then process the events.

Determining CIP or RWIP Accounting You must create the final accounting for costs in Oracle Subledger Accounting before you can generate asset lines for the costs. The program that generates asset lines uses the final accounting from Oracle Subledger Accounting to determine the CIP or RWIP accounts for asset lines. This approach ensures that Oracle Project Costing interfaces the final CIP or RWIP accounts to Oracle Assets. The program uses the predefined post-accounting programs that Oracle Project Costing provides in Oracle Subledger Accounting to obtain final CIP or RWIP accounts from Oracle Subledger Accounting. If you define journal line types for Oracle Subledger Accounting that use different accounting classes, then you must add these accounting classes to the post-accounting program assignments. Note: The generate asset lines process obtains the CIP or RWIP accounts from the cost distribution lines in Oracle Project Costing, and not from Oracle Subledger Accounting, in the following two situations:

• The Interface Costs to GL option for the type of cost is set to No in Oracle Project Costing implementation options.

• You import costs from an external non-Oracle system into Oracle Project Costing as accounted costs. As a result, Oracle Project Costing does not generate accounting events or create accounting for these costs.



Assigning Asset Lines

Assigning Asset Lines

• Assigning an Asset to Unassigned Asset Lines - When the program that generates asset lines creates asset lines without an asset assignment, you need to manually assign an asset to the line before you can send it to Oracle Assets. If unassigned asset lines are associated with an event, then you can only assign the lines to an asset that is included in the event.

• Changing the Asset Assigned to an Asset Line - You can change the asset or description for an asset line in the Asset Lines window. However, you cannot change asset lines you already sent to Oracle Assets.

• Splitting an Asset Line - You can split an asset line and assign the split costs to multiple assets by using percentages or amounts. You can split lines with and without asset assignments.

• Note: The Asset Category field displays the asset category related to payables invoice items. The field does not display the asset category for assets defined in Oracle Project Costing.



Sending Asset Lines to Oracle Assets

Sending Asset Lines to Oracle Assets

Run PRC: Interface Assets to Oracle Assets to send valid capital asset and retirement adjustment asset lines to Oracle Assets. Then, in Oracle Assets, you can review the mass addition lines created from the project asset lines in the Prepare Mass Additions window. For Oracle Project Costing to send asset lines to Oracle Assets, the asset line must meet these specific conditions:

• The actual date in service or retirement date must fall in the current or a prior Oracle Assets accounting period.

• A capital asset or retirement adjustment asset must be associated with the asset line. The program creates one mass addition line in Oracle Assets for each asset line in Oracle Project Costing, assigning the asset information you entered for the asset in Oracle Project Costing to the mass addition line in Oracle Assets. You use the Mass Additions process in Oracle Assets to prepare and post these mass additions. If you did not enter all required asset information in Oracle Project Costing, then you must enter it for the line in the Prepare Mass Additions window before you can post it. The program PRC: Interface Assets to Oracle Assets interfaces both ledger currency amounts and reporting currency amounts for the asset lines to Oracle Assets.



In Oracle Assets you can query and review assets posted to Oracle Assets by project number and task number in the Financial Inquiry window. Prerequisite: If you are sending cost adjustments for an asset from Oracle Project Costing to Oracle Assets, ensure that the original mass addition was posted to Oracle Assets. If the mass addition has not become an asset, the Interface process will reject the adjustment line. Tieback Asset Lines from Oracle Assets After you interface assets to Oracle Assets, run the program PRC: Tieback Asset Lines from Oracle Assets. This program identifies and updates Oracle Project Costing assets and asset lines that you interfaced to Oracle Assets. For assets, the program updates the asset details to reflect the asset number assigned in Oracle Assets and the period in which the asset was posted. For asset lines, the program updates each line to reflect the Oracle Assets period in which the asset line was posted.



Quiz

Answer: b



Agenda



Adjusting Capital Project Costs

Adjusting Capital Project Costs

You can adjust expenditure items whose cost you sent to Oracle Assets, and send the summarized asset lines to Oracle Assets. You process these cost adjustments in Oracle Project Costing and send them to Oracle Assets as adjusting asset lines. You can also collect new expenditure items for an asset in Oracle Project Costing after you capitalize or retire an asset. Your cost adjustments can be either positive or negative. For example, you receive a credit memo from a supplier for a capitalized asset you sent and posted to Oracle Assets. When you send this credit memo to Oracle Project Costing, you create new negative asset lines, which you can send to Oracle Assets as a negative cost adjustment to the original asset. Oracle Project Costing includes the information you enter for the asset on the adjusting asset line you send to Oracle Assets. If you specify to amortize depreciation adjustments for a capital asset in Oracle Project Costing, then Oracle Assets amortizes any catch-up depreciation amount for the adjustment over the remaining life of the asset. Otherwise, it expenses the catch-up depreciation for the adjustment in the current period. You cannot send cost adjustments to Oracle Assets until you have posted the original mass addition line (imported asset line) to Oracle Assets using the Post Mass Additions process.



Reversing Capitalization of Assets in Oracle Project Costing

Reversing Capitalization of Assets in Oracle Project Costing

If you placed an asset in service in error or sent inappropriate asset costs to Oracle Assets, you can reverse capitalization of the asset in Oracle Project Costing, and send the reversing line to Oracle Assets as an adjustment. After the capitalization is reversed, you interface the negative distributions to Oracle Assets. Those distribution lines are merged with the existing asset reducing the cost to 0. After you adjust the asset cost to 0, you can retire the asset in Oracle Assets. If depreciation had been taken on the asset, then there will be a credit to depreciation expense in the reversal period. Never retire an asset prior to adjusting the cost to 0 or Oracle Assets calculates gains and losses associated with the retirement. When reversing capitalization, note that:

• If you reverse capitalize an asset in Oracle Assets that was created from Oracle Project Costing, then this transaction is recorded in Oracle Assets only, and not in Oracle Project Costing. If this happens, you cannot manually update the corresponding asset in Oracle Project Costing.

• You cannot send a reversing line to Oracle Assets until you have posted the original asset using the Post Mass Additions process. You cannot make a negative cost adjustment (reversal) to a mass addition not yet posted to Oracle Assets.



• When you choose the action to reverse capitalize an asset, Oracle Project Costing checks Oracle Assets to determine if the asset was retired previously. If yes, then Oracle Project Costing issues a warning message and you can either continue processing or cancel the reversal action.

Reversing Capitalization of a Capital Asset After Depreciation Oracle Assets processes reversal transactions from Oracle Project Costing as negative cost adjustments to the original asset. If you have begun depreciating this asset, then Oracle Assets must reverse the depreciation expense in the period you reverse capitalize the asset. Before you reverse an asset, ensure that the Amortize Adjustment check box is unchecked for the asset. If you reverse capitalize an asset for which you specify to amortize adjustments, then the monthly depreciation on the original cost will not equal the monthly depreciation generated to account for the asset cost reversal in Oracle Assets. Oracle Assets amortizes the catch-up depreciation on the negative cost adjustment over the remaining life of the asset. Recapitalization of Reverse Capitalized Assets To recapitalize an asset, enter the new Date Placed in Service in Oracle Project Costing so you can generate new asset lines. You must also manually change the Date Placed in Service for the asset in the Asset Workbench in Oracle Assets, as the Date Placed in Service cannot be updated through the Mass Additions process.



Abandoning a Capital Asset in Oracle Project Costing

Abandoning a Capital Asset in Oracle Project Costing

You can abandon a capital asset at any time. Before Interfacing to Oracle Assets You can abandon a capital project prior to interfacing to Oracle Assets by changing all expenditure items from capitalizable to non-capitalizable. The journal entries for the adjusted costs transfer these costs from a CIP or RWIP account to an Expense account. After Interfacing to Oracle Assets If you already interfaced the asset that you want to abandon, then you must reverse capitalize the asset in the Assets window in Oracle Project Costing. You also need to send the reversing lines to Oracle Assets to account for the abandoned CIP asset. The program to generate asset lines creates reversal lines, which you can then interface to Oracle Assets.



Agenda



Asset Capitalization Implementation Steps



Implement Asset Extensions

Implement Asset Extensions

• Asset Assignment Extension - Implement your company’s rules for assigning an asset to a task during asset line generation. Oracle Project Costing calls the Asset Assignment extension:

• For all unassigned assets. You can modify the extension to designate the assets for specific tasks (asset lines) and thus avoid the UNASSIGNED designation, or you can assign an asset to the line manually.

• If the Override Asset Assignment check box is selected on the Project Types window (Capitalization tab). You can modify the extension to override the asset assigned to specified tasks.

• Asset Cost Allocation Basis Extension - Define your own allocation bases for allocating unassigned and common costs across multiple project assets. Oracle Project Costing calls this extension to allocate costs for projects that specify an asset cost allocation method of Client Extension in the Capital Information window.

• Asset Lines Processing Extension - The program PRC: Generate Asset Lines program (for a Single Project or a Range of Projects) calls this extension for each project for which it generates asset lines. Use this extension to automatically create project assets (capital assets



and retirement adjustment assets) and asset assignments prior to the creation of asset lines, based on transaction data (such as inventory issues or supplier invoices) entered for the project.

• Capital Event Processing Extension - The program PRC: Create Periodic Capital Event calls this extension for each project for which it creates a capital event. Use this extension to automatically create project assets (capital assets and retirement adjustment assets) and asset assignments prior to the creation of capital events, based on transaction data (such as inventory issues or supplier invoices) entered for the project.

• CIP Account Override Extension - Override the CIP account associated with an asset line to specify a different account for posting CIP clearing amounts. This capability enables you to utilize accounts for clearing CIP amounts that are different from the accounts you use to account for CIP expenditures. This extension allows you to preserve the original CIP cost account details.

• CIP Grouping Extension - Define a unique method that your company uses to specify how expenditure lines are grouped to form asset lines. Oracle Project Costing predefines five CIP Grouping Methods. If these methods do not meet your company’s business needs, then use this client extension to create your own CIP Grouping Method. After you define the extension, select the Group by Client Extension grouping method. Oracle Project Costing calls the CIP Grouping extension when it generates asset lines.

