Subject:Impact of R12 Design in PO Accounting Doc ID:NOTE:429105.

1 Type: WHITE PAPER Last Revision Status: 21-JUL-2008 PUBLISHED Date: In this Document
Abstract Document History Impact of R12 Design in PO Accounting

Applies to:
Oracle General Ledger - Version: 12.0.4 to 12.0.4 Oracle Purchasing - Version: 12.0.4 to 12.0.4 Information in this document applies to any platform.

Abstract
This document explains the impact of R12 design in PO Accounting and Difference in Behavior between 11i and R12 in the following areas 1. Setting up of Encumbrance 2. Generation of Encumbrance Entries 3. Receipt Accounting a) Online Accruals with Expense destination b) Online Accruals with Inventory destination c) Period End Accruals 4. Accrual Reconciliation Process a) Accrual Reconciliation Reports b) Accrual Write-off Process It also gives a basic idea of table level flow of accounting entries from Purchasing to General Ledger

Document History
Author : Manighandan Venkatraman Create Date 27-APR-2007 Update Date 27-APR-2007 Expire Date

Impact of R12 Design in PO Accounting

Basic Changes: 1. Set Of Books is replaced by the term Ledger. The column set_of_books_id has been replaced with ledger_id in Gl Tables 2. Subledger Accounting (SLA) options has been introduced 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. As a part of Subledger Accounting, new SLA tables XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS have been introduced. 5. PO details are not available in reference columns(reference_1,reference_2...) in GL_JE_LINES and GL_BC_PACKETS. Hence accounting entries in these tables can be retrieved only using SLA tables and GL_IMPORT_REFERENCES 6. Receiving Subledger is not directly linked to GL_JE_LINES,instead it is linked through the subledger tables XLA_AE_HEADERS, XLA_AE_LINES and XLA_DISTRIBUTION_LINKS. XLA_AE_LINES is mapped to GL_IMPORT_REFERENCES with the gl_sl_link_id and gl_sl_link_table columns. The linking columns between GL_IMPORT_REFERENCES and GL_JE_LINES are je_header_id and je_line_num Setting up of Encumbrance: 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 If Encumbrance needs to be enabled, then the Subledger Accounting Method has to be set as "Encumbrance Accrual" for the ledger. If Encumbrance is not used, then the Subledger Accounting Method has to be set as "Standard Accrual" for the ledger Difference in Behavior between 11i and R12: In 11i, there is no need of enabling Encumbrance for the Set of books in GL module other

than enabling the Budgetary Control option where as in R12, Subledger Accounting Method has to be set for the ledger. 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 Generation of Encumbrance Entries: On Reserving and Approving the PO, Encumbrance entries get generated in GL_BC_PACKETS with SOURCE_DISTRIBUTION_TYPE as po_distributions_all and SOURCE_DISTRIBUTION_ID_NUM_1 as po_distribution_id. Encumbrance entries will also get generated in the table PO_BC_DISTRIBUTIONS which has been newly introduced in R12. This table has the reference4 and reference3 columns where the PO/PR number and distribution id gets populated. Accounting entries created on reserving the PO can be viewed in SLA menu in Purchasing module Navigation: Purchasing>Accounting>SLA:User Main Menu>Journal Entries Query by transaction dates and ledger name Following Accounting entries will be available in the HTML page Budget a/c DR Reserve For Encumbrance CR These accounting entries are populated in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for this Encumbrance entry is PO_PA_RESERVED The table PO_BC_DISTRIBUTIONS and XLA_AE_HEADERS are linked with the column event_id. The table XLA_AE_HEADERS and GL_BC_PACKETS are linked with the column ae_header_id. The table XLA_AE_HEADERS and XLA_AE_LINES are linked with the column ae_header_id The Concurrent Request "Transfer Journal Entries to GL" has to be submitted from Purchasing Responsibility to transfer the Encumbrance Entries to GL. Difference in Behavior between 11i and R12: 1. In 11i, Encumbrance entries created in GL_BC_PACKETS will be directly moved to GL_JE_LINES by running the CJE program, whereas in 12i, Encumbrance entries gets generated in a new table PO_BC_DISTRIBUTIONS in addition to GL_BC_PACKETS.

These entries will be moved to GL by running the program "Transfer Journal Entries to GL" instead of CJE program. 2. In 11i, it is not possible to view the Encumbrance entries in Purchasing module, where as in 12i, 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 PO Reservation ( budget a/c debit entry) and these entries can be viewed from SLA menu in Purchasing Receipt Accounting: Online Accruals: When Purchase Order has Accrue on Receipt set to Y, 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. There is an option to make the journal entry and post the journals automatically at the time of Create Accounting process 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. The Create Accounting Process happens based on a profile option CST:Receiving Accounting option which has the following two values 1. Online - When the profile CST:Receiving Accounting option is set to Online, accounting entries for the Receiving transactions happen in Receiving subledger as well as in SLA on saving the PO receipt. Journal Import and Posting program will also get spawned automatically and the accounting entries will get posted in GL. 2. Concurrent - When the profile CST:Receiving Accounting option is set to Concurrent, accounting entries for the Receiving transactions will happen only in Receiving subledger on saving the PO receipt. To get the entries in SLA, Create Accounting -Receiving concurrent program has to be submitted from Purchasing>View Requests or from Cost Management Responsibility > SLA menu > Create Accounting This program will spawn another program called "Accounting Program" which will generate the entries in SLA. Depending on the profile value "SLA: Disable Journal Import" and the parameters choosen while submitting the Create Accounting program, journal import and posting will happen for these entries. Parameters used while submitting the Create Accounting-Receiving 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 the subledger table without gl_sl_link_id. 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 be transferred to General Ledger. b) Final - Final mode creates SLA journals which can not be modified and can be transferred to General Ledger. For the values of the profile option SLA: Disable Journal Import , Draft and Final options work in the same way c) Final Post - Final Post works differently for the two values of the Profile option. If profile option is set to No, then Final Post creates the SLA journals in Final mode, transfers the data to GL_INTERFACE, runs Journal Import and triggers the General Ledger Posting program too. If profile option is set to Yes, then Final Post will create the SLA journals in Final mode and will transfer the data to GL_INTERFACE. Thus the data will be in GL_INTERFACE table, which will have to be manually Imported. 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 even in gl_interface. 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

