FAQ R12 Essentials Of Accrual Accounting [ID 827125.1]


Modified 23-SEP-2010 Type FAQ Status ARCHIVED

In this Document
Purpose
Questions and Answers
What is SLA and where can you get information on SLA setups, upgrade,pre-upgrade, and post-upgrade information?
What is Cost Management SLA Responsibility?
Where can I find the latest Accrual R12 Patches?
What is different about the process of moving Receiving Transactions to GL in R12 and R11i?
What is different in the process of moving AP Transactions to GL in R12 and R11i?
What is different in Period End Accruals in R12 and what changes if any have been made to the Uninvoiced Receipt Report?
What is different about the Period -End Reversal Entries in R12?
What is different about the Load Program in R12 and Accrual Rebuild Reconciliation Report (Accrual Rebuild Reconciliation manager) in R11i?
What is different about the Accrual Reconciliation Report and the AP and PO Reconciliation Reports in R12?
What is different about the Accrual Write Off Process in R12 and R11i?
Where do I get information on the Accounts to use in Reconciliation in R12?
Where Do I find the steps to use in Reconciling AP and PO Summary Reconciliation Reports and GL in R12?
What should I check if Create Accounting runs successfully but does not post any transactions to GL?
Where do I find information on Posting Transactions in Summary or Detail to GL?
Where do I find information on Account Derivation Rules in R12?
References

Applies to:

Oracle Purchasing - Version: 12.0.4 and later [Release: 12 and later ]
Information in this document applies to any platform.

Purpose

The process of accounting for On line Accrual and Period End Accrual has changed in Release 12 . Subledger Accounting (SLA) has replaced GL_INTERFACE as the intermediary between PO Receiving Transactions and AP Invoices and the General Ledger. Subledger Accounting now stores permanent records of Accrual Transactions unlike the GL_INTERFACE that stored no records after they have been moved to General Ledger. The Create Accounting Process moves transactions from RCV_RECEIVING_SUB_LEDGER to XLA Tables and at the same time Transfer and post the Accrual Transactions to GL.
This paper provides answers to some of the likely questions you may face relating to Accrual Process when upgrading to Relase 12 in contrast with theAccrual Process in Release 11i .

Questions and Answers

What is SLA and where can you get information on SLA setups, upgrade,pre-upgrade, and post-upgrade information?

Sub Ledger Accounting (SLA) is a common rule-based accounting engine used by Oracle products that
posts accounting entries into Oracle General Ledger. The SLA engine is also a common engine for all sub ledger applications and provides a single common paradigm for defining accounting behaviors.

In simple terms SLA is an intermediate step between subledger products and Oracle General Ledger. Journal Entries are created first in SLA and then transferred to Oracle GL.

When doing an Upgrade it is recommended that companies should carefully evaluate their business requirements with regards to historical data before deciding how far back to keep detailed accounting information. Release 12 SLA Upgrade will upgrade the transactions in the accounting periods specified.

For further information Review the following Notes:
Note:429105.1 Impact of R12 Design in PO Accounting
Note:399362.1 Oracle Applications Release 12 Upgrade Sizing and Best Practices to evaluate the potential growth of your SLA tables
Note:604893.1 R12 FAQ for the SLA Upgrade: SLA Pre-Upgrade,Post-Upgrade,and Hot Patch

What is Cost Management SLA Responsibility?

This is a new responsibility that allows for the setup of SLA and access to the Create Accounting – Cost Management process.
The Create Accounting process that can be used for receiving transactions are:
  • Create Accounting – Cost Management ... (Use Process Category = Receiving)
    OR
  • Run Create Accounting Receiving Concurrent Program
This last process, Create Accounting Receiving Concurrent Program is also available in Purchasing responsibility and can only be run for receiving transactions. However note that even though available in Purchasing Responsibility the Concurrent Program belongs to Bills Of Material and Accrual Transactions from Purchasing transferred to SLA and GL will have Source: Cost Mangement.

The Receipt Accrual-Period End concurrent program is also available in both Cost mangement -SLA Responsibility and Purchasing Responsibility. Even though the program is owned by Bills Of Materials it only populates RCV_RECEIVING_SUB_LEDGER when run. One has to run the Create Accounting-Receivng Program to move the Transactions to XLA TAbles.

The Transfer Journal Entries for Receiving Transactions should only be run from Cost Mangement-SLA Responsibility.

