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Impact of R12 Design in Procure To Pay Accounting Flow

Posted by Mahmoud Elemam on December 30, 2011


Impact of R12 Design in Procure To Pay Accounting Flow

Basic Changes

Functional design

1. Set Of Books is replaced by the term Ledger.

2. Accounting entries for transactions happening in all the applications such as Purchasing,Cost Management,Payables will go to General Ledger through a common module called “Subledger Accounting (SLA)” which is introduced in R12 and accounting entries can be viewed at SLA menu.

3. Accounting entries can be created manually at SLA level and can be transferred to General Ledger by running the program ‘Transfer to GL’.

4. SLA architecture gives the flexibility to derive the accounts for all transactions when it comes to SLA using Account Derivation Rules to meet various business needs and the accounting entries using those derived accounts can be transferred to General Ledger. Also it gives the flexibility to modify the accounting line types,balance types,conditions based on which the accounting gets generated for all the event classes.

5. SLA has the option to generate the accounting entries for respective subledgers in Draft mode or Final mode. Accounting entries can be created in Draft mode first in SLA which is a rough or draft entry to see whether the journal needs any modification in terms of account code or journal category. These draft entries will not get transferred to GL at any point of time. If any modification is required, it can be done using the features available in SLA and the accounting entries can be created in Final mode once the user feels that the journals do not need any modification. When the entries get created in Final mode in SLA, it will override the entries already created in Draft mode and these final mode entries alone will get transferred to GL.

5. The concept of Secondary Ledger has been introduced so that you can have two different accounting methods set at ledger level, for eg; Accrual basis accounting method for Primary ledger and Cash basis accounting method for Secondary ledger, and the ledgers can have different chart of accounts/currencies/calenders.  Actual and Encumbrance entries in the Procure to Pay cycle can be generated in secondary ledger also along with the entries in Primary ledger.

Technical design

1. The column set_of_books_id has been replaced with ledger_id in GL Tables

2. As a part of Subledger Accounting, new SLA tables XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS have been introduced through which the accounting entries flow to GL.

3. PO details will not available in reference columns(reference_1,reference_2…) in tables GL_JE_LINES and GL_BC_PACKETS. Hence accounting entries in these tables can be retrieved only using SLA tables and GL_IMPORT_REFERENCES table.

4. Receiving Subledger/Inventory subledger/Payables subledger is not directly linked to table GL_JE_LINES,instead it is linked through the subledger tables XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS.

5. XLA_AE_LINES table is mapped to GL_IMPORT_REFERENCES table with the gl_sl_link_id and gl_sl_link_table columns. The linking columns between GL_IMPORT_REFERENCES and GL_JE_LINES tables are je_header_id and je_line_num.

Setting up of Encumbrance

Defining the Subledger Accounting Method (SLAM) :

Navigation:

General Ledger>Set up>Financials>Accounting Set up Manager>Accounting Set ups
Query the ledger and you can find the option for setting up the Subledger Accounting Method

Subledger Accounting Method is having the option of

a) Standard Accrual
b) Encumbrance Accrual
c) Standard Cash
d) Encumbrance Cash

If Encumbrance needs to be enabled, then the Subledger Accounting Method has to be set as  “Encumbrance Accrual” in case of Accrual basis accounting method or “Encumbrance Cash” in case of cash basis accounting method for the ledger.
If Encumbrance is not used, then the Subledger Accounting Method has to be set as “Standard Accrual” or “Standard Cash” for the ledger.

Difference in Behavior between 11i and R12:

1. In 11i, Encumbrance related set ups include enabling the Budgetary control flag for the set of books, defining the Reserve for Encumbrance a/c, enabling the encumbrance for REQ,PO and INVOICE in Financial Options.
Where as in R12, Subledger Accounting Method has to be set for the ledger in addition to other set ups done in 11i. If it is set to “Standard Accrual”, Encumbrance cannot be used for that ledger even though the Encumbrance is enabled for the REQ,PO and INVOICE in Financial Options.

2. In 11i, there is an option to choose different encumbrance types for REQ,PO and INVOICE in Financial options but in R12, Financial options does not have the LOV to choose the encumbrance type. By default, Requisition encumbrance will be “Commitment”, PO encumbrance will be “Obligation” and invoice encumbrance will be “INVOICE”. If any of these 3 encumbrance types is not enabled in GL > Set up > Journal > Encumbrance, then the respective document REQ/PO/Invoice will throw budgetary control exception and will fail funds check.

