Subject:Impact of R12 Design in PO Accounting

Doc ID:NOTE:429105.1 Type: WHITE PAPER

Last Revision Status:
21-JUL-2008 PUBLISHED
Date:

In this Document
Abstract
Document History
Impact of R12 Design in PO Accounting

Applies to:
Oracle General Ledger - Version: 12.0.4 to 12.0.4
Oracle Purchasing - Version: 12.0.4 to 12.0.4
Information in this document applies to any platform.

Abstract
This document explains the impact of R12 design in PO Accounting and Difference in
Behavior between 11i and R12 in the following areas

1. Setting up of Encumbrance
2. Generation of Encumbrance Entries
3. Receipt Accounting
a) Online Accruals with Expense destination
b) Online Accruals with Inventory destination
c) Period End Accruals
4. Accrual Reconciliation Process
a) Accrual Reconciliation Reports
b) Accrual Write-off Process

It also gives a basic idea of table level flow of accounting entries from Purchasing to
General Ledger

Document History
Author : Manighandan Venkatraman
Create Date 27-APR-2007
Update Date 27-APR-2007
Expire Date

Impact of R12 Design in PO Accounting

Basic Changes:

1. Set Of Books is replaced by the term Ledger. The column set_of_books_id has been
replaced with ledger_id in Gl Tables

2. Subledger Accounting (SLA) options has been introduced and accounting entries can
be viewed at SLA menu

3. Accounting entries can be created manually at SLA level and can be transferred to
General Ledger by running the program 'Transfer to GL'.

4. As a part of Subledger Accounting, new SLA tables XLA_AE_HEADERS,

XLA_AE_LINES and XLA_DISTRIBUTION_LINKS have been introduced.

5. PO details are not available in reference columns(reference_1,reference_2...) in

GL_JE_LINES and GL_BC_PACKETS. Hence accounting entries in these tables can be
retrieved only using SLA tables and GL_IMPORT_REFERENCES

6. Receiving Subledger is not directly linked to GL_JE_LINES,instead it is linked

through the subledger tables XLA_AE_HEADERS, XLA_AE_LINES and
XLA_DISTRIBUTION_LINKS.

XLA_AE_LINES is mapped to GL_IMPORT_REFERENCES with the gl_sl_link_id and

gl_sl_link_table columns. The linking columns between GL_IMPORT_REFERENCES
and GL_JE_LINES are je_header_id and je_line_num

Setting up of Encumbrance:

Navigation:

General Ledger>Set up>Financials>Accounting Set up Manager>Accounting Set ups

Query the ledger and you can find the option for setting up the Subledger Accounting
Method

Subledger Accounting Method is having the option of

a) Standard Accrual
b) Encumbrance Accrual

If Encumbrance needs to be enabled, then the Subledger Accounting Method has to be set
as "Encumbrance Accrual" for the ledger.
If Encumbrance is not used, then the Subledger Accounting Method has to be set as
"Standard Accrual" for the ledger

Difference in Behavior between 11i and R12:

In 11i, there is no need of enabling Encumbrance for the Set of books in GL module other
than enabling the Budgetary Control option
where as in R12, Subledger Accounting Method has to be set for the ledger. If it is set to
"Standard Accrual", Encumbrance cannot be used for that ledger even though the
Encumbrance is enabled for the REQ,PO and INVOICE in Financial Options

Generation of Encumbrance Entries:

On Reserving and Approving the PO, Encumbrance entries get generated in

GL_BC_PACKETS with SOURCE_DISTRIBUTION_TYPE as po_distributions_all
and SOURCE_DISTRIBUTION_ID_NUM_1 as po_distribution_id.

Encumbrance entries will also get generated in the table PO_BC_DISTRIBUTIONS

which has been newly introduced in R12. This table has the reference4 and reference3
columns where the PO/PR number and distribution id gets populated.

