005 EBS R12 SubLedger Accounting

Release 12 Field Readiness Workshop Sales Track Financials
Oracle Subledger Accounting
Copyright 2006, Oracle. All rights reserved.
R12 Financials Oracle Subledger Accounting

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

Part 1: Subledgers and Subledger Journal Entries Part 2: Accounting Methods Builder Part 3: Subledger Balances, Inquiries, and Reports Part 4: Additional Features
Customer Impact / Upgrade Considerations Demo ADS Content Hands-on

Agenda


Introduction to Solution - Definition
Oracle Subledger Accounting:

Oracle Subledger Accounting is a rulesbased engine for generating accounting entries based on source transactions from ALL Oracle Applications.
Background
Projects
Assets
Receivables
Payables
Each Subledger Generated Accounting Entries Individually
Payroll
Purchasing Inventory
8
Leasing
Background
Issues with this Approach:
Inconsistencies in Accounting Generation
Summary vs. Detail Direct to General Ledger vs. Open Interface
Inconsistent Drilldown from General Ledger Inconsistent Mechansims for Controlling Accounting
FlexBuilder Account Generator Automatic Offsets Etc.
Duplication of Development Effort
Background
Requirement for Multiple Accounting Representations
Certain European countries require statutory accounting in addition to corporate requirements Similar requirement in certain regulated industries (e.g. Insurance) Global Accounting Engine (AX) introduced to address European requirement Non-AX customers use consulting extensions and/or Global Consolidation System (GCS)
10
Projects
Assets
Receivables
Payables
Subledger Accounting to the Rescue
Payroll
Purchasing Inventory
11
Leasing
Rule-based accounting engine, toolset & repository supporting Oracle E-Business Suite modules
Allows multiple accounting representations for a single business event, resolving conflicts between corporate and local fiscal accounting requirements
Retains the most granular level of detail in the subledger accounting model, with different summarization options in the General Ledger, allowing full auditability and reconciliation Introduces a common data model and UI across subledgers, replaces various disparate 11i setups, providing single source of truth for financial and management analysis
12

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

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

Transactions and Accounting Entries
Ledger: FR Statutory GL Date: 2-Mar-2006 Invoice Internal Identifier: 1001 Invoice Internal Identifier: 1001
Invoice #100 ABC Networks

2 Monitors Marketing $1000 5 Printers Marketing $ 500 Freight Tax Total $ 100 $ 110 $1710
Invoice# 100 Ledger: US Corporate Supplier: ABC Networks GL Date: 2-Mar-2006 Invoice# 100 Supplier: ABC Networks
DR
CR Invoice Line 1 Invoice Line 2 Invoice Line 3 Invoice Line 4
1 Expense 01-EXP-200 2 Freight 01-FR-200 3 Tax 01-TX-200
$1500 $100 $110
4 Liability 01-LIAB-200
$1710
15
This is a transaction
This is a transaction This is NOT an accounting entry

(New Slide) 16
Transactions vs. Accounting
SLA provides a distinction between a transaction and the accounting representation of the transaction Accounting distributions did not necessarily go away
Needed for upgrade customers Needed as starting point for SLA (Dont want to force customers to define their own SLA rules) In some cases, necessary to allow user input
Most default SLA rules just pass through the distribution accounts (where applicable) If you modify SLA rules, the ultimate accounting entry may not match the distributions. OK because distribution accounts are just defaults
(New Slide)
17
Key Business Messages
Better, Richer Information: Automatically capture detailed information to drive financial and management reporting without cluttering up your general ledger Improved Control: Control every transaction that impacts your accounts and drive consistency across the enterprise
Business Agility: React quickly to accounting rule changes, regulatory shifts, and new information requirements without involvement from IT
Clear, Easy Reconciliation: The link between general ledger balances and underlying transactions is maintained automatically for internal and external audit purposes
18
Account for any transaction from any application and centralize accounting policies and processing
Enable compliance with multiple legislative, industry or geography requirements concurrently in a single instance through configurable rules
Streamline accounting processing Provide GL to subledger transaction reconciliation platform by maintaining link between transaction and accounting data Increase transparency and enable full auditability of the transaction and accounting data through the new data model
19

