Oracle R12 Upgrade - Sub Ledger Accounting


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Sub Ledger Accounting: In line with R12 upgrade from 11i.

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Oracle R12 Upgrade - Sub Ledger Accounting

  1. 1. Outcomes-Driven Value-Centric.Sub Ledger Accounting:In line with R12 upgrade from 11i
  2. 2. Outcomes-Driven Value-Centric.In R12, Oracle has introduced new functionality named Sub ledger accounting.Oracle Sub ledger accounting is a rule based engine, for generating accountingentries based on source transactions from all the modules of Oracle application.This paper covers brief introduction to Sub ledger accounting with its keyfeatures. This paper also attempts to cover the technical upgrade process for11i customer, who wishes to upgrade from Oracle E Biz 11i to Oracle Release12. Briefly this paper touches the set up process and bottom up account buildingprocess required to make Sub Ledger accounting functional in Implementation orupgrade process.Release 12 of Oracle has significantly improved the accounting capabilities ofE Business suite. Sub ledger accounting is a rule based accounting enginethat centralizes accounting for Oracle E Business suite products. Sub Ledgeraccounting is not a separate product in itself, but is Oracle’s engine catering tothe accounting needs of Oracle Applications.Earlier accounting events were stored within individual sub ledgers. In OracleR12, a new schema (XLA) is defined and the accounting events were storedwithin centralized data model. Within the same engine, Oracle released a newfunctionality named as ‘Accounting method builder’. With this functionality userswill be able to define and maintain custom accounting rules. Previously, this washandled by Work flow Account Generators. However accounting method builderis not replacing workflow account generator, and can be used in conjunction.Introduction
  3. 3. Outcomes-Driven Value-Centric.Accounting method builder is more robust and user friendly and togetherwith new ledger support, sub ledger accounting enables support of multipleaccounting requirements, concurrently in a single instance. Different accountingregulations can be satisfied by maintaining and applying different sets oftransactions; or accounting for the same transaction with multiple methods.There are no sub ledger accountings responsibilities and sub ledger accountingforms are embedded within standard Oracle application responsibilities (e.g.Costing Manager, Payable Manager, etc). Sub ledger accounting providesfollowing services to Oracle applications• Generation and storage of detailed accounting entries• Flexible Journal Entry Set Ups• Storage of Subledger balances• Subledger accounting entries along withbi-directional drilldown to transactions• Subledger reporting• Multiple Accounting RepresentationsKey Features of Sub Ledger AccountingIn 11i, the account used during transaction flows to the GL, and there is nooption of configuring the accounts once the distribution is created. While inR12, account re configuration is possible event after transaction is recorded inSubledger.The difference between 11i and R12
  4. 4. Outcomes-Driven Value-Centric.To further understand this, we will take example of one application (CostManagement) and explore it. And we will consider following three scenarios forbetter understanding,1. No customization in SLA2. Customization in SLA for changing GL Code of combinations3. Creation of shadow journals for reporting purposeIf a company chooses to pass the accounting as it is, there is no customizationrequired. This application came as hand in and completely integrated with othermodules of Oracle e-business suite. The customization or transformation termsused in SLA refer to GL code combination or additional entries required only.SLA is required in R12; it’s not option but mandatory requirement. The data firstpass to Subledger accounting engine before moving to General Ledger.
  5. 5. Outcomes-Driven Value-Centric.Let say, Inventory application creates an accounting entry for X.Y.Z Account andwould like to see this code as it is in General Ledger,Let say, Inventory application creates an accounting entry for X.Y.Z Account andwould like to see this code as X.Y1.Z1 in General LedgerOracle provides seeded rules and set up, by using that, this can be achieved,without any customization. This is standard functionality.No customization in SLA (Seeded Set up)Customization in SLA for changing GLCode of combinationsThis can be achieved by attaching custom rules to Event types, however as perOracle suggestion if implementer has to change the seeded rule, he/she has tocopy the custom definition (or seeded set up) and then make the changes. Thiswould affect the entire chain in SLA set up.
