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Oracle E-Business Suite R12.1 Financials Pre-Upgrade, Setup and Operational Tips

Oracle E-Business Suite R12.1 Financials Pre-Upgrade, Setup and Operational Tips

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Published by Asim Majeed
An Oracle White Paper Sep 2010
This document describes Release 12.1 Financials product-specific changes and planning considerations. It also provides tips related to pre-upgrade, post-upgrade, setup, operational, and troubleshooting activities. Many of the changes listed here were first introduced in Release 12.0.
An Oracle White Paper Sep 2010
This document describes Release 12.1 Financials product-specific changes and planning considerations. It also provides tips related to pre-upgrade, post-upgrade, setup, operational, and troubleshooting activities. Many of the changes listed here were first introduced in Release 12.0.

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Oracle E-Business Suite R12.

1 Financials Pre-Upgrade, Setup and Operational Tips
An Oracle White Paper Sep 2010

Oracle E-Business Suite R12.1 Financials Pre-Upgrade, Setup and Operational Tips

Product-Specific Considerations and Tips .......................................... 4 Payables ............................................................................................ 5 Overview ...................................................................................... 5 Pre-Upgrade Tips ......................................................................... 6 Setup Tips ..................................................................................... 6 Operational Tips ........................................................................... 6 Payments .......................................................................................... 8 Overview ...................................................................................... 8 Planning Considerations .............................................................. 8 Post-Upgrade Tips........................................................................ 8 Internet Expenses ............................................................................ 9 Overview ...................................................................................... 9 Planning Considerations .............................................................. 9 Pre-Upgrade Tips ......................................................................... 9 Post-Upgrade Tips.......................................................................10 Setup Tips ....................................................................................10 Receivables......................................................................................10 Overview .....................................................................................10 Planning Considerations ............................................................. 11 Setup Tips .................................................................................... 11 Operational Tips .......................................................................... 11 Advanced Collections ..................................................................... 13 Overview ..................................................................................... 13 Planning Considerations ............................................................. 13 Assets............................................................................................... 13 Overview ..................................................................................... 13 Operational Tips ..........................................................................14 Advanced Global Intercompany System .......................................14 Overview .....................................................................................14 Planning Considerations .............................................................14

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Post-Upgrade Tips.......................................................................14 General Ledger ................................................................................ 15 Overview ..................................................................................... 15 Setup Tips .................................................................................... 15 Operational Tips ..........................................................................16 Global Accounting Engine .............................................................. 17 Overview ..................................................................................... 17 Planning Considerations ............................................................. 17 Subledger Accounting .................................................................... 17 Overview ..................................................................................... 17 Planning Considerations ............................................................. 17 Operational Tips ..........................................................................18 E-Business Tax .................................................................................19 Overview .....................................................................................19 Planning Considerations ............................................................ 20 Post-Upgrade Tips...................................................................... 20 Setup Tips .................................................................................... 21 Troubleshooting Tips .................................................................. 21 Change Record ............................................................................... 23

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Oracle E-Business Suite R12.1 Financials Pre-Upgrade, Setup and Operational Tips

PRODUCT-SPECIFIC CONSIDERATIONS AND TIPS This document describes Release 12.1 Financials product-specific changes and planning considerations. It also provides tips related to pre-upgrade, post-upgrade, setup, operational, and troubleshooting activities. Many of the changes listed here were first introduced in Release 12.0. You should use this document in conjunction with the following documents: • Planning Your Oracle E-Business Suite Upgrade from Release 11i to Release 12.1 – Doc ID 987516.1
Offers upgrade planning tips for the E-Business Suite.

R12 Upgrade Considerations by Product: Financials – Doc ID 889733.1
Provides planning considerations, process change, and configuration changes for the R12.1 Financial products.

R12.1 Financials Recommended Patches – Doc ID 954704.1
Review this document for the latest Financials recommended patches released after the R12.1.x EBS suite-wide release.

R12.1 Oracle Financials Pre-Upgrade Patch, supplemental patch list for the R12.1 EBS Consolidated Patch Update (CUP) - Doc ID 1127593.1 The pre-upgrade patches listed in this document are crucial for assuring a successful upgrade from 11i to R12.1.x.