Accounting entries created on reserving the PO can be viewed in SLA menu in

Purchasing module

Navigation:

Purchasing>Accounting>SLA:User Main Menu>Journal Entries

Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

Budget a/c DR
Reserve For Encumbrance CR

These accounting entries are populated in the table XLA_AE_LINES. The event type
code in XLA_AE_HEADERS for this Encumbrance entry is PO_PA_RESERVED

The table PO_BC_DISTRIBUTIONS and XLA_AE_HEADERS are linked with the

column event_id.
The table XLA_AE_HEADERS and GL_BC_PACKETS are linked with the column
ae_header_id.
The table XLA_AE_HEADERS and XLA_AE_LINES are linked with the column
ae_header_id

The Concurrent Request "Transfer Journal Entries to GL" has to be submitted from
Purchasing Responsibility to transfer the Encumbrance Entries to GL.

Difference in Behavior between 11i and R12:

1. In 11i, Encumbrance entries created in GL_BC_PACKETS will be directly moved to

GL_JE_LINES by running the CJE program, whereas in 12i, Encumbrance entries gets
generated in a new table PO_BC_DISTRIBUTIONS in addition to GL_BC_PACKETS.
These entries will be moved to GL by running the program "Transfer Journal Entries to
GL" instead of CJE program.

2. In 11i, it is not possible to view the Encumbrance entries in Purchasing module, where
as in 12i, the entries can be viewed from SLA menu in Purchasing

3. In 11i, a Credit against the Reserve For Encumbrance a/c (RFE) can be seen only at
the time of posting the Encumbrance Debit entry in GL, But in R12, RFE a/c gets
credited along with the PO Reservation ( budget a/c debit entry) and these entries can be
viewed from SLA menu in Purchasing

Receipt Accounting:

Online Accruals:
When Purchase Order has Accrue on Receipt set to Y, Receiving Transaction Processor
generates the accounting entries in RCV_RECEIVING_SUB_LEDGER upon Receipt
and Deliver of the PO. Then the Create Accounting process should take place to create
SLA journals which will insert records in XLA_AE_HEADERS, XLA_AE_LINES and
XLA_DISTRIBUTION_LINKS. There is an option to make the journal entry and post
the journals automatically at the time of Create Accounting process itself. This option is
used by setting the profile SLA: Disable Journal Import to "NO" .This will be the most
preferred setting for this profile option and this indicates that Journal Import will
ALWAYS accompany the transfer of data from Subledger. Another main implication of
this value is that, on failure of Journal Import, the data will be rolled back to SLA tables
and hence there will not be any data in GL_INTERFACE.

The Create Accounting Process happens based on a profile option CST:Receiving

Accounting option which has the following two values

1. Online - When the profile CST:Receiving Accounting option is set to Online,

accounting entries for the Receiving transactions happen in Receiving subledger as well
as in SLA on saving the PO receipt. Journal Import and Posting program will also get
spawned automatically and the accounting entries will get posted in GL.

2. Concurrent - When the profile CST:Receiving Accounting option is set to Concurrent,

accounting entries for the Receiving transactions will happen only in Receiving subledger
on saving the PO receipt. To get the entries in SLA, Create Accounting -Receiving
concurrent program has to be submitted from Purchasing>View Requests or from Cost
Management Responsibility > SLA menu > Create Accounting This program will spawn
another program called "Accounting Program" which will generate the entries in SLA.
Depending on the profile value "SLA: Disable Journal Import" and the parameters
choosen while submitting the Create Accounting program, journal import and posting
will happen for these entries.

Parameters used while submitting the Create Accounting-Receiving concurrent program:

