R12 : Sequence in GL made Legal Compliance Easy

In R12, to cater the need for legal compliance some other counties like Asia, Latin America, and Europe ,two Journal Sequencing options have been provided. These are accounting and reporting sequence, in reality there is bit difference in these two terms.

Accounting Sequence
This is sequence used in GL journals when posted in GL ,Sequence subledger journals when completed in Subledger Accounting.

What we have seen in Release 11i, we had document sequencing that sequentially numbered documents upon creation. Accounting Sequencing will automatically assign a sequence number to GL journal entries that are posted in GL. There's also an option to sequence subledger journals when they are completed in SLA Accounting.

Reporting Sequence
This sequence is used in GL Journals when you close a GL Period.Sequence sub ledger Journals when you complete the accounting in SLA .This is one of replacement of Accounting Engine (AX) legal sequencing and Italian Journal Book commonly known Libro Giornale.

These two Sequences can be assign mutually exclusive sequences based on:

• Ledgers or Reporting Currencies
• Journal sources
• Journal categories
• Balance types

The benefit of using these sequnces are summarized :

a) Legal Compliance made easy: The one biggest advantage of it will now addresses business requirements in many countries, such as Europe & Asia. Therefore its allows fiscal authorities to verify the completeness of a company's accounting records.

b)Flexibility get enhanced:With this it provides greater flexibility in choosing different journal sequencing options, as mention above, these can be based out of these different criteria, such as by ledgers, reporting currencies, journal sources, journal categories, and balance types.

c)No Localization Required: Somehow related to (a) discussed above, earlier it the local reporting need was catered by localization , which now is part of GL activity.

Where to Define the the sequence.

You can define the accounting sequence in the context of a ledger in Accounting Setup Manager.There is another way ie Accounting Sequencing menu function which we can create and manage our sequencing rules.

For Accounting Sequences which is internally a posting event, the GL journals are sequenced when they are posted in GL and Subledger journals are sequenced when completed in SLA. For Reporting Sequences (period close event), GL journals and subledger journals are sequenced when a GL period is closed.You can see both can be appear in the Journal screen as below.

R12-AR-New-Features

Release 12 : What’s New in Oracle Receivables Receivables.

Revenue Recognition
In R12 revenue recognition is based on Rules and Events, and they are:

• Time-Based Revenue Recognition
  • Ratably Over Time
  • Upon Expiration of Contingencies
• Event-Based Revenue Recognition
  • Payment
  • Customer Acceptance
• Rule-Based Revenue Recognition
  • Payment Term Thresholds
  • Refund Policy Thresholds
  • Customer Credit worthiness

Lets take a quick look on some of the new changes:

• Daily Revenue Recognition
  • Revenue distribution over full as well as partial accounting periods.
  • Fulfills stringent accounting standards
  • Accuracy to the number of days in the accounting period.
• Enhanced Revenue Contingencies :
  • Fully Supports US GAAP and IAS
  • User definable contingencies
  • User definable defaulting rules for contingencies assignment
  • Supports parent-child (e.g. Product and Service) relationship
  • Integration with Order Management and Service Contracts
  • User Interface as well as Programming Interface (API) support
  • Access control through seeded Revenue Managers Responsibility
• Deferred Revenue Management

Event-Based Revenue Management in Oracle Receivables allows users to define revenue deferral reasons or contingencies and corresponding revenue recognition events. In Release 12, revenue contingencies for customer acceptance that are applied to goods sold in Order Management are now applied to services sold to cover those goods. Revenue is deferred for service ordered in both Order Management and Service Contracts. Acceptance contingencies associated with an item instance are automatically applied to service revenue associated with the item instance when it is covered in a Service Contract as a Covered Product. Revenue for services on other covered levels, subscriptions and usage is not impacted by contingencies applied to goods associated with those services.

Global Architecture

As we know, with in global architecture , these new things has been introduced.

