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R12 SLA: Analyzing Subledger

Accounting
Posted on November 25th, 2007 by Sanjit Anand |
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As in last post about subledger accounting we understood with this new feature:

All accounting performed before transfer to the GL.


and this is achieved by user setup who can do by definable accounting rules.

At the data level, its a big change for all the subledgers, though there is a first
generation changes we have noticed sometime when 11i Payables where concept of
Accounting Events introduced first time and accounting performed at subledger
level first before moving into GL.
The same idea has been incorporated in new sub ledger accounting model , indeed a was
a real need because of some uneven functionality likes:

Inconsistencies in Accounting Generation like Summary vs. Detail


Direct to General Ledger vs. Open Interface
Inconsistent Drilldown from General Ledger
Also it has been seen inconsistent Mechanisms for controlling Accounting as
certain options has been used in existing version:
o flex builder
o Account Generator
o Automatic Offsets

What is sub ledger mean for a non finance person?

A new transactional application that generates accounting impact


Used to store detailed information not needed for a general ledger
Sub ledgers post summarized activity to a general ledger periodically to maintain
centralized account balances for the company

With these accounting at this level the respective sub ledgers & General Ledger is tied
out, as below.

How Receivables Accounting happen in 11i


As we know the final accounting data not generated prior to transfer to GL as only
distribution level information is passed to GL.
In 11i , we know three distinct distributions tables for invoices / Credit Memos / Debit
Memos have to capture accounting class & amounts information but not debits & credits.

Receipts & Adjustments


Unapplied, applied
Both debits & credits
o Misc. Cash Receipts
Both debits & credits
As we know View Accounting is a report against distributions to see the
accounting information.

How Payables Accounting happen in 11i


We know accounting data generated and stored in Accounting Events tables prior
to transfer to GL in Payable. Once Transaction get completed it was need to run the
Create Accounting process which basically populate data into accounting events
tables.Then the actual line information move takes place from accounting events table to
General Ledger Tables.The existing 11i accounting Process is can be best understood by
figure below.

Subledger to Ledger Reporting in 11i


It means complete, final accounting only available in the GL

All debits and credits

All journal entries


All balances

The only issues in pre R12 versions was to link summarized accounting data with source
details.
How it is resolved in Release 12 Subledger Accounting
All sub ledger accounting data generated and stored in shared SLA tables prior to transfer
to GL , and this is achieved by running Create Accounting to populate SLA
tables(Very very similar to Payable events). Once this can be done , user can View
Accounting only after Create Accounting is run and completed successfully.
Transferring Accounting information from AP/AR to GL in R12
The Create Accounting process has similar options, you can create accounting in Final or
Draft mode and if Final mode is selected, the Transfer to GL parameter can be used to
automatically transfer the accounting created by the corresponding run. When the Create
Accounting process transfers the journal entries to GL it only transfers the accounting
created by the process that calls it. If there is accounting created by the online option =
Final or a previous Create Accounting program that was not transferred, that accounting
will not be transferred. The Transfer Journal Entries to GL program needs to be ran
separately to transfer any accounting created online or created by a previous Create
Accounting process that did not transfer the entries.
Is/was link an issue in 11i?
Yes, From Distributions to SLA

Create Accounting process


Applies accounting rules
Loads SLA tables, GL tables
Creates detailed data per accounting rules,stores in SLA distribution links
table

SLA Distribution Links Table

Must join through to get true Distribution ==> SLA journals matches
Holds finest granularity of accounting data
Multiple distributions may be aggregated into a few SLA journal lines

and Final picture looks like:

SLA Key attribute :Something called Event Model ? What is all about?
Event Model are basically definition of the sub ledger transaction types and there life
cycle.
It has three levels

Event Entity: Highest level, often 1 per sub ledger application


Event Class: classifies transaction types for accounting rule purposes
Event Type: for each transaction type, defines possible actions with accounting
significance.

It is very important that 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
we have notice some of event classes in Payable and Receivable.

Payables
o Invoice
o Debit Memo
o Prepayment
o Payments

Refunds
Receivables
o Invoice
o Deposit
o Receipt
o Bill Receivable
o

and typical event Types are like

AP Invoice Events
o Validated
o Adjusted
o Cancelled
AR Receipt Events
o Created
o Applied
o Unapplied
o Updated
o Reversed

Posted in EBS Suite, R12, Release12 |

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8 Responses
1. Paul Says:
December 3rd, 2007 at 2:19 pm

Thank you for all your articles, great source of information.


