R12.x Oracle Financial Applications Overview Student Guide Volume - 1

Transcription

1 R12.x Oracle Financial Applications Overview Student Guide Volume - 1 D60216GC10 Edition 1.0 April 2010 D64753

2 Copyright 2007, 2010, Oracle. All rights reserved. Disclaimer This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy and print this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way. Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display, perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorization of Oracle. The information contained in this document is subject to change without notice. If you find any problems in the document, please report them in writing to: Oracle University, 500 Oracle Parkway, Redwood Shores, California USA. This document is not warranted to be error-free. Restricted Rights Notice If this documentation is delivered to the United States Government or anyone using the documentation on behalf of the United States Government, the following notice is applicable: U.S. GOVERNMENT RIGHTS The U.S. Government s rights to use, modify, reproduce, release, perform, display, or disclose these training materials are restricted by the terms of the applicable Oracle license agreement and/or the applicable U.S. Government contract. Trademark Notice Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. Author Shivranjini Krishnamurthy Technical Contributors and Reviewers Ivy Farren, Ruth Kukla This book was published using: Oracle Tutor

3 Table of Contents ebusiness Suite Overview ebusiness Suite Overview Objectives Agenda Key Business Flows Forecast to Plan Procure to Pay Demand to Build Campaign to Order Click to Order Order to Cash Contract to Renewal Request to Resolution Project to Profit People to Paycheck Quiz Summary Accounting to Financial Reporting Accounting to Financial Reporting Objectives Agenda Purpose of General Ledger General Ledger Capabilities Functions and Features General Ledger Accounting Cycle Journal Entry Functions Sharing Ledgers Across Oracle Applications Accounting Entries Interface Information Subledger Integration Reporting and Analysis Interface Data Transformer (IDT) IDT Responsibility and Data Menus IDT Transformation Rule Sets Open Integration with External Processing Open Integration with External Processing: GL Business Events Open Integration with External Processing Benefits Advanced Global Intercompany System (AGIS) AGIS Features AGIS Journals Balancing Process AGIS Implementation Considerations Agenda Elements Chart of Accounts Structure Chart of Accounts Business Requirements Creating Vertical Structures Defining Hierarchies Account Hierarchies Building the Chart of Accounts Structure Creating Accounting Flexfields Defining and Assigning Value Sets Defining the Accounting Flexfield Structure R12.x Oracle Financial Applications Overview Table of Contents i

4 Management Reporting and Security Management Reporting and Security Example Defining Segment Values Secondary Tracking Segment Secondary Tracking Segment Benefits Selecting Account Combinations Using Dynamic Insertion Defining Cross-Validation Rules Defining Flexfield Security Rules Accounting Calendar Defining Period Types Accounting Period Statuses Unlimited Currencies Selecting Currencies Creating a Ledger Accounting Setup Manager Ledger Options Linking a Ledger to a Responsibility Sharing a Ledger Across Oracle Applications Account Hierarchy Manager Security Definitions Replacement for Disabled Accounts Control Accounts Account Analysis & Drilldown Accounting and Reporting Sequencing Accounting and Reporting Sequencing Benefits Agenda Subledger Accounting (SLA) Overview Subledger Accounting Subledger Accounting Definition Subledger Accounting Engine Agenda Simultaneous Opening and Closing of Periods Simultaneous Year-End Closing Journals Simultaneous Currency Translation Financial Reporting Across Ledgers Agenda Performing Journal Entry Functions Types of Journal Entries Journal Creation Methods Automatic Journal Copy Integrated Web-based Spreadsheet Interface Integrated Web-based Spreadsheet Interface Benefits Journal Components Grouping Journals into Batches Manual Journal Entries Performing Additional Journal Actions Posting Journals Posting to a Prior Period Automatic Posting Performing Online Inquiries for Accounts and Journal Entries Reversing Journal Entries Creating Reversing Journals Reversing Journals Automatically Journal Reversal Criteria Journal Reversal Benefits Recurring Journals R12.x Oracle Financial Applications Overview Table of Contents ii