If Encumbrance is enabled, Online Accounting will happen for the Receiving Transactions irrespective of the value for the profile option CST:Receiving Accounting Option. a) Online Accruals with Expense destination: When the PO is received and delivered to expense destination, Create Accounting process will happen automatically and Actual and Encumbrance Reversal entries get populated in SLA and GL.The encumbrance reversal entry can be viewed in SLA menu in Purchasing module as well as in SLA menu in Costing Navigation: Purchasing>Accounting>SLA:User Main Menu>Journal Entries Query by transaction dates and ledger name Following Accounting entries will be available in the HTML page Budget a/c CR Reserve For Encumbrance DR

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 for Expense destination and PO_DEL_INV for Inventory destination. These two entries can also be viewed as follows Receiving Transaction Summary>Deliver Transaction>View Accounting But the actual entries for the DELIVER transaction cannot be viewed from View Accounting. Only the actual entries for the RECEIVE transaction can be viewed from View Accounting. The Actual entries created by the Receipt & Deliver transaction will not be available in the Purchasing>SLA Main Menu , even though the Create Accounting Program is run /completed . SLA in Purchasing will only show the Encumbrance entries . It is required that we navigate to the Cost Management responsibility to view the Actual entries . Navigation: Cost Management 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 Receiving Inspection a/c DR Charge a/c DR Receiving Inspection a/c CR These accounting entries will be available in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for these actual entries is RECEIVE, DELIVER_EXPENSE. b) Online Accruals with Inventory destination: When the PO is received and delivered to inventory destination, Create Accounting process will happen automatically and Actual entries for the RECEIVE transaction get populated in SLA and GL. But online Accounting will not happen for DELIVER transaction. Create Accounting program needs to be submitted from Cost Management to get the Actuals and Encumbrance Reversal in SLA and GL. View Accounting from Receiving Transaction Summary will only show the accounting entries for RECEIVE transaction. Material Distributions form will show the actual entries for DELIVER transaction. To view these actual entries and Encumbrance Reversal entries in SLA, navigate to

Cost Management Resp>SLA>Inquiry>Journal entries Query by transaction dates and ledger name This will have the event type code as PO_DEL_INV in XLA_AE_HEADERS. The tables RCV_RECEIVING_SUB_LEDGER and XLA_DISTRIBUTION_LINKS can be linked using the column SOURCE_DISTRIBUTION_ID_NUM_1. 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. Similarly for the deliver transactions to inventory destination, the tables MTL_TRANSACTION_ACCOUNTS and XLA_DISTRIBUTION_LINKS can be linked using the column SOURCE_DISTRIBUTION_ID_NUM_1. 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: 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 12i, 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. c) Period End Accruals: When Purchase Order has Accrue on Receipt set to N, Receipt Accruals Period End program generates the accounting entries only in RCV_RECEIVING_SUB_LEDGER during month end when the received quantity is greater than billed quantity.Then the Create Accounting process should happen to create actual entries in SLA and GL depending on the profile option CST:Receiving Accounting Option. If encumbrance is enabled, then online accounting will happen on running the Receipt Accruals Period End program irrespective of the profile value. This Create Accounting process will create the actual entry and encumbrance reversal entry for the current period in SLA and GL and it will also reverse these entries in SLA. But these reversal entries will happen in GL only when the 'Complete Multiperiod Accounting' program is run. Once the accounting is created for Receiving transactions,the actual entries and encumbrance reversal entries can be viewed in SLA menu in Costing 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 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 Budget a/c DR Reserve For Encumbrance CR These accounting entries will be available in the table XLA_AE_LINES. The event type code in XLA_AE_HEADERS for these actual entries is PERIOD_END_ACCRUAL 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. 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 has to be run to create SLA journals which in turn will trigger the journal import. 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 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 two tables called CST_RECONCILIATION_SUMMARY and CST_AP_PO_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. 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 12i: 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 12i. 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 12i, 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. 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 12i: 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.

Keywords
BUDGETARY~CONTROL ; TRANSFER~TO~GENERAL~LEDGER ; ACCRUAL~R ECONCILIATION ; JOURNAL~IMPORT ; CREATE~ACCOUNTING ; VIEW~ACCO UNTING ; ENCUMBRANCE ; 12.0.1 ;
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