Subledger Accounting Implementation Options

1. Subledger Accounting Implementation Options Presented to the UKOUG Oracle Financials SIG by Nic Atkin

2. Subledger Accounting Implementation options for new R12 implementations, and R11i upgrades

3. About the presenter • Nic has been implementing, designing or developing solution architectures within the Oracle E-Business Suite arena since Release 7. • Nic spent 15 years with Oracle Consulting UK, and in his last year delivered both the R12 Awareness and Financials Accounting Hub training to consultants throughout EMEA. • Since leaving Oracle Consulting UK he has worked as an independent contractor implementing: • Financials Accounting Hub at Ministerie van Landbouw, Natuurbeheer en Voedselkwaliteit; LNV (Netherlands Ministry of Agriculture, Nature and Food Quality); • Subledger Accounting at LNV and Royal KPN NV (Netherlands landline and mobile telecommunications). • Nic is currently at Balfour Beatty as the R12 Solution owner delivering a common business process and share service centre based solution to 16 disparate Operating Companies in the Balfour Beatty Group.

4. Agenda • Introduction to Subledger Accounting • Scope of Subledger Accounting in EBS • 11i upgrade options • R12 Implementation options

5. Introduction to Subledger Accounting

6. Introduction to Subledger Accounting • What is Subledger Accounting (SLA)? • Common Accounting Engine embedded in E-Business Suite R12 • A specific licence usage of the Financials Accounting Engine • SLA Licence comes free with EBS licence • Financials Accounting Hub (FAH/FSAH) licence is the other licence usage of the Financials Accounting Engine • What does it do? • Creates Journals from the transactional events that happen to a document during its lifecycle, e.g. approval, cancellation, adjustment • Can create Journals in many ledgers (Primary, Secondary, Reporting) from a single accounting event

7. END USER END USER END USER END USER Enter/validate/ approve transaction Import into GL Post in GL Financial Options System Options Accounting Options Create accounting and transfer to GL 11i Introduction to Subledger Accounting11i User Interaction

8. END USER END USER Create accounting, transfer, and import into GL Enter/validate/ approve transaction Post in GL SLA Setup Transaction Data Accounting Event Accounting event created 11i New in R12 Introduction to Subledger AccountingR12 User Interaction END USER

9. Introduction to Subledger AccountingKey Components (1) • Components configured and used by each Subledger separately • Single journal repository (can report across subledgers using custom reports) • Configuration/Setup • Event and Entity Model • Defines the Events that can happen to a document • Defines Entities to extract data from the source subledger document • Transaction Account Builder • Defines how an account code combination is built up in a subledger* • Account Method Builder • Defines a Journal and its Lines • Uses or overrides account code combination built in the subledger • Subledger Accounting Rules Detail Listing Report • Reports the entire configuration * If implemented by Oracle Development

10. Introduction to Subledger AccountingKey Components (2) • Master Data Management User Functionality • Mappings Sets • Map any source value to a account segment or an entire account code combination • End User Functionality • Accounting Journals • Create Accounting (Offline) and • Online accounting (not in all subledgers) • Inquiry: Drill-down, Drill-up (GL->SLA->Subledger->SLA->GL) • Reports • Account Analysis Report • Journal Entries Report • Open Account Balances Listing • Subledger Multiperiod Accounting and Accrual Reversal Report • Subledger Period Close Exceptions Report • Third Party Balances Report • Trading Partner Summary Report

11. Introduction to Subledger AccountingTwo licenses, Two levels of permission Subledger Accounting Financials Accounting Hub Subledger Registration Applies to seeded Subledgers Event Model Change to seed data NOT SUPPORTED by Oracle Entity Model Supported by Oracle for a new Subledger Registration ONLY Standard Sources Custom Sources Account Method Builder If implemented by Oracle Development Transaction Account Builder

12. FR Statutory Ledger Standard IAS Subledger Accounting Method Payables Application Accounting Definition Payment Journal Line Definition Journal Line Types Account Derivation Rules (ADRs) Journal Entry Descriptions Sources (Fields) Document Transaction Entity (Objects, Records) Introduction to Subledger Accounting Accounting Methods Builder (AMB)