• Depreciation Account Override Extension - Define your own logic for deriving the depreciation expense account when you define an asset or interface asset lines to Oracle Assets. Oracle Project Costing calls this extension during update of the Assets and Asset Details windows and during validation of asset information when you interface asset lines to Oracle Assets.



Define Standard Unit Costs for Asset Cost Allocations

Define Standard Unit Costs for Asset Cost Allocations

You can select an asset cost allocation method for the project to set up a capital project to automatically allocate unassigned and common costs to multiple assets. To allocate costs using the Standard Unit Cost method, you must define a standard unit cost for each asset book and asset category combination for which you want to allocate costs. When you choose this method of cost allocation, Oracle Project Costing multiplies the standard unit cost times the units installed for each asset to determine the proration basis for allocating costs.



Enable Retirement Cost Processing

Enable Retirement Cost Processing

To enable retirement cost processing features, you must set the value of the site-level profile option PA: Retirement Cost Processing Enabled to Yes. This site-level profile option determines whether retirement cost processing windows and features are enabled in Oracle Project Costing. If you enable retirement cost processing and you also use Oracle Assets group asset processing features, then you can access all retirement cost processing features in Oracle Project Costing. However, if you do not use Oracle Assets group asset processing features, you can only use the retirement requests processing feature.



Define Proceeds of Sale Expenditure Types

Define Proceeds of Sale Expenditure Types

To enter and record proceeds of sale amounts for retirement cost processing in Oracle Project Costing, you must define unique expenditure types to classify and account for the amounts. To define and update expenditure types for proceeds of sale, navigate to the Retirement Cost Classification Lookups window. You can also define and update expenditure types for proceeds of sale by navigating to the Oracle Project Costing Lookups window and querying the lookup type: PROCEEDS_OF_SALE_EXP_TYPES. When you define lookup values, you can use the Tag field to define the sort order in which Oracle Project Costing displays lookup values in a list of values. If you do not specify tag values, then Oracle Project Costing sorts the list based on the value displayed in the lookup Code field. Do not use the PROCEEDS_OF_SALE_EXP_TYPES lookup type to define expenditure types that you want to account for as cost of removal. Oracle Project Costing classifies all amounts you enter for the expenditure types defined in this lookup as proceeds of sale amounts. Conversely, when you enter amounts for a retirement cost task and specify an expenditure type that is not defined in the PROCEEDS_OF_SALE_EXP_TYPES lookup type, Oracle Project Costing automatically classifies the amounts as cost of removal.



Summary


Cross Charge Chapter 17 - Page 1

Cross Charge Chapter 17



Cross Charge



Objectives



Agenda



Overview of Cross Charge

Overview of Cross Charge

When projects share resources within an enterprise, it is common to see those resources shared across organization and country boundaries. Further, project managers can also divide the work into multiple projects for easier execution and management. The legal, statutory, or managerial accounting requirements of such projects often present complex operational control, billing, and accounting challenges. Cross charge enables project managers to easily view the current total costs of the project, regardless of who performs the work or where it is performed.



Cross Charge Terminology

Cross Charge Terminology

• Borrowed and Lent - A method of processing cross charge transactions that generates accounting entries to pass cost or share revenue between the provider and receiver organizations within a legal entity.

• Cross Charge - The act of charging costs directly to a project outside your own organization, operating unit, ledger, legal entity, or business group. A cross charge is the act of entering a transaction where the expenditure organization and the task owning organization are different. End users see no change; the cross charge is just another project in their List of Values.

• Cross Charge Transaction - An expenditure item whose provider operating unit is different from the receiver operating unit, the provider organization is different from the receiver organization, or both.

• Cross Charge Type - One of the three types of cross charge transactions: intercompany, inter–operating unit, and intra-operating unit.

• Intercompany Billing - A method of internally billing work performed by a provider operating unit and charged to a project owned by a receiver operating unit. The provider



operating unit creates an Oracle Receivables invoice, which is interfaced as an Oracle Payables invoice to the receiver operating unit.

• Provider Operating Unit - The operating unit whose resources provide services to another project or organization. For cross charge transactions, the provider operating unit is the expenditure operating unit; the project operating unit owns the intercompany billing project.

• Provider Organization - For cross charge transactions, the organization that provides resources to another organization. The default is the expenditure organization or the non-labor resource organization, which can be overridden using the Provider and Receiver Organization Override client extension.

• Receiver Operating Unit - An operating unit whose projects receive services from another project or organization.

• Receiver Organization - The operating unit whose projects receive services from another project or organization.

• Transfer Price - The price agreed upon by the provider and receiver organizations in a cross charged transaction.



Cross Charge Types Example

Cross Charge Types Example

A transaction’s cross charge type depends on whether the provider operating unit, organization, and legal entity are different from those of the receiver. You cannot change the provider or receiver operating unit, but you can use the Provider and Receiver Organizations Override client extension to override the default provider organization and receiver organization. Oracle Project Costing provides three types of cross charge transactions:

• Intercompany - Operating units and legal entities are different. • Inter-Operating Unit - Operating units are different, but legal entities are the same. • Intra-Operating Unit - Operating units and legal entities are the same, but the

organizations are different.



Processing Methods

Processing Methods

You can choose one of the following processing methods for cross charge transactions: • Borrowed and Lent Accounting - Oracle Project Costing creates accounting entries to

pass costs and revenue across organizations without generating internal invoices. Oracle Project Costing determines the appropriate cost or revenue amounts based on the transfer price rules of the provider and receiver organizations. Borrowed and lent accounting entries provide a financial view of an organization’s performance.

• Intercompany Billing Accounting - Companies choose the intercompany billing method largely due to legal and statutory requirements. Oracle Project Costing generates physical invoices and corresponding accounting entries at legal transfer prices between the internal seller (provider) and buyer (receiver) organizations when they cross a legal entity boundary or operating units. For additional discussion of Intercompany Billing, see the Advanced Topic lesson titled “R12 Projects Advanced - Intercompany Billing.”

• No Cross Charge Process - Companies generally process cross charges in Oracle Project Costing using the borrowed and lent or intercompany billing method. However, companies may not need to process cross charge transactions, if, for example, you have performed intercompany billing manually in Oracle General Ledger.



Quiz

Answer: b



Agenda



Borrowed and Lent Processing

Borrowed and Lent Processing

The borrowed and lent processing method creates accounting entries ONLY to pass costs or share revenue between the provider and receiver organizations within a legal entity. Borrowed and lent processing is a general ledger reclassification of funds and costs. No additional Oracle Project Costing transactions exist and Oracle Project Costing does not generate any legal documents. The borrowed and lent processing method creates accounting entries to pass costs or share revenue (the transfer price amount determines the cost or revenue amounts) between the provider and receiver organizations. If you choose to pass costs from the provider to the receiver, then this processing method:

• Debits the cost from the receiver (or lent) organization. • Credits the cost account of the provider (or borrowed) organization.

Similarly, if you choose to share revenue, then this processing method: • Debits the revenue from the receiver organization. • Credits the revenue to the provider organization.

Oracle Project Costing provides AutoAccounting functions for borrowed and lent processing.



Project and Task Setup

Project and Task Setup

To specify cross charge information for a project or a task, select the Cross Charge project or task option. When you select the Cross Charge option at the project level, the Project Multinational Setup window opens. When you select the Cross Charge option at the task level, the Task Multinational Setup window opens. You can enter the following information in the Project Multinational Setup and Task Multinational Setup windows:

• Allow Charges from Other Operating Units - Enable this check box to accept cross-charged transactions from other operating units. At the project-level, this entry is the default value for each new top-task that you create. At the task-level, this entry is the default value for each new subtask that you create.

• Process Cross Charges - Optionally enable the Labor, Non-Labor, or both check boxes to have Oracle Project Costing process labor and non-labor cross-charged transactions. If you do not enable a check box, then Oracle Project Costing does not process cross-charged transactions for that type of cost. If you enable a check box, then you must specify a transfer price schedule for that selection. You can optionally specify a fixed date to use to calculate the transfer price amount. Oracle Project Costing uses this date only if the transfer price rule uses a calculation method based on a bill rate or burden schedule. If you do not enter a date, then Oracle Project Costing uses the expenditure item date.



- At the project-level, this entry is the default value for each new top-task that you create.

- At the task-level, this entry is the default value for each new subtask that you create. If you assign a transfer price schedule to a lowest-level task, then Oracle Project Costing uses that transfer price schedule to process labor or non-labor cross-charged transactions. If you do not assign a transfer price schedule at the lowest task level, then Oracle Project Costing uses the transfer price schedule that you assign at the project-level.

Note: Intercompany Tax Receiving Task (project-level only) is for intercompany billing. You can specify the task to use to collect nonrecoverable intercompany tax amounts as project costs.



Subledger Accounting Process Flow: Cross Charge

Subledger Accounting Process Flow: Cross Charge

The provider operating unit performs the following tasks: 1. Enter or import cross charge transactions - The provider operating unit enters or

imports cross charge transactions. 2. Distribute costs of cross charges - The provider operating unit distributes the costs of the

cross charges. In addition to determining the raw and burden cost amounts and the accounting information for project transactions, the cost distribution processes also determine the following information for cross charge transactions:

• Provider and receiver operating units and organizations • Cross-charge type, which indicates whether a transaction is an intra-operating unit,

inter-operating unit, or intercompany cross charged transaction or not a cross charged transaction

• Cross-charge processing method, which indicates whether a transaction is subject to cross charge processing and which processing method to use

3. PRC: Distribute Borrowed and Lent Amounts - Calculates the borrowed and lent cross charge amounts. The program also uses AutoAccounting to determine the default debit account for each expenditure item.



4. PRC: Generate Cross Charge Accounting Events - Uses AutoAccounting to determine the default credit account and then to generate accounting events. You can select Borrowed and Lent for the Process Category parameter to run the program only for borrowed and lent transactions.