This section is by no means a complete treatment of the Financials products or features; it simply highlights information that you may wish to consider for planning purposes. For a complete discussion of Release 12 upgrade impacts to Financials products, refer to the Oracle Financials and Oracle Procurement Functional Upgrade Guide: Release 11i to Release 12. For a complete discussion of product-specific implementation and operation, refer to the standard implementation and user

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guides. All Release 12.1 documentation is available via the E-Business Suite Product Information Center – refer to My Oracle Support Doc ID 806555.1. Release 12 introduces Oracle Subledger Accounting, Oracle EBusiness Tax, Ledgers, Banks, and other common data model components that are used by Oracle Payables. Payables Overview Release 12 introduced Oracle Subledger Accounting, Oracle E-Business Tax, Ledgers, Banks, and other common data model components that are used by Oracle Payables. The following Payables features are new as of Release 12:

Suppliers are defined as Parties within the Oracle Trading Community Architecture (TCA). Invoice Lines are introduced as an entity between the Invoice Header and Invoice Distributions to better match the structure of invoice documents and to improve the flow of information such as manufacturer, model and serial number from Purchasing through to Assets. Banks, bank branches, and internal bank accounts are defined centrally and are managed in Oracle Cash Management. Document sequencing of payments has moved to the Cash Management bank account setup. A new module called Oracle Payments now handles payments and all funds disbursement activities. Payment features controlled by Global Descriptive Flexfields (GDF) in prior releases have been consolidated and migrated into the data models of Oracle Payables, Oracle Payments, and Oracle Cash Management. The architecture of this solution moves attributes from the GDFs, which are now obsolete, to regular fields on the appropriate entity, including the invoice, payment format and document, supplier site, and bank account. Having a single code base as opposed to GDFs implemented per country simplifies global implementations and streamlines transaction processing. Oracle Subledger Accounting, a new module in Release 12, handles accounting definitions and all accounting setup associated with a Ledger. In Release 12, Oracle General Ledger has replaced the term Sets of Books with Ledgers. As part of this change, centralized accounting reports are available to all applications. Additionally, Oracle Payables introduces a new Trial Balance report. Oracle E-Business Tax, a new module in Release 12, manages transaction tax setup associated with trading partners and tax authorities, as well as transaction tax processing and reporting across the Oracle E-Business Suite. Part of the architecture of this solution moves tax attributes from

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Global Descriptive Flexfields (GDFs), which are obsolete in Release 12, to regular fields on the appropriate entities.

A responsibility can be associated with multiple Operating Units using Multiple Organization Access Control (MOAC). Due to this change, all processing and some reporting in Oracle Payables are available across Operating Units from a single applications responsibility. Hence you can isolate your transaction data by operating unit for security and local level compliance while still enabling shared service center processing.

Pre-Upgrade Tips Just prior to the upgrade:
• • •

Import all invoices from the Payables open interface. Confirm or cancel all Unconfirmed Payment batches. Run the Payables Accounting Health Check script (My Oracle Support Doc ID 416699.1 to ensure that there are no inconsistencies in your 11i data.

Setup Tips

Once you have set options for Automatic Offsets, do not change them. Doing so would represent a major setup change that does not update past transactions and would lead to accounting issues. A change in Automatic Offsets should be considered as a project that includes full testing before being implemented in your production system. Past transactions must be cleared before such a change. When specifying the Open Balances Definition, include all code combinations that need to be reconciled (accounts that can be attached at the Invoice header level.) If automatic offsets are on, include the overlay accounts that can be generated. When defining new bank accounts, ensure that cash clearing and cash accounts have been provided at the bank accounts control level.

Run the Invoice Validation program on a regular basis (at least daily) to determine if there are invoices that are not getting validated. The best practice is to schedule a concurrent request so that it runs daily at a time when load is not high.

Operational Tips Regular Activities

Run the Invoice Validation program on a regular basis (at least daily) to determine if there are invoices that are not getting validated. The best practice is to schedule a concurrent request so that it runs daily at a time when load is not high. Run the Create Accounting program on a regular basis (at least daily) to identify invoices that are not getting accounted. When you make manual entries to the General Ledger, ensure that proper descriptions are provided so that they can be tracked back as required

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For U.S. implementations: Once you begin creating 1099 payment information for 1099 suppliers, periodically review the information to verify its accuracy and completeness. Payables provides three standard reports to help you identify 1099 reporting exceptions: o 1099 Supplier Exceptions Report - Review this report to identify 1099 supplier exceptions, for example: null, non-standard or duplicate TIN. Correct any exceptions in the Suppliers form. 1099 Invoice Exceptions Report - Review this report to identify and correct invoices without income tax types for 1099 suppliers, 1099 invoices for a non-1099 supplier, and 1099 invoices with null or invalid income tax regions. Tax Information Verification Letter - Submit the Tax Information Verification Letter report for each supplier, requesting name, address, TIN, and type of organization.

o

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Period Closing-related Activities

Consider doing a mock closing at least 5 days before your actual close. Check the exceptions report for any unusual activity, for example: Invoices or Payments that should have been accounted but are still appearing in the report, or Invoices that should have been validated but are still appearing in the report.

Reconciliation-related Activities

Ensure that accounts used as liability accounts, and that need reconciliation, are not used for any other purpose. For example, such accounts should not be used in any other Subledger and no manual entries should be made against them. To ensure this, make these accounts control accounts using a new feature of Release 12. Ensure that accounts used as liability accounts, and that need reconciliation, are not used as accounts at the distribution level. Otherwise, reconciliation will become difficult. After closing the periods in Payables and General Ledger, please run the needed reports to balance within Payables. This would typically include the Trial Balance, Posted Invoice Register, and Posted Payment Register reports. You’ll also need to run the Account Analysis in General Ledger and reconcile that to Payables. Ensure that a monthly reconciliation is performed. Track any unexpected data.

