Sub Ledger Accounting Cost Management – SLA Steps
Prior to R12, the accounting flow is as follows:
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Sub Ledger Accounting(SLA)11i Accounting Flow
The Accounts Specified by the User while transaction flows to the GL and there is no option of configuring the accounts once the Costing of the transaction has been done.
In R12, SLA uses events for processing transactions. An event is the recording of a change of status in the transaction life cycle, i.e., invoice approved, payment received, period close, etc. This allows for a clear separation between transactions and accounting representation. Events are the bridge between transactions and journal entries, so product teams are involved for coordinating actions based on event models.
Events
Event Entities have Event Classes. Each Event Class has Event Types.The Work in Process list below shows the Main Event Entity is WIP Accounting.The Event Classes are then listed with each Event Type that is part of the Event Class.
There are four Main Entities for Cost Management:
1) Work in Process: WIP Accounting Events Event Class: WIP Absorption
Event Type: Resource Absorption Resource Overhead Absorption Scrap Absorption Outside Processing Event Type: OSP Transaction ShopFloor Delivery for Direct Items IPV transfer to Work Order WIP Variance Event Type: Period Close Variance Job close Variance Final Completion Variance WIP Lot Event Type: WIP Lot Split WIP Lot Merge WIP Lot Update Quantity WIP Lot Bonus WIP Cost Update Event Type: WIP Cost Update2) Inventory: Material Accounting Events Event Classes: PO Delivery in Inventory WIP Material Lot Sales Order Issue Logical Intercompany Internal Order to Expense Retro price adjustment WIP Material Material cost update Consigned Inventory Ownership Transfer Miscellaneous IntraOrg transfer Direct Interorg Shipment Intransit Interorg Receipt – FOB Receipt Direct Interorg Receipts Intransit Interorg Shipment – FOB Shipment All other intransit interorg transactions3) Purchasing/Receiving Write Off Accounting Events4)Receiving Accounting Events
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Sub Ledger Accounting(SLA)Key Concepts
• Event Model: definition of the subledger transaction types and
lifecycle
• Entity : Classification of source of transaction
• Event Class: Classifies transaction types for accounting rule purposes
• Event Type: for each transaction type, defines possible actions with accounting significance
ENTITY Material Transaction, Receiving or WIP or Write Off
EVENT CLASS
Logical grouping of events which have similar kind of accounting
EVENT TYPE
The most granular level of business event which has accounting impact
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Sub Ledger Accounting(SLA)Setup – Event Model
Hierarchy of events consists of these four main groups
Correspond to existing transaction types and are
grouped into Event classes based on similarities in their accounting
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Sub Ledger Accounting(SLA)Setup – Event Class Options
This information is shown for an accounting event
belonging to this event class when the event is viewed in
SLA
This Event class has a potential encumbrance
journal entry
These options are not selected for any Cost
Management Event classes since the accounted amounts are always provided to SLA
R12 Subledger Accounting Rules:SLA uses a rules-based accounting engine that posts entries into GL. The rules used by the engine are user defined. The rules are stored in a common repository for all subledger applications. A subledger application would be a product area, such as Inventory, Payables, Receivables, Purchasing, etc.
The SLA process allows for the display of the inventory valuation accounts to be seen for a user defined date range. The engine also allows the accounting department to maintain control over accounting and chart of accounts for the ledgers used.
When rules are created, the rules engine will override user entered accounts that might be incorrect. This is important to control user errors that can occur within a period. The rules will automatically redirect the costs to the correct account. The rules can be created for most item attributes to allow for granularity of costs if so desired.
Basic Steps to Build Accounts:Accounting Methods Builder
Ledger | Subledger Accounting Method (SLAM) | Application Accounting Method (AAM) | Journal Line Definition (JLD) | ---------------------------------
| | Journal Line Type Account Derivation Rule (JLT) (ADR) | Sources | Transaction Objects
The process is built from the bottom up.
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JOURNAL ENTRY SETUPS
Define/copy and modify journal line types
Define/copy and modify account derivation rules
Define/copy and modify descriptions
PROCESS
Enter Transaction(s)
Cost Manager
Create Accounting* Transfer Journal Entries to GL
*Run ‘Create Accounting – Cost Management’concurrent request for accounting all transactions from the Cost Management – SLA responsibility.
Receiving Accounting can be generated in the Purchasing responsibilities using the ‘Create Accounting – Receiving’concurrent request.
These requests have an option to transfer the entries created toGeneral Ledger. A separate process is also available.
Sub Ledger Accounting(SLA)Setup and Process
These steps are needed for each different journal line type that is going to be used. For example, Inventory valuation, Receiving valuation, WIP valuation, Cost of Goods Sold.