5. PRC: Create Accounting - Creates subledger journal entries for eligible accounting events. You can select Borrowed and Lent for the Process Category parameter to run the program only for borrowed and lent accounting events. You can run the program in either draft or final mode. Optionally, the program can post journal entries in Oracle General Ledger to send journal entries to Oracle General Ledger.

6. PRC: Transfer Journal Entries to GL - When you run the program PRC: Create Accounting, if you select No for the parameter Transfer to GL, then you run this program to transfer final subledger accounting entries to Oracle General Ledger.

7. Journal Import (in Oracle General Ledger) - Imports the final accounting entries into Oracle General Ledger. Either PRC: Create Accounting or PRC: Transfer Journal Entries to GL initiates this program when you transfer final subledger accounting journal entries to Oracle General Ledger. Optionally, you can set these programs to post journal entries in Oracle General Ledger.

You can require the receiver operating unit to run additional customized processes to create additional accounting entries in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. For example, your implementation team can develop customized processes to handle organizational profit elimination to satisfy your company's accounting practices. In addition, the provider operating unit can adjust cross charge transactions or perform steps resulting in the reprocessing of borrowed and lent transactions.



Borrowed and Lent Accounting

Borrowed and Lent Accounting

In this example, the cost center associated with the provider organization (490) received the initial charge for the labor, while the receiver organization received the benefits of the resources. The borrowed and lent accounting, using transfer prices, relieved the cost for the provider operating unit and debited the cost center associated with the receiver operating unit (422).



Cross Charge Adjustments

Cross Charge Adjustments

In the Expenditure Items window or Project Expenditure Items window: • Marking for cross charge reprocessing - You can mark one or more expenditure items for

cross charge reprocessing in the Expenditure Items window or the Project Expenditure Items window. To do this, choose the Reprocess Cross Charge option from the Tools menu. The next time you run the programs to process cross charges, the programs process these transactions as new cross charged transactions. Marking a transaction for cross charge reprocessing:

• Resets the cross charge type to Null. • Resets the cross charge processing method to Pending. • Resets the cross charge processing status to Never Processed. • Resets the transfer price amount in all currencies to Null. • Re-determines the cross charge type and processing method.

• Marking transactions to skip cross charge processing - You can mark one or more expenditure items so that the cross charge programs skip them. To do this, choose Mark For No Cross Charge Processing from the Tools menu. Marking a transaction as not requiring



cross charge processing resets the cross charge processing method to No Cross Charge Processing and the cross charge processing status to Never Processed.

• Changing transfer price conversion attributes - You can reconvert transfer price amounts from the transaction currency if you change the transfer price exchange rate date type and exchange rate type, which govern how Oracle Project Costing converts the transfer price amount from the transaction currency to the functional currency. To do this, you choose the Change Transfer Price Functional Currency Attributes option from the Reports menu.

• Changing transfer price base amounts - If you recalculate raw or burdened cost, then the amount of the transfer price basis (and the final transfer price amount) of a cross charged transaction can also change. The respective cost distribution processes determines whether such recalculations affect the transfer price amount of any cross charged transactions and automatically mark the transactions for cross charge reprocessing. The cost distribution programs automatically reset the cross charge processing status to Never Processed and blanks out the transaction’s transfer price amount.

• Performing transfers and split - Transferring or splitting a cross charged transaction does not affect the cross charge processing method of the existing transactions. The reversing and new transactions undergo the cross charge processing as usual.

In addition, if you change and recompile a burden schedule that Oracle Project Costing used to determine the transfer price of some items, then the recompile program marks these items for cross charge reprocessing. The program resets the cross charge type to Null, the cross charge processing method to Pending, and the cross charge processing status to Never Processed.



Processing Cross Charge Adjustments

Processing Cross Charge Adjustments

Oracle Project Costing processes adjustments similarly to the original transactions. PRC: Distribute Borrowed and Lent Amounts performs the following steps:

• Recalculates the transfer price if no transfer price amount exists in transaction currency. • Reconverts the transfer price amount from the transaction currency to functional currency

if an amount exists in transaction currency but not the functional currency. After it completes the common processing steps for cross charge adjustments, the program:

• Regenerates accounting entries - If any accounts for which you already generated cross charge accounting events changed, then the program reverses the original cross charge distributions and creates new ones. The program also determines the PA dates for the reversing and new distributions. If you did not generate cross charge accounting events for the original accounting entries, and the accounts or amounts changed, then the program replaces them with new entries.

• Reverse existing distributions if processing method has changed - If the cross charge processing method for the transaction changes from borrowed and lent to intercompany billing or no cross charge processing, then the program reverses existing entries for which you already generated cross charge accounting events.



Note: If the adjustment has an impact on the accounting, then you must run the programs PRC: Generate Cross Charge Accounting Events and PRC: Create Accounting to process the adjustment accounting. You can select the process category Borrowed and Lent for both programs to restrict the processing to only borrowed and lent accounting events.



Quiz

Answer: a



Quiz

Answer: b



Agenda



Borrowed and Lent Cross Charge Processing Implementation Steps



Transfer Price Rules

Transfer Price Rules

In Oracle Project Costing, transfer price refers to the price that two organizations agree upon for cross charge purposes. Define transfer price rules to determine how Oracle Project Costing calculates the transfer price for cross charged transactions. You can base the calculations based on:

• Transfer price basis - Base your transfer price on a cross charged transaction’s raw cost, burdened cost, or revenue.

• Cross-charge calculation method - You can optionally perform an additional calculation and apply a markup or discount to the amount from the transfer price basis.

Oracle Project Costing automatically converts transfer price amounts to the functional currency of the provider operating unit using the transfer price currency conversion attributes defined in that operating unit. You can use the Transfer Price Currency Conversion Override Extension to adjust these conversion attributes. You can process transfer price based on revenue amounts for cross-charged transactions independent of revenue generation. Oracle Project Costing calculates the revenue of the receiver project as part of transfer price calculation even if the revenue is not generated in the receiver operating unit. The cost transaction does not have to be billable. You can use the



potential revenue amount as a basis and apply a transfer price markup percentage even when the cost transaction is not billable from the receiver project's perspective. To define a transfer price rule:

1. Enter a unique name for the rule. 2. Select a type (Labor or Non–Labor). 3. Specify a description and the effective dates. 4. For Basis, select Raw Cost, Burdened Cost, or Revenue. 5. Select one of the calculation methods to determine the transfer price:

- Basis - Use the transfer price with no further adjustments. - Burden Schedule - Specify the name of an existing burden schedule to apply to the

basis. - Bill Rate Schedule - For Operating Unit, specify the name of the operating that owns

the bill rate schedule that you want to use. For Schedule, specify a bill rate schedule to apply to the basis.

6. In the Apply field, enter a percentage (zero or any positive number). - The percentage is the amount of a markup or discount to the transfer price amount

calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup.



Transfer Price Schedule

Transfer Price Schedule

A transfer price schedule is a list of transfer price rules. In the simplest transfer price schedule, an enterprise has a single transfer price rule that every provider and receiver organization pair follows. Oracle Project Costing supports more complex schedules so different pairs of provider and receiver organizations can negotiate their own transfer price rules. You can also define a schedule with one rule that applies to cross charges to a particular organization and another rule for cross charges to all other organizations. You can define one transfer price schedule consisting of different rules for different organization pairs or multiple schedules consisting of different rules for the same pair of organizations. When defining transfer price schedule lines, you can use the amount type classification to assign different rules for revenue sharing and cost reimbursement agreements. As Oracle Project Costing processes cross charge transaction, it uses the work type attribute to classify each transaction as cost or revenue, and therefore, to determine the schedule line to use when it calculates the transfer price. Oracle Project Costing uses the labor or non-labor transfer price schedule that you specified for the lowest-level task to which you charged the transaction. If you do not assign a transfer price schedule at the lowest task level, then Oracle Project Costing uses the transfer price schedule that you assign at the project-level.



To define a transfer price schedule: 1. Enter a unique name for the schedule 2. Select a type (Labor or Non-Labor). 3. Specify a description and the effective dates. 4. Enter the schedule lines:

- Line Num - Enter a number greater than zero to specify the display order for the lines.

- Provider - Choose any organization, parent organization, operating unit, legal entity, or business group.

- Receiver (Optional) - Choose any organization, parent organization, operating unit, legal entity, or business group. If you leave this field blank, then this transfer price schedule applies to any receiver organization receiving transactions from the specified provider organization.

- Labor Rule and Non Labor Rule - For Labor Rule, choose a valid transfer type rule with a type of Labor for this provider and receiver organization pair. For Non Labor Rule, choose a rule with a type of Non Labor. You must specify at least one transfer price rule (labor, non-labor, or both) for each schedule line.

- Apply % - One Apply % field applies to labor rules, the other to non-labor rules. Enter a percentage (zero or any positive number). The percentage is a markup or discount to the transfer price amount calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup.

- Transfer Price Amount Type - Select one of the following: - Cost and Revenue - The schedule line applies to all cross charge transactions. - Cost Transfer - The schedule line is applied to transactions when the assigned

work type has an amount type of Cost. - Revenue Transfer - The schedule line is applied to transactions when the

assigned work type has an amount type of Revenue. - Effective Dates - Enter effective dates for this schedule line. - Default - Choose one schedule line to be a default for this schedule. Oracle Project

Costing uses the rule associated with this line to derive the transfer price if none of the other lines match your transaction. Oracle Project Costing does not require that a transfer price schedule line be identified as the default line, however, it does issue an error message if it cannot determine a rule to apply to a transaction.



Cross Charge Implementation Options

Cross Charge Implementation Options

1. Enter the exchange rate date type and the exchange rate type that Oracle Project Costing uses to convert the transfer price amount to the functional currency of the provider operating unit.