Centralized accounting
Transaction Systems Management Framework
Oracle Receivables
Oracle Projects
rules Predefined Validations Date effective policies Sophisticated error handling Full audit trail Bidirectional drilldowns
Information Delivery
Oracle Payables
Subledger Accounting
Detailed Journal Entries Configurable Reference
Information Consistent Balances On-line inquiries
Analytics
Oracle Payroll
Regulatory Reporting
20
21

US GAAP US COA US Calendar
$
Simultaneous Accounting for All Entities
while Ensuring Corporate Visibility & Local Compliance
$
French IAS Plan Comptable French Calendar
Operations in US, UK, France
22
Streamlined accounting processing Provide GL to subledger transaction reconciliation platform by maintaining link between transaction and accounting data Increase transparency and enable full auditability of the transaction and accounting data through the new data model
23
24
25
26
Impacted Applications
General Ledger Payables Receivables Projects Assets Costing OPM Public Sector/Federal
Payroll Property Manager Loans Lease Management (Post R12) Cash Management Globalizations Intercompany
27
Agenda


28

Subledger
A transactional application that generates accounting impact Used to store detailed information not needed for a general ledger Subledgers post summarized activity to a general ledger periodically to maintain centralized account balances for the company Example: The A/R subledger stores receivables by customer, but this detail is not needed in a general ledger
29
Subledger Journal Entry
30
Subledger vs. GL Journal Entries

SLA JE #1 Invoice No: 136274 GL Date: 01/27/07 3rd Party: Fender 101.100.63580.0000.720.000.000 101.100.22100.0000.000.000.000 6,000 EUR 6,000 EUR
SLA JE #2
Invoice No: 131299
GL Date: 01/27/07
3rd Party: Gibson
101.100.63580.0000.720.000.000 101.100.22100.0000.000.000.000 Invoice No: 116555
3,000 EUR 3,000 EUR 3rd Party: Kramer
SLA JE #3
GL Date: 01/27/07
101.100.63580.0000.720.000.000 101.100.22100.0000.000.000.000 Batch: AP Invoices 27-Jan-07
2,000 EUR 2,000 EUR
GL JE #1
GL Period: Jan-07
101.100.63580.0000.720.000.000 101.100.22100.0000.000.000.000
11,000 EUR 11,000 EUR
(New Slide)
31
SLA GL Flow
GL Balances Posting GL Journal Entry
Journal Import
SLA Journal Entry
Create Accounting Transaction
(New Slide)
32
SLA GL Flow with Subledger-Level Secondary Ledger
Journal Import
SLA Journal Entry
Journal Import
SLA Journal Entry
(New Slide)
33
SLA GL Flow with Journal-Level Secondary Ledger
GL Balances Posting GL Journal Entry Posting
Journal Import
SLA Journal Entry
(New Slide)
34
SLA GL Flow with Balance-Level Secondary Ledger
GL Balances Posting GL Journal Entry GCS
Journal Import
SLA Journal Entry
(New Slide)
35
SLA GL Flow with Subledger-Level Reporting Currency
Journal Import
SLA Journal Entry
Journal Import
SLA Journal Entry
(New Slide)
36
SLA GL Flow with Journal-Level Reporting Currency
GL Balances Posting GL Journal Entry Posting
Journal Import
SLA Journal Entry
(New Slide)
37
SLA GL Flow with Balance-Level Reporting Currency
Translation
GL Balances
Journal Import
SLA Journal Entry
(New Slide)
38
Event Model
Event Model: definition of the subledger transaction types and lifecycle

Event Class: classifies transaction types for accounting rule purposes Event Type: for each transaction type, defines possible actions with accounting significance
Applications must tell SLA when an event has occurred. When a user runs the SLA Create Accounting program, it processes all events with the appropriate status
39
Event Classes
Payables
Invoice Debit Memo Prepayment Payments Refunds
Assets
Additions Adjustments Capitalization Depreciation
etc.
Receivables
Invoice Deposit Receipt Bill Receivable
40
Event Types
AP Invoice Events
Validated Adjusted Cancelled
FA Depreciation Events
Depreciation Rollback depreciation
AR Receipt Events
Created Applied Unapplied Updated Reversed
etc.
41
Sources
Identified by application development teams and made available as data in SLA for:
Deriving accounts Inclusion in descriptions Conditial logic: generate a journal line if distribution type = accrual
Mapped to specific SLA accounting attributes such as account, amount, GL Date, conversion rate type, etc.
42
Sources
43
Accounting Attributes
AR_CASH_RECEIPTS_ALL.RECEIPT_DATE AP_INVOICE_LINES_ALL.ACCOUNTING_DATE AR_CASH_RECEIPTS_ALL.AMOUNT AP_INVOICE_LINES_ALL.AMOUNT
(New Slide)
44
Accounting Attributes
45
Agenda


