SLA Customization in Oracle Fusion


What is Subledger Accounting?

Oracle has provided standard accounting derivation for all the possible events of different aspects of business. However, there could be requirements of deriving custom accounting on certain conditions or business events.
Subledger Accounting (SLA) is a rule-based accounting engine that centralizes accounting for Oracle Fusion products. Subledger Accounting is not a separate product in itself, rather it is Oracle’s engine catering to the accounting needs of both Oracle and external modules.
Together with the ledger support, Subledger Accounting enables support of multiple accounting requirements concurrently in a single instance. Different accounting regulations can be satisfied by maintaining and applying different sets of rules to different sets of transactions, or accounting for the same transaction with multiple methods. Subledger accounting options define how journal entries are generated from subledger transactions at the subledger application level.
Subledger accounting customizations comes in handy for such requirements. It has been first introduced in Oracle Applications e-business suite. Oracle fusion has leveraged the same functionality and extended it to a greater flexibility to derive accounting, descriptions, references and other components by using various conditions and even formulas which makes it even more flexible and result oriented.
The different components to achieve such complex accounting derivations are as given hereunder:
Mapping Sets
Account Rules
Journal Line Rules
Description Rules
Events
Subledger Journal Entry Rule Sets
Accounting Method
Ledger

Mapping Sets

Mapping sets provide an efficient way to define a segment or account combination value for one or more transaction or reference attribute values. Using such input and output mappings is simpler than using complex conditions on account rules.
Based on the value of the source input, a single segment or a full account is derived.

Account Rules

These are the rules that determine from where an accounting flexfield value is taken or how it is derived. Oracle does provide seeded rules, however one can create one’s own rules to derive accounting flexfield segment values. The following rule types are available:
·         Account combination
·         Segment
·         Value Set

Journal Line Rules

These are the rules that determine whether a subledger journal line will be a debit or a credit line, whether lines with the same account should be merged and what the accounting class of the line is. The Link Journal Lines option determines whether the journal line rule is set up to establish a link between the accounting of transactions that are related both within the same application, and across applications. In the seeded definition, no link is established.

Description Rules

These are the rules that determine what appears on the subledger journal entry at the header and/or the line. The definition determines both the content and sequence in which the elements of the description appear.

Event

Events are used to process transactions, i.e. the transaction drives the accounting event. E.g. the SLA setup for the transaction Addition, e.g. is built under the event Addition and the event CIP Addition. There are also non-accountable events, like an amortized life change where no subledger journal entry is created from the event.

Subledger Journal Entry Rule Sets

The component rules (Account Rules, Journal Line Rules, Description Rules, and Supporting References) are now combined under the Subledger Journal Entry Rule Sets to form the complete set of rules per accounting event for the subledger.
This summary of the set of rules needs to be validated before it can be linked to the Accounting Methods for the subledger. The Subledger Journal Entry Rule Set can be assigned only to a Subledger Accounting Method with the same chart of accounts.

 Accounting Method

The Accounting Method is the list of Subledger Journal Entry Rule Sets per subledger that can then be linked to the ledger. Only one Subledger Journal Entry Rule Set can be assigned to a Accounting Method with the same chart of accounts.

Ledger

The Ledger is what used to be called the General Ledger Set of Books. It consists of the currency, chart of accounts, accounting calendar, ledger processing options and subledger accounting method.

Fusion and EBS SLA vis-à-vis


Fusion
e-Business Suite
Accounting Methods (AM)
Subledger Accounting Method (SLAM)
Subledger Journal Entry Rule Sets (SJERS)
Application Accounting Definition (AAD) with Journal Line Definition (JLD) *
Journal Line Rules (JLR)
Journal Line Type (JLT)
Account Rules (AR)
Account Derivation Rules (ADR)
Description Rules (DR)
Journal Entry Description (JED)

*AADs are obsolete. One links the Subledger Journal Entry Rule Sets (JLD's) directly to the Accounting Method.