2. Select a method for processing cross charges within an operating unit: - None - Borrowed and Lent

3. To allow cross charges to all operating units within a legal entity, enable the check box, and then choose a default processing method for this type of transaction:

- None - Borrowed and Lent



Provider and Receiver Controls for Borrowed and Lent Accounting

Provider and Receiver Controls for Borrowed and Lent Accounting

1. Select the operating unit that owns the controls. 2. Enter the operating unit that can receive cross charges from the current operating unit. 3. Enable Allow Cross Charge check box to allow cross charges to this operating unit.

- This value overrides the Allow Cross Charges To All Operating Units Within Legal Entity option. Changes to the check box affect future cross charges to this receiver operating unit.

4. For Processing Method, select the cross charge processing method to use for transactions charged to this receiver operating unit. You can choose:

- Borrowed and Lent only if the receiver operating unit and provider operating unit are in the same legal entity.

- Intercompany Billing only if you have identified the operating unit as a receiver for internal billing.



AutoAccounting Rules for Borrowed and Lent Transactions

AutoAccounting Rules for Borrowed and Lent Transactions

Define AutoAccounting rules for borrowed and lent cross charges in each provider operating unit. Use the Borrowed Account and Lent Account AutoAccounting functions to select the appropriate intercompany borrowed and lent accounts. You can optionally set up Oracle Subledger Accounting to overwrite the default borrowed and lent accounts, or individual segments of the accounts, that Oracle Project Costing derives using AutoAccounting rules. For additional discussion, see the lesson titled “Accounting for Costs.”



Implement Cross Charge Extensions

Implement Cross Charge Extensions

• Provider and Receiver Organizations Override Extension - Use this extension to enforce cross-charge rules at a higher level in the organization hierarchy than the level at which you assign resources and projects. This extension provides a single place for you to enforce and maintain your business rules in all organizations in your enterprise.

• Cross Charge Processing Method Override Extension - Use this extension to have custom business rules that help you identify how to process cross-charged transactions. For example you can exclude certain cross-charged transactions from cross-charge processing or you can change the cross-charge method.

• Transfer Price Determination Extension - Use this extension to specify a transfer price for transactions. If this extension returns a valid value for the transfer price, then Oracle Project Costing uses that value as the transfer price instead of computing the transfer price.

• Transfer Price Override Extension - Use this extension to override the transfer price for a transaction.

• Transfer Price Currency Conversion Override Extension - Use this extension to override the default attributes that Oracle Project Costing uses to convert the transfer price from the transaction currency to the functional currency.



Quiz

Answer: a



Summary


Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 1

Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18



Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking



Objectives



Agenda



Integration with Oracle Inventory

Integration with Oracle Inventory

Oracle Project Costing fully integrates with Oracle Inventory to enable you to enter inventory transactions in Oracle Inventory and transfer them to Oracle Project Costing. You can order and receive items into inventory before assigning them to a project. You can then assign the items to a project as they are taken out of or received into Oracle Inventory. When you enter project-related transactions in Oracle Inventory, you enter the project information on the source transaction. Oracle Inventory and Oracle Project Costing carry the project information through from the Issue To or Receipt From transaction in Oracle Inventory to the project expenditure in Oracle Project Costing. If you integrate with Oracle Inventory, you can use function security to prevent users from manually entering preapproved batch items in Oracle Project Costing with an expenditure type class of Inventory.



Integration with Oracle Inventory Flow

Integration with Oracle Inventory Flow

In a non-manufacturing environment, you enter issues and receipts into Oracle Inventory. After you process costs, these transactions become costed transactions. Next, run the Cost Collector. You can initiate the Cost Collector from the Project Cost Transfers window in Oracle Inventory to collect and then transfer costs to Oracle Projects. Next, in Oracle Projects, run the program PRC: Transaction Import for the transaction source Inventory Misc to create expenditures in Oracle Projects. If the import program rejects any transactions, then you can review and correct them using the Review Transactions window. After you correct the transactions, resubmit the PRC: Transaction Import program. The program imports the transactions into Oracle Project Costing as accounted and costed. You cannot perform adjustments on expenditure items from Oracle Inventory in Oracle Project Costing that impact the raw cost accounting for the expenditure item. The Allow Adjustments transaction source option is disabled for the transaction source Inventory Misc.



Miscellaneous Transactions

Miscellaneous Transactions

To enter a miscellaneous transaction in Oracle Inventory: 1. Enter the date and time (or accept default values).

- The transaction date becomes the expenditure item date. 2. Select a project-enabled transaction type in the Type field. 3. Enter the following required information:

- Item - Subinventory - Unit of Measure - Quantity - Account - Source Project - Source Task Expenditure Type - Expenditure Organization

4. Save



Launching Transaction Managers

Launching Transaction Managers

After you enter project-related inventory transactions in Oracle Inventory, the next step is to cost the transactions. You start the material cost transaction manager to cost material transactions. This manager processes costs for all material transactions. For details, see the Oracle Inventory User's Guide.



Transfer and Import

Transfer and Import

The next step in moving the transactions to Oracle Project Costing is to run the Project Cost Collector in Oracle Inventory. The Project Cost Collector collects the organization's project-related costs and passes these costs by project, task, and expenditure type to the Transaction Import Interface table in Oracle Project Costing. You can then import these transactions into Oracle Projects. The total Inventory Cost becomes the Raw Cost in Oracle Projects. Use the Project Cost Transfers window to submit the Project Cost Collector program and then run the program PRC: Transaction Import for the transaction source Inventory Misc in Oracle Project Costing to import the transactions from the interface table. In Oracle Project Costing, you can optionally run the request set PRC: Interface Miscellaneous Inventory Costs from Oracle Inventory to both collect costs and import transactions. This request set runs the following programs:

• Projects Cost Collection Manager - In the parameters, enter the Organization ID and the Number of Days to Leave Costs Uncollected. The program transfers the amount and quantities of the inventory transactions to the Transaction Import interface table.

• PRC: Transaction Import - The program imports the transactions as costed and accounted.



Quiz

Answer: a



Agenda



Oracle Inventory Integration Implementation Steps



Install and Implement Oracle Inventory

Install and Implement Oracle Inventory

For details regarding how to install and setup Oracle Inventory, see the Oracle Inventory User’s Guide.



Enable Project Cost Collection

Enable Project Cost Collection

To collect project-related costs in Oracle Inventory, you need to enable project cost collection for each organization: In Oracle Inventory: (N) Setup > Organizations > Parameters

• Select the Costing Information Tab • Enable the Project Cost Collect. Enabled check box.



Create a Project-Enabled Transaction Type

Create a Project-Enabled Transaction Type

Terminology associated with transaction types: • Transaction Source Type - A type of entity against which Oracle Inventory charges a

transaction. Along with a transaction action, it uniquely identifies the type of transaction you perform. Select a transaction source type of either Inventory or Move Order from the list of values.

• Transaction Action - A generic type of material movement or cost update with no specificity regarding the source of the transaction. Along with a transaction source type, a transaction action identifies a transaction type. When defining project-enabled transaction types with a transaction source type of Inventory, you can select either Receipt into stores or Issue from stores as the transaction action. You can set up a separate transaction type for each action. For project-enabled transaction types with a transaction source type of Move Order, select Issue from stores as the transaction action.

• Transaction Type – The combination of a transaction source type and a transaction action. It is used to classify a particular transaction for reporting and querying purposes. Use the Transaction Types window to define additional transaction types to customize transaction entry. A user-defined transaction type is a combination of a user-defined



transaction source type and a predefined transaction action. Oracle Inventory provides transaction reporting and querying capabilities by transaction type.

Only user-defined transaction types can be project-enabled. To create a user-defined transaction type: In Oracle Inventory: (N) Setup > Transaction > Types

1. Select the User Defined tabbed region. 2. Enter a unique name for the transaction type. 3. Enter a transaction source type. 4. Select a transaction action. 5. Enable the Project check box. 6. Save your work.

To make a user-defined transaction type inactive: Enter the date on which the transaction type becomes inactive. As of this date, you can no longer use the transaction type in a transaction. To enable Shortage Alerts and Shortage Notifications: You can choose to receive an online shortage alert, a workflow-based notification, or both for user-defined transaction types. For project-enabled transaction types, you can enable the alerts and notifications for transaction types that have a transaction action of Receipt into stores. Enable the check boxes to select which transaction action types will generate material shortage alerts and notifications.



Create an Inventory Expenditure Type

Create an Inventory Expenditure Type

In Oracle Project Costing, create at least one expenditure type with the expenditure type class Inventory. For additional discussion about how to define expenditure types, see the lesson titled “Implementing Expenditures.”



Set Expenditure Type Profile Option

Set Expenditure Type Profile Option

The profile option INV: Project Miscellaneous Transaction Expenditure Type governs the entry of expenditure types for project-related miscellaneous transactions. You can update the profile option at the site and responsibility levels. Values for this profile option are:

• User Entered - You must enter expenditure types for project-related miscellaneous transactions.

• System Derived from Cost Element - You cannot enter expenditure types for project-related miscellaneous transactions. The Cost Collector uses the expenditure types linked to the cost elements of the current weighted average unit cost of the item to post to Oracle Project Costing. If you select this option, then you need to associate expenditure types with cost elements using an Oracle Cost Management responsibility.

Associating Expenditure Types with Cost Elements Select an Oracle Cost Management responsibility and navigate to the Expenditure Types for Cost Elements window:

• (N) Setup > Expenditure Types for Cost Elements • Select a Transfers In and a Transfers Out expenditure type each of the following cost

elements:



- Material - An account to accumulate material costs. - Material Overhead - An account to accumulate material overhead or burden costs. - Resource - An account to accumulate resource costs. - Outside Processing - An account to accumulate outside processing costs. - Overhead - An account to accumulate resource overhead or department overhead

costs. • In expenditure types are used to cost the value of transfers into a project. Out expenditure

types are used to cost the value of transfers out of a project. • You can choose only Expenditure Types that are not defined as Rate Required in Oracle

Projects



Quiz

Answer: b



Agenda



Integration with Oracle Project Manufacturing

Integration with Oracle Project Manufacturing

Oracle Project Manufacturing is a solution for companies that manufacture products using projects or contracts. Oracle Project Manufacturing combines three major applications:

• Oracle Projects Suite • Oracle Manufacturing Suite • Third-party project planning and scheduling systems (project management systems)

When used as a part of the Oracle Project Manufacturing functionality, Oracle Project Costing acts as a cost repository for manufacturing-related activities from other products in the Oracle Project Manufacturing suite. This integration enables you to:

• Set up the WBS for a manufacturing project. You can then track all manufacturing costs by project and task and import the cost into Oracle Project Costing.