46

Accounting Methods Builder (AMB)
Description Account Derivation Rule
Line Type
47
Journal Line Type
Line Type
48
Journal Line Type
Identify the natural side

Debit Credit Gain/Loss
Determine the accounting class Set under which conditions the rule will create a line Define the values needed for entry line generation, such as amount, currency, conversion rate information Control behavior for certain features i.e. multiperiod accounting, business flows, line merging and summarization
49
Journal Line Type
50
Account Derivation Rule
51
Determine if rule will be generic or specific for a given chart of accounts
Identify what will be derived

Accounting flexfield Segment/qualifier value Value from a value set
Define how the value will be derived

Constant Source value Mapping Set Another account derivation rule
52
Set under which conditions the rule will derive a value

53
54
Oracle-Owned vs. User-Owned AMB Components
Owner: Created by: Updatable? Chart of Accounts?
Oracle Oracle Development No Generic
User Customer Yes Generic or Specific
(New Slide)
55
Account Derivation Rules
Chart of Accounts:
Generic
Specific
Use Source for entire Account?
Yes
Yes
Yes for Any Segment
Use Source for individual Yes for Qualified segment? segments
Use Mapping Sets?

Use Specific Values?
No
No
Yes
Yes
(New Slide)
56
Journal Entry Description
Description
57
Define how the description on a journal entry or on each of its lines will be built:
Constant Source Value
Set under which conditions the rule will be used
58
59
Journal Lines Definition
Identify the journal line types, descriptions, and account derivation rules that will be used to create a journal entry for a particular event type Generic or specific for a chart of accounts Define processing options for advanced features such as Multiperiod Accounting and Business Flows
60
Journal Lines Definition
61
Application Accounting Definition
Payables Accrual Application Accounting Definition

Invoice Journal Line Definition
Journal Line Types
Journal Entry Descriptions
Sources
Transaction Objects
62
Subledger Accounting Method

Vision Operations (USA) Ledger Standard/GAAP Accrual Subledger Accounting Method
Payables Accrual Application Accounting Definition

Invoice Journal Line Definition
Journal Line Types
Journal Entry Descriptions
Sources
Transaction Objects
63
Agenda


64

Subledger Balances
Third Party Control Account Balances

Track balances by account and Customer/Supplier Statutory reporting requirement in certain countries
Supporting Reference Balances

Store an unlimited number of sources as supporting references on the accounting entries Optionally track balances by account and supporting reference
Open Account Balances

Track balances by originating transactions and downstream applied transactions
Balances calculated and stored AFTER Accounting Program Completes

(New Slide)
65
Subledger Balances
Journal Import
SLA Journal Entry Balance Calculation SLA Balances
(New Slide)
66
Third Party Control Accounts
Certain accounts can be identified as control accounts. In this case:

You cannot enter manual adjustments against these accounts in General Ledger SLA maintains balances for these accounts by third party
This typically only applies to balance sheet accounts
67
Third Party Control Accounts
68
Supporting References
Transaction attributes can be identified as supporting references and stored on journal entries. In this case:
SLA maintains subledger balances for each supporting reference value and account.
This can apply to balance sheet as well as income statement accounts. In the latter case, subledger balances are reset automatically at fiscal year end. Formerly (in 11i FSAH) known as analytical criteria.
69
SLA JE #1 Invoice No: 136274 101.100.63580 101.100.22100 GL Date: 01/27/07 6,000 EUR 6,000 EUR 3rd Party: Fender Product: X8F54 Buyer: Smithers
SLA JE #2
Invoice No: 131299