Step 1 Create Account Derivation Rule (ADR)
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Sub Ledger Accounting(SLA)Setup – Account Derivation Rule
This source refers to the account from MTL_TRANSACTION_ACCOUNTS,
WIP_TRANSACTION_ACCOUNTS, and RCV_RECEIVING_SUB_LEDGER
Step 2 Define conditions required for the ADR created
Step 3 Create Journal Line Definitions (JDL) for an event class a- query the LOV of seeded event classes b- copy the seeded event class using the Copy Definition button c- replace existing ADR in the Journal Line type form with the new ADR this is in the Line Assignments sections, using Line Type
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Sub Ledger Accounting(SLA)Setup – Journal Line Definitions
These are the possible journal line types that can
be generated for this event class
The Account Derivation Rule that provides the account for this journal
line type
Step 4 Create new Applications Accounting Definition (AAD) a- query for the seeded AAD b- copy from this to create a new AAD c- associate the new JLD assignments created in Step 3 d- validate the definition. If successful continue to next step or continue creating the JLDs required. If unsuccessful, check the setup for all steps above before moving to next steps.
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Sub Ledger Accounting(SLA)Setup – Application Accounting Definitions
Oracle ships three Application Accounting Definitions for Cost Management application. They are:
–Cost Management: US GAAP
–Cost Management Encumbrance: US GAAP with encumbrance accounting
–Federal Costing: Supports Federal requirements
Step 5 Associate the new AAD with the Subledger Accounting Method (SLAM) a- query SLAMs to view existing methods b- for the existing AAD enter an end date to stop this from being used c- attach the new AAD with the start date
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Sub Ledger Accounting(SLA)Setup – Subledger Accounting Method
Cost Management application accounting definition is shipped
with the Standard Accrual Subledger Accounting method
Step 6 Assign the SLAM to the Ledger
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Sub Ledger Accounting(SLA)Setup – Ledger
When customers create a new ledger, they will have to
associate it with the subledger accounting method
After the rules are established, the Cost Management – SLA responsibility allows for the creation of the user-defined accounting data. The request group related to this process includes all SLA processes as well as standard accounting processes.
For inventory transactions, a transaction would be received or costed. The transaction will then be passed to GL via the Create Accounting – Cost Management program.So for a Miscellaneous receipt, the following occurs: User creates misc receipt Cost Manager processes transaction Create Accounting - Cost Management Inventory Category process is run. This validates the accounts to be used as per any rules that have been defined. If no rule defined for a transaction event then the default account value set for the organization is used. If the setting were final and post, the details would be transferred to GL. If no transfer to GL was indicated and the setting was final and post, then the Transfer to GL process still needs to be run via CSTGLTRN - Transfer Journal Entries to GL.
Create Accounting – Cost Management This process is tied to the Cost Management – SLA process and uses the following Process Categories: Inventory Receiving Work in Process Third Party Merge
Manual
The process then completes or shows errors that need correction.
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Sub Ledger Accounting(SLA)Process: Responsibility
New Menu ‘Cost Management and Subledger Accounting’ for
Costing and SLA menu functions
A new responsibility that can run ‘Create Accounting –
Cost Management’ needs the application set to ‘Cost Management’. ‘Create
Accounting – Receiving’ can be run only in a responsibility
tied to the ‘Purchasing’ application
New Request group that includes all the costing and
costing related SLA concurrent requests
(including ‘Create Accounting – Cost Management’). ‘Create Accounting –
Receiving’ has been added to Purchasing request group
The Create Accounting - Cost Management request creates accrual journal entries,
accrual reversals, and multi-period journal entries.
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Sub Ledger Accounting(SLA)Process: Create Accounting – Cost Management
Program available only within Cost
Management – SLA responsibility
Create Accounting – Cost Management Parameters:
Ledger
Required; limits accounting events to the chosen ledger If profile option SLA: Enable Data Access Security in Subledgers = Yes, only the ledgers included in the SL Access Sets assigned to the responsibility is on the LOV
Process Category
Optional; Restricts events selected to particular process category. The program selects events with event types that are part of the event class assigned to the process category.
End DateRequired; End date for the program to use. Will only process those events with event dates on or before the end date.
Mode
Optional; Determines if entries created in Draft or Final mode.Draft Mode –Transfer to GL, Post in GL, and GL Batch Name fields are disabled as the draft entries cannot be transferred to GL; It is recommended to run in draft first to check for errors
Errors
Required; Limits the creation of accounting to those events that previously failed. If set to Yes the program will process all events with the status of error.