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Payments In Release 12, the Oracle EBusiness Suite introduces Oracle Payments, a configurable, robust and centralized engine for disbursing and receiving payments. Overview In Release 12, the Oracle E-Business Suite introduced Oracle Payments, a configurable, robust and centralized engine for disbursing and receiving payments. In addition to new features, Oracle Payments offers functionality previously released as Oracle iPayment, which becomes obsolete starting with Release 12. Oracle Payments provides a new formatting solution based on standard XML technology. In previous releases, payment formats were created using proprietary Oracle reports technology. In Release 12, payment formats are created as templates in Oracle BI Publisher, and are applied to XML data extracts produced by Oracle Payments. Planning Considerations The Release 11i iPayments setup is migrated to the Release 12 Payments module. All Release 12 payment formats are BI Publisher-based; therefore, the 11i payment formats are obsolete. Oracle seeds payment formats in Release 12 corresponding to those that were seeded in 11i. You may need to configure the seeded payment formats using BI Publisher to satisfy the requirements of your banking partners. This configuration involves modifying the format files, and then sending them to your banking partners for validation. You may need to repeat this process a few times before your format files are validated, so ensure that you allocate enough time. For more information on upgrading your Release 11i payment formats, see My Oracle Support Doc ID 549024.1. Post-Upgrade Tips

Dummy Funds Capture setup in Payments is required to perform Automatic Receipts transactions in Receivables. In Release 11i, bank accounts were not centralized and customer bank accounts were stored in Receivables tables. Oracle iPayment was leveraged only for credit card transactions. The Receipt remittance is done by a format program in Oracle Receivables. In Release 12, Oracle Payments is required for remitting receipts since bank accounts are centralized in Payments. Therefore, the minimal Payments setup (for Payee, Payment System, Funds Capture Process Profile, and so on) is required in Release 12 for the remittance of receipts. A user can create dummy Payments setup per the following My Oracle Support articles: o o 471418.1 – Oracle Payments Setup for Funds Capture Processing 553614.1 – Funds Capture Setup for Credit Card Processing

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Internet Expenses Overview Release 12 changes to Oracle Internet Expenses include:

Itemization – Internet Expenses can represent the parent-child relationship of an itemized expense line by creating a new parent line with a unique identifier. Integration with Payments – Integration with Oracle Payments takes advantage of encryption capabilities. Credit card transaction data has been centralized in Payments’ secure payment data repository. Per Diem and Mileage – Per diem and mileage transaction data are not migrated. However, per diem and mileage setup data is automatically upgraded. Expense Reports – Expense Reports that were created prior to the upgrade display information in a pre-Oracle Internet Expenses minipack (11i.OIE.K) format. Newly created expense reports use the new user interface. Integration with Oracle E-Business Tax – The integration with Oracle EBusiness Tax has no direct tax upgrade impact. Tax lines run through Oracle Payables.

Planning Considerations Prior to the upgrade, it’s important to review your catalog data. A recommended pre-upgrade procedure for identifying and fixing exceptions in your catalog data is documented in the “Reducing Downtime” appendix of the Oracle Applications Upgrade Guide: Release 11i to Release 12.0.x. You should also remove duplicate suppliers and sites from your supplier data prior to the upgrade to reduce the number of parties created in Trading Community Architecture (TCA). Consider implementing Multiple Organization Access Control (MOAC) for those responsibilities that are new with Release 12 and designed to be MOAC, for example, the supplier profile administrator for creating and managing suppliers. Although the Release 11i per diem and mileage schedules are migrated to Release 12, detailed testing is recommended. With Release 12, entering and viewing project information in Internet Expenses changes. Be sure to address these changes in your user training. Pre-Upgrade Tips

Since the Expense Report Import program is obsolete in Release 12, submit it just prior to the upgrade to ensure that all intercompany data in Internet Expenses interface records is imported into Oracle Payables. Fix any rejections and resubmit until all records are imported.

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In Release 12, the address for the Employee Supplier cannot be changed; it is the address in HRMS that is used for making payments to employees. Before you upgrade, make sure that the address for the Employee Supplier is the same at the Supplier Site and in the HRMS application.

Post-Upgrade Tips

In Release 12, tax is always marked as inclusive for the expense report lines containing a Tax Code. When entering an expense report, a user should enter an amount that is inclusive of the tax amount for the expense line.

