Oracle Applications Release Oracle SLA White Paper GreenChain Software Solutions Pvt Ltd

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1 Oracle Applications Release Oracle SLA White Paper GreenChain Software Solutions Pvt Ltd GreenChain Software Solutions Pvt Ltd Page 2 of 35

2 Contents Oracle SLA... 4 Transaction flow of SLA to GL:... 5 Account Generators vs. SLA... 6 Prerequisites Setups... 7 Subledger Accounting Options Setup... 7 SETUP PAGES... 7 Accounting Method Builder (AMB)...10 NAVIGATION TO SLA FORM: COMPONENTS OF AMB STEPS TO DEFINE RULES IN SLA User Configurable - Scenarios...21 SCENARIO 1 DEFINE DIFFERENT LIABILITY ACCOUNT BASED ON SUPPLIER TYPE SCENARIO 2 - DISPOSAL CHARGED TO SPECIFIC COST CENTRE Commonly Used Reports...33 Important Backend Tables...33 Glossary...34 GreenChain Software Solutions Pvt Ltd Page 3 of 35

3 Oracle SLA Oracle Sub Ledger Accounting is a set of services for R12 that significantly enhances accounting support across the E-Business Suite. Subledger Accounting is a Service, not an application. There are no SLA Responsibilities and there is no direct login to SLA. SLA forms and programs are embedded within the Standard Oracle Application responsibilities (Eg. Payable Manager) SLA is : Simply a rule-based engine, tool set & repository supporting Oracle E-Business Suite Modules Allows multiple accounting representations for a single business event, resolving conflicts between corporate and local fiscal accounting requirement Retains the most granular level of detail in Subledger accounting model, with different summarization options in General Ledger, allowing full audibility and reconciliation Introduces a common data model and UT across Sub-ledger, replacing disparate 11i setups, proving a Single source of truth for financial and management Analysis Participating sub-ledgers include: Payables Receivables Projects Assets Cash Management Purchasing Cost Management Process Manufacturing GreenChain Software Solutions Pvt Ltd Page 4 of 35

4 Transaction flow of SLA to GL: Transaction Creation SLA Journal Entry Create Accounting GL Journal Entry Journal Import GL Balances Posting GreenChain Software Solutions Pvt Ltd Page 5 of 35

5 Account Generators vs. SLA Account Generators are special workflows which automatically construct Accounting Flexfield combination using Oracle or User-defined business rules. Seeded Account Generators can be utilized to generate accounts. If special business needs exists, Users can modify the Account Generator based on Oracle rules that must be followed when customizing the Account Generators. Below are the Con s which has resulted in transition to SLA: Some Account Generators require Customization Patching can often overwrite Customized Account Generator Customizations are not protected during Upgrades Database has to be bounced for changes to account generators to go into effect There are a couple of key points worth highlighting here as well: Most of the sub-ledgers continue to use their existing (11i) methods to derive the accounting which users see in Distribution windows. For example: - Receivables still uses Auto Accounting to default invoice accounting - Projects still use Auto Accounting to default revenue accounting and an Account Generator to default P2P expenditure accounting - Assets may use an Account Generator to derive its account codes In most cases SLA picks up this account code as the default source for its account derivation rules. By default, it will simply pass this through to GL, however SLA also allows you to modify this if you wish to In cases where you have a choice between methods (for example in Assets where the profile option FA: Use Workflow Account Generation allows you to opt to bypass the use of the Account Generator), its recommend to consider going directly to the newer technology i.e. SLA, (rather than investing further in a workflow based method whilst knowing that workflow technology will not be used in the next generation Fusion Applications) GreenChain Software Solutions Pvt Ltd Page 6 of 35