The Transfer Journal Entries Program in Purchasing Responsibility is for Transferring Obligation/Commitment Transactions from gl_bc_packets not Receiving Transactions
XLAGLTRN module: Transfer Journal Entries to GL.


Accrual Load Reconciliation and AP and PO Reconciiliation Report


Both the Load Program and the AP and PO Reconciliatin Programs are available in both Purchasing Responsibility and Cost Mangement -SLA Responsibility. Both programs are owned by Bills of material

The Release 12 Accrual Reconciliation Process will use the accounting entries from SLA as SLA is the source of truth for the real accounting entries. Hence the accrual load can not report any transactions prior to SLA upgrade start date.


Most users prefer to run the accrual programs from Cost Management – SLA responsibility.
This responsibility should have more security and restrictions from users.



Where can I find the latest Accrual R12 Patches?

It has been commonly found that installing the latest patches for Inventory Accruals can resolve many issues. Therefore we would recommend making sure you have the latest fixes installed and tested before spending effort analyzing an issue in depth. From Release 12 onwards, standard patches will be released as part of Release Packs (RUP) only. As such, check the following note for details on the latest RUP patch released

For the latest Release 12 Update Packs (RUP) please refer to Note 222339.1
It is also highly recommended to apply Patch 8442125:R12.BOM.A COSTING R12 RUP7 Consolidated patch applicable on top of R12 RUP6.
This patch includes many critical and recommended patches fixed as on 16-APR-2009.
If for any reason one cannot apply this rollup patch at this time,please at least apply ONE -OFF Patch
<<7950123:R12.BOM.A>> to get the fixed file version CSTACCLB.pls 120.23.12000000.19 for the load program

What is different about the process of moving Receiving Transactions to GL in R12 and R11i?

In R11i for Inventory Destination Transactions, the Receiving Transaction Processor Debits and Credits the Receiving Account and Inventory AP Accrual Account respectively in GL_INTERFACE and RCV_RECEIVING_SUB_LEDGER. These Transactions in GL_INTERFACE are identified with User_je_source_name ='Purchasing' and user_je_category_name 'Receiving'. In RCV_RECEIVING_SUB_LEDGER these transactions are identified by column accrual_method_flag ='O'
In R11i for Period End Transactions ie Transactions with accrue_on_receipt_flag ='N' in PO_DISTRIBUTIONS_ALL, no accounting transactions are generated on receipt of goods. The Receipt_Accrual_Period-End program generates the Accounting Entries in GL_INTERFACE and RCV_RECEIVING_SUB_LEDGER simultaneously by Debiting Charge Account and Crediting Expense AP Accrual Account. In GL_INTERFACE the Transactions are identified by column names user_je_source_name='Purchasing' and user_je_category_name ='Acccrual'. In RCV_RECEIVING_SUB_LEDGER the Transactions are identified by column Accrual_Method_flag ='P'.

In R11i both On Line Transactions and Period End Transactions are moved from GL_INTERFACE to GL_IMPORT_REFERENCES,GL_JE_HEADERS and GL_JE_LINES by JOURNAL IMPORT.

In R12 GL_INTEFACE TABLE is no longer directly used for Receiving Transactions. The Receiving Transaction Processor only populates the RCV_RECEIVING_SUB_LEDGER with Inventory Destination Transactions. The Receipt_Accrual_Period-End program also only populates the RCV_RECEIVING_SUB_LEDGER with Expense Destination Period End Accruals.

Create Accounting-Receiving Concurrent program from Cost Mangement Responsibility transfers the journals in RCV_RECEIVING_SUB_LEDGER to SLA Tables. Once the accounting entries are created in receiving subledger for the receiving transactions, Create Accounting process gets started depending on the profile option CST:Receiving Accounting option and the encumbrance set up.

On submitting this program, it spawns the Accounting program which will do the validations and picks the data from table rcv_receiving_sub_ledger and process it according to the accrual method set for the POs

Depending on the accrual method and the value for profile SLA:Disable journal import, this spawned program "Accounting program" inserts the data into gl_interface first and then calls the Journal import program and posting program and populates the accounting events in subledger table xla_ae_headers and entries in xla_ae_lines and xla_distribution_links.
If there is any problem with the Journal import, the data will get rolled back from gl_interface. Once the Journal import is completed, data will get populated in gl_import_references,gl_je_headers and gl_je_lines.

Once the accrual method is validated and recognized by the accounting program based on the accrual method flag in rcv_receiving_sub_ledger that the accrual type is Period end, the accounting program spawns the Subledger Multiperiod Accounting program (SMPA) which creates the accrual reversal in xla_ae_headers,xla_ae_lines and xla_distribution_links.