Setup Tips

The Cost Center segment should be defined as an independent segment to render the proper value for cost center on an Expense Report. To apply advances to an Expense Report, use one of the following processes: o If you would like the User / Auditor / Both to apply advances, then set the profile option “OIE: Enable Advances” to End User / Payables / Both. If you would like advances to be automatically applied while exporting expense reports to Payables, then check the “Apply Advances” checkbox at the Payables Options > Expense Report tab.

o

Receivables Overview Release 12 changes to Oracle Receivables include:

Integration with E-Business Tax – Release 12 introduces Oracle E-Business Tax to manage tax across the E-Business Suite. During the upgrade, system and customer options used to control tax calculation and tax code defaulting are migrated from Oracle Receivables into Oracle E-Business Tax entities. Integration with Subledger Accounting – Release 12 introduces Subledger Accounting for managing accounting across Subledger transactions. Receivables no longer creates any accounting entries. Existing Receivables accounting options and setups remain, and they affect the generation of accounting distributions in the Receivables data model. Centralized Banks and Bank Accounts Definitions – In Release 12, all internal banks and bank accounts you previously defined for your operations are migrated to central Cash Management entities. Remittance bank accounts are owned by a legal entity rather than by an operating unit. However, bank accounts you defined for your customers

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are migrated from the Payables entities to the centralized Payments entities. Oracle Payments centralizes and secures all payment instrument data, including external bank accounts, credit cards, and debit cards.

Integration with Payments for Funds Capture – Release 12 introduces Oracle Payments, which is used by Oracle Receivables for processing funds capture.

Planning Considerations In Release 12, suppliers are modeled in the Trading Community Architecture (TCA), and there is a new user interface for maintaining suppliers. Backward-compatible Receivables views to customer and supplier tables no longer exist, so if you have custom reports running against those views, plan to modify them to run against the TCA tables. Setup Tips

Model your customer accounts and sites according to the best practices recommended in the white paper, “Oracle Trading Community Architecture: Modeling Customer and Prospect Data – TCA Best Practices”, My Oracle Support Doc ID 164519.1. Submit the Create Accounting program in draft mode and review the accounting before submitting in final mode and posting to the General Ledger. Run the Create Accounting program on a regular basis (at least daily) to identify invoices that are not getting accounted.

Operational Tips Performance-related:

To process large volumes, run multiple instances of the “Automatic Receipts Creation Program (API)” program concurrently for all of the Receipt Class/Payment Methods that have been set up. Leverage the “Remittance Parallelization” feature of Receivables to improve the performance of the remittance program. You can schedule multiple instances of the “Automatic Remittances Creation Program (API)” program to run concurrently for as many remittance bank accounts as you have. To process large volumes, run multiple instances of the Revenue Recognition Master program, scheduling each instance by operating unit and specifying the maximum number of workers per run. This will result in launching multiple workers per scheduled instance. You can run multiple instances of the Late Charges program for specific operating units. The number of parallel workers can be used to distribute

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the processing load for the Late Charges program instance across multiple jobs or workers, resulting in faster generation of your finance charges.

You can run multiple instances of the Submit Accounting program by Ledger and End Date combinations for which a unique set of accounting events associated with Receivables distributions are selected.

Reconciliation-related:

Perform the following pre-requisite steps before starting the Receivables to General Ledger reconciliation: Ensure that the Create Accounting program in Receivables has successfully completed. Review the Un-posted Items reports to confirm that all items are posted to the General Ledger. Review the Posting Execution Report to check that journal entries transferred from Receivables are successfully posted to the General Ledger. Receivables automatically prints the Posting Execution Report that displays a summary line for each currency within every category of transaction that you transfer. The following steps are recommended for reconciliation of Receivables with General Ledger: Run the Receivables Reconciliation Report as the first step in the reconciliation process. It displays summary information consistent with detailed registers and journal reports. It also displays transactional data in an Activity column, and accounting data in a Journal column. If any discrepancies exist, run the following reports for more details: o o o o o Transaction Register versus Sales Journal Adjustment Register versus Adjustment Journal Applied Receipts Register versus Journal Unapplied and Unresolved Receipts Register versus Journal Invoice Exception Report

Run the Potential Reconciling Items Report to view items that might have accounting setup errors. This report suggests journal items that might potentially post to General Ledger accounts with unexpected account types, thus creating reconciliation issues in General Ledger. When a potential reconciling item is an error, correct the individual transaction as well as the incorrect setup to prevent future occurrences of the error. Run the Ageing - 7 Buckets - By Account OR the Ageing - 4 Buckets report to view beginning and ending customer balances, and to compare with AR Reconciliation Report balances.

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Run the Journal Entries Report after completing Create Accounting (Final Accounting) to show the accounting data transferred to Subledger Accounting. This should be matched with the AR Reconciliation Report to ensure that Receivables versus Subledger Accounting reconciliation is done. Run the AR to GL Reconciliation Report to ensure that there are no differences. o Run this report after transactions in Receivables are posted to General Ledger and there are no unposted transactions per the “Unposted Items” report. This report compares the account balances in Receivables to those in General Ledger and highlights the journal sources where discrepancies might exist.

o

The Collections Workbench module in Oracle Receivables is obsolete and is replaced with comparable functionality in Oracle Advanced Collections.