 • Ledger - Ledger (SOB) name to be given
• End date - Accounting entries to be created for all receipts TO DATE
a) Draft - Draft mode creates the SLA journals as Draft which can be modified.
Hence these entries will not get transferred to General Ledger and it will be
available only in the subledger table without gl_sl_link_id. Once the entries
created in Draft mode are verified and confirmed, Create Accounting program has
to be run in Final mode and the entries getting created now will be transferred to
General Ledger.
b) Final - Final mode creates SLA journals which can not be modified and can be
transferred to General Ledger.
For the values of the profile option SLA: Disable Journal Import , Draft and Final
options work in the same way
c) Final Post - “Final Post” works differently for the two values of the Profile
option. If profile option is set to No, then “Final Post” creates the SLA journals
in Final mode, transfers the data to GL_INTERFACE, runs Journal Import and
triggers the General Ledger Posting program too.
If profile option is set to Yes, then “Final Post” will create the SLA journals in
Final mode and will transfer the data to GL_INTERFACE. Thus the data will be
in GL_INTERFACE table, which will have to be manually Imported.
• Report - Options available are Detail or Summary
• Transfer to General Ledger - Yes or No - If the mode is set to Final and the value
for this parameter is set to No, then the accounting entries will get created only
in SLA table and it will not be available even in gl_interface. You need to submit
the program "Transfer to Gl" in Cost Management Responsibility > SLA to
transfer the entries created in Final mode from SLA to General Ledger.
• Post in General Ledger - Yes or No

If Encumbrance is enabled, Online Accounting will happen for the Receiving

Transactions irrespective of the value for the profile option CST:Receiving Accounting
Option.

a) Online Accruals with Expense destination:

When the PO is received and delivered to expense destination, Create Accounting

process will happen automatically and Actual and Encumbrance Reversal entries get
populated in SLA and GL.The encumbrance reversal entry can be viewed in SLA menu
in Purchasing module as well as in SLA menu in Costing

Navigation:
Purchasing>Accounting>SLA:User Main Menu>Journal Entries
Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

Budget a/c CR
Reserve For Encumbrance DR
These accounting entries will be available in the table XLA_AE_LINES. The event type
code in XLA_AE_HEADERS for this Encumbrance Reversal entry is
DELIVER_EXPENSE for Expense destination and PO_DEL_INV for Inventory
destination.

These two entries can also be viewed as follows –

Receiving Transaction Summary>Deliver Transaction>View Accounting
But the actual entries for the DELIVER transaction cannot be viewed from View
Accounting. Only the actual entries for the RECEIVE transaction can be viewed from
View Accounting.
The Actual entries created by the Receipt & Deliver transaction will not be available in
the Purchasing>SLA Main Menu , even though the Create Accounting Program is run
/completed . SLA in Purchasing will only show the Encumbrance entries . It is required
that we navigate to the Cost Management responsibility to view the Actual entries .
Navigation:

Cost Management Resp>SLA>Inquiry>Journal entries

Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

AP Accrual a/c CR
Receiving Inspection a/c DR

Charge a/c DR
Receiving Inspection a/c CR

These accounting entries will be available in the table XLA_AE_LINES. The event type
code in XLA_AE_HEADERS for these actual entries is RECEIVE,
DELIVER_EXPENSE.

b) Online Accruals with Inventory destination:

When the PO is received and delivered to inventory destination, Create Accounting

process will happen automatically and Actual entries for the RECEIVE transaction get
populated in SLA and GL.

But online Accounting will not happen for DELIVER transaction. Create Accounting
program needs to be submitted from Cost Management to get the Actuals and
Encumbrance Reversal in SLA and GL.

View Accounting from Receiving Transaction Summary will only show the accounting
entries for RECEIVE transaction. Material Distributions form will show the actual entries
for DELIVER transaction. To view these actual entries and Encumbrance Reversal
entries in SLA, navigate to
Cost Management Resp>SLA>Inquiry>Journal entries
Query by transaction dates and ledger name

This will have the event type code as PO_DEL_INV in XLA_AE_HEADERS.

The tables RCV_RECEIVING_SUB_LEDGER and XLA_DISTRIBUTION_LINKS can

be linked using the column SOURCE_DISTRIBUTION_ID_NUM_1.
RCV_SUB_LEDGER_ID has to be given as SOURCE_DISTRIBUTION_ID_NUM_1
for the source_distribution_type "RCV_RECEIVING_SUB_LEDGER" in
XLA_DISTRIBUTION_LINKS.

Similarly for the deliver transactions to inventory destination, the tables

MTL_TRANSACTION_ACCOUNTS and XLA_DISTRIBUTION_LINKS can be
linked using the column SOURCE_DISTRIBUTION_ID_NUM_1.
INV_SUB_LEDGER_ID has to be given as SOURCE_DISTRIBUTION_ID_NUM_1
for the source_distribution_type "MTL_TRANSACTION_ACCOUNTS".

