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Firstly, what exactly does SLA do? SLA is a module which now sits between the SubLedgers like AP/AR etc and the General Ledger. Have a look at this diagram below. As you will notice, SLA can act as a mediator between the subledgers and Oracle General Ledger.
Before we progress, some terminologies of R12 must be revisited. In 11i we had set of books, and in R12 we call them Ledgers. Likewise in R12 we also have secondary ledgers and reporting ledgers. Hence from 11i perspective think of Ledger as Set of Books. As for Subledger, a Subledger is nothing but a module like AP/AR/PO/Inventory etc. In the diagram below, the second scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.B.C.D. In such case, if SLA module is not customized, then the very same A.B.C.D combination will be passed to Oracle General Ledger via the SLA. And before you wonder... Yes, SLA module has its own set of tables to capture these accounting entries. Please see the image below.
In the image above, SLA passes to GL whatever value is fed by the Subledger, in this case A.B.C.D
D code combination of Payables can be passed to Oracle General Ledger via the SLA as A. then the A.C.B.C. This scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.C1.B.There are cases where SLA module can alter or massage the CCID or code combination that is generated in Subledger before transferring the same to Oracle General Leger.D instead. if SLA module is customized. .D.B1. In such case.
The most important application however of the SLA is its ability to create shadow journals that contain different values or differing credit/debit entries for the .
D is never passed to the GL.C. the French company has to do accounting journals in formats that can be reported as per French legislation and also as per UK legislation. whereas in UK the inventory item is accounted as an asset. Let us take an example.D is passed to the Primary Ledger FRANCE and A2.B1. Instead to GL A.C.B.C1.B2. in France an inventory item is accounted as expense.transactions. In the example below. For company "Apps2Fusion UK". For example. A.D is passed to the Secondary Ledger UK. it might have operations in France. . This is the main reason why SLA module was invented/designed. With UK being the parent company. The picture below shows the role that SLA plays in such scenario. which is "Apps2Fusion France".
.Therefore in this article you have learnt the different usages of Subledger accounting.
for example Credit Memo. Invoices etc. then you may want to create an accounting entry. Expense Reports. the activity of "Encumbrance" against a Purchase Order is known as Event Type. This is explained in the diagram below. For example in Procurement. against the Event classes we define Event Types.In this article you understand some of the basics fabrics/terminology used in SLA. For Payables. whenever your Invoice is validated or cancelled or adjusted. for example. In case of SLA. . Event types are therefore the types/list of events against transactions which you wish to account for in General Ledger. an INVOICE transaction and a PAYMENT transactions are known as Entities within SLA. Likewise when a Payables Invoice is Validated. And your accounting rules for Invoice Validation will be attached against this specific "Event Type". Entities can be subdivided into various "Event Classes". Further to this. you may want some specific accounts in the General Ledger to be impacted. i. Debit Memo. Event Classes and Event Types. It is important for you to understand the variables within SLA engine which influence whether an accounting entry needs to be generated for a specific event within subledger like Payables or Receivables. Entities.e. there may be a need to generate accounting whenever a Purchase Order is encumbered. In this case the "Invoice Validation" is an "Event Type".
Each entity is identified by unique identifier or primary key from the underlying tables. .
you can then "attach something called an ADR to this Journal Line Type". but you also need to decide whether a specific CCID will be debited or credited. To create any journal. Therefore you not just require the CCID. You also need to know whether this CCID will be debit or this CCID will go into credit. The ADR returns the final code combination.The Journal Line Definition "defines" how the entire journal is built. SLA needs to know where this CCID will be coming from. . the "Journal Line Type" will specify whether the accounting entry is credit or debit. one of the key things is to get the CCID or the code combination of segments. In SLA. Therefore Journal Line type will leverage the JLT+ADR to know which CCID is crediting and which CCID is debiting in the journal. Also.
