R12 SLA: Analyzing Subledger Accounting

Posted on November 25th, 2007 by Sanjit Anand | Print This Post | Email This Post

As in last post about subledger accounting we understood with this new feature:

• All accounting performed before transfer to the GL.
• and this is achieved by user setup who can do by definable accounting rules.

At the data level, it’s a big change for all the subledgers, though there is a first generation changes we have noticed sometime when 11i Payables where concept of “Accounting Events ” introduced first time and accounting performed at subledger level first before moving into GL.

The same idea has been incorporated in new sub ledger accounting model , indeed a was a real need because of some uneven functionality likes:

• Inconsistencies in Accounting Generation like Summary vs. Detail
• Direct to General Ledger vs. Open Interface
• Inconsistent Drilldown from General Ledger
• Also it has been seen inconsistent Mechanisms for controlling Accounting as certain options has been used in existing version:
  • flex builder
  • Account Generator
  • Automatic Offsets

What is sub ledger mean for a non finance person?

• A new transactional application that generates accounting impact
• Used to store detailed information not needed for a general ledger
• Sub ledgers post summarized activity to a general ledger periodically to maintain centralized account balances for the company

With these accounting at this level the respective sub ledgers & General Ledger is tied out, as below.

How Receivables Accounting happen in 11i

As we know the final accounting data not generated prior to transfer to GL as only distribution level information is passed to GL.

In 11i , we know three distinct distributions tables for invoices / Credit Memos / Debit Memos have to capture accounting class & amounts information but not debits & credits.

• • Receipts & Adjustments
    • Unapplied, applied
    • Both debits & credits
  • Misc. Cash Receipts
    • Both debits & credits
• As we know “View Accounting” is a report against distributions to see the accounting information.

How Payables Accounting happen in 11i

We know accounting data generated and stored in “Accounting Events” tables prior to transfer to GL in Payable. Once Transaction get completed it was need to run the “Create Accounting” process which basically populate data into accounting events tables.Then the actual line information move takes place from accounting events table to General Ledger Tables.The existing 11i accounting Process is can be best understood by figure below.

Subledger to Ledger Reporting in 11i

It means complete, final accounting only available in the GL

• All debits and credits
• All journal entries
• All balances

The only issues in pre R12 versions was to link summarized accounting data with source details.

How it is resolved in Release 12 Subledger Accounting

All sub ledger accounting data generated and stored in shared SLA tables prior to transfer to GL , and this is achieved by running “Create Accounting” to populate SLA tables(Very very similar to Payable events). Once this can be done , user can “View Accounting” only after “Create Accounting” is run and completed successfully.

Transferring Accounting information from AP/AR to GL in R12

The Create Accounting process has similar options, you can create accounting in Final or Draft mode and if Final mode is selected, the Transfer to GL parameter can be used to automatically transfer the accounting created by the corresponding run. When the Create Accounting process transfers the journal entries to GL it only transfers the accounting created by the process that calls it. If there is accounting created by the online option = Final or a previous Create Accounting program that was not transferred, that accounting will not be transferred. The Transfer Journal Entries to GL program needs to be ran separately to transfer any accounting created online or created by a previous Create Accounting process that did not transfer the entries.

Is/was link an issue in 11i?

Yes, From Distributions to SLA

• Create Accounting process
• Applies accounting rules
• Loads SLA tables, GL tables
  Creates detailed data per accounting rules,stores in SLA “distribution links” table

SLA Distribution Links Table

• Must join through to get true Distribution ==> SLA journals matches
• Holds finest granularity of accounting data
• Multiple distributions may be aggregated into a few SLA journal lines

and Final picture looks like:

SLA Key attribute :Something called Event Model ? What is all about?

Event Model are basically definition of the sub ledger transaction types and there life cycle.

It has three levels

• Event Entity: Highest level, often 1 per sub ledger application
• Event Class: classifies transaction types for accounting rule purposes
• Event Type: for each transaction type, defines possible actions with accounting significance.

It is very important that applications must tell SLA when an event has occurred.When a user runs the SLA Create Accounting program, it processes all events with the appropriate status

we have notice some of event classes in Payable and Receivable.

• Payables
  • Invoice
  • Debit Memo
  • Prepayment
  • Payments
  • Refunds
• Receivables
  • Invoice
  • Deposit
  • Receipt
  • Bill Receivable

and typical event Types are like

• AP Invoice Events
  • Validated
  • Adjusted
  • Cancelled
• AR Receipt Events
  • Created
  • Applied
  • Unapplied
  • Updated
  • Reversed