Difference in Behavior between 11i and R12:

In 11i, Receiving Transaction Processor creates the Receipt Accounting entries in

Receiving Subledger as well as in GL_INTERFACE. Journal Import will be done to
transfer the entries to GL_JE_LINES where as in 12i, Receiving Transaction Processor
will create the entries only in Receiving Subledger. Create Accounting Program has to be
run to create SLA journals which in turn will trigger the journal import.

c) Period End Accruals:

When Purchase Order has Accrue on Receipt set to N, Receipt Accruals Period End
program generates the accounting entries only in RCV_RECEIVING_SUB_LEDGER
during month end when the received quantity is greater than billed quantity.Then the
Create Accounting process should happen to create actual entries in SLA and GL
depending on the profile option CST:Receiving Accounting Option. If encumbrance is
enabled, then online accounting will happen on running the Receipt Accruals Period End
program irrespective of the profile value. This Create Accounting process will create the
actual entry and encumbrance reversal entry for the current period in SLA and GL and it
will also reverse these entries in SLA. But these reversal entries will happen in GL only
when the 'Complete Multiperiod Accounting' program is run.
Once the accounting is created for Receiving transactions,the actual entries and
encumbrance reversal entries can be viewed in SLA menu in Costing

Navigation:
Cost Management>SLA Resp>SLA>Inquiry>Journal entries
Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

AP Accrual a/c CR
Charge a/c DR

Budget a/c CR
Reserve For Encumbrance DR

for the period in which Receiving is done and for the next period,you can see the reversal
entry as

AP Accrual a/c DR
Charge a/c CR

Budget a/c DR
Reserve For Encumbrance CR

These accounting entries will be available in the table XLA_AE_LINES. The event type
code in XLA_AE_HEADERS for these actual entries is PERIOD_END_ACCRUAL

Encumbrance will get reversed from the PO once the invoice is validated.Encumbrance
on the PO will get converted to Invoice encumbrance. On doing Create Accounting for
the invoice, Encumbrance on the invoice will also get reversed.

Difference in Behavior between 11i and R12:

1. In 11i, Receipt Accruals Period End program creates the Receipt Accounting entries in
Receiving Subledger as well as in GL_INTERFACE. Journal Import will be done to
transfer the entries to GL_JE_LINES where as in R12, Receipt Accruals Period End
program will create the entries only in Receiving Subledger. Create Accounting Program
has to be run to create SLA journals which in turn will trigger the journal import.

2. In 11i, Accrual entries need to be reversed manually in the next period whereas in R12,
reversal of accrual entries for the next period will happen automatically

Accrual Reconciliation Process:

a) Accrual Reconciliation Reports:

After completing the Receipt transactions and Invoice matching, Create Accounting
program has to be run in Final mode along with the subsequent transfer of entries to
General Ledger after which the Accrual Reconciliation Process has to be started.

"Accrual Reconciliation Load Run" program has to be submitted with transaction date as
the parameter which will populate the data in two tables called
CST_RECONCILIATION_SUMMARY and CST_AP_PO_RECONCILIATION. Now
run the Accrual Reconciliation Report for the operating unit and do the reconciliation.
There are 3 different types of Accrual Reconciliation Report
1. AP and PO Accrual Reconciliation Report - This report shows the transaction details
based on each accrual account for each PO distribution with the Receiving transaction
amount and invoice transaction amount with a net balance greater than zero.