Generation of Encumbrance Entries

Functional design

On Reserving and Approving the Requisition(PR)/Purchase Order(PO), Encumbrance amount gets reflected in Funds Inquiry screen and the encumbrance entries can be viewed in SLA menu in Purchasing module.

Navigation:
Purchasing>Accounting>SLA:User Main Menu>Accounting events
Query by transaction dates,ledger name and transaction number which is the PR/PO number

Following Accounting entries will be available in the HTML page

Budget a/c DR
Reserve For Encumbrance CR

There is an option to do funds check before taking the RESERVE and APPROVE action on the PR/PO by navigating to Tools > Check funds in Requisitions and Purchase Order forms to see the funds check behavior before approving the PR/PO. This funds check activity will create a draft entry in SLA and once the document is reserved, encumbrance entry will get created in Final mode overriding the draft entry already created for the “Check funds” action. If the funds check fails due to insufficient funds on taking the RESERVE action, entries will get created with Invalid status in SLA.

If Secondary ledger is associated to the primary ledger with the conversion level as ‘Subledger’ and if the secondary ledger is using encumbrance based SLAM, then encumbrance entries will get created in both primary subledger and secondary subledger on doing the RESERVE action on the PO.

The Concurrent Request “Transfer Journal Entries to GL” has to be submitted from Purchasing Responsibility to create the encumbrance entries in GL. On running this request, encumbrance entries created in Final mode alone will get transferred to GL.

Difference in Behavior between 11i and R12:

1. In 11i, encumbrance entries will get transferred to GL by running the concurrent program “Program-Create Journals” from GL responsibility. But in R12, “Transfer Journal Entries to GL” has to be submitted from Purchasing Responsibility to create the encumbrance entries in GL.

2. In 11i, it is not possible to view the encumbrance entries in Purchasing module, where as in R12, the entries can be viewed from SLA menu in Purchasing.

3. In 11i, a credit against the Reserve For Encumbrance a/c (RFE) can be seen only at the time of posting the Encumbrance debit entry in GL. But in R12, RFE a/c gets credited along with the budget a/c debit entry which can be viewed from SLA menu in Purchasing.

Technical design

On reserving and approving the PR/PO, encumbrance entries get generated in table GL_BC_PACKETS with column source_distribution_type as ‘PO_REQ_DISTRIBUTIONS_ALL’ for PR and ‘PO_DISTRIBUTIONS_ALL’ for PO and column source_distribution_id_num_1 as req distribution id for PR and po distribution id for PO.

Encumbrance entries will also get generated in the table PO_BC_DISTRIBUTIONS which has been newly introduced in R12. This table has the columns ‘reference4’ and ‘reference3’ columns where the PO/PR number and distribution id gets populated.
These accounting entries are also populated in the table XLA_AE_LINES. The table XLA_AE_HEADERS will show whether the encumbrance entry is created in Draft mode or Final mode or Invalid mode indicated by the column accounting_entry_status_code and it will also show whether the entry is transferred to GL or not indicated by the column gl_transfer_status_code.

The tables PO_BC_DISTRIBUTIONS and XLA_AE_HEADERS are linked with the column ‘event_id’.
The tables XLA_AE_HEADERS and GL_BC_PACKETS are linked with the column ‘ae_header_id’.
The tables XLA_AE_HEADERS and XLA_AE_LINES are linked with the column ‘ae_header_id’.

Once the entries are populated in GL and those entries are posted, records from the table GL_BC_PACKETS will get deleted but the entries in table PO_BC_DISTRIBUTIONS will remain always.

Difference in Behavior between 11i and R12:

In 11i, Encumbrance entries created in GL_BC_PACKETS will be directly moved to GL_JE_LINES by running the CJE program, whereas in R12, Encumbrance entries gets generated in a new table PO_BC_DISTRIBUTIONS and also in XLA tables in addition to GL_BC_PACKETS.

Receipt Accounting


As mentioned earlier, accounting entries for transactions happening in Receiving subledger and inventory subledger will flow to GL only through SLA which involves a new process called “Create Accounting process”.