  6. 6. Outcomes-Driven Value-Centric.Creation of shadow journals for reporting purposeThis is the most important and significant change, which oracle has introducedthrough Sub Ledger accounting. Let us take an example, of “Smart Inc”organization; it might have operations in France, which is “Smart Inc France” andwith UK being the parent company, the French company has to do accountingjournals in formats that can be reported as per French legislation and also asper UK legislation. For example, in France an inventory item is accounted asexpense, whereas in UK the inventory item is accounted as an asset. In theexample below, X.Y.Z is never passed to the GL. Instead to GL X.Y1.Z1 ispassed to the Primary Ledger FRANCE and X.Y2.Z2 is passed to the SecondaryLedger UK. The picture below shows the role that SLA plays in such scenario.*Cost Management used above is just for an example, similar results can beachieved with all other Sub ledger applications as shown in following diagram,
  7. 7. Outcomes-Driven Value-Centric.Account Generators to SLA (11i to R12)On upgrade from Release 11i to Release 12, all Account Generators areretained. It is Oracle’s recommendation that post upgrade users transitionaccount generation from the Workflow Account Generators to the SubledgerAccounting Engine. The Subledger Accounting Engine will be the technologymoving forward and Workflow will not be technology available in Fusion.In Fixed Assets, the FA Account Generator (FAFLEXWF) is retained. A newprofile option, FA: Use Workflow Account Generation is set to Yes by default.Once rules are defined in the Accounting Methods Builder and the customaccount generation is accomplished by the Subledger Accounting Engine, setthe Profile Option to No. Picture 6 shows the account derivation rule in SLA.Note that two different accounts are generated based on the conditions that areset. The first rule which is selected uses the Account generated by the WorkflowAccount Generator.
  8. 8. Outcomes-Driven Value-Centric.Notice that the condition is ‘Generated Code Combination Identifier IS NOTNULL’. So, if the account is generated by the Workflow Account Generator, usethe generated account. Otherwise, use the default account. So even if using theWorkflow Account Generator, SLA still has rules to manage for that scenario.The Fixed Assets Account Generator has three journal type account levels: Book,Category, and Asset. Journal types are divided up into the different accountlevels. SLA now provides greater flexibility because it does not utilize journaltype account levels. Every journal type can be modified individually to bookaccording to requirements, so users are not required to have only one accountgeneration methodology for a journal type account level. On a side note, in SLAeach Fixed Assets book can now feed a ledger directly. Users can have multiplerepresentations for both corporate and tax books.
  9. 9. Outcomes-Driven Value-Centric.Even with the SLA account derivation, AutoAccounting setup in Receivablesand Projects is still required. AutoAccounting creates the default accounts fortransactions. The SLA accounting rules are configured to accept these defaultaccounts without change. Optionally, additional user-defined accounting rulescan be defined in SLA. These SLA rules will override default accounts orindividual segments of accounts. One of the reasons AutoAccounting setup isstill required is because the default accounts are used for processing beforebeing transferred to SLA. For example, Oracle Projects cost distribution, revenuegeneration, and accounting event generation processes require AutoAccountingto create default accounts during processing. SLA allows multiple Receivablesdistributions. However, they are not definable in AutoAccounting, only in SLA. Byutilizing configurable account derivation in SLA, users could reduce the numberof Transaction Types needed in Receivables to support AutoAccounting. It isrecommended that users setup basic default accounting in AutoAccounting andthen let SLA override this accounting using rules based on user requirements.It is important to realize that accounting rules can only be applied to transactionscoming from the subledgers. Manual Journal Entries and/or entries uploadedthrough Web/ADI are not processed by the subledger accounting engineand therefore cannot leverage user-defined accounting rules. The followingsubledgers (see Figure 2) use the Subledger Accounting Engine whenaccounting entries are generated. Following applications are integrated with SLA,Purchasing Asset ReceivablesPayables Cash Management IntercompanyCost Management Process Manufacturing ProjectsPayroll Loans Lease ManagementProperty Manager Public Sector/Federal Globalizations
  10. 10. Outcomes-Driven Value-Centric.Implementation considerations –R12 SLA (Subledger Accounting) Pre-Upgrade program• SLA Pre Upgrade program• Historic data conversion• SLA Post Upgrade program & Hot patch• SLA Set upDuring the upgrade, existing accounting data from the subledgers (i.e., AR, AP)is upgraded into the new Oracle Subledger Accounting (SLA) data model. Bydefault, the upgrade updates the data for the current fiscal year, as well as thenecessary periods of the previous fiscal year, to ensure that there are at least sixperiods included in the upgrade (occurs when the upgrade is performed in thefirst half of the fiscal year). This is the minimum downtime upgrade.You may need to run the SLA Pre-Upgrade program if you are using OracleGeneral Ledger and at least one of the following subledgers: Assets, CostManagement, Payables, Receivables, Purchasing, or Project Accounting. Thisoptional program allows changing the default number of periods of historic datato be upgraded.The R12 SLA Pre-Upgrade program is run on your 11i instance. In order to runthe R12 SLA Pre-Upgrade program to change the default number of periodsof historic data to upgrade, you must apply Patch 5233248 to your Release11iAPPL_TOP and submit the SLA Pre-Upgrade Program.