Advanced Collections Overview The Collections Workbench module in Oracle Receivables is obsolete and is replaced with comparable functionality in Oracle Advanced Collections. This includes functionality relating to customer interactions and correspondence, transaction processing, and dunning activities. With Release 12, additional features such as scoring, collections strategies, enhanced payment and promise processing, automated promise tracking, and automated collector work assignment are also available. Planning Considerations Receivables users who have not purchased a license for Advanced Collections are not authorized to use the full feature set of this product. The Receivables Collections Workbench has been replaced with a limited version of Oracle Advanced Collections for Oracle Receivables. Details on the collections features available in Receivables and the features available in Oracle Advanced Collections are provided in My Oracle Support Doc ID 389443.1. Assets Overview In Release 12, Oracle Assets adds Subledger Accounting (SLA) functionality. By default, transactions in the current fiscal year in Assets books will have their accounting lines migrated to the Subledger Accounting model. Accounting for current period depreciation will be upgraded only if depreciation has already run for the period, and the period remains open. After the upgrade, you can run the SLA post-upgrade process to update accounting for past transaction data as needed.

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Operational Tips

Important reports such as the transaction diagnostics report and reconciliation reports should be run before closing the period to ensure that the accounting entries are reviewed and verified. Whenever a Retirement or Reinstatement transaction occurs, the Calculate Gain and Loss program should be run before the Create Accounting program is run. If you are using multiple asset books that link to the same ledger, ensure that the natural account segment value of the asset clearing account is unique for each asset book. Once Group Asset Advanced Rules options are defined, you cannot change them. Review group asset options carefully to determine which ones satisfy your requirements for accounting and tracking of group and member assets.

Advanced Global Intercompany System Overview The Oracle Advanced Global Intercompany System (AGIS) is a new module in Release 12 that allows companies to streamline intercompany processing and facilitates the reconciliation of intercompany transactions. It replaces the Global Intercompany System (GIS) feature provided by General Ledger in Release 11i. Planning Considerations All GIS setup and transaction data are moved to the AGIS data model. It’s a good idea to review existing 11i intercompany rules and update them as necessary before the upgrade. Post-Upgrade Tips

The Intercompany accounts in GIS are upgraded to AGIS Intra-company Balancing rules. Auto-Accounting rules in GIS are not upgraded, and need to be set up as Account Derivation Rules and compiled with the Transaction Account Builder in Subledger Accounting. Creating intercompany organizations in the AGIS module in Release 12 is a mandatory setup for entering intercompany transactions. Release 11i subsidiaries are replaced by Release 12 intercompany organizations. For more information, see My Oracle Support Doc ID 418649.1.

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General Ledger In Release 12, Oracle General Ledger is significantly enhanced to support multi-national companies and shared services centers. These changes allow you to maximize processing efficiencies while maintaining a high level of information and setup security. Overview In Release 12, Oracle General Ledger is significantly enhanced to support multinational companies and shared services centers. These changes allow you to maximize processing efficiencies while maintaining a high level of information and setup security. You can perform simultaneous accounting for multiple reporting requirements. You can also gain processing efficiencies by setting up, accessing, and processing data across multiple ledgers and legal entities from a single responsibility. In addition, General Ledger definitions - such as Mass Allocations and Financial Statement Generator (FSG) reports - can be more easily shared and secured across your organization by allowing you to restrict certain users from viewing or updating these definitions or from using them in processes. Many global features that were previously available only in localized versions are included in Release 12 of General Ledger. Terminology Changes: “Sets of books” is replaced by “ledgers”. All sets of books options are now called ledger options. The upgrade retains all Release 11i settings. “Multiple Reporting Currencies” (MRC) is replaced by “Reporting Currencies”. Reporting sets of books are replaced by reporting currencies. Reporting sets of books assigned to primary sets of books automatically upgrade to reporting currencies that are assigned to a primary ledger. All conversion options for Multiple Reporting Currencies are retained as part of the reporting currency definition. Setup Tips

The currency in which you do your local statutory reporting (transaction based, such as VAT or withholding tax, or accounting) must be the currency of your primary ledger. Oracle supports local compliance by having local currency as the Primary Ledger currency. Ensure that the date range for your calendar includes the 29 day of February in leap years. Check the calendar validation report before using the calendar for setting up ledgers. You can change any of a period's specifications, except for the period type, so long as the period has not been used for transaction processing in General Ledger or in the subledgers. You cannot change a calendar period that is open, closed, future enterable, permanently closed, or is included in an open budget or encumbrance year. To create a document using Web ADI, the functions BNE_ADI_CREATE_DOCUMENT, BNE_CREATE_DOCUMENT must be added to the menu.
th