Create Accounting process for Online Accruals

When purchase order is set to accrue at receipt, accounting entries get created in Receiving subledger once the receiving transactions are done. Then the Create Accounting process should take place to create journals in SLA accompanied by Transfer to GL process and posting which are optional. Users can choose whether they want the journal import and posting also to happen at the same time when the create accounting process is done or the Transfer to GL/Posting can be done explicitly. But if encumbrance is enabled, it is always preferred to do the Transfer to GL and Posting along with the create accounting process by having the values for parameters ‘Transfer to GL’ and ‘Posting in GL’ as YES while submitting the create accounting program. For more details on this, please refer to Note.728064.1. Another main implication of this model of doing the GL transfer and posting along with create accounting process 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.

This Create Accounting Process involves two concurrent programs Create Accounting-Receiving which can be submitted from Purchasing>View Requests or from Cost Management Responsibility > SLA menu > Create Accounting and Create Accounting-Cost Management which can be submitted from Cost Management Responsibility > SLA menu. “Create Accounting – Receiving” only accounts for Expense destination PO Receipt. “Create Accounting – Cost Management” accounts for all transactions mentioned below.

– Expense destination PO Receipt
– All Inventory transactions including inventory destination POs
– WIP transactions
– Accrual Write Off transactions

Parameters used while submitting the Create Accounting concurrent program:

  • Ledger – Ledger (SOB) name to be given
  • End date – Accounting entries to be created for all receipts  TO DATE
    a) Draft – Draft mode creates the SLA journals as Draft which can be modified. Hence these entries will not get transferred to General Ledger and it will be available only in SLA. Once the entries created in Draft mode are verified and confirmed, Create Accounting program has to be run in Final mode and the entries getting created now will override the draft entries in SLA and will get transferred to General Ledger.
    b) Final – Final mode creates SLA journals which can not be modified and can be transferred to General Ledger.
  • Report – Options available are Detail or Summary
  • Transfer to General Ledger – Yes or No – If the mode is set to Final and the value for this parameter is set to No, then the accounting entries will get created only in SLA table and it will not be available in gl_interface or GL. You need to submit the program “Transfer to Gl” in Cost Management Responsibility > SLA to transfer the entries created in Final mode from SLA to General Ledger.
  • Post in General Ledger – Yes or No

  a) Online Accruals with Expense destination

Functional design

When the PO which is set to accrue at receipt is received and delivered to expense destination, Receipt Accounting happens in Receiving subledger. Then the Create Accounting process has to be submitted to generate the receipt accounting in SLA and GL.
This receipt accounting includes encumbrance reversal entries if the PO is encumbered, otherwise it just includes the actual entries. These entries can be viewed in SLA menu in Cost Management module.

Navigation:
Cost Management,SLA > SLA >SLA: Inquiry > Accounting event
Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

AP Accrual a/c CR
Receiving Inspection a/c DR

Charge a/c DR
Receiving Inspection a/c CR

If encumbrance is enabled, encumbrance reversal also can be viewed as follows

Budget a/c CR
Reserve For Encumbrance DR

These entries can also be viewed from Receiving Transaction Summary > View Accounting.

In encumbrance enabled environment, once the receiving process is done, Create Accounting process and posting in GL has to be completed in order to get the encumbrance reversal and actuals to hit the GL funds inquiry simultaneously as the funds availability calculation in Funds Inquiry screen will consider the encumbrance reversal and actuals only when they are posted in GL.

Note: R12 SLA architecture does not have this design initially. This new design is introduced by a patch which is explained in more detail in Note.728064.1 to maintain accurate funds availability for the budget account at any point of time.

Technical design

When purchase order has Accrue on Receipt set to YES, Receiving Transaction Processor generates the accounting entries in RCV_RECEIVING_SUB_LEDGER upon Receipt and Deliver of the PO. Then the Create Accounting process should take place to create SLA journals which will insert records in XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS. These accounting entries will be available in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for this Encumbrance Reversal entry is DELIVER_EXPENSE and the event type code in XLA_AE_HEADERS for these actual entries will be RECEIVE for receipt accounting and DELIVER_EXPENSE for delivery accounting.
The tables RCV_RECEIVING_SUB_LEDGER and XLA_DISTRIBUTION_LINKS can be linked using the column source_distribution_id_num_1. The value of rcv_sub_ledger_id has to be given as source_distribution_id_num_1 for the source_distribution_type “RCV_RECEIVING_SUB_LEDGER” in XLA_DISTRIBUTION_LINKS table.

  b) Online Accruals with Inventory destination

Functional design

When the PO is received and delivered to inventory destination, Receipt Accounting happens in Receiving subledger and Deliver Accounting happens in inventory subledger. Then the Create Accounting process has to be submitted to generate the receipt accounting and deliver accounting in SLA and GL. This deliver accounting includes encumbrance reversal entries if the PO is encumbered, otherwise it just includes the actual entries.