5 Recurring Journal Types Formula Recurring Journals MassAllocations MassAllocations versus Recurring Journals Journal Line Reconciliation Agenda Budgeting Budgets Anatomy of a Budget Available Methods Multiple Versions Define Budget Organizations Entry Methods Creating Journals Loading with Web ADI Budget Wizard: Overview Agenda Foreign Currency Concepts Conversion Conversion Example Revaluation Revaluation Example Translation Translation Rates Currency Rates Manager Description Currency Rates Manager Features Currency Rates Manager Benefits Cross-Ledger and Foreign Currency Allocations Cross-Ledger and Foreign Currency Allocations Benefits Entered Currency Reporting and Analysis Entered Currency Reporting and Analysis Benefits Agenda Consolidations Consolidating Data in Multiple Instances Consolidation Workbench Consolidation Mapping Streamlined Consolidation Mappings Consolidation Mappings Consolidation Mappings Benefits Mapping Rules Using Account Mapping Rules Using Segment Mapping Rules Using Segment Rollup Rules Hierarchy Viewer Preparing Subsidiary Data Posting Consolidation Journal Entries Creating Eliminating Entries Agenda Reporting Options Financial Statement Generator Defining Row Sets Defining Column Sets Defining Ad Hoc Reports E-Business Intelligence Oracle Business Intelligence XBRL Financial Reporting Features XBRL Financial Reporting Benefits R12.x Oracle Financial Applications Overview Table of Contents iii

6 GL Standard Reports Integration With BI Publisher Simultaneous Accounting for Multiple Reporting Requirements Quiz Summary Procure to Pay Flow Overview Procure to Pay Flow Overview Objectives Agenda Procure to Pay Flow Purchasing Integration Procure to Pay Lifecycle Oracle Procure to Pay Process Introduction to Legal Entities RFQs and Quotations Requisitions Suppliers Purchase Orders Receiving Invoicing Payment Quiz Summary Suppliers Overview Suppliers Overview Objectives Agenda Overview How Oracle Products Use Supplier Information Flow of Default Values Agenda Suppliers in the Trading Community Architecture (TCA) TCA Security by Functional Areas Agenda Suppliers Page Supplier Record Structure Enter/Update Suppliers Supplier Level Versus Site Level Entry Supplier Site Settings Avoiding Duplicate Suppliers Agenda Key Reports Agenda Merge Suppliers Data Example - Supplier Merge Agenda Responsibility for Supplier Entry/Maintenance Supplier Naming Conventions Supplier Naming Convention Examples Supplier Conversion Methodology Fax or Setup Agenda Oracle Purchasing and the Enterprise Structure Oracle Inventory Organizations What is an Item? Oracle Applications That Use Items Quiz R12.x Oracle Financial Applications Overview Table of Contents iv

7 Summary Purchasing Overview Purchasing Overview Objectives Agenda Item Attributes Item Master Organization and Child Organizations Overview of Creating an Item Describing Item Attributes - Purchasing Defining Item Relationships - Purchasing Agenda Central Procurement Document Access Levels Security, Approval Limits, and Approval Routing Options Agenda Purchase Requisitions Information Flow Agenda Professional Buyer's Work Center Benefits User Interface Agenda Request for Quotation Agenda Sourcing Rules Create a Sourcing Rule Create a Sourcing Rule Assignment Levels of Sourcing Rule Assignments Sourcing Rules with an ASL Source Document Agenda Purchase Orders Process Origin Information Flow Management Interfaces Purchasing e-commerce Capabilities Purchasing XML Capabilities Creating Purchase Orders Maintaining Purchase Orders Agenda Printing and Communication Document Attachments Document Attachment Types Setup Define Purchasing Options Agenda Receiving Process Receiving in Oracle Purchasing Open Interface Agenda Purchasing Accounting Considerations Purchasing Period-End Accrual Cycle Accounting Implementation Considerations Quiz Summary Payables Overview Payables Overview Objectives R12.x Oracle Financial Applications Overview Table of Contents v