• Sub ledger Accounting - Journal Creation takes place prior to GL.
• Bank Model - This unified model enables to park customer Bank as well as Internal bank information into there new model, so that working capital cash flow should be enhanced.
• EBusiness Tax - Oracle E-Business Tax is a new product that uniformly delivers tax services to all Oracle EBusiness Suite business flows. In Release 12, Receivables is enhanced to support
  integration with the E-Business Tax product.
• Intercompany - This is enhanced by automatic balancing,

MOAC Control

This enhance you by enabling and performing tasks across operating Units (OUs), where you have access to without changing responsibilities.As we know , MOAC enables companies that have implemented a Shared Services operating model to efficiently process business transactions by allowing them to access, process, and report on data for an unlimited number of operating units within a single applications responsibility.
In nutshell, once MOAC is enabled, then you can:

• Perform Setups for any OU
• Enter invoices across OUs
• Receive Cash for any OU
• Manage Customer Credit across all OU
• Run reports across OUs

Because of this greatly enhanced Role based security options, the ability to access multiple operating units with a single responsibility can simplify SOX compliance monitoring from finance controller side.

Line Level Cash Applications

The Line Level Cash Applications solution allows the application of receipts to specific transaction items such as individual lines, groups of lines, or tax or freight buckets. From the receipt workbench,you are able choose whether to allocate cash to the entire transaction or to apply amounts against specific items according to the customer remittance.

• Apply to specific lines or groups of lines
• Indicate when tax, freight or finance charges only are paid
• Make changes as needed
• Easily view activity against receipts
• Know what historical activity affects your receipt
• See what prior activity affects a new application

Enhanced Customer Screen

We have seen 11i Customer standard forms makes easier by simple navigation. This times there is clearer separation of the party and account layers, which makes a consist ant look and feel.More over full backward compatibility with 11i UI Bill Presentment Architecture has been provided.

The AR Create Customer page in R12 has eliminated the navigation to separate windows. Now, users can specify the following on a single page:

• Customer Information
• Account Details
• Address
• Account Site Details
• Business Purpose

Refunds

Oracle Receivables is fully integrated with Oracle Payables to deliver a seamless, automated process to generate check and bank account transfer refunds for eligible receipts and credit memos.

Late Charges

As we know oracle receivables delivers enhanced Late Charges functionality enabling the creation of standard late charge policies that can be assigned to customer accounts or account sites.Flexible policy configurations include multiple interest calculation formulas, transaction and account balance thresholds, and currency-level rate setups. With new changes these are the enhanced functionality:

• Expanded assessment and calculation capabilities
• Tiered charge schedules
• Penalty charge calculation
• Integration with Balance Forward Billing
• Centralized setup and maintenance of late charge policies
• Calculation performed independent of Dunning and Statement processing

AR-AP Netting

The matching of open receivables and open payables is automated.

Balance Forward Billing

This makes easy transaction processing.
Balance Forward Billing is an enhanced version of the existing consolidated billing functionality for industries where customers are billed for all their account activity on a regular, cyclical basis.
Balance Forward Billing provides the ability to setup cycle-based billing at the account or account site levels, enable event based billing, and leverage user configurable billing formats provided by Oracle Bill Presentment Architecture.
A typical case can be best understood as

• Payment Term defaults
• from Site profile if Bill Level = Site
• from Account profile if Bill Level = Account
• Billing Date derived from transaction date and billing cycle
• Due Date derived from billing date and payment term
• Optionally select non-Balance Forward term if Override Terms = Yes

R12 - AP - New Features

 

Welcome to R12 Account Payable

As we learnt during Release 12, the E-Business Suite has couple of new products like Subledger Accounting, E-Business Tax thus significant changes have been observed in Account Payable data module as some of functionality is shared by some other products. Thus it is important to understand what is new. I would like to briefly outline the details of some of new changes and underlying impact on the objects. More details can be found in R12 release documents published by Oracle a month ago.
Let’s have a dissection view of R12 payable, with some of its core objects
Supplier

We have seen in 11i

• Suppliers defined in AP.
• Supplier contacts replicated for each supplier site.

Where as in R12

• Supplier becomes as TCA Party.
• Suppliers Sites as TCA Party Site for each distinct address.
• Contacts for each supplier/address , it means Single supplier address and contact can be leveraged by multiple sites, for each OU
  • A single change to an address can be seen instantly by all OUs
  • No longer need to manually 'push' updates across OUs.This can be best understood by the figure below.