Use case

Scenario:

The requirement is to derive the cost center of a payable invoice for Item Expense line as per the conditions given below:
1.       If Invoice currency is INR then Cost center to be ‘1000’
2.       If Invoice currency is USD then Cost center to be ‘1005’
3.       If Invoice currency is EUR then Cost center to be ‘1010’
4.       If Invoice currency is anything other than INR or USD or EUR then Cost center to be ‘000’

Solution:

We shall define a custom mapping set having these conditions met and then attach it to the ledger user defined account method. The steps involve here are as follows:
1.       Create a custom mapping set
2.       Create a custom account rule which consists of the mapping set created in step1
3.       Create a custom Journal Entry Rule (JER)
4.       Create a custom Subledger Journal Entry Rule Set (SJERS)
5.       Create a custom accounting method and assign the SJERS created in the previous step
6.       Assign the custom accounting method to the Ledger

Create a Custom Mapping Set

Navigation: Setup and Maintenance-> Financials-> Payables click on All Tasks and Navigate to Manage Mapping Sets task











This opens the Mapping set search page, click on either Actions->Create or + as shown below:
Create mapping set page opens. Fill in the required information and conditions as per the business requirements.

In the screenshot, we have selected Output Type as Segment as we want only one segment i.e. Cost center to change, based on currency.

Scroll to Input Sources section and click on Actions->Select and Add









Fill in the information as shown for Input Source and Chart of Accounts Sections:






Create a mapping set based on the conditions













Click on Save and Close at the top right, once finished.

Create Account Rule

Navigation: Setup and Maintenance-> Financials-> Payables click on All Tasks
Click on Manage Account Rules tasks from task list













Fill in the required information and select the mapping set you created in the previous step under Rules section.











Click on Validate button and then Save and Close

Create Subledger Journal Entry Rule Set

Navigation: Setup and Maintenance-> Financials-> Payables click on All Tasks
Click on Subledger Journal Entry Rule Set task from the task list




















Select the suitable Seeded Event Class and select Duplicate from Actions menu. It will create a duplicate copy of the seeded Journal Entry Rule Set and you can leverage on it and make changes according to your requirement.
Fill in the required information

Scroll to the Journal line rule of your requirement and make changes. In our example, we are trying to derive Cost Center in Item Expense Line.








Click on Save and Close once finished.

Create Accounting Method

Navigation: Setup and Maintenance-> Financials-> Payables click on All Tasks
Click on Manage Accounting Method task from the task list
Select the suitable Seeded Accounting Method and select Duplicate from Actions menu.
End date the existing SJERS used and create a new entry with the custom one.










Save and Close

Activate Subledger Journal Entry Rule Set Assignments

Navigation: Setup and Maintenance-> Financials-> Payables click on All Tasks
Click on Activate Subledger Journal Entry Rule Set Assignments task from the task list.
It takes you to submit a job which Validates and activates accounting setups for a subledger application and accounting method.

Select appropriate Accounting Method and Subledger Application and submit the job. Check the status of the job submitted.




Assigning the custom accounting method to the Ledger

Navigation: Setup and Maintenance-> Financials-> General Ledger
Click on Specify Ledger Options task from the task list















 Select the custom accounting method created, under Subledger Accounting Section
Save and Close

This completes the configuration of custom accounting method based on the requirements given in the scenario.

Verify the custom Accounting Method functioning

Create four invoices each in INR, USD, EUR and any other currency.
Invoice 1 with USD Currency and Cost Center selected as 000 through distribution set

















In the above screenshot, we can see that the cost center selected is 000 and Invoice Currency is USD. After accounting of the invoice, let’s see how it looks like:


















Here we can see, based on currency the cost center is derived from 000 to 1005 post accounting when compared to Invoice Distributions.

Comments

  1. Goutham PonduraiJuly 15, 2024 at 12:11 AM

    The article is very clear and precise!!

    ReplyDelete

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