8 Agenda Payables Process Invoice Structure Types of Invoices Invoice Lines Line Types Distribution Types Matching to a Purchase Order Match Approval Level Options Purchase Order Shipment Match Receipt Match Matching to Distributions for Assets Invoices: Matching to Distributions for Expenses Invoices: Matching to Distributions for Inventory Invoice Approval Workflow Resubmission Gapless Invoice Numbering for Self-Billing Invoices Holds and Releases Invoice Validation Levels of Invoice Validation Invoice Validation Concurrent Processing Invoice Processing for Contract Financing, Retainage, and Progress Terms Agenda Setting Up Payables for Expense Reports Expense Reporting Process Expense Report Import Program Processing and iexpenses Agenda Invoice Payments Payment Manager Terminology Using the Invoice Workbench Time Zone Support Invoice Payment Methods Manual Payment Creating Quick Payments Invoice Payments: Formatting Payments Agenda Key Processes Period Close Mass Additions Accounting - Periodic Accrual [Period End] Subledger Accounting and General Ledger Accounting Process Error Validation and Reporting Agenda Daily Business Intelligence Agenda Oracle isupplier Portal Invoice Matching Controls Attachments PO Number Display Retroactive Pricing of Purchase Orders Support Attachments Agenda Payables Integration with E-Business Tax Multiple Organization Access Control Quiz Summary Assets Overview Assets Overview R12.x Oracle Financial Applications Overview Table of Contents vi

9 Objectives Agenda Overview Assets Integration Asset Life Cycle Agenda Positioning Regions Calendar Region Accounting Rules Region Natural Accounts Region Subledger Accounting Architecture Asset Categories Positioning Asset Categories Regions Agenda Adding Assets Manually Asset Additions Required Data QuickAdditions Detail Asset Additions Agenda Additions Integrator Mass Asset Additions Process Mass Additions Process Using the Mass Additions Interface Table Step 1 - Mass Additions Create Step 2 - Prepare Mass Additions Step 3 - Post Mass Additions Step 4 - Delete Mass Additions Accounting for Mass Additions Periodic Accrual [Period End] Agenda Asset Adjustments Single Asset Reclassification Adjusting Units Adjusting Financial Information Single Asset Transfers Mass Transactions Mass Reclassification Using Mass Changes Mass Asset Transfers Performing Physical Inventory Entering Physical Inventory Physical Inventory Comparison Physical Inventory Reconciliation Integrating Web ADI with Physical Inventory Agenda Enable/Disable Group Assets Allow CIP Member Assets in Group Assets Agenda Depreciation Elements Basic Depreciation Calculation Depreciation Methods Run Depreciation Process Depreciation Program Processes Automatic Rollback of Depreciation Agenda Tracking Asset Retirements Retiring an Asset R12.x Oracle Financial Applications Overview Table of Contents vii

10 Fully Retiring Assets Partially Retiring Assets Mass Asset Retirements External Retirements Retirements: Reinstating Retired Assets Agenda Assets Journal Entries Flow Oracle Subledger Accounting Journal Entries Created Quiz Summary Order to Cash Flow Overview Order to Cash Flow Overview Objectives Agenda Overview: Order to Cash Overview: Click to Order Overview: Order to Cash Lifecycle Overview: Order Lifecycle Order Processing: Order Entry Methods Order Processing: Pricing Process Order Processing: Viewing and Managing Orders Shipping Execution: Shipping Process Shipping Execution: Scheduling Collection: AutoInvoice Process Collection: Receivables Process Summary Customers Overview Customers Overview Objectives Agenda Party Model Integrating Party Information Party Model Definitions Relationships Managing Parties Customer Accounts Multi-Org Access Control (MOAC) Agenda Profile Classes Profile Class Characteristics Managing Customer Account Profiles Agenda Entry Methods Business Issues Business Purposes Multiple Sites and Business Purposes Centralized Example Multiple Sites and Business Purposes Decentralized Example Creating Customers Review Information Agenda Customer Account Relationships Merge Parties or Customer Accounts Customers Online Integration Agenda Required Setup Steps for Customers R12.x Oracle Financial Applications Overview Table of Contents viii