The image below describes the end result journal that is produced by SLA . then every journal has credit/debit and description.For each and every application there is a combination of event class and event type. The journal has description at header and also at line level. you can go and modify SLA to meet your business needs. The JED allows you to generate the description of the Journal at both header and line level. However where these standard seeded accounting do not suffice. For example you may want Customer Name or Customer Number in the journal description for a journal that is initiated from Oracle Receivables module. There is something called as Journal Entry Description. Using JED in SLA you can build header or line level descriptions. Depending upon the combination of event class and event type the accounting gets triggered. The standard SLA out of the box from Oracle meets your requirement by 90%. When a transaction is transferred as a journal. For example you can fetch the standard accounting from payables or receivables options.
The Journal Line Type also provides options to do accounting for Gain/Loss of Foreign currency transactions. Further to that you can specify if SLA should merge the . you can specify whether the entry is for credit or debit side.In JLT Journal Line Type.
.journal lines that have same CCID.
when defining ADR. It is good to remember that the "Journal Line Definition=JED+JLT+ADR" This is visible from the screenshot as shown below . Further to this.ADR . We tell the system how we want the CCID should be built and transferred to the general ledger.We specify how the account combination must be generated. you can specify the conditions under which a specific segment or CCID is returned. These conditions are like IF Conditions. You can either transfer the standard account as calculated within Subledger(AP or AR or PA etc) or the account generated from Subledger can be modified or replaced via ADR configuration within SLA.
In the SLA Part 2 article you Entities. you will see how the "Journal that gets constructed using Journal Line Definition" is associated with an underlying transaction in the respective module. . how does Oracle E-Business Suite decide which specific Journal Line Definition should be used when a specific event takes place against an invoice in Oracle Payables. Event Class and Event Types.You will notice that two "Journal Line Types" have been attached to this Journal Line Definition. In other words. how will SLA decide how the Journal will be constructed when an invoice is validated within Payables. However you might be wondering how this Journal Line Definition gets associated with a Subledger transaction. For example. By now you would have understood the significance of Journal Line Definition. The first journal line type assignment creates a credit line in the journal and the second journal line type assignment creates a debit line in the journal. We will learn this via AAD in next part of the article using Application Accounting Definitions. In the SLA Part 3 you learnt the high level basics of Journal Line Definitions. In this Part 4.
.As seen in the image above. you must remember that each Application Accounting Definition [AAD] belongs to a module. then you will have 2 AAD's defined.e. one for Payables and another for Receivables. Effectively it means that AAD = JLD for an Event Class+ Event Type combination = ADR+JED+JLT for an Event Class+ Event Type combination As a thumb rule. Therefore if you have one Ledger implemented [ 11i Set Of Books] and two modules implemented like AP and AR. the Application Accounting Definitions [AAD] is attached to one or more Journal Line definition [JLD]. i.
Seeded Application Accounting Definitions are provided for each module out of the box by Oracle. As we have seen in the Part 4 of SLA. which means creating custom JLT. When a specific event within Subledger example Payables or Receivables becomes eligible for Accounting b. However in reality you will have more than one event classes like Invoices. each Primary Ledger[ 11i equivalent of primary set of book] and also each secondary ledger should be able to generate Journals as per their respective legislator requirements for all the modules implemented. It is important to remember that you must create a custom copy of an existing SLA component before making modifications. In other words a SLAM is a collection of accounting definitions for various modules in Oracle Apps. If you recollect from previous article. This is where "Subledger Accounting Method" [SLAM] comes into the play. Hence SLAM provides an umbrella to join accounting entries from various modules so that they can be channeled through to Oracle General Ledger. custom JED and custom ADR as appropriate. Therefore the flow of accounting entries appears as shown below . Payments etc associated with a AAD for Payables module. In the next article you will see Subledger Accounting Method. However a Ledger[11i SOB equivalent] needs accounting entries to be processed across many modules. Application Accounting Definition is connected to only one module like Payables or Receivables etc. then you can copy the existing AAD's to a custom AAD. However. A SLAM is then attached to the Ledger[11i equivalent of Set Of Books]. How the journal is constructed. the Application Accounting definition is used to decide two things a.In the above picture only one Event Class of Invoice is used in AAD. However if the existing definitions do not meet your business requirements. and then make alterations to the custom AAD.
The flow represented in simple equation appears as below Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Liability Lines-->[JED+JLT+ADR] Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Expense Lines-->[JED+JLT+ADR] In order to assign the SLAM to a ledger. Click on update against the ledger . go to the General Ledger Super User responsibility and click on menu as shown below.