• Track projects and tasks throughout various manufacturing applications. • Charge project costs from inventory and work in process to a project and task. • Include project costs from manufacturing and distribution in your budget.



Importing Project Manufacturing Costs

Importing Project Manufacturing Costs

When you incur project-related costs in Oracle Project Manufacturing, the Cost Collector process in Oracle Cost Management passes those costs to Oracle Project Costing. The Cost Collector finds all costed manufacturing transactions that have a project reference and passes the costs to the correct project, task, and expenditure type in Oracle Project Costing. Run PRC: Transaction Import in Oracle Project Costing to import the costs. See the following pages for additional information about the transactions sources that you use to import transactions into Oracle Project Costing. If you use Oracle Project Manufacturing, then use function security to prevent users from entering pre-approved batch items with an expenditure type class of Inventory or Work in Process.



Transaction Sources

Transaction Sources

Oracle Project Costing predefines transaction sources to import transactions manufacturing-related costs. Do not use these transaction sources to import transactions from non-Oracle sources.



Transaction Sources (continued)

Transaction Sources (continued)

For the transaction sources for Inventory, WIP, and WIP Straight Time transactions, the GL Posting Option in the Project Manufacturing Parameters window determines whether Oracle Project Manufacturing or Oracle Project Costing generates accounting events and creates accounting for the transactions in Oracle Subledger Accounting as follows:

• If the posting option is Manufacturing, then Oracle Project Manufacturing creates accounting for the transactions in Oracle Subledger Accounting.

• If the posting option is Projects, then Oracle Project Costing creates accounting for the transactions in Oracle Subledger Accounting. The value that you select for the Account Option determines the source of the default accounting as follows:

- If the option is set to Use AutoAccounting, then Oracle Project Costing uses the transaction sources with No Accounts to import the transactions with no accounts. Oracle Project Costing then uses AutoAccounting to derive the default accounts.

- If the option is set to Send Accounts to PA, then Oracle Project Costing uses the transaction sources with Accounts to import the transactions and the default accounting from Oracle Project Manufacturing.



Quiz

Answer: a



Agenda



Integration with Oracle Asset Tracking

Integration with Oracle Asset Tracking

Oracle Asset Tracking is a fully integrated solution in the Oracle E-Business suite designed to deploy and track internal products and assets at internal or customer sites, while providing the ability to automatically capture financial transactions. Oracle Asset Tracking enables you to provide users with access to tracking information, without allowing them access to sensitive processes related to assets and purchasing. You can also track inventory items after you have installed them and link financial transactions to the physical movement of equipment. Oracle Asset Tracking enables you to create assets upon receipt in Oracle Purchasing. After you create the asset, Oracle Asset Tracking performs the changes in the background for any further physical movement. For example, if you move the asset from one location to the other, then Oracle Asset Tracking performs the asset cost, distribution, and unit changes without manual intervention. Oracle Asset Tracking integrates with Oracle Inventory, Oracle Purchasing, Oracle Project Costing, Oracle Assets, Oracle Order Management, and Oracle Payables, and stores information collected from them. Oracle Asset Tracking integration includes:

• Creating project-related purchase orders linked to Oracle Asset Tracking



• Entering receipts for project-related purchase orders in Oracle Purchasing and validating the receipts against the Oracle Asset Tracking repository

• Importing tracked items and cost into Oracle Project Costing • Monitoring costs in Oracle Project Costing • Generating asset lines for non-depreciable tracked items



How Purchase Order Receipts Flow into Project-Related Transactions

How Purchase Order Receipts Flow into Project-Related Transactions

The flow of purchase order receipts starts with the creation of a purchase order. Items against the purchase order are then received into the project. Oracle Asset Tracking validates the receipt data against the Oracle Installed Base repository and creates or updates the repository instance depending upon the physical attributes of the instance.

• For serialized items, Oracle Installed Base always creates a new instance. • For non-serialized items, physical attributes are combinations of values for Inventory Item

ID, Project ID, Task ID, and Instance Status. If any values of these attributes are different, then the application creates a new instance in Oracle Installed Base. If these attributes match, then the application adds the new receipt to the same instance.

During the process of creating purchase orders for expense items, that is, receipt into project, you must check the Accrue on Receipt flag in the purchase order shipment. You can capture project information in the distribution record only when the destination type is Expense. Accrual at period end is not supported. Run PRC: Transaction Import to create project expenditures after receipt is complete. Use the Expenditure Inquiry window in Oracle Projects to view the expenditures.



For a depreciable item, an asset is created upon receipt. Therefore, the cost is transferred from Oracle Assets to Oracle Subledger Accounting and then to Oracle General Ledger and not from Oracle Project Costing. To create mass additions in Oracle Assets, you must run the Create Assets: Interface Inventory Transactions to Oracle Assets concurrent program in Oracle Asset Tracking.



Importing Oracle Asset Tracking Cost

Importing Oracle Asset Tracking Cost

You run the program PRC: Transaction Import in Oracle Project Costing to import cost. When you run the program, you must select a transaction source:

• CSE_INV_ISSUE - Imports transactions of the type Issue for non-depreciable items. • CSE_INV_ISSUE_DEPR - Imports transactions of the type Issue for depreciable items. • CSE_IPV_ADJUSTMENT - Imports supplier cost adjustments for non-depreciable

items. • CSE_IPV_ADJUSTMENT_DEPR - Imports supplier cost adjustments for depreciable

items. • CSE_PO_RECEIPT - Imports transactions of the type Receipt for non-depreciable items. • CSE_PO_RECEIPT_DEPR - Imports transactions of the type Receipt for depreciable

items. • Inventory Misc - Imports miscellaneous transactions such as Miscellaneous Issue and

Miscellaneous Receipt. For additional information, see the Oracle Asset Tracking Implementation Guide and the Oracle Asset Tracking User Guide.



Summary


Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 1

Appendix B: Budgetary Controls and Budget Integration Chapter 19



Appendix B: Budgetary Controls and Budget Integration



Objectives



Agenda





Prerequisite Setup Before you set up budgetary controls and budget integration you must define resource lists in Oracle Project Foundation. For detailed discussion regarding defining resource lists, see the course titled “12.1 Project Foundation Fundamentals." If you want to create budgets that use budgetary controls and budget integration features, then complete the following steps: 1. Define budget types. 2. Define budget entry methods. 3. Define budget change reasons. 4. Define resource lists.



Define Budget Change Reasons

Define Budget Change Reasons

You can select a budget change reason for budget versions and for individual budget lines. To define a budget change reason:

1. Navigate to the Budget Change Reason Lookups window. 2. Enter the following information for the budget change reason:

• Code • Meaning • Description • Tag value (optional – tag value is not used by Oracle Projects) • Effective dates

3. Check the Enabled check box. 4. Save your work.



Define Additional Budget Types

Define Additional Budget Types

Budget types define the different types of budgets that you plan for when you want to create budgets that use budgetary controls and budget integration features. You designate each budget type as either a cost budget type or a revenue budget type.

• For a cost budget type, you can enter quantities, raw cost amounts, and burdened cost amounts.

• For a revenue budget type, you can enter quantities and revenue amounts. You can use any budget type for project status tracking. Oracle Projects predefines four budget types:

• Approved Cost Budget • Approved Revenue Budget • Forecast Cost Budget • Forecast Revenue Budget

You can define additional budget types during implementation. For example, your company may want to create a separate budget type from the Approved Cost Budget to track what if scenarios for future project alternatives.



To define a budget type: 1. Navigate to the Budget Types window. 2. Enter a name and description for the budget type. 3. Enter effective dates for the budget type. 4. Select Cost Budget or Revenue Budget as the Amount Type. 5. Optionally, enable Workflow for the budget type.

• If you want to enable Workflow for the budget type, then check the Use Workflow for Budget Status Changes check box.

6. Save your work.



Define Additional Budget Entry Methods

Define Additional Budget Entry Methods

Budget entry methods are used when you create budgets that use budgetary controls and budget integration features. Budget entry methods specify and control the following options:

• The level of the work breakdown structure at which you enter a budget. • The time phase that you use to enter budget amounts, if any. • Whether you enter amounts that are categorized by resources. • The amounts that you can enter.

Budget entry methods simplify budget entry by leading you through the budget entry windows to enter the data that you need. Budget entry methods also provide a way to enforce consistent budget entry across similar projects, which facilitates cross–project reporting. You select a budget entry method when you create a draft budget for a project. You also specify a default budget entry method for a project type. Oracle Projects predefines three budget entry methods:

• By lowest tasks and date range, Categorized by Resources • By lowest tasks and GL period, Categorized by Resources



• By lowest tasks and PA period, Categorized by Resources You can define additional budget entry methods during implementation. To define a budget entry method: 1. Navigate to the Budget Entry Methods window. 2. Enter a name and description for the budget entry method. 3. Select an entry level.

• The entry level can be Project, Top Tasks, Lowest Tasks, or Top and Lowest Tasks. 4. Select Categorized by Resources if you want to categorize amounts by resources. 5. Select a time phased type.

• The choices are Date Range, GL Period, PA Period, or None. 6. Select the enterable fields for cost and revenue using the displayed check boxes. 7. Save your work.



Budget Calculation Extensions

Budget Calculation Extensions

Budget calculation extensions allow you to control how Oracle Projects processes budgets. You can make the following types of changes:

• Facilitate budget entry by defining your own rules for calculating budget amounts, based on the quantities and raw cost amounts that you enter.

