Turbo-Charge Your Accounting With the Release 12 Subledger
Accounting Engine
Alyssa Johnson
Rolta
The new Subledger Accounting Engine represents a major shift in architecture for the accounting
component of the Financials product family. In prior releases, the accounting events were stored within
individual subledgers. Now a new schema (XLA) exists and the accounting events for each subledger are
retained within one data model.
This new rules-based accounting model with a new schema (XLA) provides several benefits, including the
standardization and consolidation of the accounting. Previously, the “Create Accounting” process was not
standardized throughout the subledgers. Now, in Release 12, because the accounting is generated in a
central location, there is consistency across the subledgers. This will help make the transfer to GL and
month-end close processes simpler.
Because the accounting entries are all stored in one centralized repository, companies will realize
improved control and transparency of their accounting. A definite shift has occurred in that the processing
of the transactions is separated from the accounting associated with transactions. Also, because of this
centralization, balancing can now occur at the subledger level. Finally, the bottom line is that this
centralization streamlines reconciliation and supports a faster close cycle. With the addition of the SLA
repository, the flow of data is shown in Figure 1.
Figure 1 – The accounting events for each subledger are stored within one data model
It is important to realize that accounting rules can only be applied to transactions coming from the
subledgers. Manual Journal Entries and/or entries uploaded through WebADI are not processed by the
subledger accounting engine and therefore cannot leverage user-defined accounting rules. The following
subledgers (see Figure 2) use the Subledger Accounting Engine when accounting entries are generated.
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Purchasing
Assets
Receivables
Payables
Cash Management
Intercompany
Cost Management
Process Manufacturing
Projects
Payroll
Loans
Lease Management
Property Manager
Public Sector/Federal
Globalizations
Figure 2 – These subledgers use the Subledger Accounting Engine when accounting entries are generated
Subledger Accounting is not a module, it is a set of services to a module, and therefore there are no
Subledger Accounting responsibilities. All of the Subledger Accounting inquiry forms and concurrent
programs are embedded within each standard Oracle Application responsibilities (e.g. Payables
Manager). A new Cost Manager – SLA responsibility has been created to manage the accounting for
Inventory, WIP, and Receiving. The services that the Subledger Accounting Engine provides to the
subledgers are:
•
•
•
•
•
Generation and storage of detailed accounting entries
Storage of subledger balances
Access to subledger accounting entries with drilldown to transactions
Subledger reporting
Configurable rules, instead of hard-coded ones, used by a common accounting engine
One of the biggest benefits of the Subledger Accounting Engine is the ability to create more than one
accounting representation for a single transactional entry. This is especially beneficial to global
organizations which have statutory and regulatory requirements. To understand how this accomplished,
it is important to understand some new Release 12 definitions. A Ledger replaces Set of Books in 11i.
The ledger is an accounting representation for an organization that is accountable in a self-contained way
It provides balanced ledger accounting for the accounting entity and serves as the repository of financial
information. It is the principal source of information for analytical applications in EBS. Now the Ledger is
comprised of the "the 4 Cs“:




Chart of Accounts (CoA)
Calendar
Currency
Subledger Accounting Convention (new in Release 12)
The Subledger Accounting Method is used by the Subledger Accounting Engine to generate the correct
accounting entries. Users can define both Primary Ledgers and Secondary Ledgers. Primary Ledgers
are associated with Legal Entities and typically reflect the transactional accounting. Primary Ledgers not
associated with a Legal Entity can be used for consolidation. Secondary Ledgers are associated with
Primary Ledgers and can be utilized for statutory, management, and/or consolidation reporting. They can
differ from the Primary Ledger from one to all of the 4 Cs. The mapping from the Primary to associated
Secondary Ledger(s) is defined in General Ledger and is assigned in the Accounting Setup Manager. A
Reporting Currency is similar to Secondary Ledgers but they are Ledgers which only differ by the
Currency. Ledgers can be combined into Ledger Sets which essentially treats multiple ledgers as one
Ledger. All Ledgers in a Ledger Set must have the same Calendar and Chart of Accounts. Users can
perform the following operations for a Ledger Set: Open/Close Periods, Create Journals, Translate
Balances, Reporting, and Viewing Information.
This functionality can be used to implement business cases where a consolidated view across Ledgers is
required. Figure 3, illustrates a corporation which has a corporate office and 2 global offices. The
Primary Ledger is the statutory Ledger and the associated Secondary Ledgers reflect the corporate
accounting representation. Using a Ledger Set, users can have a global view of their financials reporting.
