Subledger Accounting Functional Overview TCS Oracle Practice

27 February 2016 Agenda –Product Overview –What is Subledger Accounting –Market Drivers –Business Benefits –Key Concepts –11i vs. R12 Daily User Interaction –Demo 1: R12 Payables Daily User Interaction –New/Improved Accounting Features in R12 –Accounting Methods Builder - Close Up –Demo 2: Configuring the Accounting Methods Builder –Technical Deep Dive –Implementation Considerations –Upgrade Considerations –Global Considerations –Trouble Shooting

27 February 2016 What is Subledger Accounting –Rule-based accounting engine, toolset & repository supporting Oracle E-Business Suite modules –Allows multiple accounting representations for a single business event, resolving conflicts between corporate and local fiscal accounting requirements –Retains the most granular level of detail in the subledger accounting model, with different summarization options in the General Ledger, allowing full auditability and reconciliation –Introduces a common data model and UI across subledgers, replaces various disparate 11i setups, providing single source of truth for financial and management analysis

27 February 2016 Market Drivers –Varying legislative, industry, and geography accounting standards and requirements –Customizations to standard products not supported –Disparate setups and processing across products –Need for uniform data model for auditability, reconciliation, and consistent reporting and analysis –Increasing emphasis on operational excellence, compliance, and audit

27 February 2016 Business Benefits –Account for any transaction from any application and centralize accounting policies and processing –Enable compliance with multiple legislative, industry or geography requirements concurrently in a single instance through configurable rules –Streamline accounting processing –Provide GL to subledger transaction reconciliation platform by maintaining link between transaction and accounting data –Increase transparency and enable full auditability of the transaction and accounting data through the new data model

27 February 2016 Business Benefits Management Framework Information Delivery Regulatory Reporting Subledger Accounting Transaction Systems Oracle Payroll Oracle Projects Oracle Payables Oracle Receivables Centralized accounting Centralized accountingrules Predefined Validations Predefined Validations Date effective policies Date effective policies Sophisticated error handling Sophisticated error handling Full audit trail Full audit trail Bidirectional drilldowns Bidirectional drilldowns Centralized accounting Centralized accountingrules Predefined Validations Predefined Validations Date effective policies Date effective policies Sophisticated error handling Sophisticated error handling Full audit trail Full audit trail Bidirectional drilldowns Bidirectional drilldowns Detailed Journal Entries Detailed Journal Entries Configurable Reference Information Configurable Reference Information Consistent Balances Consistent Balances On-line inquiries On-line inquiries Detailed Journal Entries Detailed Journal Entries Configurable Reference Information Configurable Reference Information Consistent Balances Consistent Balances On-line inquiries On-line inquiries AnalyticsAnalytics Account for any transaction from any application and centralize accounting policies and processing

27 February 2016 Business Benefits US GAAP US COA US Calendar $ US GAAP US COA US Calendar £ Simultaneous Accounting for All Entities… US GAAP US COA US Calendar $ …while Ensuring Corporate Visibility & Local Compliance French IAS Plan Comptable French Calendar € Operations in US, UK, France Enable compliance with multiple legislative, industry or geography requirements concurrently in a single instance through configurable rules

27 February 2016 Business Benefits Streamline accounting processing

27 February 2016 Business Benefits Provide GL to subledger transaction reconciliation platform by maintaining link between transaction and accounting data Increase transparency and enable full auditability of the transaction and accounting data through the new data model

27 February 2016 Key Concepts: Event Classes Payables –Invoice –Debit Memo –Prepayment –Payments –Refunds Receivables –Invoice –Deposit –Receipt –Bill Receivable Assets –Additions –Adjustments –Capitalization –Depreciation etc.

27 February 2016 Key Concepts Event Model: definition of the subledger transaction types and lifecycle –Event Class: classifies transaction types for accounting rule purposes –Event Type: for each transaction type, defines possible actions with accounting significance Transaction object: data model containing transaction information to be used in accounting Source: any attribute of a transaction that can be used in defining the journal entry rules and when generating an entry Accounting Attribute: elements required to create a valid journal entry

27 February 2016 Key Concepts: Event Types AP Invoice Events –Validated –Adjusted –Cancelled AR Receipt Events –Created –Applied –Unapplied –Updated –Reversed FA Depreciation Events –Depreciation –Rollback depreciation –etc.