6 Prerequisites Setups 1. Set up a subledger application in the Accounting Methods Builder (AMB) Please refer Accounting Method Builder 2. Set up ledgers in General Ledger Please Oracle General Ledger Student User guide for setup Sub ledger Accounting Options Setup Set up Pages What: Define how journal entries are generated from subledger transactions at the subledger application level for both Primary and Secondary Ledgers Why : To customize basic accounting attributes like entered amount, accounted amount, Date, Currency code etc and the complex attributes like Ledger, Code Combination ID, Periods etc. and there interface to GL from SLA How : Below are the Subledger Accounting Options Setup Pages which are accessed from General Ledger : 1. Subledger Applications (N): Setup > Financials > Accounting Setup Manager > Accounting Setups In this page, select the application to update and the Update Subledger Accounting Options page opens. You can choose to disable Subledger Accounting for a particular application in the Update Accounting Options page of a secondary ledger GreenChain Software Solutions Pvt Ltd Page 7 of 35

7 2. Update Accounting Options (N): Setup > Financials > Accounting Setup Manager > Accounting Setups > Accounting Options > Subledger Applications > Click on Update This page displays the Subledger Accounting options for the ledger and the Subledger application. Review and update the options. The view for this page depends on the Subledger application type (valuation method or nonvaluation method) and the ledger type (primary or secondary). Click on Update Accounting Options against the relevant Application to update the Accounting Options. Update Accounting Options General Ledger Journal Entry Summarization: Determines the level of summarization of subledger journal entries, whether by GL Period /GL Date / None, when transactions are transferred to General Ledger GreenChain Software Solutions Pvt Ltd Page 8 of 35

8 Reversal Method: Determine how the reversal subledger journal Entries are generated in Subledger Accounting for a given application and ledger, whether by reversing the Debit for a credit or sign is changed keeping reversal entry same side as the original entry Rounding Rule: Determines the option for rounding to Up/ Down / Nearest value Third Party Merge Accounting Options: Determine the option of merging third party account Accounting Program Defaults Default options are used when running the Create Accounting program and are applied to the following: Primary ledgers Secondary ledgers for applications subject to value method subledger Accounting Program Mode: Determines a default value for the parameter in the standard report submission window to determines how subledger journal entries are created Allow Mode Override: Determines whether users can override the value specified in the Accounting Mode parameter Transfer to GL: Predefines whether the Transfer to GL and the General Ledger Import should occur automatically Allow Transfer Override : Determines whether users can override the value specified in the Transfer to GL parameter in the previous field Post in GL : Predefines whether the GL Posting should occur automatically Allow Post override : Determines whether users can override the value specified in the Post in GL Accounting Report Level : Determines whether the Create Accounting report is generated in Detail or Summary mode Stop at Error Limit : Controls the execution of the Create Accounting program. Users can set the Create Accounting program to stop when a certain number of events, specified in the Error Limit field, fail to create subledger journal entries Error Limit : Specifies the maximum number of failed events allowed before the Create Accounting program stops creating subledger journal entries when submitting a batch of documents Event Class Options Describes the defaults for event class options that can be overridden at a Journal Category and Use Document Sequence 3. Update System Options GreenChain Software Solutions Pvt Ltd Page 9 of 35

9 (N): Setup > Financials > Accounting Setup Manager > Accounting Setups > Accounting Options > Subledger Applications > Click on Update > Click on Update System Options Defines the processing unit size at the event class level to process a large number of items in one commit cycle.the Create Accounting program processes the default processing unit size at the application level. Accounting Method Builder (AMB) A set of Screens which provide the flexibility to create your own Subledger accounting setup or use the seeded subledger accounting setup Enables to create and modify subledger Journal line setups and application accounting definitions. These Definitions define the Journal Entries that enable the organization to meet the fiscal, regulatory and analytical requirements. It Supports logic such as prioritization and conditional statements without using SQL. Also, Userdefine SAM retained can be during patching and upgrades GreenChain Software Solutions Pvt Ltd Page 10 of 35