In our organization we have over 40 countries (global), set of book for each entity,
multiple currencies, and configuration and setup for each. Very complex.
Question - We are going to run the SLA on our set of books (testing) on our POC
instance. AND would like to know of any important changes we should pay
attention.
Thank you.
Paul
2. Yugandhar A Says:
December 14th, 2007 at 6:56 am

Thanks a lot This is great information for us. It is very very useful for all Oracle
Functional and Technical People.
Thanks
Yugandhar Appani

3. Durga Says:
February 11th, 2008 at 8:32 pm

Paul,
I guess your question is related to upgrade to R12.
Normally the upgrade should take you to the standard SLA method.Mean to say
that when you upgrade the default subledger method must be standard. So no real
changes are required from SLA point of view. However, the following may
require consideration.
1. The number of periods of past accounting data you want to upgrade to SLA
model. This has to be determinied in advance to upgrade. There is also a post
upgrade process which can be run after actual upgrade to upgrade the historical
accounting data as and when need arises.
2. Usage of account generator. All the account generator WFs like FA account
generator should work fine. However you may avoid the usage of WFs if you can
have your SLA model redesigned as per the need.
Thanks,
Durga

R12 SLA: From Product Accounting to


Subledger Accounting
Posted on November 16th, 2007 by Sanjit Anand |
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Most of us are well aware that in Release 12 of Oracle Applications, Subledger


Accounting (SLA) has been introduced, which is a Rule-based accounting engine, toolset
& repository which is supporting most of Oracle business Suite modules. As we know
driver for introduction this is to have an option of allowing multiple accounting
representations for a single business event, resolving conflicts between corporate and
local fiscal accounting requirements. The Functionality is somehow very similar to
Global accounting engine, which oracle does offer for European reporting Need.
So What is Subledger Accounting?

SLA is an intermediate step between subledger products and the Oracle General
Ledger
Journal entries are created in Subledger Accounting and then transferred to Oracle
General Ledger
Each subledger transaction that requires accounting is represented by a complete and
balanced subledger journal entry stored in a common data model
Is this Module or what?
It is good to know ,sub ledger Accounting is a Service, not an Application .
The high points of SLA would be:

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
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
Subledger reporting (e.g. Subledger journal reports, open account balances listing)

What oracle application Module taking services for SLA?


Most of modules which need accounting entry with finance uses service of SLA Modules.
This new Product has these many new functionality such as:

Journal Entry Setup and sequencing


Date Effective Application accounting Definitions
Multiple Accounting Representation
Multi-period Accounting
Summarization Options
Draft and online accounting
Replacement for disabled accounts
Process category Accounting
Transaction account Builder
Accrual Reversal Accounting
Accounted and Gain/Loss Amount calculations
Application Accounting Definition Loader
Enhanced Reporting Currency Functionality

The overall advantage of SLA can be summarized by oracle as below:

GL Flow with Subledger-Level Secondary Ledger


Lets take a case , with a scenario with basic Finance module, you can find how tightly
accounting model is separated with transaction model in release 12.

This is the typical flow within one product with SLA can be best described as:

Posted in EBS Suite, R12, Release12 |

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10 Responses
1. Gareth Roberts Says:
November 17th, 2007 at 6:38 pm

Hi Anand,
Nice post, Im keen to know if subledger accounting is just the extension and
exposure of the ap_ae_headers/lines that the core financials modules have
already in 11i? Any thoughts?
Gareth
2. R12 SLA: Analyzing Subledger Accounting Says:
November 25th, 2007 at 12:53 am

[...] and 2007 report for ERP VendorsOracle OpenWorld 2007 Presentations :
Available for DownloadR12 SLA: From Product Accounting to Subledger
AccountingSCM SubsystemKNOW WHAT IS SUPPLY CHAIN
MANAGEMENT (SCM)? : An OverviewDiscrete & Process [...]
3. Release 12 : Legal Entity uptake Says:
December 7th, 2007 at 9:09 am

[...] and 2007 report for ERP VendorsOracle OpenWorld 2007 Presentations :
Available for DownloadR12 SLA: From Product Accounting to Subledger
Accounting [...]
4. Release 12: 6 New and Changed Feature in Oracle Assets Says:
January 27th, 2008 at 7:35 am

[...] we have already seen in few earlier post Oracle Subledger Accounting is a
rules-based engine for generating accounting entries based on source transactions
from [...]
5. R12 - Oracle General Ledger - New and enhanced features Says:
February 3rd, 2008 at 7:00 am

[...] discussed in couple of earlier post GL is integrated with SLA to enable a


unified process to account for subledger transactions and post data to GL, and to
[...]
6. Highlights:Release 12 Financials Says:
February 5th, 2008 at 12:48 am

[...] R12 SLA: From Product Accounting to Subledger Accounting [...]