Attach the SLAM to this ledger
You can also modify the SLA accounting options using the two screenshots as shown below
The overall flow of the SLA can therefore be depicted as shown in image below. .
as shown in image below is to ensure both a Credit and Debit line gets created for a Journal.Overall. when you create new definitions in SLA. . The parallel flow on top. you can follow the bottom up model.
with one set each for Credit line. You will basically apply the steps learnt thus far into practical implementation.JLT and ADR’s are required. Journal Line Type to mainly define credit or debit 3. we will create these three components. Account Derivation Rules for CCID used in journal line Therefore typically. However to create a Journal Line Definition. we need to create the following 1. and the other set for the debit line. Journal Entry Description for journal line description 2.In this article we will create a Journal Line Definition. . two set of JED. In this article.
Click on New to create a new JED.Go to a subledger like Payables and within the SLA menu as shown below. you can open the Journal Enty Description screen. .
We will use this for generating the Journal Line Description for both the credit and the debit lines. .Create a new Journal Entry Description named ANIL_JED.
The description of the journal line can be a static text or dynamic text based on database sources within SLA or the combination of the two. .The journal line description can be constructed by clicking on Details button.
Here we are using the Supplier Name to construct the journal line description. .
then Journal Line Description should be defg Click on condition button to define the condition . For example IF CONDITION1=TRUE. then Journal Line Description should be abcd ELSE IF CONDITION2=TRUE.In addition to the dynamic journal line text. SLA allows you to put conditions.
After defining the Journal Entry description. now we can create Journal Line Type named ANIL_JLT_CREDIT for the credit line of the journal. .
Also specify Merge. as explain in image below .Specify the Transfer to GL in Summary or Detail mode.
Use the Payables setup option as source to build condition for JLT .
In this example, we want to build a condition for “Journal Line Type” eligibility depending upon whether in the Payables Options Screen has Automatic Offset Method is set to None or Balancing or Account. In the above condition, we have placed an OR condition.
You can for example also build a condition based on Invoice Distribution type as shown below.
Next we need to define the Account Derivation Rule .
.Here we are creating an account derivation rule for the credit line.
An ADR can either return a full CCID or a specific segment. These seeded sources are mapped to database tables. The values can be sourced either statically or from existing seeded dynamic sources in SLA. .
We are stating that this specific ADR named ANIL_LIABILITY_ADR will return a constant value in company segment .
In the above image you will see that the value for Company segment can be derived from the corresponding value set.f. In fact you can specify conditions within an ADR. When CONDITION1=TRUE then segment combonation a.b.g combination is returned for your account. As below. it is also possible for the specific ADR to return a full segment combination.d is returned or when CONDITION2=TRUE then d.e. .c.
For the debit side. we are saying that the Account segment must always be 7450 .
.The conditions can be defined. But conditions as evaluated as per the priority.
Finally we create a Journal Line Definition. JLTJLD. Here everything hangs together. we are saying that the CCID for the Credit Line of the journal will be calculated from ANIL_LIABILITY_ADR .ADR=Journal Line Defnition As shown below.
C.F then your journal line debit entry will be . with the specific segment from Account segment being replaced as per ANIL_EXPENSE_ADR.B. For example.D.E. if the CCID in AP_INVOICE_DISTRIBUTION equates A.And the CCID for the debit line will be calculated by the CCID value in Invoice Distribution line.
Hence for each application like AP.PA. we are stating that journal line definition ANIL_JLD should be used for creating journal whenever any event occurs against an Invoice in Payables. However. Now it is time to create AAD. The purpose of AAD in SLA is to dictate which "Journal Line Definition" must be used when a specific event takes place against a specific type of transaction in a specific module like Payables or Receivables. In the previous article you created a Journal Line Definition that is responsible for constructing a Journal. which is "Application Accounting Definition". you have learnt creation of the Journal Line Definition. If you recollect. in AAD screen you will specify when the Journal Line Definition will be used. as per the image below. However.PO etc there will exist an existing AAD in the Subledger Modules.In the previous part of this SLA article. Oracle ships out of the box an AAD for every simply module/application that uses SLA. the "Journal Line Definition" definition creates a Credit Line and the Debit Line of a Journal. .AR. In this case. for this example we will create a new AAD for Payables.