Parameters used while submitting the program:

Operating Unit - Select the Operating Unit for the report

Title - Enter your title for the report
Sort by - Parameter to specify how to sort the data at the distribution level - Valid Values
- Age in days,Total Balance,Vendor,PO number (default)
Aging Period Days - The number of days by which to group transactions sorted in
descending order
Item From and Item To - Range of items to consider for this report
Vendor From and Vendor To - Range of Vendors to consider for this report
Min Outstanding Balance and Max Outstanding Balance - Limits of distribution balance
to dispaly
Balancing Segment From and Balancing Segment To - Range of balancing segment to
consider for this report

2. Summary Accrual Reconciliation Report - This report shows the total balances for
each accrual account without any distribution details and individual transaction amount
and also shows whether that summarized accrual balance is related to AP PO transaction
or AP no PO transaction or Miscellaneous Inventory transaction.
Parameters used while submitting the program:

Operating Unit - Select the Operating Unit for the report

Title - Enter your title for the report
Balancing Segment From and Balancing Segment To - Range of balancing segment to
consider for this report

3. Miscellaneous Accrual Reconciliation Report - This report shows the transaction

details based on each accrual account which got hit because of Miscellaneous Inventory
transactions and AP NO PO transactions.Accrual amount will be displayed for each
transaction along with the source whether it is INV or AP.

Parameters used while submitting the program:

Operating Unit - Select the Operating Unit for the report

Title - Enter your title for the report
Sort by - Parameter to specify how to sort the data at the distribution level - Valid Values
- Item,Transaction Date (default) , Amount
Date From - Starting date of time period to display for this report
End Date - Ending date of time period to display for this report
Item From and Item To - Range of items to consider for this report
Min Amount and Max Amount - Limits of transaction amount to display
Balancing Segment From and Balancing Segment To - Range of balancing segment to
consider for this report

Difference in Behavior between 11i and 12i:

1. In 11i, the Accrual Rebuild Reconciliation Report which was required to be run to
populate the accrual reconciliation table is now replaced by "Accrual Reconciliation Load
Run" program in 12i. The table PO_ACCRUAL_RECONCILE_TEMP_ALL has been
replaced by the tables CST_RECONCILIATION_SUMMARY
and CST_AP_PO_RECONCILIATION in R12.

2. 11i has only one Accrual Reconciliation Report which will show all the transactions
for the accrual account irrespective of whether it is Miscellaneous INV transaction or AP
NO PO transaction. But in 12i, there are 3 different reports, one for AP-PO individual
transactions, one for Miscellaneous transactions showing the individual transaction
details for source INV and AP and one for showing the summarized accrual balance for
all transaction types.

3. 11i has the option of running the Accrual Reconciliation Report with net accrual
balance as 0 as well as net accrual balance greater than 0. But in R12, Accrual
Reconciliation Report will show only the transactions having net accrual balance greater
than zero.

b) Accrual Write-off Process:

Once the accrual entries for the PO or invoice are shown in Accrual Reconciliation
Report, Accrual Write-off can be done using Cost Management or Purchasing
responsibility>Accounting>Accrual write offs>AP and PO. This will delete the accrual
entry from CST_AP_PO_RECONCILIATION table and populate the write off
transaction in CST_WRITE_OFFS table. This write off transaction can also be viewed in
the form View Write offs.
Accounting entries have to be created in SLA and GL for these write off transactions by
submitting the Create Accounting program.This can be viewed in SLA menu by
navigating to Tools > View Accounting in the View Write offs form.

Following Accounting entries will be available in the HTML page for a RECEIVE
transaction

Accrual a/c DR
Offset a/c CR

Similarly for an AP PO MATCH transaction

Accrual a/c CR
Offset a/c DR
This Offset a/c will always be the Invoice Price Variance account.

Accounting events for this write off transaction will show the Event status as "Final
Accounted" once the Create Accounting program is submitted and the entries are
transferred to GL.

Difference in Behavior between 11i and 12i:

1. The table PO_ACCRUAL_WRITE_OFFS_ALL has been replaced by the

table CST_WRITE_OFFS in R12.

2. In 11i, accounting will not get created for the write off transaction and accrual entry
has to be manually adjusted in GL whereas in R12, Create Accounting program will
create the accrual entry for the write off transaction in SLA as well as in GL and hence
manual adjustment of accrual entry is not required.

Keywords
BUDGETARY~CONTROL ; TRANSFER~TO~GENERAL~LEDGER ; ACCRUAL~R
ECONCILIATION ; JOURNAL~IMPORT ; CREATE~ACCOUNTING ; VIEW~ACCO
UNTING ; ENCUMBRANCE ; 12.0.1 ;

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