Then the question is what will happen if any one can come from existing financial products. The Impact from upgrade can summarize as:
1. When we upgrade supplier tables replaced with backward compatible views.
2. One party site for each distinct supplier site address

Country and address line1 are required, this is because creation of suppliers in Party in TCA data model would requires Country and address information, but it also understood if there is no country or address line 1 specified for a supplier site in cases when upgrades takes place, Payables derives the country based on the most frequently used operating unit of the Supplier's historical transactions.

3. Employee as suppliers: address NOT migrated to party site in TCA remains in Oracle HR for data security reasons.

As we know in 11i employees are part of internal supplier's record in order for Oracle Payables to create payments for their expense reports. Employees defined in Oracle Human Resources and associated with an Oracle Payables supplier record have existing party information. During the upgrade, Oracle Payables updates the existing party information to have a party usage of supplier but it does not migrate the employee address to the party site in TCA, they remain in Oracle Human Resources for data security reasons.

4. Utilize TCA Party relationships for franchise or subsidiary and its parent company.

Invoice

Till 11i version, we have seen invoices:

• Had only distributions line.
• Allocation of freight and special charges are captured at the distribution level only
• Tax and payment and Project accounting Payment was captured through global Descriptive Flexfields.

But in R12,
1. Invoice Lines as a new additional line accommodated in Invoice data model.

Because of introduction of invoice line there is significant improvement of data flow with n other oracle modules like

• Fixed Asset - Asset Tracking
• Business Tax - Tax line
• Payment - Payment
• SubLedger Accounting - Accounting

2. Allocate freight and special charges are captured to the lines on the invoice
3. Invoice distributions created at the maximum level of detail similar to 11i.
4. Core functionality
The impact with Upgrade can be summarized as:

1. One invoice line for every distribution in 11i
2. Sub Ledger Accounting requires that Payables transform the invoice distributions to be stored at the maximum level of detail
3. Global Descriptive Flexfields migrated to named columns.

          That's means functional testing is more required while upgrade takes place.

Banks and Bank Details

Now a days corporate treasury role has been greatly enhanced thus picking up a global bank as partner for all banking need is demand of time in global working model. The recent couple of years have seen drastic increase in acquisition and merger of company thus global working as well as global instance get popularity in ERP areana, and this is one of reason of the reason bank data model has been significant changes from 11 to 11i and 11i to R12.
Internal Bank AccountsIn 11i we have seen internal Banks defined in AP and that is shared by AP/AR/CE, Payroll and Treasury and they are bank accounts often replicated in multiple OUs
Where as in R12,

• Bank and Branch become part of TCA Parties.
• Internal Bank Account in Cash Management which is owned by a Legal Entity. Here the Operating units have granted usage rights.

Suppliers Bank Accounts
In 11i

• Banks/Branches defined in AP
• Bank accounts often replicated in multiple OUs Before

R12

• Suppliers, Banks and Branches are defined as Parties in TCA
• Supplier (party's) payment information and all payment instruments (Bank Accounts, Credit Cards) moved into Oracle Payments.

The typical data model for bank can be summarized as:

Impact of Upgrade

1. With Upgrade banks and branches migrated to TCA parties
2. Banks merged if the following attributes are all the same:

• a. Bank Number
  b. Institution type
  c. Country
  d. Bank admin email
  e. Bank name alt
  f. Tax payer ID
  g. Tax reference number
  h. Description, Effective dates

3. Bank accounts, bank account uses are migrated into cash management.
4. Transactions are stamped with the bank account uses identifiers as part of the upgrade

 Integration with Oracle E-Business Tax

In 11i

• Oracle standard functionality was based out of User which determines tax by assigning Tax Codes at line level of invoice and Tax rules was controlled at underline code.
• There was global descriptive flex fields were captured for country-specific tax attributes.
• More importanta most of the setup performed at OU level.