we concatenate static text and dynamic content from SLA Sources[mapped to DB columns or pl/sql functions] so as to construct a description for Journal Line or Journal header. .You can also click on "Header Assignment" button in AAD to attached "Journal Entry Description" [JED] which dictates how the Journal Header description will be constructed. in Journal Entry Description. If you recollect.
in any implementation there is a need to perform accounting for all the modules. because in reality you will have the AAD's of other applications like Receivables . In previous article we have seen that in SLA. and hence the SLAM will be attached to the UK Legal Entity. in any implementation there is a need to perform accounting across various different modules. Using AAD we specify the Journal creation rules per module. "APPS2FUSION UK" might be running Payables and Receivables and also Project Accounting. In SLAM we specify the applications/modules for which the Journals must be built for the entire organization such as "APPS2FUSION UK" across Payables and Receivables and Project Accounting.In this article we have seen that AAD is created for each module. However. In the image below we are creating a SLAM named ANIL_SLAM. Project Accounting. . Fixed Assets etc attached to the SLAM as well. a company named "APPS2FUSION UK" might be running Payables and Receivables and also Project Accounting. Hence a SLAM is nothing but a grouping of all the AAD's possibly for a given chart of account. The decision of whether the journal must be created is delegated to the AAD. The company such as "APPS2FUSION UK" will have a legal entity in UK. and hence the SLAM will be attached to the UK Legal Entity. However. and attaching the AAD named ANIL_PAYABLES. Hence we need to create a SLAM [Subledger Accounting Method] that will take care of generating the Accounting journal lines for each of the module. For example. the "Application Accounting Definition" is created for each module in E Business Suite. The company "APPS2FUSION UK" will have a legal entity in UK. Hence we need to create a SLAM-Subledger Accounting Method. Using AAD we specify the Journal creation rules per module. As for how the journal is constructed and how the accounts are derived is delegated to the Journal Line Definition. In SLAM we specify how the Journals must be built for the entire organization "APPS2FUSION UK" across Payables and Receivables and Project Accounting. This is a simplistic example.
the Ledger is equivalent of set of books in 11i.In the above image. in R12. . To remind you. click on Accounting Setups. and here you can attach the SLAM to a Ledger.
In this article. hence we will create an Invoice in Payables and check the accounting entries to reconcile those against our SLA setup. we understood the basic concepts of Subledger Accounting. If you recollect. Our SLA setup was done for Payables. In the SLA articles Part 7 to Part 9.In the SLA articles Part 1 to Part 6. We will also explain the results of the test. . This AAD will invoke JLD named ANIL_JLD to build the journal lines when an event takes place against the Payables invoice. In the image below we are creating an Invoice from Payables responsibility and ensuring its invoice line distribution account is 01110-6100-0000-000. we will test the configuration to see the results of the configuration performed in Part 7 to Part 9 of the SLA articles. we created an AAD named ANIL_PAYBLES which is attached to Oracle Payables module. we configured SLA for Payables as an example. Next we click on Actions button and validate the invoice and create accounting entries.
.Now check the accounting generated by clicking on menu title Reports||View Accounting as shown in the image below.
Please note that the third segments value of 6100 from Invoice Distribution has been replaced by 7450 from ADR named ANIL_EXPENSE_ADR as shown below.You will notice that the Debit entry of 1000 is charged to 01-110-7450-0000-000 instead of being charged to 01-110-6100-0000-000 in the Invoice Distribution Line of Payables. . The complete logic is described after this image.
Typically Code Combination for the credit/liability accounting .Now. let us revisit how the credit line in the journal has been built.
0000. This was done by defining ANIL_LIABILIY_ADR as shown below. .000. In this case the ADR returns the complete CCID because the Output Type radio button is set to Flexfield.000. in SLA we have hard coded the credit account to be 01.entry of the invoice line is picked from Payables Options setup of the operating unit.2220. However in this case.