7. Ram Ganesh Says:
March 20th, 2008 at 5:20 am

Dear Anand
it was a excellent article that has given me a good insight into the basic concepts
vis a vis the SLA in Release 12. Yet i am having more doubts in SLA Set up.
8. R12 SLA: Accounting Methods Builder Says:
April 18th, 2008 at 2:51 am

[...] R12 SLA: From Product Accounting to Subledger Accounting [...]


9. White Paper : R12 Oracle Subledger Accounting Says:
May 2nd, 2008 at 4:00 am

[...] R12 SLA: From Product Accounting to Subledger Accounting [...]


10. Fixed Asset & SLA Says:
July 2nd, 2008 at 12:38 am

[...] is no need to explaining again , we already seen why this concept brought into
Financial application . Fixed asset though one of Application, which heavily
utilize the accounting information [...]

R12 SLA: Accounting Methods Builder


Posted on April 17th, 2008 by Sanjit Anand |

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In Subledger Accounting, have you heard something called Accounting Methods Builder,
which is sort of toolset to define journal entry rules for the transactions and events of a
subledger application . This allows us defining multiple sets of rules to be used
concurrently for different requirements.
How AMB work?
Lets try to understand on the basis of Journal entry. Normally a journal are split into three
main components:

Descriptions
Line Types
Account Derivation rules

A particular Journal can be best described as figure 1.0(adopted) as below.

Description : Description can be on the entry or its individual lines. You set up
descriptions, as many as you want, by using pieces of data from the transaction and
constant values.
Purposely it identify the journal line types, descriptions, and account derivation rules that
will be used to create a journal entry for a particular event type
Type :The Line Type is another component, actually one of the two main components
of the entry. The line type defines whether this is a debit or a credit, what the accounting
class is, where the amount should come from etc. Again, you set up as many as you need
of these for a particular entry. You can have a single invoice line or distribution create as
many debits or credits as needed.

Under type you can identify the natural side of entry like Debit,Credit,Gain/Loss
This will determine the accounting class
You can set under which conditions the rule will create a line
This can be tighten by defining the values needed for entry line generation, such
as amount, currency, conversion rate information

Account derivation rule : This determines to which GL account a line should be


booked. You can have lot of flexibility around the account derivation rules. You can also
set up a rule for each flexfield to be used, or you can make it more complex and build
each flexfield segment by segment by combining multiple rules.
Normally these rules can be setup to derive the accounts or segment values from
transactional data, including conditions of when to use a particular rule versus another.
You can also note,this will:

Determine which rule will be generic or specific for a given chart of accounts
This will identify what will be derived like Accounting flexfield or there
respective segment or qualifier value or Value from a value set
This will also have a provision to define how the value will be derived for
defaulting some Constant values or any Source value or any mapping set

Accounting Methods Builder


The transaction objects and the sources carry transaction information into the rules
defined for each component of an entry.
These components, for example, journal line type, account derivation rule, journal entry
descriptions, are attached together as a journal line definition for a particular event.

Take a case if you set up a Journal line description for an invoice validation event,
another one for a payment creation, another one for payment clearing. The set of such
rules for a particular sub ledger application is called the application accounting definition.
And the set of application accounting definition for multiple applications is called the sub
ledger accounting method.
In reality this accounting methods is assigned to each ledger, which determines which
rules are applied when accounting is being generated for a particular ledger. If you have a
setup with a primary and a secondary ledger, you could have different accounting
methods attached to and used for each. Sounds good.

Your Navigation

Setup - Application Accounting Definition (Navigation)


o Setup > Accounting Setups > Subledger Accounting Setup > Accounting
Methods Builder > Methods and Definitions > Application Accounting
Definitions
Setup - Subledger Accounting Method (Navigation)
o Setup > Accounting Setups > Subledger Accounting Setup > Accounting
Methods Builder > Methods and Definitions > Subledger Accounting
Methods
Setup - Account Derivation Rule (Navigation)
o Setup > Accounting Setups > Subledger Accounting Setup > Accounting
Methods Builder > Journal Entry Setups > Account Derivation Rules