  11. 11. Outcomes-Driven Value-Centric.Historical DataAs per Oracle, “Evaluate your business requirements carefully with regardsto historical data before deciding how far back you wish to keep detailedaccounting information. The R12 SLA Upgrade will upgrade the transactions inthe accounting periods you specify. Your decision can have an impact on theincreased data volume and your system resources. We recommend that youupgrade the data that you need.Some Key notes1. The records considered by pre-upgrade program are for AP, AR, ProjectAccounting, FA, Inventory /Costing and PO products only.2. The accounting period under consideration must be a NON-Adjustmentperiod.3. The period has a status of closed, open, future, and never opened.4. The GL_PERIOD_STATUSES table is updated by pre-upgrade program.5. The R12 SLA Pre-Upgrade Program does not perform the actual upgrade.This program writes out to the GL_PERIOD_STATUSES table. It is the subledger(i.e., AP, AR, FA, Costing etc.,) upgrade programs that actually perform theupgrade by reading the accounting information in the subledger (FA, AP, ARetc.,) tables and writing the corresponding records to the SLA tables for futurereference.6. The R12 upgrade works differently for AP transactions. For AP only, allrecords in the ap_accounting_events_all, ap_ae_headers_all, and ap_ae_lines_all tables are upgraded into the respective SLA tables. Only the xla_distribution_links records for AP are migrated based on the xla_upgrade_dates and theaccounting period in the gl_period_statuses tables
  12. 12. Outcomes-Driven Value-Centric.For example, upgrade data for periods that have open transactions--i.e., invoicesthat have not been paid and invoices you plan to cancel. You will also needhistorical data to clear payments, cancel payments, and reconcile payments.”The SLA pre-upgrade program selects the first date of the current fiscal year asits START DATE. If there are not enough periods to make up 6 months, then thesystem will look at the periods in the prior fiscal year.Current Accounting Periodin FiscalR12 downtime upgradeDefaultR12 downtime upgradeDefault R12 SLA Pre-Upgrade ProgramSep-11 Jan-2011 to Sep-2011 Allow you to specify thenumber of periodsFeb-11 Sep-2010 to Feb-2011 Allow you to specify thenumber of periodsR12 SLA Post-upgrade program and Hot PatchIf you do not perform a complete upgrade of the accounting data, OracleSubledger Accounting allows you to perform an additional upgrade of the data byrunning the SLA post-upgrade process whenever the missing data is required.SLA hot patch can be run during uptime to upgrade historical data, if user choseto only a partial or minimal upgrade during downtime. Before running any SLApost-upgrade process (i.e., SLA Hot Patch), user must enter the initial date to beused to determine the initial period to be upgraded. This date is entered in theSLA: Initial Date for Historical Upgrade profile option. This profile option must bepopulated in order to run the process. Run the process as follows:1. Run AutoPatch with options=hotpatch.