101.100.63580 101.100.22100 Invoice No: 116555 101.100.63580 101.100.22100
GL Date: 01/27/07
3,000 EUR 3,000 EUR
3rd Party: Gibson
Product: S7000 Buyer: Siszlak 3rd Party: Kramer
SLA JE #3
GL Date: 01/27/07 2,000 EUR 2,000 EUR
Product: 8811920 Buyer: Flanders
GL JE #1
Batch: AP Invoices 27-Jan-07
GL Period: Jan-07
101.100.63580 101.100.22100
11,000 EUR 11,000 EUR
(New Slide)
70
71
Online Inquiries: Events
72
Online Inquiries: Journal Entries
73
Online Inquiries: Journal Lines
74
New Reports
XML Publisher Reports
Journal Entries: Listing of subledger journal entries Account Analysis: Listing of beginning and ending balances from General Ledger with merge of subledger and General Ledger journal entries Open Account Balances (a.k.a. Trial Balance): Listing of open balances by third party (leverages business flows) Third Party Balances: Balances by third party control account and third party Period Close Exceptions Report: Listing of transactions / subledger journal entries that have not yet been posted to General Ledger
(New Slide)
75
Account Analysis Report
(New Slide)
76
Journal Entries Report
(New Slide)
77
Open Account Balances Listing
(New Slide)
78
SLA Reports Detail
All reports are native to XML Publisher All extracts are very fat, i.e. they include a tremendous amount of data that is not displayed by default but can be added by simple template modifications Journals and Account Analysis reports include GL journals for non-SLA sources Open Account Balances Listing is based on Business Flows
It replaces (and genericizes) the AP Trial Balance. You must create a report definition in advance
(New Slide)
79
New Reports
XML Publisher Reports
Journal Entries: Listing of subledger journal entries Account Analysis: Listing of beginning and ending balances from General Ledger with merge of subledger and General Ledger journal entries Open Account Balances (a.k.a. Trial Balance): Listing of open balances by third party (leverages business flows) Third Party Balances: Balances by third party control account and third party Period Close Exceptions Report: Listing of transactions / subledger journal entries that have not yet been posted to General Ledger
80
Agenda


81

Dual Posting
Ledger: FR Statutory GL Date: 2-Mar-2006 Invoice Internal Identifier: 1001 Invoice Internal Identifier: 1001
Invoice #100 ABC Networks

2 Monitors Marketing $1000 5 Printers Marketing $ 500 Freight Tax Total $ 100 $ 110 $1710
Invoice# 100 Ledger: US Corporate Supplier: ABC Networks GL Date: 2-Mar-2006 Invoice# 100 Supplier: ABC Networks
DR
CR Invoice Line 1 Invoice Line 2 Invoice Line 3 Invoice Line 4
1 Expense 01-EXP-200 2 Freight 01-FR-200 3 Tax 01-TX-200
$1500 $100 $110
4 Liability 01-LIAB-200
$1710
82
Draft Accounting
83
Online Accounting
84
Straight-Through Accounting
85
Straight-Through Accounting
Journal Import
SLA Journal Entry
Create Accounting (Final Post)
(New Slide)
86
Replacement Accounts
When you disable an account in General Ledger, you can specify a replacement account SLA and GL will both use the replacement account when generating a journal entry which uses the disabled account This helps avoid a common source of errors (and Service Requests)
87
Replacement Accounts
88
Journal Entry Sequencing
Journal entries in GL and SLA can be assigned sequence numbers:

Accounting Sequence: Assigned at time of SLA entry creation or GL posting Reporting Sequence: Assigned at time of period close
Intended to address statutory requirements in certain countries This is in addition to Document Sequencing, available in 11i
89
Journal Entry Sequencing
90
Business Flows
01-EXP-200 DR CR 01-EXP-240 DR CR
Invoice #100
$800
Invoice #100
$200
Invoice #100
$1000
01-LIAB-200 DR CR $800 Payment 1101 $400 for Invoice #100 Invoice #100 Payment 1101 for Invoice $100 #100 01-LIAB-240 DR CR $200 Invoice #100
Payment #1101 Invoice #100
$500
01-CASH-200 DR CR $400 Payment 1101 for Invoice #100 01-CASH-240 DR CR $100 Payment 1101 for Invoice #100
91
Multi-period Accounting
You can spread a transaction amount across multiple periods, for example to recognize a revenue or expense over time.
92
Accrual Reversals
You can schedule the automatic reversal of accrual entries.
93
Manual Journal Entries
You can enter manual entries in SLA, similar to GL journal entries Manual subledger journal entries must be posted to GL like any other subledger journal entry Unlike GL journal entries, subledger journal entries are identified by a subledger journal source (e.g. Payables)
94
Error Handling
If the accounting program cannot generate any journal entry (for any ledger), it completes with status Error The accounting program generates an execution report detailing any errors To avoid errors, keep in mind:
Accounting rules are pre-validated When you disable an account, you can specify a replacement account
95
Diagnostics Framework
The diagnostics framework captures all sources passed to the accounting program This allows you to validate whether the Accounting Program is doing the correct thing There is performance overhead associated with this, so only enable it when needed.
96
Diagnostics Framework
Accounting Program
Diagnostic Extract
Diagnostic tables
97
Agenda