In R12

• A new module eBusinessTax determines tax based on facts about each transaction, this is reason why Oracle has introduced additional line information at invoice level.
• The module "ebusiness Tax" set and configure Tax rules which can be viewed
• Tax attributes collected in fields on key entities
• Configure tax rules once per regime and share with your legal entities

Impact of Upgrade
1. Payables Tax setup, Tax Code defaulting rules defined per OU are migrated to eBusiness Tax.
2. OUs migrated to tax content owner in R12
3. Tax information in tax codes are transformed to Regime-Rate flow.
4. E-Business Tax takes information from the AP invoice lines and creates summary and detail tax lines in the E-Business Tax repository.

Multi Org Access Control

MOAC is new enhancement to the Multiple Organizations feature of Oracle Applications.
This feature enables user to access data from one or many Operating Units while within a set given responsibility. Due to this change, all processing and some Reporting in Oracle Payables is available across Operating Units from a single Applications responsibility. Hence you can isolate your transaction data by Operating unit for security and local level compliance while still enabling shared Service centre processing.Data security is maintained using the Multiple Organizations Security Profile, defined in Oracle HRMS, which specifies a list of operating units and determines the data access privileges for a user.
Impact of UpgradeR12 Upgrade does not automatically create security profiles, thus is important if any one want to use Multiple Organizations Access Control, the first things is to define security profiles, then link them to respective responsibilities or users.

R12 - GL - New Features

R12 – Oracle General Ledger – New and enhanced feature

Lot many emails I was getting since in past few months , asking to share some more information for R12 of General Ledger features, so thought to share in a post.
Here are some of the new feature of General Ledger in R12.
Accounting Setup Manager
The ledger is a basic concept in Release 12. The ledger replaces the 11i concept of a set of books. It represents an accounting representation for one or more legal entities or for a business need such as consolidation or management reporting. Companies can now clearly and efficiently model its legal entities and their accounting representations in Release 12. This seems to be a major area in getting success of the shared service center and single instance initiatives where many or all legal entities of an enterprise are accounted for in a single instance, and data, setup, and processing must be effectively secured but also possibly shared.
Now, legal Entities can be mapped to entire Ledgers or if you account for more than one legal entity within a ledger, you can map a legal entity to balancing segments within a ledger.
While a set of books is defined by 3 C’s,

1. chart of accounts
2. functional currency
3. accounting calendar,

The addition in this list the ledger is defined by a 4th C: the accounting method,
This 4th C allows you to assign and manage a specific accounting method for each ledger. Therefore, when a legal entity is subject to multiple reporting requirements, separate ledgers can be used to record the accounting information.
Accounting Setup Manager is a new feature that allows you to set up your common financial setup components from a central location.

What is Accounting Setup Manager
Accounting Setup Manager is a new feature that streamlines the setup and implementation of Oracle Financial Applications. The Accounting Setup Manager will facilitate the setup required for simultaneous accounting for multiple reporting requirements.
With the Accounting Setup Manager, you can perform and maintain the following common setup components from a central location:

• Legal Entities
• Ledgers, primary and secondary
• Operating Units, which are assigned to primary ledgers
• Reporting Currencies, which is an enhanced feature
• Subledger Accounting Options. This is where you define the accounting methods for each legal entity subledger transaction and associate them to the ledger where the accounting will be stored.
• Intercompany Accounts and Balancing Rules
• Accounting and Reporting Sequencing
• Both Intercompany and Sequencing

Will discuss some more granular details in some other post.

Subledger Accounting (SLA)
As discussed in couple of earlier post GL is integrated with SLA to enable a unified process to account for subledger transactions and post data to GL, and to provide a consistent view when drilling down from GL to subledger transactions. You can read here.

Enhanced Foreign Currency Processing by Reporting Made easy
GL has added new features and enhanced existing features to support foreign currency processing , they are mainly as:

• In R12, MRC feature is enhanced with a feature call Reporting Currencies. That mean it will now support multiple currency representations of data from any source, including external systems, Oracle or non-Oracle subledgers, and Oracle General Ledger journals and balances.
• The second one is in reporting to view balances view balances that were entered in your ledger currency separate from those balances that were entered and converted to the ledger currency.The change in R12 is that balances entered in the ledger currency are maintained separately from balances converted to the ledger currency for use in Reporting and Analysis.

