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SUNDAY, DECEMBER 07, 2008

Learn using Sub Ledger Accounting (SLA) in R12 Oracle Payables

Sub Ledger Accounting (SLA) is a Rule-Based accounting engine that
defines how journal entries are generated in sub-ledger transactions in
Oracle sub-ledger applications. However, SLA also supports external
applications generating accounting information which ultimately needs
to be transferred to Oracle General Ledger. Before we get into SLA we
need to know few of the basic concepts like event types, event class,
etc.

Event Class - classifies transaction types for accounting rule purposes.

E.g. in Payables, following are possible event classes: Invoice, Debit
Memo, Prepayments, Refunds and Payments.

Event Type - for each transaction type, defines possible actions with
accounting significance. E.g. in Payables, following are possible event
classes: AP Invoice Events – Validation, Adjustment and Cancellation.
Similarly we will have event types for other event classes.

In most of the cases we would not need to customize SLA and accounting
features will work same as 11i. 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. I will try and show a simple scenario of how to derive
custom accounting for a business scenario using SLA in Oracle
Payables.

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.

Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal Entry Setups > Mapping Sets

Step2: Define ADR (Account Derivation Rules)

Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal Entry Setups > Account
Derivation Rules
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)
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’.
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’.
Step 6: Assign the custom SAM to Primary Ledger
Navigation: Set ups > Accounting Setups > Ledger Setup > Define > Accounting Setup
Verification of new SLA rule:

Create an invoice for supplier type ‘Contractor’ and create accounting

Liability Account for Supplier Type “Contractor” is 01-000-2990-0000-000
Liability Account for other Supplier Types is 01-000-2210-0000-000
Posted by Krishanu Bose
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Labels: Oracle Payables, Subledger Accounting

Reactions:

3 comments:
Anonymous said...
Krishanu,
Is there a way once the sub ledger has been transferred to the GL to change the accounting string. I have an error 7 message and can't seem to
change the accounting string.

Thank you

March 03, 2009 11:45 AM

jesus said...
Hi Krishanu Bose

Thank you for an excellent blog, it is very informative.

I have a question.

Our company (in Mexico) is implementing Oracle and I have we have an issue with payments when there is a currency gain or loss. From what I
understand, I believe it can be solved with reclassification of the gain at SLA to GL posting.
Let me Explain
1)SALE
-Our base currency is Mex Peso
-Sale Is in Dollars with VAT (Vat is paid when payment is received)
-Accounting goes AR-Client account, Income Accounts, Tax to Collect Account
2)PAYMENT in MX Pesos (IN FULL)
-PAYMENT goes to Bank account
-AR_Amount is credited
-Currency profit goes to Currency Profit account
-Tax to Collect is credited into Tax to Pay
-Tax currency profit goes to Currency Profit account
3)My problem that the tax currency profit should go to My Tax to Pay Account, since in Mexico by law, this gain is for the government (not Me)
According to our consultants It cant be done since oracle sends all currency gains to the same account
their solution is to run a process to check all payments in non mexican currencies and to post an adjustment to correct this.
My question is can I configure a rule from SAL to GL to reclassify Currency gains from tax to a different account?
Thank you

February 01, 2010 6:15 PM

Denise said...
I am glad I was able to visit your blog. This is what exactly I am looking for. Hope that you'll write further articles for the Sub Ledger Accounting
(SLA). Thanks for the share. Thumbs up!

Denise

invoice solutions

September 01, 2010 11:54 PM

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ABOUT ME

Krishanu Bose
India

Krishanu's Oracle Applications Blog - Oracle Apps consulting services scenario in India. Also, an inside view of Oracle Apps outsource services in
India. Also the blog features new developments in Oracle Apps and my learning's in this field. The views expressed are my own only and not of my
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