10 Each Ledger is assigned to Subledger Accounting Method (SLAM) Subledger Accounting method tells what type of accounting method is used i.e., Cash or Accrual in the ledger Under SLAM, set of Application Accounting Definition (AAD) is defined for different Subledger Under AAD, set of Journal Line definitions( JLD) for each Event Class (Ex. Invoices, Prepayment, Payments) and Event Type (Ex. Invoice Validation, Prepayment application, Payment Created) combination is defined Each JLD, hold group of Journal Line Types (JLT Ex. Liability, Item Expense, Gain, Loss etc.,), Account Derivation Rules ( ADR Ex. GL Accounts ) and Journal Entry Description ( JED Ex. Check Details) JLT type contains: Accounting Attributes (Ex. Accounting Date, Accounting amount, Party Id etc.,) Basic info which determines Journal line properties (Ex. Side Dr/Cr, Balance Type Actual /Encumbrance, Transfer to GL - Summary or Details etc., ) Condition Navigation to SLA Form: Although SLA is a separate product, it may be helpful to think of it as a service rather than a separate Application, since it is accessed via the existing sub-ledgers For instance, below screen shows SLA for Payables : GreenChain Software Solutions Pvt Ltd Page 11 of 35

11 Components of AMB Subledger Accounting Method (SLAM) : It s a collection of accounting definition for all the applications that you will be generating accounting for.each Primary and Subledger Level or Secondary Ledger is associated with a SLAM, which determines the rules and standards that will be applied when generating entries for a ledger Example: Standard Accrual, Standard Cash etc., GreenChain Software Solutions Pvt Ltd Page 12 of 35

12 Application Accounting Definition (AAD): Use the Application Accounting Definition to Assign Journal Line Definitions and headers to event classes and event types. AAD s must be included in a SLAM and assigned to Ledger. You can group AAD from multiple products, such as Oracle Payables, Receivables Assets into a Single Accounting Method GreenChain Software Solutions Pvt Ltd Page 13 of 35

13 Journal Line Definition (JLD) Journal Line Type, description, account derivation rules grouped together as a Journal Line Definition to create the rule for a particular event type GreenChain Software Solutions Pvt Ltd Page 14 of 35

14 Journal Line Type (JLT) Its specifies if the Journal line is to be debit, credit or gain/loss line. Business Flow method determines of and how a journal line should inherit journal entry values It specifies whether to apply a multiperiod accounting to a journal line type Switch Debit/Credit is Yes, always keep positive amounts in Journal lines.for example, Dr -500 is displayed as Cr +500 GreenChain Software Solutions Pvt Ltd Page 15 of 35

15 Account Derivation Rules (ADR) ADR are used to determine the account combination for Subledger journal entries. We can various rules to determine how a journal entry account is derived. The account code combination can be derived segment by segment or as a complete account code combination. The below accounting derivation rule is placed with conditional logic. If the condition holds for priority 1, then this source (Invoice Liability account) is used. If not, SLA uses the source for the priority 2 (if it s available) GreenChain Software Solutions Pvt Ltd Page 16 of 35

16 Journal Entry Description ( JED) This is useful in finding the the actual transaction object details (Ex. Invoice/Payment details from Journal line) Transaction Objects Transaction object is nothing but a view which all the transaction information required to create Journal line for particular event class AP_INVOICE_EXTRACT_HEADER_V, AP_INVOICE_EXTRACT_DETAILS_V are transaction objects for even class invoices. So, accounting for all the invoice type events gets the transaction information from the transaction objects GreenChain Software Solutions Pvt Ltd Page 17 of 35

17 Sources Each Column in the transaction object is define as source in the AMB. AMB uses these sources to get the transaction information from transaction objects. GreenChain Software Solutions Pvt Ltd Page 18 of 35

18 Accounting Attributes Sources are mapped with accounting attributes. Accounting attributes is the bridge between JLT and Sources. For example, GL Date, Entered currency code, Entered amount, Accounted amount, Conversion rate date GreenChain Software Solutions Pvt Ltd Page 19 of 35