13. FR Corporate Ledger Corporate Chart of Accounts Receivables Invoice Transaction Account Definition Receivables Invoice Revenue Transaction Account Type Sources (Fields) Document Transaction Entity (Objects, Records) Introduction to Subledger Accounting Transaction Account Builder (TAB) Account Derivation Rules (ADRs)

14. Scope of Subledger Accounting in EBS Where and how used up to R12.1.3

15. Scope of Subledger Accounting in EBS Where and how used up to R12.1.3 • Accounting for Journals in the following subledgers of the core Financials Suite: • Assets, Cost Management*, Purchasing**, E-Business Tax, Payables, Receivables, Cash Management • *Cost Management covers Purchasing Receipts, Inventory and Manufacturing • **Purchasing covers burden and encumbrance accounting for Requisitions and Purchase Orders • Accounting for Journals elsewhere in EBS: • Payroll, Projects, Lease and Finance Management, Loans, Property Manager, Process Manufacturing, Price Protection, Trade Management, Contract Commitment and Federal Financials. • Transaction Account Builder only used for Financials Common Modules (Advanced Global Intercompany System (AGIS))

16. Scope of Subledger Accounting in EBSTransaction Account Builders up to R12.1.3

17. Scope of Subledger Accounting in EBSTransaction Account Builders post R12.1.3? SLA Transaction Account Builder?

18. Scope of Subledger Accounting in EBSRelated changes in R12 • Replaced Sets of Books with Ledger and Ledgers Sets • Primary • Secondary • Reporting (Currency) • Moved Multiple Reporting Currency functionality to Reporting currency • Moved Taxation functionality embedded in the subledgers to the common tax engine (E-Business Tax) • Legal entities model and functionality extended into most subledgers and supports Inter- and Intra- company accounting • Replaced Global Intercompany System (GIS) with Advanced Global Intercompany System (AGIS) • Replaced Global Accounting Engine with Subledger Accounting

19. 11i upgrade options and considerations

20. 11i upgrade options and considerationsKey options • Your existing 11i implementation should upgrade without any changes in configuration or additional development – subject to regression testing. • Factors that may change an upgrade ‘without changes’: • You have accounting (GAAP) issues that are being addressed by manual journals, that could be addressed by changing the seeded accounting • You have customised any one of the Account Generators (dependent Workflow technical skills) Projects AutoAccounting (dependent on SQL technical skills) but want to revert to standard TABs and override account derivation in SLA instead • You want to implement a secondary ledger with a different chart of accounts. • You want implement some of the advanced features of SLA (see R12 implementation options) • Note: this may still require PL/SQL technical skills to develop custom sources.

21. 11i upgrade options and considerationsUpgrade considerations • By default, the upgrade updates the data for the current fiscal year, as well as the necessary periods of the previous fiscal year, to ensure that at least six periods are included in the upgrade • How much data must be moved to the new model to support the business?, if more required then: • Get patch 5233248 • Run SLA Pre-upgrade program to change the number of periods of data to upgrade • How much downtime is available to upgrade old data to the new model? • How many old transactions could possibly be reversed or rely on previous accounted transactions in a flow? (e.g. the accounting of payments related to a payable invoices are in a flow) • Mitigation: “Upgrade by Request” can run SLA post-upgrade program at any time to create the missing data

22. 11i upgrade options and considerationsSubledger Specific considerations: Payroll • Use old GL Interface approach • No effort required • Use new SLA approach • Provides GL to Payroll SLA journal drill-down (unlike other subledgers not to HR/Payroll itself as this is secured data) • Full control of accounting • Need to configure all Journal Lines from scratch • On My Oracle Support, see: • Article ID 399632.1 and Article ID 409174.1 • White Paper Oracle Payroll - Sub Ledger Accounting Integration - An Oracle White Paper

23. 11i upgrade options and considerationsSubledger Specific considerations: Assets • Use existing Account Generator • Set FA: Use Workflow Account Generation profile option to Yes • SLA Account Derivation rules • Set FA: Use Workflow Account Generation profile option to No • Amend Account Derivation Rules in SLA as required.