  13. 13. Outcomes-Driven Value-Centric.Technical flow of the R12 SLA Upgrade2. Specify $XLA_TOP/patch/115/driver/xla5584908.drv when prompted for theunified driver.Note: The SLA Hot Patch can be run multiple times, each time by specifying adate that covers a range that has not been upgraded.Caution: Running the Hot Patch could take several minutes or several hours tocomplete depending on the date range you specify and the amount of data to beupgraded.This is the technical flow of the R12 SLA Upgrade, which is performed in themain r12 udriver file.1. Identify what accounting periods will be upgraded. The periods to beupgraded depend upon the minimum Downtime upgrade or initial period setup inthe pre-upgrade or uptime upgrade. (Files Used: XLA_UPGRADE_DATES andGL_PERIOD_STATUSES )2. The periods to be upgraded are stamped with an intermediate status(P-pending). (The same set of periods are populated in the XLA_UPGRADE_DATES)3. The data in the Subledger accounting tables are upgraded into the SLAaccounting tables. (The periods in the XLA_UPGRADE_DATES is checked inthis step)4. The Subledger products call the SLA API to update the period statuscolumn in the General Ledger. They stamp the data for the periods specified toindicate that they have been upgraded (U-upgraded). The SLA API stamps theGL_JE_HEADERS table for the upgraded applications. The column je_from_sla_flag=U is also stamped.This completes the R12 SLA Upgrade cycle.
  14. 14. Outcomes-Driven Value-Centric.Set up considerationsSince SLA is a new enhancement in Oracle R12, we should know fewterminologies,Accounting Method Builder:Accounting Method Builder (AMB), enable users to define accounting rules usingStandard Oracle Forms. The AMB gives users the ability to create and maintainuser-defined accounting rules. This provides the user with great flexibility whilemaintaining necessary control. Users can also more easily comply with multiplegeographic, legislative, or industry requirements. By putting accounting rulesin place, manual journal entries and customizations can be reduced. An addedbenefit is that because these user-defined accounting rules are created andmaintained through the forms, all user-defined accounting rules will be retainedin subsequent upgrades. The AMB supports logic such as prioritization andconditional statements without using SQLTo customize an accounting method, users must create a user-definedSubledger Accounting Method. A Subledger Accounting Method is composed ofmultiple Application Accounting Definitions. For example, the Standard AccrualSubledger Accounting Method is made up of the following Application AccountingDefinitions: Asset Standard Accounting, Cash Management Standard Accounting,Load Standard Accrual, Cost Management, Accrual Basis (which is the Payablesdefinition), Process Standard Accounting, Projects Standard Accounting, PropertyManager Normalized Accounting, and Receivables Default Accrual. Notice theserepresent the different sub ledgers that will create accounting entries in theGeneral Ledger.Set up considerations
  15. 15. Outcomes-Driven Value-Centric.Subledger Accounting Method (SLAM) - This is the Subledger accountingmethod that is built and assigned to a Ledger. This will be created via theAccounting Methods Builder and includes all the details needed to create theappropriate journal entries.Application Accounting Definitions (AAD) - The application accountingdefinitions is made up of the Journal Line Definition, Journal line types, andAccounting Derivation Rules. These are developed using the event classes andtypes. A new AAD can be created or a seeded AAD can be used. The details areassigned and validated to be certain the setup at this level is correct.Journal Line Definitions (JLD) - JLT, ADR and JED are combined to create theJDL for an event. These can be shared across AADs and can be used to createsets of line assignments for event classes and types.Journal Line Types (JLT) - The types are defined for each particular class to beused. 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 includeidentifying the natural side used (debit, credit, gain/loss), accounting class,summarization, and other conditions that will cause the rule to create a journalentry.Accounting Derivation Rule (ADR) - This is used to determine the accountingcombinations that will be used for the journal entries. Various rules can bedefined. 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 constantvalue-use the account combination that is defined in the accounting chart ofaccounts.