View Accounting from Receiving Transaction Summary will show the accounting entries for RECEIVE transaction. To view the actual entries for DELIVER transaction, navigate to Material Distributions form which will show the accounting entries once the deliver transaction is costed. To view these actual entries and Encumbrance Reversal entries in SLA after create accounting process is done, navigate to

Cost Management Resp>SLA>Inquiry>Accounting event
Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

AP Accrual a/c CR
Receiving Inspection a/c DR

Material Valuation a/c DR
Receiving Inspection a/c CR

If encumbrance is enabled, encumbrance reversal also can be viewed as follows provided the flag “Reverse encumbrance” is checked in organization parameters > Costing tab.

Budget a/c CR
Reserve For Encumbrance DR

In encumbrance enabled environment, once the receiving process is done, Create Accounting process and posting in GL has to be completed in order to get the encumbrance reversal and actuals to hit the GL funds inquiry simultaneously as the funds availability calculation in Funds Inquiry screen will consider the encumbrance reversal and actuals only when they are posted in GL.

Note: This design related to encumbrance reversal and actuals hitting the funds inquiry after posting is yet to be implemented which will be done soon as this design is restricted only to expense destination POs and not for inventory. As of now, for inventory destination POs, there is a limitation in funds availability calculation where encumbrance reversal hits the funds inquiry at the time of receipt and delivery where as actuals hits the funds inquiry only at the time of posting the actual entries in GL after the create accounting process. Therefore delaying the create accounting process will result in incorrect funds availability. This limitation will be overcome by introducing the same design for inventory destination which is already done for expense POs.

 Technical design

When purchase order has Accrue on Receipt set to YES and destination_type_code is set to Inventory, Receiving Transaction Processor generates the accounting entries in RCV_RECEIVING_SUB_LEDGER upon Receipt and Cost manager generates the accounting entries in MTL_TRANSACTION_ACCOUNTS upon Deliver of the PO. Then the Create Accounting process should take place to create SLA journals which will insert records in XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS. These accounting entries will be available in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for this Encumbrance Reversal entry is PO_DEL_INV and the event type code in XLA_AE_HEADERS for these actual entries will be RECEIVE for receipt accounting and PO_DEL_INV for delivery accounting.

The tables MTL_TRANSACTION_ACCOUNTS and XLA_DISTRIBUTION_LINKS can be linked using the column source_distribution_id_num_1. The value of  inv_sub_ledger_id has to be given as source_distribution_id_num_1 for the source_distribution_type “MTL_TRANSACTION_ACCOUNTS”.

Difference in Behavior between 11i and R12:

1. In 11i, Receiving Transaction Processor creates the Receipt Accounting entries in Receiving Subledger as well as in GL_INTERFACE. Journal Import will be done to transfer the entries to GL_JE_LINES where as in R12, Receiving Transaction Processor will create the entries only in Receiving Subledger. Create Accounting Program has to be run to create SLA journals which in turn will trigger the journal import.

2. In 11i, if encumbrance is enabled, encumbrance reversal and actuals will undergo funds check when these entries are populated in gl_interface and GL funds inquiry will reflect the encumbrance reversal and actuals even before posting the entries in GL. But in R12, encumbrance reversal and actuals will hit the GL funds inquiry only when these entries are posted in GL even though funds check happens in SLA itself.

  c) Create Accounting process for Period End Accruals

Functional design

When the PO which is set to accrue at period end is received and delivered to expense destination and Receipt Accruals Period End program is submitted, accounting entries get created in Receiving subledger during period end for the PO shipments which has the received quantity greater than billed quantity. Then the Create Accounting process has to be submitted to generate the receipt accounting in SLA and GL.

This create accounting process is accompanied by Subledger Multiperiod Accounting program which gets spawned automatically to generate the reversal for the accrual entries for the next period in SLA. Depending on the value for  the parameter “Transfer to GL” given while submitting the create accounting program, Journal import will happen and the accrual entries for the current period and next period will get transferred to GL.