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Do not freeze the journal source if you intend to correct journals from the source during import into General Ledger. Do not freeze the journal source if you enabled it for auto-reversal. Ensure that you are assigning correct balancing segment values to ledgers in the Accounting Setup Manager. Once you assign them, you can enddate the assignment, but you cannot un-assign them. Ensure that you have defined a Tax Recoverable/Liability account for tax rates that you plan to use in General Ledger. The system will generate a tax line only if a Tax Recoverable/Liability account is defined for your ledger for the tax rate in E-Business Tax. Refer to My Oracle Support Doc ID 367429.1 to resolve FSG performance and formatting issues. Ensure that you disable the legal entity balancing segment value assignment whenever you disable the legal entity. Ensure that the start date of an organization type is set to a valid date before creating the operating unit in the Accounting Setup Manager. Ensure that you run the General Ledger Setup diagnostics test to validate your overall setup of General Ledger.

• •

Operational Tips

Run the Segment Value Inheritance Program when changes are made to the segment qualifiers for segment values of the chart of accounts. Before you consolidate your subsidiary ledger to a parent ledger for the first time, and before you try to run translation from the consolidation workbench, ensure that you have run translation on the subsidiary ledger at least once. Set the status of the first accounting period in the new fiscal year to “Future Entry”. Do not open the first period of the new fiscal year until all of the year-end processing for the last period of the current year has completed. Close the period in your subledgers before closing the period in General Ledger. This will prevent subledgers from posting entries to a closed period. If you are using a calendar with an adjusting period that represents the last day of the fiscal year, close the current period and open the adjusting period. Create and post adjusting entries and accruals in the adjusting period. If Mass Allocation is not creating any journal entries, check for any invalid or end-dated account combinations used in the Mass Allocation formula.

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If yes, either enable the account combinations, or modify the Mass Allocation formula to exclude them.

Run the General Ledger Period Closing diagnostics test to verify that a ledger period is ready to close.

Global Accounting Engine Overview In Release 12, Global Accounting Engine functionality is replaced by Oracle Subledger Accounting, now standard for all feeders (Receivables, Payables, Assets, Project Accounting.) Related to this change, all secondary and non-MRC posting Sets of Books in Release 11i are upgraded to secondary ledgers in Release 12, with automatic posting between the primary ledger and the secondary ledger. Planning Considerations It’s important that all statutory postings are up to date before you upgrade. It is also important that dual posting from Payables and Receivables be tested thoroughly. Oracle Subledger Accounting (SLA) provides a common accounting engine that replaces the existing accounting processes in the different Subledger applications. Subledger Accounting Overview Oracle Subledger Accounting (SLA) provides a common accounting engine that replaces the existing accounting processes in the different Subledger applications. The SLA upgrade involves migrating existing accounting data between 11i and Release 12 to ensure a continuous business operation. Depending upon your business requirements, “existing accounting data” may have different implications. For the purposes of this discussion, accounting data is defined as: “All data that has accounting relevance for the customer, including journal entries, balances, base transactions that have generated journal entries, and related information, such as accounting events and setup information.” While the default accounting continues to be stored in the Subledger applications, the new SLA module is where the true accounting is held. SLA is a behind the scenes module, largely transparent to end users except when they run the Create Accounting program to create Subledger accounting entries and to transfer journal entries. Planning Considerations The upgrade team should fully understand SLA functionality and closing processes, which vary slightly by application. Receivables’ and Project Accounting’s auto-accounting rules are migrated to Release 12, where they are represented as default SLA rules. Run transactions through to confirm that your auto-accounting rules are correctly reflected in the SLA tables.

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Map custom reports, such as custom reconciliation reports, to the new SLA tables. Upgrading Subledger Accounting Data During the upgrade, existing accounting data from the subledgers is upgraded into the new SLA data model. 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. You can change the amount of historical accounting data to be upgraded to SLA as a pre-upgrade step. For example, you can specify that a larger range of periods be upgraded. This is an important decision because some SLA functionality relies on the existence of previous accounting data. For example, if you need to cancel invoices from two years ago, then you need to upgrade at least two years of accounting data to SLA. However, you have the flexibility to limit the amount of Subledger data you update during the upgrade to reduce downtime and save on disk space. If you do not update all of your accounting data during the upgrade downtime, you can perform additional updating at a later point, either during daily business operations, or during a subsequent downtime. Review the document called R12: FAQ for the SLA Upgrade: SLA Pre-Upgrade, Post-Upgrade, and Hot Patch -- Doc ID 604893.1, for more information about the SLA Pre-Upgrade, Post-Upgrade, and Hot Patch. Operational Tips Review the Period Close Subledger Exception Report The General Ledger period can be closed even if there are exceptions in the transfer of journals from Subledger Accounting. Review the Period Close Subledger Exception report, which is started automatically when General Ledger’s “Close Period” process is run, to get a clear view of any exceptions. Run Create Accounting Daily for All Subledger Applications The Create Accounting program processes eligible accounting events to create Subledger journal entries based on application accounting definitions that are created in the Accounting Methods Builder (AMB). Create Accounting should be run for each Subledger application every day to avoid dealing with large volumes and possible data exceptions at month’s end. If you deal with large volumes on a daily basis, you can run the Create Accounting program more frequently, or you can run it by category: for example, by receipts or invoices, and by date. Also on a daily basis, review the Subledger exceptions report, and address any exceptions, for example, invalid GL account code combinations (CCIDs.) Users may want to develop a protocol for finding and handling such exceptions. For example, all of the Subledger teams could meet with the General Ledger team to determine roles and responsibilities for addressing any issues.