The Transfer Journals to GL and Posting of the Journals can be run concurrently with the Create Accounting Program by selecting the relevant parameters or they can be run independently to move and post the Transactions to General Ledger. What is different in R12 is that the xla tables : xla_ae_headers,xla_ae_lines and xla_distributions_link provide permanent records from subledgers unlike GL_INTERFACE where records are deleted when they are moved to GL.

What is different in the process of moving AP Transactions to GL in R12 and R11i?

Just like the Receiving Transactions discussed above, Create Accounting-cost Mangement program moves the Transactions from the Ap Tables to XLA TAbles and then Transferred to General Ledger.

For more information on AP Create Accounting Process refer to Note:579836.1 Create Accounting Process

What is different in Period End Accruals in R12 and what changes if any have been made to the Uninvoiced Receipt Report?

Period End Accruals is the recommended method for accruing Expense Destination Transactions in Oracle. Expenses are generally classified in Accounting as Period Costs because they are consumed in generating the revenues for a period. Expense items typically are not accounted for on a daily basis and most companies find it more convenient to account for and reconcile them at month- end rather than at the time each individual expense is incurred.

In R12, although the basic underlying assumptions for accumulating and reporting Period End Accruals essentially remain the same as in prior releases, there have been changes in the methods of moving the Transactions from PO Tables to the General Ledger. SLA -Subledger Methodology now stores permanent records transferred to GL replacing the temporary GL interface Table.

In Release12 Period End Accrual processes can be done either in Purchasing Responsibility or under Cost Management Responsibility: Navigation : Cost Management/ SLA Responsibility.

Prior to Release 12 the Accrual process was under the Purchasing Responsibility


RVCAC.opc the executable used in running the Receipt_Accrual_Period-end in R11i is replaced by CSTVRAPS.pls in R12

Receipt_Accrual_Period-End in prior releases generates the Accounting Entries in both RCV_RECEIVING_SUB_LEDGER and GL_INTERFACE . In Release 12 the program populates only the RCV_RECEIVING_SUB_LEDGER .

SLA in R12 acts as the interface with GL. SLA is populated by the Create Accounting- Receiving Concurrent Program. There are options in the Create Accounting -Receiving program to Transfer the Journals to GL/and or post to GL.
  • If the option to Transfer and Post the Journals is selected the Create Accounting -Receiving Program will spawn another program 'Subledger Multiperiod Accounting and Accrual Reversal' Report which will automatically reverse the actual period end accrual entries in the next period in SLA as well as in GL.
  • If the Create Accounting-Receiving Program is selected with Parameters: Transfer to General Ledger = 'NO' and Post in General Ledger='NO' then the Transactions will be in Draft Mode and one will need to to run separate concurrent program : Transfer to General Ledger in Cost management-SLA responsibility to Transfer the Journals to GL.
    In R12 the Uninvoiced Receipt Report should be used exclusively for reconciling Expense Destination
    Transactions accrued at period End. The Reconciliation Load Program and the AP and PO Reconciliation Reports must be used for reconciling On Line Accruals.

    The technical name for Uninvoiced Receipt Report (URR) has changed from POXPORRA.rdf in R11i to CSTACREP.rtf in R12. The URR parameters however remain the same. 'Accrued Receipt' looks at the accrued_flag in the PO_DISTRIBUTIONS_ALL table. If the parameter is set to 'N' only transactions with accrued_flag = 'N' in PO_DISTRIBUTIONS_ALL will be retrieved. The Parameter: 'Include On Line Accruals' looks at the accrue_on_receipt_flag at PO_LINE_LOCATIONS_ALL (at shipment level)and the PO_DISTRIBUTIONS_ALL (at the distribution level). If the parameter is set to 'N' then only transactions that meet this criteria will be retrieved.


    For Full understanding of R12 period End Accruals concepts and Setups please refer to
    Note:603971.1 R12 How To Diagnose Issues with Period End Accruals

    What is different about the Period -End Reversal Entries in R12?


    In R12 Accrual Reversals are done automatically not manually.
    In R12 For non Encumbrance environment set the profile:
CST: receiving Accounting Option =CONCURRENT.

  • This will enable the Create Accounting Program to generate both the Actual Entries and Reversal Entries in SLA. If the option transfer to Gl is set to Y, the Actual Journals will also be sent to GL. When the GL Period for the next period is opened, manually run the Transfer To General Ledger Program to transfer Reversal Entries to GL.
  • What is different about the Load Program in R12 and Accrual Rebuild Reconciliation Report (Accrual Rebuild Reconciliation manager) in R11i?