19 Steps To Define Rules in SLA The screens used are Accounting Methods Builder (AMB). Below are the Steps which need to be followed for modifying the Subledger Accounting Method: 1. Determine Accounting Requirement 2. Create a new Sub-ledger Accounting Method. 3. Create a new Application Accounting Definition by copying the existing one for Receivables. 4. Create a new Journal Line Definitions by copying the seeded one. Provide the chart of accounts name in the Accounting Field. 5. Create a Mapping Set ( Optional) 6. Attach the new Journal Line Definitions to the Application Accounting Definition and remove the seeded value. 7. End date the existing Application Accounting Definition assigned to the Subledger Accounting Method and attach the new Application Accounting Definition. 8. Assign the new Subledger Accounting Method to the Ledger. Note Pre Work: Before customizing the subledger definition, ensure that new Subledger Accounting Method, Application Accounting Definition and Journal Line Definitions are created. It is best to copy the seeded definitions given by Oracle. Ensure that the Accounting Chart of Accounts is given in each of the three definitions. GreenChain Software Solutions Pvt Ltd Page 20 of 35

20 User Configurable - Scenarios In most of the cases we would not need to customize SLA. Some of the typical business scenarios where we would need to customize SLA in Payables are as follows: To have a different Liability account based on Operating Unit for which the invoice is entered. To have different natural account (expense) based on different Invoice Type and Invoice Line type. To have different natural account (expense) and different liability account based on different criteria like supplier type, entering currency, pay group, etc. The cost center segment of Invoice distribution Liability account shall be picked from the Invoice distribution Account while the other segment values from the Liability account defined at supplier site. To cater to some of the above requirements we can use other alternatives like using distribution sets also. But setting up a custom SLA for such scenarios is an easier approach with lower user maintenance. Below scenarios explain, how a customization is carried in SLA : Scenario 1 Define different Liability Account Based on Supplier Type Business Scenario: We need to define different liability account (natural account segment) based on Supplier Type so that business can track the liability by supplier type. The other segment values will default from supplier site. I am limiting this example to only one supplier type Contractor". The objective would be to have a different natural account for Liability account for invoices of supplier type "Contractor" alone, while for other supplier types the normal liability account should default Solution: Step1: First define a mapping set for various supplier types. (N): Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal Entry Setups > Mapping Sets GreenChain Software Solutions Pvt Ltd Page 21 of 35

21 Step2: Define ADR (Account Derivation Rules) Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal Entry Setups > Account Derivation Rules GreenChain Software Solutions Pvt Ltd Page 22 of 35

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23 Step3: Define JLD (Journal Line Definition) Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Journal Line Definitions Always create a copy of the seeded JLD and do not modify a seeded JLD. We will create a copy of ACCRUAL_INVOICES_ALL for our Chart of Accounts Operations Accounting Flex only. Add the custom ADR created to Liability, Basic (Line Assignment) GreenChain Software Solutions Pvt Ltd Page 24 of 35

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26 Step 4: Setup AAD (Application Accounting Definition) Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Application Accounting Definition Create a copy of seeded AAD only and do not modify existing AAD. I am creating a custom AAD called TEST_AAD for COA Operations Accounting Flex. GreenChain Software Solutions Pvt Ltd Page 27 of 35

27 Step 5: Setup SAM (Subledger Accounting Methods) Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Subledger Accounting Methods Create a copy of a seeded SAM and do not modify seeded SAM. Add the custom AAD to the Event Class Payables. GreenChain Software Solutions Pvt Ltd Page 28 of 35

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29 Step 6: Assign the custom SAM to Primary Ledger Navigation: Set ups > Accounting Setups > Ledger Setup > Define > Accounting Setup GreenChain Software Solutions Pvt Ltd Page 30 of 35

30 Verification of new SLA rule: Create an invoice for supplier type Contractor and create accounting Liability Account for Supplier Type Contractor is GreenChain Software Solutions Pvt Ltd Page 31 of 35