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Make Account Code Changes with Care On certain occasions, you may need to make segment changes that invalidate account codes (CCIDs) that you have previously used. For example, when a cost center moves from one line of business to another, you need to reflect the change in your account code validation rules. In this circumstance, you run the segment inheritance program to invalidate the CCID so that no new transactions can reference it. Different business models will dictate the extent to which account code changes are made during a month. In general, however, it is a good practice to designate a fixed day in each month when any necessary chart of accounts changes are made and communicated. This should reduce the need to make ad hoc changes throughout the month, and will result in a cleaner close cycle. Maintain Account Code Consistency across Subledger Accounting and General Ledger We recommend that you adopt practices to maintain account code consistency across all of your Subledger applications, as well as Subledger Accounting and General Ledger. This is especially important if your business is subject to frequent account code changes. One way to maintain consistency is, for each of the subledgers, to run Create Accounting on a regular basis (at least daily), and then immediately to run Transfer to General Ledger so that there is no disabling of account codes before journal import occurs. If Create Accounting and the Transfer to General Ledger always run back to back, then the account codes used by SLA and General Ledger should be in synch. To address an account code disconnect between SLA and General Ledger, Release 12 provides a new feature in the “GL Accounts” form that allows you to replace an invalid account code in Subledger Accounting data, which in turn allows General Ledger to find a valid account code and for import to proceed without error. Account replacement is also performed for non-Oracle journal sources during the import process. However, since a retrospective fix to an account code can cause Subledger application data to get of synch with Subledger Accounting and General Ledger data, it is best to avoid the situation altogether by adopting practices for maintaining account code consistency. Oracle E-Business Tax provides the infrastructure for transaction tax knowledge management and delivery using a global system architecture that is configurable and scalable for adding countryspecific tax content. E-Business Tax Overview Oracle E-Business Tax provides the infrastructure for transaction tax knowledge management and delivery using a global system architecture that is configurable and scalable for adding country-specific tax content. As the single point solution for managing transaction-based tax, Oracle E-Business Tax uniformly delivers tax services to all E-Business Suite business flows through one application interface. Oracle E-Business Tax consists of a tax knowledge base, a variety of tax services

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that respond to specific tax events, a set of repositories (for tax content and tax recording) that allows customers to manage their local tax compliance needs in a proactive manner, as well as the ability to integrate with external tax providers through a single integration point. In short, Oracle E-Business Tax is the global and consistent compliance repository that encapsulates fiscal and tax rules in a single point solution for tax events that is easy to integrate, extend and implement. EBusiness Tax replaces the following tax solutions available in 11i:
• • •

Order to Cash – Global Tax Engine Procure to Pay – Automatic Tax Calculation General Ledger – General Ledger Automatic Tax Calculation

Planning Considerations In Release 11i, tax setups were defined separately in various products. In Release 12, tax setup and calculation have been centralized. Your tax manager, who knows your organization’s current and future tax needs, should be responsible for configuring the tax setup. During the upgrade, Release 11i tax setups are migrated to Release 12. While you may not choose to utilize the new/advanced features of E-Business Tax immediately after your upgrade, Oracle recommends that you familiarize your tax users with the key E-Business Tax features and start taking advantage of them. Test tax scenarios for all of your countries after the upgrade. In Payables, ensure that you test your invoice sources (XML, iSupplier, flat file, and manual) to confirm that each can automatically derive the correct tax regime-to-rate information. Also, standardize your Release 11i customer and supplier tax setup before your upgrade, as this will help to ensure that tax is derived correctly in Release 12. Post-Upgrade Tips

After the upgrade, you can still provide the tax codes in transactions and also use defaulting hierarchies and tax groups in the same manner as you did in Release 11i without changing your setup. Over time, you can incrementally update your migrated tax data to gradually move from your Release 11i tax code model to the E-Business Tax regime-to-rate and tax rules model. Group constraints in Receivables are migrated as-is to E-Business Tax. However, they are migrated as read only and cannot be modified. If you want to add new conditions, you must use the new E-Business Tax rules functionality to create rules (expert or guided) with all conditions. E-Business Tax provides users the flexibility to share a tax setup across multiple Operating Units/Legal Entities, or to restrict it to a particular Operating Unit/Legal Entity. You must decide which setup is appropriate for your enterprise.