  • In Release 11i when you run the Accrual Rebuild Manger(or Accrual old version of Report) all transactions relating to an Account that has ever been used as Inventory AP Accrual account will be pulled and populated to the temp Table po_accrual_reconcile_temp_all .
  • In other words so long as a transaction used an accrual account (accrual_account_id) and that transaction fell within the date range of the rebuild, the separate block of transactions were pulled from ap tables,po tables and inventory tables and dumped into the temp table irrespective of whether the PO is Open,Fully Invoiced or Closed. So in the temp table one finds Receipts/Invoices/write offs for different dates.
  • Simply put the po_accrual_reconcile_temp_all table in R11i, is a storage of historical data of all po transactions at different dates.
  • Because these Transaction blocks with different dates existed in the Temp Table, the Accrual Reconciliation Report uses the quantity and amount tolerances (in the Report parameter) to report the transactions based on the date range selected.
  • It is worth emphasizing that one major drawback here is that each line of a PO must meet the quantity and amount tolerances test or else all transactions of the line will show up on the report.
  • If there are for example 10 distributions of a line and only 1 distribution does not meet the test of exclusion from the report, then all transactions of the line will appear on the Report Refer to Note:738594.1

  • The new reconciliation load architecture in Release12 tries to mimic the net accrual balance philosophy. In other words the load program (Rebuild counterpart in R12) will only populate the Temp tables CST_AP_PO_RECONCILIATION and CST_RECONCILIATION_SUMMARY with Net po_distribution amounts.
  • Since the load program will only retrieve Net PO Distribution Amount =(Receipt Qty-Invoice Qty)P–Returns-Write Offs all things being equal the sum of all the Net PO Distributions – Manual Journals in Gl should equal the Inventory AP Accrual Account in GL.
  • By design therefore the the AP and PO Reconciliation Report and Miscellaneous Accrual Reconciliation Report can only report Net PO Distribution balances since they pull the information from CST_AP_PO_RECONCILIATION and CST_RECONCILIATION_SUMMARY tables.
  • Therefore at any given time the balances of these Reports should equal the Current Net Accrual Account balance in GL after deducting Manual Journals made to the GL Account.

  • What is different about the Accrual Reconciliation Report and the AP and PO Reconciliation Reports in R12?

  • Accrual Reconciliation Report in R11i has a date range and can be run for any date range selected. The reason being that the po_accrual_reconcile_temp_all table the source of information for the Reconciliation Reports in R11i, is a storage of historical data of all po transactions.
  • The AP and PO Reconciliation Report in R12 has no date range . The report displays only the CURRENT net accrual balances of po distributions, 'AS OF DATE' balance will always reflect current net balance of the po distributions and that explains why there is no date parameter in the report. The reason for this is because The load program whenever it is run dynamically populates the CST_AP_PO_RECONCILIATION and CST_RECONCILIATION_SUMMARY tables , the source of information for the Reconciliation Reports in R12 ,with only Net PO Distribution balances.
  • The new Accrual philosophy in R12 therefore requires you to reconcile and complete their Accrual Reconciliations monthly. Do not run the Load Program of the next Period unless the previous month reconciliation is comple.
  • For workaround in reconciling prior period accruals when the load program has already been run for the current period please refer to Note:1107953.1 - R12 Accrual Balance Mismatch Between Accrual Reconciliation Report and GL - Troubleshooting

  • What is different about the Accrual Write Off Process in R12 and R11i?

  • In R11i Accrual Write Offs only affected the Accrual Reconciliation Report. One had to pass manual Journal Entries in GL to adjust the GL Inventory AP Accrual Account. In other words without Manual Journals the write off process had no impact in GL.

  • In R12 the adjustment in GL is automated. No Manual Journal is required. The create Accounting program and Transfer to GL program will transfer the write off journals automatically to General ledger.

  • Where do I get information on the Accounts to use in Reconciliation in R12?

  • In Release 12 it is imperative that each of the following Accounts used in Accrual reconciliation process must be separate.