31 Liability Account for other Supplier Types is GreenChain Software Solutions Pvt Ltd Page 32 of 35

32 Scenario 2 - Disposal Charged to Specific Cost Centre Business Scenario: Client requires that Asset disposals ( Natural Account 8101) be charged to a specific cost centre 210 instead of to the balance sheet i.e. 000 Commonly Used Reports List of Frequently Used Reports: S.no Report Name 1 Journal Entries Report 2 Account Analysis Report 3 Third Party Balances Report 4 Period Close Exceptions Report 5 Open Account Balances Listing Important Backend Tables XLA_EVENTS : The table Stores records for accounting events generated by Subledger applications. Each Product team populates this table by calling Subledger accounting API and the respective product team will decide when this table is to be populated during the transaction life cycle XLA_AE_HEADERS: The table stores Subledger Journal Entries. There is one-to-many relationship between accounting events and journal entry headers XLA_AE_DISTRIBUTION_LINKS: The table stores detailed distribution for Journal Entries. This table Stores the data at the most granular level and represents data contained in the respective subledger product s distribution tables. The detailed distribution stored in this table are merged into accounting lines and stored in XLA_AE_LINES table. Subledger Accounting uses this table for processing reversals and business flows. XLA_AE_LINES : The table stores the Subledger Journal Entry lines. There is one-to-many relationship between the subledger journal entry headers and subledger journal entry lines. This table will store at least one row for debit and one row for credit for each accounting entry created. If multiple debit or credit journal entry lines exists for any specific event type and if the journal line type allows merging matching lines then these will be merged into Single line.the unmerged granular level of detail for each accounting line will be available in XLA_DISTRIBUTION_LINKS table GreenChain Software Solutions Pvt Ltd Page 33 of 35

33 Glossary Processing Unit A processing unit is the number of transactions processed by the Create Accounting program in one commit cycle Event Model: It s defined as a Subledger transaction types and life cycle Event Entity: Group event classes into technical transaction models called Event Entities. For instance, group the event classes invoices and prepayments into the event entity Invoices, because both classes of transaction are stored in payables invoice transaction table (AP_INVOICES_ALL). Event entities enable you to treat events for a single transaction model in the same way. The event entity often logically corresponds to a single document used as a basis for several related transactions Event Class: It classifies transaction types for accounting rule purposes. For example, group the event types invoice approved, invoice adjusted and invoice cancelled into event class invoices. Then assign AMB components, such as JLT, by event class within the application accounting definition. This assignment simplifies setup when the accounting requirement for all the event types in a class is the same. Also, sources assigned to an event class are available for accounting of all event types in that event class For example Payables: Invoices, Debit Memo, Credit Memo, Prepayments and Refunds Event Type: Each accounting event should be represented by an accounting event type. These types are registered in AMB. When subledger journal entries are created, the event type determines which application accounting definitions should be used to process the accounting event. Application accounting definitions created in the AMB determine the lines, description, accounts and other elements of Subledger journal entries For example AP Invoice Events: Validation, Adjusted and Cancelled Transaction Chart of Accounts: The transaction chart of accounts is the chart of accounts for the primary ledger and is referenced when users enter Accounting Flexfields for their transactions. This chart of accounts is employed when users enter and maintain the data required to support the daily operations of a company GreenChain Software Solutions Pvt Ltd Page 34 of 35

34 Accounting Chart of Accounts : Use the accounting chart of accounts to create the Accounting Flexfields for subledger journal entries. It is taken from the ledger for which the journal entries are created. Account derivation rules derive accounts for a specific accounting chart of accounts. The creation of all journal entries by Subledger Accounting is therefore done in the context of the accounting chart of accounts. The transaction and accounting charts of accounts are always the same for the primary ledger. They can be different in cases where users create secondary multiple representations Mapping Set : Mapping sets helps to associate a specific output value for an Accounting Flexfield or Accounting Flexfield segment. Based on the input value, a specific value can be assigned to a single segment or to the entire Accounting Flexfield. Use mapping sets in account derivation rules to build the Accounting Flexfield Multiperiod Accounting: Multiperiod accounting enables users to create accounting for a single accounting event for more than one GL period. The functionality is primarily used to recognize revenue or a prepaid expense or revenue across multiple GL periods GreenChain Software Solutions Pvt Ltd Page 35 of 35