Here’s an example. Assume we have a ledger and the ledger currency is USD.
I enter and post two journals; one in 1,000 US Dollars, and another in 500 British Pounds that gets converted to 1200 US Dollars.
In Release 11i, I can review the 500 GBP and the 1200 USD that results from converting the 500 GBP, and the total 2200 USD which is the USD balance in the Cash Account. The $2200 is the sum of the $1000 entered in USD and the $1200 converted from the 500 British Pounds. However, I view that a 1000 USD were entered directly in USD.
In Release 12, I can view the 1000 USD by performing an account inquiry on the Cash account for balances entered only in the ledger currency. The amounts entered in foreign currencies that were converted to the ledger currency will not be included in the balance. Of course, if I want to retrieve all balances in USD, both the entered as well and the converted, I can still do that in Release 12.


Creating foreign currency recurring journals
In Release 11i, you could define recurring journals using the functional currency or STAT currency.
Now in Release 12, you can create recurring journals using foreign currencies. This is particularly useful if you need to create foreign currency journals that are recurring in nature. For example, assume a subsidiary that uses a different currency from its parent borrows money from the parent. The subsidiary can now generate a recurring entry to record monthly interest payable to the parent company in the parent’s currency.
Data Access to Multiple Legal Entities and Ledgers
You no longer have to constantly switch responsibilities in order to access the data in a different ledger. You can access multiple ledgers from a single responsibility as long as all ledgers share the same chart of accounts and calendar.
Simultaneous Opening and Closing of Periods for Multiple Ledgers
You no longer have to open and close periods for each ledger separately. You can now open and close periods across multiple ledgers simultaneously by submitting Open and Close Periods programs from the Submit Request form.
Simultaneous Currency Translation of Multiple Ledgers
You can run the Translation program for multiple ledgers simultaneously, if you are managing multiple ledgers.
Financial Reporting for Multiple Ledgers
Now with this feature you can run Financial Statement Generator (FSG) reports for multiple ledgers simultaneously. This is useful if you manage multiple ledgers and want to run a balance sheet or income statement report for all of your ledgers at the same time.
Cross-Ledger and Foreign Currency Allocations
You are able to allocate financial data from one or more ledgers to a different target ledger. This enables you to perform cross-ledger allocations, which is useful for purposes such as allocating corporate or regional expenses to local subsidiaries when each entity has its own ledger
Streamlined Automatic Posting
You can now share AutoPost Criteria sets across multiple ledgers that share the same chart of accounts and calendar and use the AutoPost Criteria sets to post journals across multiple ledgers simultaneously.
Streamlined AutoReversal Criteria Setup Integrated Web-based
AutoReversal Criteria Sets can also be shared across ledgers to reverse journals across multiple ledgers. This is enhanced by integrated Web-based Spreadsheet Interface.

Journal Copy
Now we can now copy entire journal batches. You can copy journal batches with any status. The system will create a new journal batch containing the same journal entries.You may also change the batch name, period, and/or effective date while copying the journal batch. After copying the journal batch, you may modify the unposted journals in the same manner as any manually created journals.
Streamlined Consolidation Mappings
You are able to define Chart of Accounts Mappings (formerly known as Consolidation Mappings) between two charts of accounts. Therefore, if you have multiple Consolidation Definitions for parent and subsidiary ledgers that share the same chart of accounts pair, and their mapping rules are the same, you only have to define a single Chart of Accounts Mapping.
The enhancement in R12 allows you to define mappings between charts of accounts instead of between sets of books, so that they can be shared across multiple Consolidation Definitions.
Therefore, if you have multiple Consolidation Definitions for parent and subsidiary ledgers that share the same chart of accounts pair, and their mapping rules are the same, you only have to define a single Chart of Accounts Mapping.
You can also secure access to chart of accounts mappings using definition access set security. This allows you to secure which users can view, modify, and/or use chart of account mappings in consolidation definitions.
Replacement for Disabled Accounts
Normally when an account is disabled, you can prevent transactions that include the account from erroring during journal import by defining a replacement account for the disabled account. Journal import replaces the disabled account with the replacement account and continue the journal import process if the replacement account is valid. This improves processing efficiency by preventing the journal import process from erroring and enabling the successful creation of the journal with minimal user intervention when an account has been disabled.
Data Access Security for Legal Entities and Ledgers
In R12, since you can access multiple legal entities and ledgers when you log into Oracle General Ledger using a single responsibility, Oracle General Ledger provides you with flexible ways to secure your data by legal entity, ledger, or even balancing segment values or management segment values. You are able to control whether a user can only view data, or whether they can also enter and modify data for a legal entity, ledger, balancing segment value or management segment value.
Management Reporting and Security
This can be best understood as:You can designate any segment (except the natural account segment) of your chart of accounts to be your management segment and use Oracle GL security model to secure the management segment for reporting and entry of management adjustments.
Prevent Reversal of Journals with Frozen Sources