• Use function security to control whether users can override the calculated amount, based user responsibility.

Types of Calculations Using budget calculation extensions, you can calculate the following budget amounts:

• Raw Cost - Oracle Projects calls the budget calculation extension for raw cost after you enter a

Quantity in a Cost Budget’s budget line. If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Raw Cost amount field.

- Some examples of rules that you can define are: · Calculate Raw Cost for an employee based on the number of Hours entered.



· Calculate Raw Cost for vehicle usage based on the number of Days entered. • Burdened Cost

- Oracle Projects calls the budget calculation extension for burdened cost either after you enter a Quantity for a budget line of a Cost Budget, or after you enter the Raw Cost, deriving the burdened cost from the raw cost.

- If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Burdened Cost amount field.

- Some examples of rules that you can define are: · Calculate Raw Cost and Burdened Cost for an employee based on the number of

Hours entered. · Calculate Burdened Cost for computer usage charges based on the Raw Cost

entered. • Revenue

- Oracle Projects calls the budget calculation extension for revenue after you enter a Quantity for a Revenue Budget’s budget line. If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Revenue field.

- Some examples of rules that you can define are: · Calculate Revenue for an employee using a standard bill rate assigned to the

task. · Calculate Revenue for the Job entered using the number of Hours entered.

• All Budget Amounts - Oracle Projects also calls the budget extension to calculate budget amounts when

you enter the Resource, Dates, and Quantity, and when you change the resource or dates for existing amounts.



Budget Verification Extension

Budget Verification Extension

The budget verification extension allows you to define rules for validating a budget before its status is changed. You should determine your requirements for submitting a budget and for creating a baseline budget. By default, the budget verification extension does not include any budget submission requirements. You can customize the extension to match your company’s rules for budget submission. If you are using Workflow for budget status changes, Workflow calls this extension twice: once before it initiates the budget approval process, and again before it changes the budget status. This ensures that the verification rules for the status change are met, even if changes have been made to the budget during the approval process.



Budget Workflow and Budget Workflow Extension

Budget Workflow and Budget Workflow Extension

Budget Workflow Budget Workflow is used to initiate an approval process when budgets are submitted. When Oracle Projects budgeting is integrated with Workflow, Workflow is initiated for budget approval when you submit the budget draft. The budget is routed via Workflow if you defined the budget type to use Workflow. You can further define rules in the budget workflow extension. Oracle Projects provides a default budget workflow process, called PA Budget Workflow. You may customize the process or create a new one, using the Oracle Workflow Builder. For additional information regarding the Default Budget Workflow, see the "Oracle Projects Implementation Guide." Budget Workflow Extension Budget workflow extension is used to customize the budget workflow processes. Oracle Projects calls the budget workflow process to determine whether to call Oracle Workflow and which workflow process to call. The default budget workflow process calls the budget workflow extension to determine the budget approver. The default procedure returns the ID of the supervisor of the person who requested the budget status change.



Quiz

Answer: b



Quiz

Answer: a



Agenda





Budgetary controls enable you to monitor and control expense commitment transactions entered for a project.



Defining Profile Options for Budgetary Controls

Defining Profile Options for Budgetary Controls

PA: Enable Budget Integration and Budgetary Control Feature • This profile option controls whether the budgetary controls windows and processes are

displayed and run. • This profile option can be set at either the site or application level. • The default value is N (no). You must set this value to Y (yes) to enable Oracle Projects

budgetary controls and budget integration features. PA: Days to Maintain BC Packets

• This profile option specifies the number of days transaction funds check results are maintained.

• This profile option is specified at the site level. • The default value is 3. Increasing this value may slow the performance of the funds check

process.



Defining Control Levels and the Time Interval

Defining Control Levels and the Time Interval

You can define budgetary controls for project types, project templates, and projects. Values that you define for a project type are the default values for project templates. Values that you define for project templates are the default values for projects. When you define a project type, you indicate whether or not the default values for budgetary controls can be changed at the project level. The default control level values defined for a project can be changed for the project, and for individual tasks, resource groups, and resources after a project budget baseline is created. For example, you have a project with an overall budget of $1000. In your project budget, you have budgeted $100 for Task 1, $200 for Task 2, and $700 for Task 3. The default control level setting is Absolute for the project level and Advisory for the task level. If you want to make sure that no more than $100 is ever spent on Task 1, but want to remain flexible on Tasks 2 and 3, you could override the default control setting for Task 1, making it Absolute, while leaving Tasks 2 and 3 at an Advisory control level. Specifying Budgetary Controls for Project Types, Project Templates, and Projects

• To specify budgetary controls for a project type, navigate to the Budgetary Control tab for a project type.



• To specify budgetary controls for a project or project template, select the Budgetary Control option from the Projects, Templates window.

Defining Control Level Defaults for Resource Groups and Resources If you want to impose different levels of control on different project resources, then you can define default budgetary control values for your resource lists. The control level you define for the resource group is the default value for all resources assigned to the group. You can change the value for individual resources. Defining the Time Intervals Time interval settings identify the beginning period and the ending period included in the available funds calculation. The time interval settings are:

• Amount Type (beginning budget period) • Boundary Code (ending budget period)



Creating an Initial Budget

Creating an Initial Budget

When budgetary controls are enabled for a project, you must create a cost budget baseline before you enter commitment transactions. If a cost budget baseline does not exist when commitment transactions are entered, the system does not enforce budgetary controls when the commitment transactions are approved. Burdened Cost Amounts For a project that uses budgetary controls, use a budget entry method that allows the entry of burdened cost amounts. Oracle Projects uses burdened cost amounts to enforce budgetary controls. Therefore, when you use budgetary controls in a project, you must specify a budget entry method for the project cost budget that allows the entry of burdened cost amounts. If you enter only raw cost amounts for a project budget with a budget entry method that allows the entry of burdened cost amounts, then the system automatically copies the raw cost amounts to the burdened cost fields. Deferred Workflow for Creating Baselines When budgetary controls are enabled for a budget type, the baseline process uses a deferred workflow. The functions performed by the deferred workflow vary depending on whether or not you use workflow to control budget status changes.



If you do not use workflow to control budget status changes, then the deferred workflow process performs the following actions: 1. Changes the budget version status to In Progress 2. Creates/maintains budgetary control balances 3. Creates a baseline budget version 4. Sends a workflow notification to the user when the baseline process is complete If you use workflow to control budget status changes, the deferred workflow process performs the following actions: 1. Changes the budget version status to In Progress 2. Creates/maintains budgetary control balances 3. Initiates the budget status change workflow process



Adjusting Default Control Levels

Adjusting Default Control Levels

When create a budget baseline, default budgetary control level settings are created for each budget level based on the values you entered in the Budgetary Controls option. You can override the default control level values for the baseline budget version.



Quiz

Answer: c



Agenda





1. Define the Project Budget Account workflow process. • When a project budget is integrated with a non–project budget, an account must be

generated for each defined project budget line. You must customize the Project Budget Account workflow process to generate accounts according to your needs.

2. Define the PA: Allow Override of Budget Accounts profile option. • This profile option enables you to control whether users can manually override

accounts generated by the Project Budget Account workflow process. 3. Define the PA: Enable Budget Integration and Budgetary Control Feature profile option.

• To define budget integration for your projects, you must enable budget integration by setting the PA: Enable Budget Integration and Budgetary Control Feature profile option to Y (Yes).

4. Define the PA: Days to Maintain BC Packets profile option. • Top–Down Budget Integration Only

5. Define integration details for project types, project templates, and projects.



Implementing Bottom–Up Integration

Implementing Bottom–Up Integration

To define bottom–up budget integration for a project type: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level

• Check this check box if you want to allow users to modify the default budget integration settings at the project level.

3. Budget Type • Select a project budget type to be integrated. You can select any active budget type.

4. Balance Type • Select Budget. (For bottom–up integration, the Balance Type must be Budget.)

5. Non–Project Budget • Select an Oracle General Ledger budget from the list of values. • For Bottom–Up Budgeting, all other budgetary control fields must be blank.

To define bottom–up budget integration for a project template or project: 1. Navigate to the Budgetary Control option of the Projects, Template window.



2. Budget Type • Select a project budget type to be integrated. You can select any active budget type.

3. Balance Type • Select Budget. For bottom–up integration, the Balance Type must be Budget.

4. Non–Project Budget • Select an Oracle General Ledger budget from the list of values. • Oracle Projects supports bottom–up integration with Oracle General Ledger only. • Only defined budgets with a status of Open or Current appear in the list of values.

For Bottom–Up Budgeting, all other budgetary control fields must be blank. Note: If entry is not allowed, verify that the project type budgetary control settings allow override at the project level.



Implementing Top-Down Integration

Implementing Top-Down Integration

To define top–down budget integration for a project type: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level

• Enable this check box if you want to allow users to modify the default budget integration settings at the project level.

3. Budget Type • Select a project cost budget type to be integrated. You can enable top–down integration

for cost budget types only. 4. Control Flag

• Enable the Control Flag check box. Budgetary controls must be enabled for top–down integration.

5. Balance Type • Select Encumbrance. (For top–down integration, the Balance Type must be

Encumbrance.) 6. Non–Project Budget



• Select the Oracle General Ledger Funding Budget. 7. Encumbrance Type

• Select a General Ledger encumbrance type from the list of values. 8. Levels

• Select a default control level for each budget level. • For top–down budget integration, the system imposes absolute control at the project level

for all encumbered accounts. 9. Time Phase

• Select an Amount Type and Boundary Code to be used when the system calculates available funds.

• The project budget controls you set must be compatible with the funding budget controls. The project budget controls must not allow a transaction to pass funds check if the transaction will fail a funds check against the funding budget. In general, the project budget controls must be equal to or more restrictive than the funding budget controls.