ReportOptional; determines if the report showing the results of the SLA program is in summary or detail.
Transfer to GL
Required if mode = Final; Determines if the subledger journal entries are transferred to GL. Journal Import is not launched if set to Yes
Post in GLRequired if mode = Final or Create Accounting is set to No
GL Batch NameOptional; user entered batch name appears in transferred GL Subledger journal entries. Transfer to GL must be set to Yes
Include User Transaction IdentifiersRequired; identifies the org each accounting entry belongs to
To transfer the details to GL: 1- Set the parameter in the Create Accounting to Yes 2- If parameter is set to No, then the Transfer to GL process must be run manually as this will only create accounting but no values are passed to GL.
There is an option to make the journal entry and post the journals automatically at the time of submitting the Create Accounting program 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. For R12, when the transactions are costed, the details for the transfer to GL are stored in the SLA tables and not in mtl_transaction_accounts or in the wip_transaction_accounts tables.
Also, part of the setup includes the Organization parameter setup for Transfer to GL. This has values of Yes or No in R12 and are required to be set to allow Transfer to GL. Product teams are responsible for the following: Identify transaction entities with accounting impacts Define event types that correspond to different status in the lifecycle Create events for transactions when passing from status to another …this is transparent to the customer although the creation is triggered by the user action. Define transaction objects that provide data that SLA uses to create journal entries Population of transaction objects is the responsibility of product teams
SLA Team is responsible for the following: Defining data model for events Develop/Maintain programs and APIs that create and maintain events and related objects Processing events as part of the Create Accounting programs
Definitions:--------------------Accounting Methods Builder This is the process that created a SLAM and assigns it to the Ledger.
Ledger The ledger determines the rules that are applied when accounting is generated. Ledgers replace Set of Books. Each Operating Unit is associated with a Primary Ledger. Multiple Legal Entities can be tied to a Ledger through the accounting set up flow. Multiple SLAMs can be assigned to a Ledger. There can be a primary and Secondary ledger setup that can use different accounting methods in each ledger.
The 3C’s is now known as the 4C’s:Chart of AccountsCalendarCurrencyAccounting convention
Examples of Subledger Methods (SLAMs) US GAAP FRENCH GAAP Accrual Basis Accounting Cash Basis Accounting
The following SLAMS are seeded in Oracle: Standard Accrual Encumbrance and US Federal Standard Cash
Subledger Accounting Method (SLAM) This is the subledger accounting method that is built and assigned to a Ledger. This will be created via the Accounting Methods Builder and includes all the details needed to created the appropriate journal entries.
Application Accounting Definitions (AAD) The application accounting definitions is made up of the Journal Line Definition, Journal line types, and Accounting Derivation Rules. These are developed using the event classes and types. A new AAD can be created or a seeded AAD can be used. The details are assigned and validated to be certain the setup at this level is correct.
Journal Line Definitions (JLD)JLT, ADR and JED are combined to create the JDL for an event. These can be shared across AADs and can be used to create sets of line assignments for event classes and
types.
For Cost Management, The Journal Entry Description is not seeded by default in Costing application accounting definition.
Journal Line Types (JLT) The types are defined for each particular class to be used. These must be assigned to the Journal Line Definition (JDL) to be used. These determine the journal entry line options to be used. These options include identifying the natural side used (debit, credit, gain/loss), accounting class, summarization, and other conditions that will cause the rule to create a journal entry.
Accounting Derivation Rule (ADR) This is used to determine the accounting combinations that will be used for the journal entries. Various rules can be defined. These can be defined by segment, accounting combination, or value set. The simplest way to derive an account is to establish the account as a constant value-use the account combination that is defined in the accounting chart of accounts.
Mapping Sets These sets are optional and user defined. If the user determines that the seeded details are insufficient, then mapping sets can be setup to allow for more specialization in the accounts. This is not supported by development as this would require customization. Seeded details are supported as they are provided by Oracle code.
Transaction Objects/Sources Transaction objects and sources carry transaction information into the rules defined for the accounting chart of accounts.
Event: An event is the recording of a change of status in the transaction life cycle, i.e., invoice approved, payment received, period close, etc. These are defined for eachSLAM used. Event classes and event types are used to create the events to be used
Event Class This classifies the types of transactions that are to be accounted for. An example of an event class is WIP Variance.
Event Type This defines actions that are possible for an event class that has potential accounting significance. Examples for the WIP Variance Event CLASS would have event TYPES defined for Period Close Variance, Job Close Variance, and Final Completion Variance.
References:SLA Powerpoint slides created by Anup Jha Cost Development