  • INVENTORY AP ACCRUAL ACCOUNT
  • Navigate to: Inventory Responsibility Setup/Organization/Parameters/Other Accounts

  • EXPENSE ACCRUAL ACCOUNT
  • Navigate to: Purchasing Responsibility Setup/Organization/Purchasing Options/Receipt Accounting

  • RECEIVING ACCOUNT
  • Navigate to: Purchasing Responsibility: Setup Organization/Receiving Options/Select the Organization/Receiving Inventory Account

  • INVOICE PRICE VARIANCE
  • Navigate to: Inventory Responsibility Setup/Organization/Parameters/Other Accounts


  • Please Review this note for more details Note 824388.1 R12 Account Requirements For Inventory Accrual Reconciliation



  • Where Do I find the steps to use in Reconciling AP and PO Summary Reconciliation Reports and GL in R12?

  • For Step by Step direction on how to reconcile the AP and PO reconciliation Report with Accrual balance in GL under different scenarios like Normal monthly Reconciliation Process, Prior Period Accrual Reconciliation, Fresh Install and Upgrade issues(relating to Accrual Reconciliation) Please review this note for more details: Note:1107953.1 - R12 Accrual Balance Mismatch Between Accrual Reconciliation Report and GL - Troubleshooting

  • What should I check if Create Accounting runs successfully but does not post any transactions to GL?

  • 1) The Profile:Disable Journal Import in Edit/Preferences:if set to YES means Journal Import must be run separately to import Journals to GL. If set to 'No' then Create Accounting automatically activates Transfer to GL Concurrent Program if Transfer to General Ledger is set to 'YES'

  • 2) If Disable Journal Import is 'NO' and Transfer to GL is 'Y' and Create Accounting does not Transfer
  • Receiving Transactions to GL, please check the status of GL_TRANSFER_STATUS_CODE of XLA-AE_HEADERS. If it is 'NT' then it means that the transactions are configured not to be transferred to GL.
  • To resolve this check GL transfer parameter's value in Inventory Organization Parameters form:

  • Navigate Oracle Inventory>Setup>Organization>Parameters
  • Select the Costing Tab Region
  • Transfer to GL Option must be either 'Yes' or' No' Not 'Null'

  • For more details on this topic pleae refer to Bug 7693744 Create Accounting - Receiving runs but will not transfer to ledger.



  • Where do I find information on Posting Transactions in Summary or Detail to GL?

  • Please refer to R12 Oracle Subledger Accounting Implementation Guide, page 1-3.

  • There are two levels of configuration. One is at the level of Subledger Accounting Options Setup. The option for General Ledger Journal Entry Summarization includes: Summarize by GL Period, Summarize by GL Date, No Summarization.

  • The second level is at Journal Line Type definition in SLA. For the Transfer to GL option here, select Detail to maintain the same level of detail as the subledger journal entry line, select Summary to summarize subledger journal entry lines by Accounting Flexfield. The R12 default is in Detail mode for JLTs that belong to Cost Management.

  • If you want to override the Oracle default Journal Line Type definition, a brief procedure is as follows:

  • 1. Use Responsibility as Cost Management-SLA
  • 2. Copy the following:
  • a. Application accounting definitions to CUST_AAD
  • b. Journal lines definitions to CUST_JLDs
  • c. Journal line types to CUST_JLTs
  • 3. In the CUST_JLTs, set the 'Transfer to GL' attribute as required (Summary)
  • 4. Assign CUST_JLTs to CUST_JLDs
  • 5. Assign CUST_JLDs to CUST_AAD
  • 6. Assign the CUST_AAD to the SLAM associated with the ledger



  • For step by step details of how to change from Detail to Summary Review the following Note for details
  • Note:740215.1 R12 How To Transfer To GL In Summary



  • Where do I find information on Account Derivation Rules in R12?

  • Release 12 Architecture allows for the Balancing Segments for Accrual Accounts ,Receiving and Inspection Account to use the same Balancing Segments as Charge Account. This is achieved using Account Derivation Rules.

  • For more information on Account Derivation Setup Rules in Release 12 refer to Note:797115.1
  • How To Derive Accounts Using Account Derivation Rules in R12 SLA Architecture


References

NOTE:797115.1 - How To Derive Accounts Using Account Derivation Rules in R12 SLA Architecture
NOTE:824388.1 - R12 Account Requirements For Inventory Accrual Reconciliation
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Products

    • Oracle E-Business Suite > Procurement > Procurement > Oracle Purchasing
Keywords

RCV_RECEIVING_SUB_LEDGER; WRITE-OFF; ACCRUALS; ACCRUAL ACCOUNT; CREATE ACCOUNTING; RECONCILIATION REPORT; SUBLEDGER ACCOUNTING; UNINVOICED RECEIPTS REPORT
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