To define top–down budget integration for a project template or project: 1. Navigate to the Budgetary Control option of the Projects, Template window. 2. Budget Type

• Select a project cost budget type to be integrated. 3. Balance Type

• Select Encumbrance. 4. Non–Project Budget

• Select the Oracle General Ledger Funding Budget. 5. Encumbrance Type

• Select a General Ledger encumbrance type from the list of values. 6. Levels

• Select a default control level for each budget level. • For top–down budget integration, the system imposes absolute control at the project level

for all encumbered accounts. 7. Time Phase

• Select an Amount Type and Boundary Code to be used when the system calculates available funds.

• If entry is not allowed, verify that the project type budgetary control settings allow override at the project level.



Summary


Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 1

Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20



Appendix C: Asset Capitalization: Capitalizing Interest



Objectives



Agenda



Overview of Capitalized Interest

Overview of Capitalized Interest

Capitalized interest (also referred to as Allowance for Funds Used During Construction) is an estimate of the interest cost that enterprises incur when they invest in long-term capital projects. Subject to accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total cost of acquiring and constructing assets that require an extended amount of time to prepare for their intended use. To accommodate this business requirement, Oracle Project Costing enables you to calculate and record capitalized interest for capital projects. To meet the requirements of regulated businesses such as those in the utilities industry that can recognize multiple types of capital interest, you can set up Oracle Project Costing to separately calculate capitalized interest for multiple interest types such as debt and equity. Oracle Project Costing calculates capitalized interest on open CIP amounts. You can spread the cost for one expenditure item across multiple assets. If you have previously capitalized any of the assets to which the cost is allocated, then Oracle Project Costing excludes the total item cost from the interest calculation. You define capitalized interest rate names to represent the interest types to capitalize. After you define rate names, you can create and maintain capitalized interest rate schedules to assign



rates to each organization. For additional discussion regarding defining rate names and rate schedules, see the section of this lesson titled “Implementing Capitalized Interest.” The process for generating and recording capitalized interest transactions includes the following tasks:

• Setting up capital projects for capitalized interest - To calculate capitalized interest for all eligible capital projects, define the capital information options for each project. You must also assign each project a status that allows capitalized interest.

• Generating capitalized interest expenditure batches - To generate interest expenditures, you periodically submit the concurrent program PRC: Generate Capitalized Interest Transactions.

• Reviewing capitalized interest expenditure batches - After you generate capitalized interest expenditure batches, review the transactions for accuracy. If necessary, you can delete or reverse a batch to allow regeneration.



Setting Up Capital Projects for Capitalized Interest

Setting Up Capital Projects for Capitalized Interest

To calculate capitalized interest for all eligible capital projects, you must define the capital information options for each project and assign each project a status that allows capitalized interest. You can define values for the following fields in the Capital Information window:

• Allow Capital Interest - Defines whether a project is eligible for capitalized interest. By default, Oracle Project Costing enables this option for all capital projects. You can deselect or select this option at any time.

• Capital Interest Schedule - Displays the default capitalized interest rate schedule for the project type, if any. If the Allow Schedule Override option is enabled for the project type, then you can override the default interest rate schedule value at the project level.

• Capital Interest Stop Date - You can optionally specify a date beyond which a project is not eligible for capitalized interest. To calculate interest, this field must either be blank or contain a date that is later than the end date of the GL period for which you want to calculate interest.

The Allow Capital Interest and Capital Interest Stop Date fields are also available at the task level. You can use these fields to control the calculation of capitalized interest for individual tasks.



Generating Capitalized Interest Expenditure Batches

Generating Capitalized Interest Expenditure Batches

To generate and record capitalized interest expenditures, submit PRC: Generate Capitalized Interest Transactions. This program calculates capitalized interest and generates transactions for eligible projects and tasks. When you submit the program, you can specify whether the program automatically releases expenditure batches. If you choose not to automatically release the batches, then you must release them manually in the Review Capitalized Interest Runs window. The program charges interest expenditures to the same tasks as the expenditure items on which it calculates interest. The program derives the expenditure organization and expenditure type values for the interest transactions from the expenditure organization source and expenditure type attributes that you define for the interest rate name.



Reviewing Capitalized Interest Expenditure Batches

Reviewing Capitalized Interest Expenditure Batches

After you submit PRC: Generate Capitalized Interest Transactions, check the status of each run and review the results in the Review Capitalized Interest Runs window. You can generate, review, and delete draft expenditure batches until you are satisfied with the results. To record the transactions in an expenditure batch, you must release the batch. You can reverse an expenditure batch after it is released successfully. If exceptions exist for one or more projects, then you can release the batch to release the successfully generated transactions. After you resolve the exceptions, you can create a new run to process the exception projects. You cannot generate a draft expenditure batch if a draft already exists for the same project and GL period. The rules for releasing, reversing, and deleting capitalized interest expenditure batches are:

• Releasing expenditure batches - You can release batches with the status Draft Success or Release Failure.

• Reversing expenditure batches - You can reverse expenditure batches with the status Release Success.

• Deleting expenditure batches - You can delete expenditure batches with the status Draft Success, Draft Failure, and Release Failure. You cannot delete batches with the status In Process. You cannot delete batches after they are reversed or released successfully.



Inactive Capital Projects Report

Inactive Capital Projects Report

Depending on your business rules, if a capital project has no activity over a period of time, then you may need to suspend the generation of capitalized interest for the project. For example, if the inactive period exceeds six months, then you can enter a Capital Interest Stop Date on the Capital Information window for the project to suspend capitalized interest calculation. You can run the MGT: Inactive Capital Projects Report to find capital projects with no activity for a specific period of time. When you submit the report, you must enter a value for the parameter Number of Inactive Periods. Enter the minimum number of periods (months) that a capital project must be inactive to appear on the report.



Quiz

Answer: a



Agenda



Capitalized Interest Implementation Steps



Defining Capitalized Interest Rate Names


You can define a unique name in the Capitalized Interest Rate Information window for each type of interest that you want to capitalize. For example, you can define a rate name to maintain interest rates for debt and another to maintain interest rates for equity. For each rate name, you can define thresholds that determine when projects become eligible for interest calculation. You can select interest calculation basis attributes that determine how Oracle Project Costing calculates interest amounts. For example, you can select an interest method to specify whether Oracle Project Costing calculates interest on a simple or compound basis. You can specify a period rate convention to determine whether Oracle Project Costing spreads interest amounts evenly across accounting periods or derives the interest amounts based on the number of days in each accounting period. You can specify the current period convention and expenditure type exclusions to determine the CIP balance on which Oracle Project Costing calculates interest. The current period convention controls how much of the current period CIP costs Oracle Project Costing includes in the balance on which it calculates interest. Expenditure type exclusions prevent interest calculation on specific types of costs.





The process for defining a capitalized interest rate name includes the following tasks: • Defining rate names - Define a unique name for each interest rate type. • Defining additional information - Specify an expenditure organization source,

optionally define thresholds, and select attributes for the interest calculation basis. • Define expenditure type exclusions - Optionally, select expenditure types to exclude

from the cost basis used to calculate capitalized interest. To define a rate name:

1. Navigate to the Capitalized Interest Rate Information window. 2. Enter a unique rate name and optionally a description. 3. Select the expenditure type for generated interest transactions.

- The expenditure type list displays only expenditure types with the expenditure type class Miscellaneous Transaction.

4. Enter an effective start date for the rate and optionally an end date. - After you use a rate name for creating interest transactions, the following restrictions

apply to updating the effective dates:



- You cannot change the effective start date to a date later than the earliest period start date associated with existing capitalized interest calculation runs.

- You cannot change the effective end date to a date prior to the latest period end date associated with existing capitalized interest calculation runs.

To define additional information: 1. In the Capitalized Interest Rate Information window, select the rate name to update, and

select the Additional Information button. 2. Select an expenditure organization source to define the expenditure organization for

generated interest transactions. 3. Optionally, select a threshold amount type to use when determining whether a project is

eligible for capitalized interest. - You can specify any combination of threshold settings. All entered thresholds must

be met before Oracle Project Costing calculates interest. 4. If you select the threshold amount type Budget, then select the budget type or plan type

you use to define cost budget amounts. If you use budget types for some projects and plan types for other projects, then select a value for both.

5. Optionally, enter a project threshold amount. - If you use the threshold amount type Budget and a budget is not defined for a

project, then the project is ineligible for interest calculation. 6. Optionally, enter a number of days from the project start date at which the project is

eligible for capitalized interest calculation. 7. Optionally, enter a task threshold amount.

- If you use the threshold amount type Budget and a budget is not defined for a task, then the task is ineligible for interest calculation.

8. Optionally, enter a number of days from the task start date at which the task is eligible for capitalized interest calculation.

9. Select a current period convention to specify the portion of the current period CIP amount to include in the interest calculation.

10. Select a period rate convention to specify how Oracle Project Costing spreads interest amounts across accounting periods.

11. Select an interest method to specify whether to use a simple or compound interest calculation.

To define expenditure type exclusions: 1. In the Capitalized Interest Rate Information window, select the rate name to update, and

select the Expenditure Type Exclusion button. 2. Select the operating unit for the exclusion and select the Find button. 3. Select one or more expenditure types that you want to exclude from the CIP basis on

which interest is calculated.



Defining Capitalized Interest Rate Schedules

Defining Capitalized Interest Rate Schedules

You define interest rate schedules to create and maintain rates for interest calculation. You maintain rates by organization and rate name. You can specify an interest rate schedule for each project type. The rate schedule you define for a project type is the default rate schedule for all projects you create for the project type. You can optionally allow override of the default rate schedule at the project level. Define capitalized interest rate schedules in the Capitalized Interest Rate Schedule window. Interest rate schedules enable you to maintain interest rates at the organization level. If you do not define a rate for an organization, then the capitalized interest calculation program uses the rate for the next higher level organization in the organization hierarchy. You can assign an interest rate schedule to a project type and optionally allow override of the assigned schedule at the project level. To define an interest rate schedule:

1. Navigate to the Capitalized Interest Rate Schedule window. 2. Enter a rate schedule name and optionally a description. 3. Enter an effective from date and optionally enter an end date.