98

Customer Impact
Default SLA rules preserve the accounting rules used in 11i

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

Builds SLA infrastructure (Accounting Methods Builder, Create Accounting program, Transfer to GL, balance calculation programs, inquiries and reports, etc.)
Other Oracle Development Teams (AP, AR, FA, etc.):

Defines event model and sources for their product Inserts code in their product to raise SLA events where needed Maps sources to accounting attributes Defines default Accounting Methods Builder rules Copies and modifies default AMB rules if desired Defines supporting references if desired Enables control accounts if desired Etc.
Customer:

(New Slide)
100
Who Does What in Deploying FSAH?
SLA Development Team:

Builds FSAH infrastructure (Accounting Methods Builder, Create Accounting program, Transfer to GL, balance calculation programs, inquiries and reports, etc.)
Customer
Defines event model and sources for each transaction source Creates code to raise FSAH events where needed Maps sources to accounting attributes Defines Accounting Methods Builder rules Defines supporting references if desired Enables control accounts if desired Etc.
(New Slide)
101
Upgrade Considerations
By default, the R12 upgrade migrates at least 6 periods of accounting entries from each application to the SLA data model. You can modify this if desired. For prior periods, the historical data is preserved. You can drill from General Ledger to the historical transactions using standard GL drilldown You can upgrade prior periods by request during uptime
102
Agenda


103

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


105

Agenda


106

Hands-on Lab Logistics

Use your initials to unique identify your setup to avoid testing collisions
107
Resources
Oracle University Recorded TOI http://ouweb.us.oracle.com/ebus/prod_financials_index.html
108
QUESTIONS ANSWERS
109

005 EBS R12 SubLedger Accounting

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Release 12 Field Readiness Workshop Sales Track Financials

Oracle Subledger Accounting

Copyright 2006, Oracle. All rights reserved.

R12 Financials Oracle Subledger Accounting

Copyright 2006, Oracle. All rights reserved.

Copyright 2006, Oracle. All rights reserved.

Copyright 2006, Oracle. All rights reserved.

Key Concepts and Terminology

Customer Impact / Upgrade Considerations Demo ADS Content Hands-on

Key Concepts and Terminology

Customer Impact / Upgrade Considerations Demo ADS Content Hands-on

Introduction to Solution - Definition

Oracle Subledger Accounting:

Copyright 2006, Oracle. All rights reserved.

Each Subledger Generated Accounting Entries Individually

Copyright 2006, Oracle. All rights reserved.

Duplication of Development Effort

Copyright 2006, Oracle. All rights reserved.

Copyright 2006, Oracle. All rights reserved.

Introduction to Subledger Accounting

Subledger Accounting to the Rescue

Copyright 2006, Oracle. All rights reserved.

Introduction to Subledger Accounting

Copyright 2006, Oracle. All rights reserved.

Introduction to Subledger Accounting

Copyright 2006, Oracle. All rights reserved.

Introduction to Subledger Accounting

Copyright 2006, Oracle. All rights reserved.

Introduction to Subledger Accounting

Invoice #100 ABC Networks

CR Invoice Line 1 Invoice Line 2 Invoice Line 3 Invoice Line 4

1 Expense 01-EXP-200 2 Freight 01-FR-200 3 Tax 01-TX-200

$1500 $100 $110

Copyright 2006, Oracle. All rights reserved.

This is a transaction This is NOT an accounting entry

Transactions vs. Accounting

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

US GAAP US COA US Calendar

US GAAP US COA US Calendar

while Ensuring Corporate Visibility & Local Compliance

Operations in US, UK, France

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Key Business Messages

Copyright 2006, Oracle. All rights reserved.

Copyright 2006, Oracle. All rights reserved.

Key Concepts and Terminology

Customer Impact / Upgrade Considerations Demo ADS Content Hands-on

Copyright 2006, Oracle. All rights reserved.

Subledger Journal Entry