  16. 16. Outcomes-Driven Value-Centric.Mapping Sets -These sets are optional and user defined. If the user determinesthat the seeded details are insufficient, then mapping sets can be setup to allowfor more specialization in the accounts. This is not supported by developmentas this would require customization. Seeded details are supported as they areprovided by Oracle code.Transaction Objects/Sources- Transaction objects and sources carrytransaction information into the rules defined for the accounting chart ofaccounts.Event- An event is the recording of a change of status in the transaction lifecycle, i.e., invoice approved, payment received, period close, etc. These aredefined for each SLAM used. Event classes and event types are used to createthe events to be usedEvent Class- This classifies the types of transactions that are to be accountedfor. An example of an event class is WIP Variance.Event Type- This defines actions that are possible for an event class that haspotential accounting significance. Examples for the WIP Variance Event CLASSwould have event TYPES defined for Period Close Variance, Job Close Variance,and Final Completion Variance
  17. 17. Outcomes-Driven Value-Centric.Basic Steps to Build Accounts
  18. 18. Outcomes-Driven Value-Centric.The process is built from the bottom up as mentioned below,1. Create Account Derivation Rule (ADR). The source information in the ADRrefers to various distribution tables.2. Define conditions required for the ADR created in step 1.3. Create Journal Line Definitions (JLD) for an event classa. Query the LOV of seeded event classesb. Copy the seeded event class using the Copy Definition buttonc. Replace existing ADR in the Journal Line type form with the new ADR.This is in the Line Assignments sections, using Line Type4. Create new Applications Accounting Definition (AAD)a. Query for the seeded AADb. Copy from this to create a new AADc. Associate the new JLD assignments created in Step 3d. Validate the definition. If successful continue to next step or continuecreating the JLDs required. If unsuccessful, check the setup for all steps abovebefore moving to next steps.5. Associate the new AAD with the Subledger Accounting Method (SLAM)a. Query SLAMs to view existing methodsb. For the existing AAD enter an end date to stop this from being usedc. Attach the new AAD with the start date6. Assign the SLAM to the LedgerEach of these definitions except sources can be copied and modified from theOracle seeded definitions to meet your accounting needs. Sources are thecomponents of a transaction such as a supplier or distribution line. If a userneeds a customized source then a developer must develop custom code and itcan be plugged into the list of sources.
  19. 19. Outcomes-Driven Value-Centric.When replicating Account Generator logic in the Subledger Accounting Engineusing the Accounting Methods Builder the components highlighted in red willhave to be copied and modified. Notice that even though the Account Derivationrules is the component that is the focus of the account generation each of thecomponents above this have to be copied and modified all of the way up to theSubledger Accounting Method.If a customer has 11i instance with very complex customization, in derivingthe accounting configuration, they can prefer to use the old customizationsin upgraded instance (R12) also. However extensive testing is required inmigrating custom code and this can be balanced out from investing in Subledger accounting. Some of the technical customization can be avoided by usingsource and mapping based accounting rules; however possibility of the technicalcustomizations at code level cannot be ruled out in Sub ledger accounting.Most of the customers use SLA functionalities for out of box solution for accounttransformations and also configure the accounts at sub ledger level for complexrequirements. This is completely situational and has to be a business decisionand should be treated on individual customization level.Business considerations
  20. 20. Outcomes-Driven Value-Centric.1. Oracle Subledger Accounting Implementation Guide (B13984-02)2. R12.0 and R12.1: FAQ for the SLA Upgrade: SLA Pre-Upgrade, Post-Upgrade, and Hot Patch [ID 604893.1]3. R12.1 Oracle Applications Upgrade Guide: Release 11i to Release 12.1.3E16342-034. R12.0 Oracle Applications Upgrade Guide: Release 11i to Release 12.0.4E12011-025. Detailed instructions for the SLA Post Upgrade (aka SLA Hot Patch) can befound in Note: 751160.16. Transitioning from Account Generators, White paper by Solution BeaconReferenceThe above information is compiled andwritten by Jitendra GahlotJitendra Gahlot, an Oracle CertifiedE-Business Consultant from Enrich ITInc. Jitendra has Over 10 years of ex-perience of Implementing, Supportingand Development of Oracle E-BusinessSuite.