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Figure 3 – Using Secondary Ledgers and Ledger Sets to support global accounting
Figure 4 is a similar scenario but this time the original corporation has acquired a company and wants to
maintain both the acquired company’s accounting representation and the acquired companies accounting
representation.
Figure 4 – Using Secondary Ledger and Ledger Sets with an Acquired Company
SLA Upgrade Decisions
SLA is required functionality in Release 12. Because it is the centralized repository of all of the
accounting entries it cannot be by-passed or turned-off. When upgrading to Release 12, users must
decide how much of their current accounting data they want the upgrade process to copy into the SLA
tables. The default is 6 months. To change the default number of periods of historic data to be
upgraded, you must apply patch 5233248 to the Release 11i APPL_TOP and submit the SLA PreUpgrade program. If using Projects and/or Grants Accounting, apply Patch 10231107 on the 11i instance
Users then specify the date to be used to determine the first period to be upgraded. This date does not
have to be the starting date of a period — the initial period is determined as the first period in which this
date falls.
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Users can also use the new Upgrade by Request process to upgrade additional data into the SLA tables
post-upgrade. This is typically done when historical data was omitted from the initial upgrade process
because of critical downtime window. For example, instead of upgrading all financial accounting data
during the downtime window, an organization could include only the last fiscal year. If additional data is
required, other fiscal years can be upgraded - months or even years after the initial upgrade. See
appendix in Oracle E-Business Suite Upgrade Guide Release 11i to 12.1.
Creating Accounting
The ‘Create Accounting’ concurrent program is the standard way that accounting is created in all of the
subledgers. This program processes eligible accounting events to create subledger journal entries. To
create these entries, the Create Accounting program applies the corresponding Application Accounting
Definitions defined in the Accounting Methods Builder. Additionally, the Create Accounting program
validates and creates subledger journal entries, optionally transfers journal entries to GL, optionally posts
journal entries to GL, and generates the Subledger Accounting Program Report. Figure 5 shows the
parameter list for the “Create Accounting” concurrent program, with the addition of the Ledger (which is
the Set of Books) and the Mode (which enables Draft Accounting and straight through posting to the
General Ledger). The Subledger Accounting Engine uses the Subledger Accounting Method that has
been assigned to the Ledger to generate the accounting entries.
Figure 5 – The parameter list for the “Create Accounting” concurrent program
Draft accounting is especially helpful for verifying the accounting entries and when developing new
Subledger Accounting Rules. Users can determine accounting impact of journal entries without
transferring the accounting entries to the General Ledger. In fact, accounting entries generated in draft
mode cannot be transferred to the General Ledger. They can be deleted and recreated and the
transaction or accounting definitions can be altered. They are included on accounting reports to fully
assess the impact of the accounting rules, but they do not update balances or reserve funds. When
accounting rules are correct then the entries can be recreated in final mode and transferred to the
General Ledger
The Subledger Accounting Program Report is generated by the Create Accounting Program. It lists
successful events and the subledger journal entries created for those events. It also lists errors for failed
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events. Users can run the program in in Summary or Detail. Summary mode provides summary of
events processed and detailed information on errors. Detail mode provides details of subledger journal
entries generated and a detailed error.
Some best practices for the Create Accounting process include running the Create Accounting Process
DAILY, utilizing Draft Mode Accounting if experiencing continual issues with accounting, resolving issues
reported in Subledger Accounting Program Report DAILY, and running the Transfer to GL process and
additional time when closing period to verify all accounting entries have transferred.
Subledger Inquiry Forms
One of the biggest impacts to the end user is the addition of three new Subledger Inquiry Forms. These
three new forms can be used for research, for reconciliation, and to drilldown from GL. The three new
forms are the Accounting Events form, the Journal Entries form, and the Journal Entry Lines form.
Developed in the new OAF technology, these forms give the users and easy to use interface to query
journal entries and accounting events. Queries can be saved as views to be re-used saving time for the
end user. They are also standardized across the subledgers. Below is a look at these new forms:
Figure 6 – Subledger Journal Entries Form
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Figure 7 – Subledger Journal Lines Form
Figure 8 – Accounting Events Form
SLA Reporting
Oracle has developed several new reports that report on data in the SLA repository. The following
reports are new in Release 12: Journal Entries Report, Account Analysis Report, Third Party Balances
Report, Period Close Exception Report, and the Open Account Balance Listing. The Journal Entries
Report displays detailed journal entry information and transaction details for subledger journal entries. It
also includes adjustments entered into the General Ledger and entries posted to General Ledger from
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other sources. Only posted entries are included in the report. The Account Analysis Report provides
drilldown information about the movement on a particular account for a period or range of periods
It only includes journal entries transferred to and posted to General Ledger. The Third Party Balances
Report displays balance and activity information for supplier and customer control accounts. This report
is a requirement in some countries.