Note: Since SLA does the accrual reversal automatically for the next period which gets transferred to GL, Auto Reversal feature available in GL should not be used in R12. Otherwise, it will result in duplication of accrual reversal entries in GL. To get more details on Auto-Reversal feature and its impact on Period end accruals in R12, please refer to Note.873399.1

During this create accounting process, it has to be ensured that the end date given while submitting the Create Accounting program is greater than or equal to the first date of the next period in which accrual reversal is supposed to happen. If the end date of Create Accounting program is less than the first date of the next period, accrual entries for the current period alone will get created in Final mode and will get transferred to GL, where as  the reversal entries will get created in SLA with status as ‘Incomplete’ and it is not eligible to get transferred to GL . To transfer the accrual reversal entries which got created with INCOMPLETE status from SLA to GL, it has to be final accounted in SLA first which can be done by running the program ‘Complete Multiperiod Accounting’ with end date which includes the first date of next period and then it can be transferred to GL. If the GL period is closed for the current period or for the next period, period end accrual entries and reversal entries will get created only in SLA. To transfer these entries to GL, the concurrent request “Transfer Journal entries to GL-Receiving” needs to be submitted after opening the GL period.

This receipt accounting includes encumbrance reversal entries if the PO is encumbered, otherwise it just includes the actual entries. These entries can be viewed in SLA menu in Cost Management module and it cannot be viewed from Receiving Transactions Summary > Tools > View Accounting.

Navigation:
Cost Management>SLA Resp>SLA>Inquiry>Journal entries
Query by transaction dates and ledger name

Following Accounting entries will be available in the HTML page

AP Accrual a/c CR
Charge a/c DR

If encumbrance is enabled, encumbrance reversal also can be viewed as follows

Budget a/c CR
Reserve For Encumbrance DR

for the period in which Receiving is done and for the next period,you can see the reversal entry as

AP Accrual a/c DR
Charge a/c CR

If encumbrance is enabled, encumbrance reversal also can be viewed as follows

Budget a/c DR
Reserve For Encumbrance CR

As mentioned for online accruals with Expense destination, in encumbrance enabled environment, once the receiving process is done, Create Accounting process and posting in GL has to be completed in order to get the encumbrance reversal and actuals to hit the GL funds inquiry simultaneously as the funds availability calculation in Funds Inquiry screen will consider the encumbrance reversal and actuals only when they are posted in GL.

Note: R12 SLA architecture does not have this design initially. This new design is introduced by a patch which is explained in more detail in Note.728064.1 to maintain accurate funds availability for the budget account at any point of time.

Encumbrance will get reversed from the PO once the invoice is validated.Encumbrance on the PO will get converted to Invoice encumbrance. On doing Create Accounting for the invoice, Encumbrance on the invoice will also get reversed. But this invoice encumbrance reversal and Actuals will get reflected in Funds Inquiry screen only when these entries are posted in GL.

Technical design

When Purchase Order has Accrue on Receipt flag set to NO, Receipt Accruals Period End program generates the accounting entries only in RCV_RECEIVING_SUB_LEDGER. Then the Create Accounting process should take place to create SLA journals which will insert records in XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS. These accounting entries will be available in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for this Encumbrance Reversal entry is PERIOD_END_ACCRUAL and the event type code in XLA_AE_HEADERS for these actual entries will be RECEIVE for receipt accounting and PERIOD_END_ACCRUAL for delivery accounting.
The tables RCV_RECEIVING_SUB_LEDGER and XLA_DISTRIBUTION_LINKS can be linked using the column source_distribution_id_num_1. The value of rcv_sub_ledger_id has to be given as source_distribution_id_num_1 for the source_distribution_type “RCV_RECEIVING_SUB_LEDGER” in XLA_DISTRIBUTION_LINKS table.

Difference in Behavior between 11i and R12:

1. In 11i, Receipt Accruals Period End program creates the Receipt Accounting entries in Receiving Subledger as well as in GL_INTERFACE. Journal Import will be done to transfer the entries to GL_JE_LINES where as in R12, Receipt Accruals Period End program will create the entries only in Receiving Subledger. Create Accounting Program will create SLA journals and ‘Transfer Journal entries to Gl’ program will move the entries to GL from SLA.

2. In 11i, Accrual entries need to be reversed manually in the next period whereas in R12, reversal of accrual entries for the next period will happen automatically

3. In 11i, if encumbrance is enabled, encumbrance reversal and actuals will undergo funds check when these entries are populated in gl_interface and GL funds inquiry will reflect the encumbrance reversal and actuals even before posting the entries in GL. But in R12, encumbrance reversal and actuals will hit the GL funds inquiry only when these entries are posted in GL even though funds check happens in SLA itself.