27 February 2016 Key Concepts: Transaction Object AP_INVOICES_ALLAP_INVOICE_LINES_ALL INVOICE_IDINVOICE_LINE_ID SUPPLIER_IDAMOUNT TAX_CODEGL_DATE LINE_TYPE CCID AP_INVOICE_EXTRACT_HEADER_V (header object) AP_INVOICE_EXTRACT_DETAILS_V (line object) SELECT ai.invoice_id, ai.supplier_id, ai.tax_code, al.invoice_line_id, al.amount, al,gl_date, al.line_type, al.ccid…… FROM ap_invoices_all ai, ap_invoice_lines_all al WHERE…

27 February 2016 Key Concepts: Sources

27 February 2016 Key Concepts: Accounting Attributes –GL Date –Entered Currency Code –Entered Amount –Accounted Amount –Conversion Rate Date –Conversion Rate Type –Conversion Rate –Distribution Type –Party Type –Party Identifier –Party Site Identifier –Statistical Amount –Exchange Gain Account –Exchange Loss Account –Applied to Attributes –Multiperiod Accounting Attributes –Accrual Reversal GL Date –Document Sequence Attributes

27 February 2016 Key Concepts: Accounting Attribute Mapping

27 February 2016 Key Concepts: Journal Entry and Accounting Attributes Header information: Accounting date Sequence Journal id Reference One header Detail information: Entered amount Accounted amount CCID Curency information Description Multiple lines

27 February i vs. R12 Daily User Interaction 11i END USER Enter/validate/ approve transaction END USER Create accounting and transfer to GL Import into GL END USER Post in GL Financial Options System Options Accounting Options

27 February i vs. R12 Daily User Interaction New in R12 Accounting event created Enter/validate/ approve transaction END USER Create accounting, transfer, and import into GL END USER Post in GL SLA Setup Transaction Data Accounting Event 11i

27 February 2016 R12 Subledger Accounting General Architecture Transactions Create Accounting GL Posting

27 February 2016 Demo: R12 Payables Daily User Interaction –Enter an invoice and validate it –Create accounting and post to GL –View SLA journal entry and t-account –Query entry in GL and drill back to SLA entry and to invoice

27 February 2016 Demonstration Scenario Summary Enhancements with R12: –Ability to create accounting real-time, directly from the transaction views, and post to GL seamlessly –Draft accounting for what-if analysis prior to final accounting –Bi-directional drilldown

27 February 2016 New/Improved Accounting Features in R12 Accounting Methods Builder –Configurable and auditable rules –Centralized setup –Date effective definitions –Versioning Streamlined Processing –Online accounting –Straight through processing to GL –Accounting per process category –Replacement of disabled accounts –Draft accounting Multiple Accounting Representations Bi-directional Inquiries and Drilldown

27 February 2016 New/Improved Accounting Features in R12 –Manual Subledger Journal Entries –Sophisticated Processing to Ensure Accuracy –Centralized and consistent currency conversion and gain/loss calculations –Business flows –Multiperiod Accounting –Automatic scheduling of accrual reversals –Accounting and transaction reversals –User-friendly Troubleshooting Capabilities –Detailed error reporting –Diagnostics tool –Advanced Compliance and Reporting Features –Control accounts –Journal entry sequencing –Period close validation

27 February 2016 New/Improved Accounting Features in R12 XML Reports –Journal Entries –Open Account Balances (a.k.a. Trial Balance) –Account Analysis –Third Party Balances

27 February 2016 Accounting Methods Builder Description Line Type Account Derivation Rule

27 February 2016 Journal Line Type Line Type

27 February 2016 Journal Line Type Identify the natural side –Debit –Credit –Gain/Loss Determine the accounting class Set under which conditions the rule will create a line Define the values needed for entry line generation, such as amount, currency, conversion rate information Control behavior for certain features i.e. multiperiod accounting, business flows, line merging and summarization