Accounting Methods Builder (AMB)
One of the new functionalities of the Subledger Accounting Engine is the Accounting Methods Builder
which enables users to define accounting rules using standard Oracle forms. With this functionality,
users will be able to define and maintain custom accounting rules. This provides the user with great
flexibility while maintaining necessary control. Users can also more easily comply with multiple
geographic, legislative, or industry requirements. By putting accounting rules in place, manual journal
entries and customizations can be reduced. An added benefit is that because these user-defined
accounting rules are created and maintained through the forms, all user-defined accounting rules will be
retained in subsequent upgrades. The AMB supports logic such as prioritization and conditional
statements without using SQL.
When defining a ledger (see Figure 9), notice that one of the fields is the Subledger Accounting Method
th
(or convention – the 4 C). Release 12.0.6 comes seeded with six Subledger Accounting Methods:
Accrual with Encumbrance Accounting, Cash with Encumbrance Accounting, Standard Accrual, Standard
Cash, US Federal Accounting, and China Standard Accrual. If any of these methods can meet your
accounting needs, no user-defined rules are required and the user can just assign this default accounting
method to the ledger. However, if special accounting rules are required, users can define them using the
Accounting Methods Builder.
Accounting is defined by
the Subledger Accounting
Method.
Figure 9 – Assigning a Subledger Accounting Method
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The Subledger Journal Entry Inquiry Form (see Figure 10) illustrates areas that can be configured using
the AMB to meet a company’s business needs.
Journal Header
1
2
Journal Lines
3
4
5
Figure 10 – Components of the Subledger Journal Entry which can be configured using AMB
Users can create user-defined Journal Header Assignments (1) and Header Definitions (2). Account
Derivation Rules can also be formulated that given a certain set of conditions derive a different account
combination (3) than the account combination entered at the transaction level. Users can also define
Journal Line Types (4) and the Journal Lines Description (5).
To customize an accounting method, users must create a user-defined Subledger Accounting Method. A
Subledger Accounting Method is composed of multiple Application Accounting Definitions. For example,
the Standard Accrual Subledger Accounting Method is made up of the following Application Accounting
Definitions: Asset Standard Accounting, Cash Management Standard Accounting, Load Standard
Accrual, Cost Management, Accrual Basis (which is the Payables definition), Process Standard
Accounting, Projects Standard Accounting, Property Manager Normalized Accounting, and Receivables
Default Accrual. Notice these represent the different subledgers that will create accounting entries in the
General Ledger. Figure 11 represents the structure supporting each of these Application Accounting
Definitions and the components that make up a complete accounting method. Note: these correspond to
the sections identified in Figure 10.
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Application
Accounting
Definition
Event Class Type
Journal Header
Assignments
Journal Entry
Descriptions
Journal Lines Definitions
Journal Line Types
Account Derivation
Rules
Over 3000 Sources Defined
Custom Sources Can Be Utilized
Figure 11 – The structure supporting each of the Application Accounting Definitions and the components that make up a complete
accounting method
Each of these definitions except sources can be copied and modified from the Oracle seeded definitions
to meet your accounting needs. Sources are the components of a transaction such as a supplier or
distribution line. If a user needs a customized source then a developer must develop custom code but it
can be plugged into the list of sources. When modifying a component further down the tree, the high
components must also be copied and modified all of the way up to the Subledger Accounting Method.
Conclusion
The new Subledger Accounting Engine represents a major shift in how accounting has been performed.
It is now possible to support Multiple ERPs in one corporation. Standardization of the functionality will
make it easier for the corporation to train end users on the functionality and will eliminate re-training when
moving positions. The Subledger Inquiry Forms along with the new Subledger Reporting will help users
in their research and reconciliation and will fully support drilldown to the accounting entries from the
General Ledger. The new Accounting Methods Builder enables organizations to configured user-defined
accounting rules through a forms-based tool to support customized accounting requirements.
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