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Setup Tips

On a migrated instance, any new operating unit should be subscribed to the relevant tax regimes if the subscription of the Legal Entity is not being used. Depending on your business requirements, if you want tax to be calculated based on tax codes (as in 11i), then you need to set up Configuration Owner Tax Options for the newly-created operating unit and specify the Regime Determination set as “STCC”. If the Configuration Owner tax option is not created or is not active for a specific combination of application, event class, and first party Legal Entity/Operating Unit, then the defaults are taken from seeded Event Class settings. Whenever you add geography, run the “Geography Name Referencing” program in TCA. You can run a transaction in the Tax Simulator to check your tax setup. The Tax Simulator should be used after any change to your tax setup to test multiple what-if scenarios without affecting the transaction database.

Troubleshooting Tips Users may report E-Business Tax problems in the following categories:
• • •

Taxes are not being calculated. Tax calculation is erroring out. Incorrect tax amounts are being calculated.

Avoid these E-Business Tax problems by following the general, offset tax, and irreversible options setup tips below: General:

Check whether all the required setups are effective on the transaction date. Check whether Tax Applicability is checked on the Configuration Owner Tax Options for all Event Classes. In the Configuration Owner Tax Options, confirm that the Regime Determination is: STCC Determine Applicable Regimes If Party Tax Profile is changed, ensure that the Tax Applicability flag is checked. Ensure that by default or as a rule result, Tax is Applicable.

• • •

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Check whether the “Make Tax available for transactions” is enabled at the Tax level. If the user has subscribed the Regime to a Legal Entity, then in the Party Tax profile for the Operating Unit, the “Allow subscription of Legal Entity flag” should be checked. This should be carefully done, as it is an irreversible setting. Run the transaction in the Tax Simulator to obtain details of the rules/defaults that are evaluated. Define all the required Tax Accounts based on your tax setup in the Tax Rate to avoid errors during transactions. For any Recovery Rule to be evaluated, check whether users have associated at least one Recovery Rate Rule in the “Rule Code of Recovery Rate” field at the Tax Rate Level. Check that the Configuration Owner Tax Options for the Event Class allows for tax exemptions to be considered. Check that you have completed the setup for all the required set up tasks listed in the E-Business Tax Home Page. Use the available Diagnostic scripts to identify any tax setup issues.

Offset Tax and Self-Assessed Tax: Self-Assessed tax is the Release 12 equivalent of Offset Tax in Release 11i. However, for backward compatibility, Offset taxes can still be configured in Release 12. Depending upon your business requirements, you can decide which options to choose:

Check that “Allow Offset Taxes” is enabled in the Party Tax Profile for the Offset Taxes. Check that “Allow Offset Tax Calculation” is enabled at the Configuration Owner Tax Options for the Event Class for the Offset Taxes. Check Offset Tax Basis also.

Irreversible Options: Note that the following setup changes are irreversible:

Inactivating the defaulting order in Application Tax Options – Once the combination of operating unit and application defaulting order is inactivated, you cannot reactivate the same. Carefully select the appropriate tax determination method from Oracle E-Business Tax or Latin Tax Engine. The “Use Subscription of the Legal Entity” box in the operating unit party tax profile - This flag should be checked if the Regime is subscribed to the Legal Entity.

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The “Make Tax available for transactions” option in the Tax, if enabled, cannot be updated.

Change Record

Date
09-Jun-2008 11-Jun-2008 17-May-2010

Author
Anne Carlson Anne Carlson Anne Carlson

Version
1.0 1.1

Change Reference
First published version Made Globalization edits under General Ledger and Global Accounting Engine sections Created Financials-specific excerpt for Chris Cianciolo to use as the basis for Support Note containing R12.1 Financials Upgrade Considerations Changed Title from Planning Your Oracle EBS Financials Upgrade from 11i to R12.1 to Oracle EBS R12.1 Financials Pre-Upgrade, Setup and Operational Tips Highlight the Financials Pre-Upgrade Patches listed in Doc 1127593.1

01-Jun-2010

Chris Cianciolo

1.2

29-Sep-2010

Chris Cianciolo

1.3

Oracle E-Business Suite R12.1 Financials Pre-Upgrade, Setup and Operational Tips

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Author: Financials Product Development Contributing Authors: Krithika Bhat, Bill Bounds, George Buzsaki, Robert Farrington, Cliff Godwin, Kevin Hudson, Mazen Khanfar, Adam Lief, Cheryl Ludwig, Amrita Mehrok, Nirajita Mitra, Anand Naik, Ognjen Pavlovic, Victoria Pickard, Mike Quick, Vasu Rao, Nick Reichenbach, Kirsten Shaw, Nayyar Siddiqui, Murali Subramanian, Terrance Wampler, Mildred Wang Document Owner: Chris Cianciolo Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 oracle.com Copyright © 2008, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

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