27 February 2016 Journal Line Type

27 February 2016 Account Derivation Rule

27 February 2016 Account Derivation Rule Determine if rule will be generic or specific for a given chart of accounts Identify what will be derived –Accounting flexfield –Segment/qualifier value –Value from a value set Define how the value will be derived –Constant –Source value –Mapping Set –Another account derivation rule Set under which conditions the rule will derive a value

27 February 2016 Account Derivation Rule

27 February 2016 Journal Entry Description Description

27 February 2016 Journal Entry Description Define how the description on a journal entry or on each of its lines will be built: –Constant –Source Value Set under which conditions the rule will be used

27 February 2016 Journal Entry Description

27 February 2016 Journal Lines Definition

27 February 2016 Journal Lines Definition Identify the journal line types, descriptions, and account derivation rules that will be used to create a journal entry for a particular event type Generic or specific for a chart of accounts Define processing options for advanced features such as Multiperiod Accounting and Business Flows

27 February 2016 Journal Lines Definition

27 February 2016 Accounting Methods Builder Vision Operations (USA) LedgerStandard/GAAP Accrual Subledger Accounting MethodPayables Accrual Application Accounting Definition Journal Line Types Account Derivation Rules Journal Entry Descriptions Invoice Journal Line Definition Transaction Objects Sources

27 February 2016 Demo: Configuring the Accounting Methods Builder –Define –Journal Line Type –Account Derivation Rule –Journal Entry Description –Construct a rule for Invoice Validation event –Create accounting and post to GL –View SLA journal entry and compare against Demo 1 entry

27 February 2016 Application Accounting Definitions … the data is retrieved from the transaction objects… … to create the journal entries. The Create Accounting program processes the events…

27 February 2016 Compilation Working environment (AMB) Archive environment Installation process Create Accounting Compilation

27 February 2016 Accounting Program

27 February 2016 Implementation Considerations –No need to fix anything if seeded definitions already working: –Standard Accrual –Standard Cash –Accrual with Encumbrance Accounting –Cash with Encumbrance Accounting –US Federal Accounting –Accounting customizations to be re-defined in SLA –Custom accounting reports need to be re-visited –Account generator type of account derivation mechanisms continue to live in R12 –Who should have access to SLA setup? –Data access security (ledger access) can be enabled in subledgers for accounting

27 February 2016 Implementation Considerations Key Profile Options –SLA: Enable Subledger Transaction Security in GL –SLA: Enable Data Access Set Security in Subledger –SLA: Additional Data Access Set –SLA: Allow Reports Journal Source Override

27 February 2016 Integrations –Payables –Receivables –Projects –Assets –Costing –OPM –Public Sector/Federal –Payroll –Property Manager –Loans –Lease Management –Cash Management –Globalizations –Intercompany

27 February 2016 Upgrade Considerations –Full historic data upgrade –Property Manager –Loans –Payables –Global Accounting Engine –Current fiscal year data upgrade –Receivables –Assets –Projects –Costing (including Purchasing and Inventory) –No upgrade –OPM –Public Sector/Federal –Optional pre-upgrade step –Upgrade by request

27 February 2016 Global Considerations Latin America Globalizations (Brazil): accounting requirements supported through additional rules in core product Global Accounting Engine: obsolete; functionality supported through rules in core products Global Accounting Reports: AX, JE, JG reports obsolete and replaced by following, based on SLA data extracts with product templates –Global Third Party Balances Summary Report –Global Third Party Detail and Balances Report –Global Third Party Account Balance Report –Global Journals and Third Party Report –Global Daily Journals Report –Global Subledger Detail Journal Report –Global Journal Ledger Report –Global Account Analysis Report

27 February 2016 Troubleshooting: Diagnostics Accounting Program Diagnostic Extract Diagnostic tables Detailed error reporting by accounting program, also providing guides to fix Diagnostics tool: analysis of transaction data used in accounting