Impact of Secondary ledger on Create Accounting process (applicable for both Online accruals and Period end accruals)

If Secondary ledger is associated to the primary ledger with the conversion level as ‘Subledger’ and if the secondary ledger is using Accrual based SLAM (e.g Encumbrance Accrual/Standard Accrual), then encumbrance entries will get created in both primary subledger and secondary subledger on doing the Create Accounting process. On the other hand, if the Secondary ledger associated to the primary ledger is using Cash based SLAM (e.g Encumbrance Cash/Standard Cash) with the conversion level as ‘Subledger’, then the setup mentioned below is mandatory. Otherwise, Create Accounting process will error out or complete with warning and will not generate the receipt accounting entries neither in Primary ledger nor in Secondary ledger.

Setup to be done for Secondary ledger using Cash based SLAM:

1. Go into the responsibility: General Ledger
2. Navigate to MENUPATH > Set up > Financials > Accounting Setup Manager > query for Primary ledger > Update accounting options
3. Go to Secondary ledger > Subledger accounting options > Update > Search for the application Cost management > Update accounting options  > Set Sublegder accounting enabled to NO > Click on Apply
When the Secondary ledger is using Cash basis accounting, Accrual based accounting entries should not get generated for Receiving transactions for the secondary ledger. Hence Create Accounting process should not create accounting entries for the source Cost Management. Therefore it is recommended to do the above mentioned set up of disabling the Subledger Accounting for Cost management application for Secondary ledger.
Impact of Cash basis accounting on Create Accounting process (applicable for both Online accruals and Period end accruals)

When the Primary ledger itself is using Cash basis accounting, Accrual based accounting entries should not get generated for Receiving transactions for the Primary ledger. In such case, it is not required to run the programs ‘Create Accounting-Receiving’ or ‘Create Accounting-Cost Management’ as no accounting entries will be created by these programs.

 Impact of Periodic Average Costing on Create Accounting process (applicable for both Online accruals and Period end accruals) 

R12 SLA design has no impact when Periodic Average Costing (PAC) is used as it follows the same 11i approach. Accounting entries created in PAC will not go to SLA and it will not undergo the create accounting process. Instead it will get transferred to GL via gl_interface from PAC distributions . But the perpetual accounting entries will also happen along with PAC entries where the perpetual accounting will follow the SLA design. But those entries should not get imported from SLA to GL as PAC accounting will be transferred to GL. To restrict the GL import of perpetual accounting entries, “Transfer to GL” option in organization parameters should be set to None for organizations which use PAC so that xla_ae_headers for perpetual accounting will have the gl_transfer_status_code as “NT” and it will not be picked by the journal import process.

Accrual Reconciliation Process

a) Accrual Reconciliation Reports:
After completing  the Receipt transactions and Invoice matching, Create Accounting program has to be run in Final mode along with the  subsequent transfer of entries to General Ledger after which the  Accrual Reconciliation Process has to be started.

“Accrual Reconciliation Load Run” program has to be submitted with transaction date as the parameter which will populate the data in tables CST_RECONCILIATION_SUMMARY, CST_AP_PO_RECONCILIATION and CST_MISC_RECONCILIATION. Now run the Accrual Reconciliation Report for the operating unit and do the reconciliation. There are 3 different types of Accrual Reconciliation Report

1. AP and PO Accrual Reconciliation Report – This report shows the transaction details based on each accrual account for each PO distribution with the Receiving transaction amount and invoice transaction amount with a net balance greater than zero.

Parameters used while submitting the program:

Operating Unit – Select the Operating Unit for the report
Title – Enter your title for the report
Sort by – Parameter to specify how to sort the data at the distribution level – Valid Values – Age in days,Total Balance,Vendor,PO number (default)
Aging Period Days – The number of days by which to group transactions sorted in descending order
Item From and Item To – Range of items to consider for this report
Vendor From and Vendor To – Range of Vendors to consider for this report
Min Outstanding Balance and Max Outstanding Balance – Limits of distribution balance to dispaly
Balancing Segment From and Balancing Segment To – Range of balancing segment to consider for this report