Oracle Cash Management. where you build the lower level components and then move up the chain to attach your SLA configuration to your Ledger[11i Set Of Book equivalent in R12]. Oracle Fixed Assets or Oracle Project Accounting etc. However you never ever use that approach in real life for modules such as Oracle Payables. we created components required for the SLA configuration from ground zero. SLA comes pre-configured for all the . as shown in image below Needless to say that the ANIL_LIABILITY_ADR was attached to the Journal Line Type=ANIL_JLT_CREDIT. the SLA has generated the same Credit entry CCID for the invoice. In the example that we saw.Hence. The reason is that. We have thus far seen the basic fundamentals and a simplistic scenario of Subledger Accounting. Oracle Receivables. That is also known as the bottom up approach.
The pre-configured SLA by Oracle will use the accounts generated in respective modules as the source.If all the respective modules can generate accounting properly then why is SLA really needed? Answer . let us first do some questions and answers Question . As you will notice from the image below. a SLAM named STANDARD_ACCRUAL is attached to the Ledger [Set Of Book equivalent of 11i ]. Cash Management. Please see the Part 1 in this series of articles. however the main reason for creation of SLA was to implement multiple shadow accountings against ledgers. Do I really ever need to customize “Subledger Accounting” in such cases? Answer.Well. Effectively "garbage in garbage out". and the same quality accounts are then sent to General Ledger". Although SLA provides you with ability to override accounting definition. In fact. Loans. Before we see the steps for customization of SLA. The seeded ADR's will in most cases return the very same accounts that are generated in the respective modules. .widely used modules in the E Business Suite. Create a copy of this SLAM as shown in the image below. or you can say "quality of the account that goes into SLA.I can customize the account generator in Procurement and Fixed Assets. Payables etc are attached to this SLAM. the customizations on the seeded SLA configurations must be kept to bare minimum. hence all you need to do is to customize those components. We will create a SLAM named ANIL_SLAM__STANDARD_ACCRUAL which happens to be the exact copy of SLAM named STANDARD_ACCRUAL. Now let us take the example for customization of an existing SLA definition pre-seeded by Oracle in R12. many modules such as Leasing. The message from seeded SLA in most cases is “What you feed to SLA will also be fed into the Oracle General Ledger”. However we are interested in modifying just the Payables piece of this SLAM. Therefore if you have already customized the account generation workflow in the respective module then you do not require customization in SLA. the main reason behind creation of SLA itself was to create shadow journals for secondary ledger. All the commonly used rules are already seeded into the SLA configure by Oracle. In this example. Question .
i.Now create new entry for Payables within the copied SLAM. new SLAM will be " ANIL_SLAM__STANDARD_ACCRUAL" .e.
end date the AAD assignment of Payables and add a new entry for Payables. we will then return to this screen in order to replace "Accrual Basis" by custom AAD.Now you have created a new SLAM. Note that we still have AAD named "Accrual Basis" attached. In this SLAM. Click on "Application Accounting Definition" button. However after we copy the "Accrual Basis" into a custom AAD. .
and this time we will copy the AAD definition named “Accrual Basis” to create a new AAD named ANIL_STD_PAYABLES_STD. . click on copy.Now.
Click on button labelled Done to complete the Copy operation for the AAD. .The new AAD will be called ANIL_STD_PAYABLES_STD as shown below.
Now this new AAD has been created. we need to ensure that this AAD has been attached to the custom SLAM that we created in Step 1 of this article. Before we customize this AAD. .
we attach the custom AAD to Payables.Now. by clicking on Application Accounting Definition button as per the image above. . Please note that the Payables entry that is attached to custom AAD named “Accrual Basis” has now been end dated. for Payables AAD assignment record. back to the SLAM screen. as shown in image below. for the custom SLAM. Now go back to AAD.
Follow the instructions as per images below .
.Now copy the Journal Line Definition itself. The image below shows how the custom/copied journal line definition will be modified. Our idea here is to attach a custom ADR for the generation of an account.
The name of the copied JLD will appear as below. .
Attach the custom ADR as shown below .
This completes the cycle for customization of the pre-seeded SLA configuration.And now attach your custom Journal Line Definition to the custom AAD. .
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