24. R12 implementation options

25. R12 implementation optionsOverview • Choose an Account Building Approach • Implement additional functionality: • Reconciliation References • Journal Header Descriptions • Journal Line Descriptions • Supporting References (for Inquiry) • Supporting Reference Balances • Integrate non-EBS sources via Financials Accounting Hub

26. Sources Transaction Account Builder (Account Generator, AutoAccounting, Hard-wired rules, SLA ADR, SLA TAB) DocumentDistributions Documentsubject to Accounting Events (e.g. Payable Invoice) 10023 2099 38765 476 00000 Master Datarelated to Document (e.g. Supplier) Setup Datarelated to Document (e.g. Operating Unit System Options) R12 implementation optionsChoose an Account Building approach (1)

27. DR CR Journal Sources DocumentDistributions Documentsubject to Accounting Events (e.g. Payable Invoice) Journal Line e.g Debit GBP 100 10023 2072 38765 421 00000 Master Datarelated to Document (e.g. Supplier) Master DataSLA Mapping Set Setup Datarelated to Document (e.g. Operating Unit System Options) R12 implementation optionsChoose an Account Building approach (2) Accounting Engine (SLA ADR)

28. R12 implementation optionsChoose an Account Building approach (3) • Key questions: • Do you want to prevent users entering account code combinations manually anywhere in EBS? – Total Accounting Automation • Do your ‘Organisational’ accounting segments change frequently causing documents with long life cycles to use invalid segment values and invalid combinations in the later part of their life?

29. R12 implementation optionsChoose an Account Building approach (3) • Two main approaches: • Calculate account code combinations at journal creation time (override ‘dummy’ TAB defaults with ADRs using setup and master data) • KPN approach • TABs calculate using setup and master data. ADRs Use TABs results at journal creation time (accept TAB defaults with minimal override in ADRs) • Oracle Product Development approach • Approach 1: • Change TABs to generate ‘dummy’ account combinations, change SLA ADRs and SLA JLDs – high cost, high complexity, custom development • Approach 2: • Take the seeded functionality: don’t change the TABs, don’t change the SLA ADRs - low cost, low complexity, no custom development • Or, do as you did in 11i implementations: change the TABs, don’t change the SLA ADRs - medium cost, medium complexity, custom development

30. R12 implementation optionsReconciliation References • Reconciliation References have to be populated (from a source) to use the new GL AutoReconciliation feature for each journal line. • Scenario: • Two source subledgers imported into GL via FAH • Subledger A, primarily debits a control/clearing account using a Transaction Reference recorded in the reconciliation reference • Subledger B, primarily credits the same control/clearing account using the same Transaction Reference recorded in the reconciliation reference • Reconciliation enabled for the control/clearing account • GL Automatically Reconciles journal lines that have the same reconciliation reference and the sum of the debits equal the sum of the credits • Should be able to prove un-reconciled journal lines balance using reports from the source Subledgers.

31. R12 implementation optionsJournal Header Descriptions • Journal Header Descriptions have to be populated (from sources) • E.g. Invoice: <Invoice Number> Suppler: <Supplier Number> • Visible in SLA Inquiry screens • Visible in GL Inquiry screens if SLA Journal Lines are not summarised

32. R12 implementation optionsJournal Line Descriptions • Journal Line Descriptions have to be populated (from sources) • E.g. Invoice: <Invoice Number> Suppler: <Supplier Number> Line Number: <Line Number> • Visible in SLA Inquiry screens • Visible in GL Inquiry screens if SLA Journal Lines are not summarised

33. R12 implementation optionsSupporting References (for Inquiry) • Supporting References have to be populated (from sources) • E.g. Project Expenditure Type • Can have up to five segments • Allows Journal Lines to be retrieved using this value in the SLA Inquiry screens • Can be a source for a data warehouse

34. R12 implementation optionsSupporting Reference Balances • Supporting References have to be populated (from sources) • E.g. Project Number • Can have up to five segments • Allows GL Balances to be further analysed • Effectively extends the accounting flexflield by up to five segments • Balances can never reset (inception to date), or reset on year end (year to date) • Can be a source for a data warehouse

35. R12 implementation optionsIntegrate non-EBS sources via Financials Accounting Hub • Requires a FAH licence • Can be a complex development • Needs detailed report requirement analysis • Needs detailed analysis of source system (subledger) to identify the documents and their accounting events • Needs detailed accounting requirements analysis to identify the journals required for each accounting event