2. Summary Accrual Reconciliation Report – This report shows the total balances for each accrual account without any distribution details and individual transaction amount and also shows whether that summarized accrual balance is related to AP PO transaction or AP no PO transaction or Miscellaneous Inventory transaction.
Parameters used while submitting the program:

Operating Unit – Select the Operating Unit for the report
Title – Enter your title for the report
Balancing Segment From and Balancing Segment To – Range of balancing segment to consider for this report

3. Miscellaneous Accrual Reconciliation Report – This report shows the transaction details based on each accrual account which got hit because of Miscellaneous Inventory transactions and AP NO PO transactions.Accrual amount will be displayed for each transaction along with the source whether it is INV or AP. This report picks data from CST_MISC_RECONCILIATION which gets populated during the load run process.

Parameters used while submitting the program:

Operating Unit – Select the Operating Unit for the report
Title – Enter your title for the report
Sort by – Parameter to specify how to sort the data at the distribution level – Valid Values – Item,Transaction Date (default) , Amount
Date From – Starting date of time period to display for this report
End Date – Ending date of time period to display for this report
Item From and Item To – Range of items to consider for this report
Min Amount and Max Amount – Limits of transaction amount to display
Balancing Segment From and Balancing Segment To – Range of balancing segment to consider for this report

Difference in Behavior between 11i and R12:

1. In 11i, the Accrual Rebuild Reconciliation Report  which was  required  to be run  to populate the accrual reconciliation table is now replaced by “Accrual Reconciliation Load Run” program in R12. The table PO_ACCRUAL_RECONCILE_TEMP_ALL has been replaced by the tables  CST_RECONCILIATION_SUMMARY and  CST_AP_PO_RECONCILIATION in R12.

2. 11i has only one Accrual Reconciliation Report which will show all the transactions for the accrual account irrespective of whether it is Miscellaneous INV transaction or AP NO PO transaction. But in R12 there are 3 different reports, one for AP-PO individual transactions, one for Miscellaneous transactions showing the individual transaction details for source INV and AP and one for showing the summarized accrual balance for all transaction types.

3. 11i has the option of running the Accrual Reconciliation Report with net accrual balance as 0 as well as net accrual balance greater than 0. But in R12, Accrual Reconciliation Report will show only the transactions having net accrual balance greater than zero.

4. In 11i, Accrual Reconciliation Report can be run for a specific data range and accrual balances can be checked for a specific period. But in R12, Accrual Reconciliation Report always shows the ‘as on date’ accrual balance and the report cannot be run for a specific date range.

b) Accrual Write-off Process:
Once the accrual entries for the PO or invoice are shown in Accrual Reconciliation Report, Accrual Write-off can be done using Cost Management or Purchasing responsibility>Accounting>Accrual write offs>AP and PO. This will delete the accrual entry from CST_AP_PO_RECONCILIATION table and populate the write off transaction in CST_WRITE_OFFS table. This write off transaction can also be viewed in the form View Write offs.
Accounting entries have to be created in SLA and GL for these write off transactions by submitting the Create Accounting program.This can be viewed in SLA menu by navigating to Tools > View Accounting in the View Write offs form.

Following Accounting entries will be available in the HTML page for a RECEIVE transaction

Accrual a/c DR
Offset a/c CR

Similarly for an AP PO MATCH transaction

Accrual a/c CR
Offset a/c DR

This Offset a/c will always be the Invoice Price Variance account.

Accounting events for this write off transaction will show the Event status as “Final Accounted” once the Create Accounting program is submitted and the entries are transferred to GL.

Difference in Behavior between 11i and R12:

1. The table PO_ACCRUAL_WRITE_OFFS_ALL has been replaced by the table CST_WRITE_OFFS in R12.

2. In 11i, accounting will not get created for the write off transaction and accrual entry has to be manually adjusted in GL whereas in R12, Create Accounting program will create the accrual entry for the write off transaction in SLA as well as in GL and hence manual adjustment of accrual entry is not required.

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11 Responses to “Impact of R12 Design in Procure To Pay Accounting Flow”

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  5. Preeti said

    very well written post and really helpful … thanks a lot

  6. DD said

    hi

    on which date or period receipt/grn accounting hits to GL.
    Suppose i have created po in april 5 and tacken receipt/grn on 15 may .
    now i want to know that on which date receiving data hits to GL.

  7. Thanks , I have recently been searching for info about
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    However, what about the bottom line? Are you certain in regards to the supply?

  8. copycat said

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