4. Select an organization hierarchy to specify the source of assignment organizations. 5. Enter a hierarchy version number. The hierarchy version is the default version of the

organization hierarchy to be applied to the schedule. 6. Select a start organization within the organization hierarchy. 7. In the Versions region, enter a version name to define a unique set of rates. 8. Enter a start date for the version and optionally enter an end date.

- Enable the Hold check box to hold this schedule from compiling. - Choose the Details button to review the details of a revision.

9. In the Multipliers region, select an organization name to which to assign an interest rate. 10. Select a rate name to which to assign an interest rate. 11. Enter an interest rate in the Multiplier field. Enter an annual rate to use for this rate name

and organization. - Enter a decimal and not a percentage value. For example, for 10% you enter 0.10. - Optionally, choose the Copy button to copy multipliers from one schedule revision

to a new revision. 12. Save your work. 13. After you have completed entry of all multipliers, choose Compile to compile new

multipliers. When you compile a schedule, Oracle Project Costing automatically submits PRC: Compile Rate Schedule.



Specifying Capitalized Interest Rate Schedules for Project Types

Specifying Capitalized Interest Rate Schedules for Project Types

You can specify a default capitalized interest rate schedule for a capital project type. The rate schedule that you specify for a project type is the default rate schedule for all projects that you create for the project type. In addition, you can specify whether you can override the default schedule at the project level. To specify a default capitalized interest rate schedule for a capital project type and set the override control, navigate to the Capitalization Information tab on the Project Types window.



Setting Project Status Controls for Capitalized Interest

Setting Project Status Controls for Capitalized Interest

You use project status controls to determine whether Oracle Project Costing calculates capitalized interest throughout the various stages of a project. By default, all project statuses to which you assign a system status of Approved allow calculation of capitalized interest. You must determine the project statuses for which to allow the calculation of capitalized interest and update project status controls accordingly. To update project status controls for capitalized interest, navigate to the Project Statuses window and select a project status. For each status, either select or deselect the Allow check box for the Capitalized Interest status controls action.



Implementing the Capitalized Interest Extension

Implementing the Capitalized Interest Extension

The Capitalized Interest Extension has the following procedures: • Target Task Override Procedure - Enables you to redirect capitalized interest

transactions to specific tasks. • Expenditure Organization Procedure - Enables you to specify organizations other than

the source project owning organization or source task owning organization as the expenditure organization for generated transactions.

• Interest Rate Multiplier Override Procedure - Enables you to define multiple interest rate multipliers based on the rate name and task owning organization.

• Interest Override Procedure - Enables you to define your own calculations for capitalized interest.

• Interest Threshold Procedure - Enables you to define duration and amount thresholds at levels lower than the operating unit.

• Grouping Method Procedure - Enables you to specify grouping criteria. • Get Transaction Attributes Procedure - Enables you to control how Oracle Project

Costing populates the transaction attribute columns.



Quiz

Answer: a



Quiz

Answer: d



Summary


Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 1

Summary of R12.x Project Costing Fundamentals Chapter 21



Summary of R12.x Project Costing Fundamentals



Objectives



Agenda





You can use Oracle Project Costing to collect costs associated with all of your project activities. A project financial structure is a task tree showing the organization of project activities. It can be as simple or detailed as you want it to be. There are no limits in width or levels.



Expenditures

Expenditures

An expenditure is a group of expenditure items, or transactions, that an employee or an organization incurs or an expenditure period. You charge expenditures to a project to record actual work performed or cost incurred. Oracle Project Costing uses these terms for expenditures:

• Expenditure batch - A user-defined name used to track a batch of expenditures, such as timecards and miscellaneous transactions.

• Expenditure - A group of expenditure items incurred by an employee or organization for an expenditure period.

• Expenditure item - The individual transactions charged to a specific project and task combination.





Oracle Project Costing is an integrated cost management solution for all projects and activities within an enterprise. Costing includes the following major steps:

1. Enter and approve expenditures through the Oracle Project Costing user interface, or import unaccounted transactions.

2. Distribute costs and derive default accounting. 3. Generate cost accounting events.





4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger.





5. Import final subledger journal entries in Oracle General Ledger. 6. Post journal entries in Oracle General Ledger.





Oracle Project Costing creates many different accounting transactions throughout its business cycle. You can use AutoAccounting to specify how to determine the correct account for each transaction. Oracle Project Costing generates accounting events and creates accounting in Oracle Subledger Accounting. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables and Oracle Purchasing use the Account Generator to determine the default account code combinations for purchasing requisitions, purchase orders, supplier invoices, and expense reports based on the project information entered.



Burden Costing

Burden Costing

Burdening, also known as cost plus processing, is a method of applying one or more burden cost components to the raw cost amount of each individual transaction to calculate burden costs.





Oracle Project Costing fully integrates with Oracle Purchasing and Oracle Payables and enables you to enter project-related documents using those products. You can use both Oracle Purchasing and Oracle Payables, or just Oracle Payables. In addition, you can use Oracle iProcurement to enter project-related requisitions. When you enter project-related transactions in Oracle Purchasing and Oracle Payables, you enter project information on your source document. Oracle Purchasing, Oracle Payables, and Oracle Project Costing carry the project information through the document flow: from the requisition to the purchase order in Oracle Purchasing, to the supplier invoice in Oracle Payables, and to the project expenditure in Oracle Project Costing. The accounting method for your ledger determines when you can interface supplier costs to Oracle Project Costing. Note: You can use Transaction Import in Oracle Project Costing to import accounted supplier invoices directly into Oracle Project Costing from 3rd party systems.





With Oracle Internet Expenses, employees and contingent workers can enter and submit expense reports using a standard Web browser or a Web-enabled mobile device. Oracle Workflow automatically routes expense reports for approval and enforces reimbursement policies. Oracle Internet Expenses integrates with Oracle Payables to provide quick processing of expense reports for payment. You can create project-related expense reports using Oracle Internet Expenses. You send expense reports entered in Oracle Internet Expenses to Oracle Payables and then to Oracle Project Costing. Note: You can enter expense reports containing project and task information in Oracle Internet Expenses or Oracle Payables. Additionally, you can import fully-accounted project-related expense reports into Oracle Project Costing from third-party systems using Transaction Import.





Oracle Time & Labor integrates with Oracle Project Costing to enable employees and contingent workers to enter and submit project-related timecards. Employees and contingent workers enter their own time, which you can subject to an approval process according to your business rules. You can transfer approved timecards to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you import the timecards into Oracle Project Costing, you cost the timecards and derive the default accounting using AutoAccounting. During cost processing, the raw cost and any additional burden cost is calculated. Finally, you generate cost accounting events and create accounting for the timecards in Oracle Subledger Accounting.



Integration with Other Applications

Integration with Other Applications

Integration with Oracle Inventory When you enter project-related transactions in Oracle Inventory, you enter the project information on the source transaction. Oracle Inventory and Oracle Project Costing carry the project information through from the Issue To or Receipt From transaction in Oracle Inventory to the project expenditure in Oracle Project Costing. Integration with Oracle Project Manufacturing When used as a part of the Oracle Project Manufacturing functionality, Oracle Project Costing acts as a cost repository for manufacturing-related activities. Integration with Oracle Asset Tracking

Oracle Asset Tracking is a fully integrated solution in the Oracle E-Business suite designed to deploy and track internal products and assets at internal or customer sites, while providing the ability to automatically capture financial transactions. You can create project-related purchase orders linked to Oracle Asset Tracking and import tracked items and cost into Oracle Project Costing. You can also generate asset lines for non-depreciable tracked items and interface the asset lines to Oracle Assets to create assets.





The allocations feature can distribute amounts between and within projects and tasks, or to projects in other organizational units. For example, you can distribute amounts such as salaries, administrative overhead, and equipment charges across several projects and tasks. Your allocations can be as simple or elaborate as you like. AutoAllocations provide the ability to generate allocations more efficiently. You can group processes and run them in a specified sequence or at the same time. AutoAllocations is an Oracle General Ledger and Oracle Project Costing feature. In Oracle General Ledger, the allocation definition is called a batch. In Oracle Project Costing, the allocation definition is called a rule.





Using capital projects, you can define capital assets and capture construction-in-process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets you are building, installing, or acquiring. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work-in-process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.



Asset Capitalization: Capitalized Interest

Asset Capitalization: Capitalized Interest

Capitalized interest (also referred to as Allowance for Funds Used During Construction) is an estimate of the interest cost that enterprises incur when they invest in long-term capital projects. Subject to accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total cost of acquiring and constructing assets that require an extended amount of time to prepare for their intended use. To accommodate this business requirement, Oracle Project Costing enables you to calculate and record capitalized interest for capital projects. To meet the requirements of regulated businesses such as those in the utilities industry that can recognize multiple types of capital interest, you can set up Oracle Project Costing to separately calculate capitalized interest for multiple interest types such as debt and equity.



Cross Charge

Cross Charge

When projects share resources within an enterprise, it is common to see those resources shared across organization and country boundaries. Further, project managers can also divide the work into multiple projects for easier execution and management. The legal, statutory, or managerial accounting requirements of such projects often present complex operational control, billing, and accounting challenges. Cross charge enables project managers to easily view the current total costs of the project, regardless of who performs the work or where it is performed. You can choose one of the following processing methods for cross charge transactions:

• Borrowed and Lent Accounting • Intercompany Billing Accounting • No Cross Charge Process



Budgetary Controls and Budget Integration

Budgetary Controls and Budget Integration

Budgetary Controls You can enforce budgetary controls against a GL budget and a project cost budget. Budgetary controls enable you to monitor and control expense commitment transactions. Expense commitment transactions are transactions for non-inventory items. Oracle Project Costing enforces budgetary controls for:


unmatched prepayments to supplier invoices Budget Integration Oracle Project Costing budget integration features enable you to integrate project budgets with non-project budgets in Oracle General Ledger. Integration is defined in order to perform bottom-up or top-down budgeting.



Agenda



Oracle Projects Fundamentals Learning Path



Summary