Sub Ledger Accounting (SLA) is a Rule-Based accounting engine that defines how journal entries are generated in

sub-ledger transactions in Oracle sub-ledger applications. However, SLA also supports external applications
generating accounting information which ultimately needs to be transferred to Oracle General Ledger. Before we
get into SLA we need to know few of the basic concepts like event types, event class, etc.
Event Class - classifies transaction types for accounting rule purposes. E.g. in Payables, following are possible event
classes: Invoice, Debit Memo, Prepayments, Refunds and Payments.
Event Type - for each transaction type, defines possible actions with accounting significance. E.g. in Payables,
following are possible event classes: AP Invoice Events Validation, Adjustment and Cancellation. Similarly we will
have event types for other event classes.
In most of the cases we would not need to customize SLA and accounting features will work same as 11i. Some of the
typical business scenarios where we would need to customize SLA in Payables are as follows:

To have a different Liability account based on Operating Unit for which the invoice is entered.
To have different natural account (expense) based on different Invoice Type and Invoice Line type.
To have different natural account (expense) and different liability account based on different criteria like
supplier type, entering currency, pay group, etc.
The cost center segment of Invoice distribution Liability account shall be picked from the Invoice
distribution Account while the other segment values from the Liability account defined at supplier site.
To cater to some of the above requirements we can use other alternatives like using distribution sets also. But
setting up a custom SLA for such scenarios is an easier approach with lower user maintenance. I will try and show a
simple scenario of how to derive custom accounting for a business scenario using SLA in Oracle Payables.
Business Scenario: We need to define different liability account (natural account segment) based on Supplier Type
so that business can track the liability by supplier type. The other segment values will default from supplier site. I
am limiting this example to only one supplier type Contractor". The objective would be to have a different natural
account for Liability account for invoices of supplier type "Contractor" alone, while for other supplier types the
normal liability account should default.


Solution:
Step1: First define a mapping set for various supplier types.
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal
Entry Setups > Mapping Sets



Step2: Define ADR (Account Derivation Rules)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups >Accounting Methods Builders > Journal
Entry Setups > Account Derivation Rules



Step3: Define JLD (Journal Line Definition)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods
and Definitions > Journal Line Definitions
Always create a copy of the seeded JLD and do not modify a seeded JLD. We will create a copy of
ACCRUAL_INVOICES_ALL for our Chart of Accounts Operations Accounting Flex only. Add the custom ADR created
to Liability, Basic (Line Assignment)




Step 4: Setup AAD (Application Accounting Definition)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods
and Definitions > Application Accounting Definition
Create a copy of seeded AAD only and do not modify existing AAD. I am creating a custom AAD called TEST_AAD
for COA Operations Accounting Flex.



Step 5: Setup SAM (Subledger Accounting Methods)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods
and Definitions > Subledger Accounting Methods
Create a copy of a seeded SAM and do not modify seeded SAM. Add the custom AAD to the Event Class Payables.




Step 6: Assign the custom SAM to Primary Ledger
Navigation: Set ups > Accounting Setups > Ledger Setup > Define > Accounting Setup


Verification of new SLA rule:
Create an invoice for supplier type Contractor and create accounting
Liability Account for Supplier Type Contractor is 01-000-2990-0000-000


Liability Account for other Supplier Types is 01-000-2210-0000-000