You can no longer reverse journals from frozen sources defined in the journal sources form.
If the journal is created from a frozen source, the journal cannot be modified even if the source is subsequently unfrozen in the future.
This provides streamlined data reconciliation with subsystems. Not being able to reverse journals that originated in subledgers will ensure that the account balances will always tie out with General Ledger. If you need to reverse a subledger journal, then you should do so in Subledger Accounting or the subledger application.

Prevent Reversal of Unposted Journals
You also can no longer reverse unposted journals. This ensures data integrity and better auditability. In the past when we allowed you to reverse unposted journals, there was a risk that the original journal could be deleted so you could end up reversing something that didn't exist. Now, all reversals can be tied back to the original posted journal.
Integrated Web-based Spreadsheet Interface
Through the integration with Web ADI, users can now leverage spreadsheet functionality in Oracle General Ledger via a web-based interface. The spreadsheet interface can be conveniently launched from a GL responsibility.
Using the Journal Wizard, we can leverage spreadsheet functionality to create actual, budget, or encumbrance journals. You can take advantage of spreadsheet data entry shortcuts such as copying and pasting or dragging and dropping ranges of cells, or even using formulas to calculate journal line amounts. You can then upload your journals to Oracle General Ledger. Before uploading, you can save and distribute your journal worksheets for approval.
We can also import data from text files into spreadsheets, where it can be further modified before uploading to Oracle. This functionality is useful when migrating data from legacy systems, or from any source that can produce delimited files.
Using the Budget Wizard, you can download budget amounts to a spreadsheet, modify the amounts, and then upload them back. You can also choose to download the actual amounts to compare it with the budget amount. Budget Wizard also allows you to plot graphs and do a graphical comparison on the amounts. Budget Wizard also provides budget notes. You can add descriptions to accounts and amounts in your budget and explain your budget within the budget worksheet, avoiding the clutter of external documentation.
Control Accounts
You are able to control data entry to an account by ensuring it only contains data from a specified journal source and to prevent users from entering data for the account either in other journal sources or manually within general ledger.
Security for Definitions
You can secure your setup and definitions by granting specific privileges to users to view, modify, and/or execute a definition. This enables you to control which of your users can view a definition, but not modify or execute it, or execute a definition without modifying it, or vice versa.
Following is a list of definitions that have this security available for:

1. MassAllocation and MassBudget Formulas
2. FSG Reports and Components
3. Accounting Calendars
4. Transaction Calendars
5. AutoPost Criteria Sets
6. AuoReversal Criteria Sets
7. Budget Organizations
8. Chart of Accounts Mappings
9. Consolidation Definitions
10. Consolidation Sets
11. Elimination Sets
12. Ledger Sets
13. Recurring Journals and Budget Formulas
14. Rate Types
15. Revaluations

Sequence for Reporting

Maintaining two sequnces have been introduced, accounting and reporting sequencing.
Read my earlier post for more details:

Journal Line Reconciliation

Journal Line Reconciliation enables you to reconcile journal lines that should net to zero, such as suspense accounts, or payroll and tax payable accounts for countries, such as Norway, Germany, or France.
In R12, we’ve made many improvements to intercompany accounting. R11i’s Global Intercompany System (GIS) has been replaced with an exciting new product called Advanced Global Intercompany System (AGIS). We also extended intercompany balancing support to include encumbrance journals.