11 Profile Options Optional Setup Steps for Customers Quiz Summary Order Management Overview Order Management Overview Objectives Agenda Items Items: Master Organization and Child Organizations Items: Creation Items: Describing Item Attributes Order Management Items: Describing Item Attributes Order Management (continued) Items: Describing Item Attributes - Invoicing Items: Describing Attributes Controls at Master Level Items: Describing Attributes Controls at Child Level Order Entry: Order Creation Methods Order Entry: Order Management Workflows Order Entry: Processing Constraints Order Entry: Defaulting Rules Order Entry: Credit Checking Order Entry: Order Header Order Entry: Order Transaction Type Order Entry: Entering Header Customer Information Order Entry: Entering Header Pricing Information Order Entry: Entering Additional Header Information Order Entry: Applying Sales Credits Order Entry: Line Statuses Order Entry: Entering Line Information Order Entry: Entering Line Information (continued) Entering Line Pricing Information Order Entry: Line Pricing Fields Order Entry: Line Date Fields Order Entry: Entering Line Shipping Information Order Entry: Entering Return Information Order Entry: Ordering Service Programs Order Entry: Splitting Order Lines Order Scheduling and Booking: Available to Promise Order Scheduling and Booking: Schedule Order Scheduling and Booking: Reserve Order Scheduling and Booking: Scheduling Options Order Scheduling and Booking: Booking Orders Drop Shipment Internal Requisition Order Import Configurator Order Management: Mass Updates Order Management: Automatic System Holds - Credit Check Hold Order Management: Creating and Applying Holds Order Management: Apply Holds Order Management: Apply Holds (continued) Order Management: Release Holds Pricing: Pricing Engine Pricing: Pricing Engine (continued) Pricing: Pricing Engine Pyramid Pricing: Process R12.x Oracle Financial Applications Overview Table of Contents ix

12 Pricing: Single Versus Multiple Currency Price Lists Pricing: Price List Creation Pricing: Price List Header Pricing: Price List Header (continued) Pricing: Price List Line Pricing: Price List Line (continued) Pricing: Price List Line Values Pricing: Price List Line Values (continued) Pricing: Price List Maintenance Pricing: Formulas Pricing: Formulas (continued) Pricing: Types of Formulas Pricing: Dynamic Calculation Pricing: Static Calculation Shipping: Ship Order Shipping: Concepts Shipping: Concepts (continued) Shipping: Pick Release Concepts Shipping: Pick Release Concepts (continued) Shipping: Pick Release Process Shipping: Pick Release Process (continued) Shipping: Ship Confirm Process Shipping: Ship Confirm Process (continued) Shipping: Delivery Line Processing Statuses (continued) Shipping: Delivery Line Processing Statuses Returns: Standard Return Returns: Returns in isupport Daily Business Intelligence Quiz Summary Receivables Overview Receivables Overview Objectives Agenda Overview Transactions Overview Invoice Entry Methods Overview Agenda AutoInvoice Process AutoInvoicing Integration Interface Tables Transaction Batch Sources Grouping Rules Line Ordering Rules Transaction Flexfields Correcting Errors Exception Handling Windows Agenda Creating a Standard Invoice Manually Invoice Components Entering Invoice Dates Standard Invoice Line Types Completing Transactions Invoice Transaction Flow Invoice Correction Methods R12.x Oracle Financial Applications Overview Table of Contents x

13 Overview of Corrections Updating Invoices Creating Debit Memos Creating Adjustments Applying Different Types of Credits Credit Memo Options On-Account Credit Options Voiding Transactions Agenda Oracle Receivables Overview Receipts Receipt Creation Manual Receipt Entry Process Receipt Types Manual Receipts versus QuickCash Receipts Applying Batch Receipts Applying Receipts to an Invoice Applying Receipts at Line Level AP/AR Netting Applications Window Deposit Applications Credit Cards Processing Credit Card Refunds Processing Credit Card Transactions Creating Credit Card Transactions Agenda Overview of Advanced Collections Advanced Collection Methods Identifying Customers With Overdue Accounts Agenda ireceivables Features Credit Memo Workflow Agenda Calculating Tax on Transactions Calculating Tax Using the Tax Classification Code Tax Partner Process Overview Agenda Period Closing Process Agenda Daily Business Intelligence Summary Cash Management Overview Cash Management Overview Course Objectives Agenda Overview Overview of Bank Account Model Agenda Defining Banks Defining Bank Branches Linking Bank and Branches in Oracle Treasury Creating Bank Accounts: Selecting Branch, Legal Entities, and Functions Bank Balance Types Entering Account Balances Manually or Uploading Automatically Creating Reports for Account Balances and Interest Calculations R12.x Oracle Financial Applications Overview Table of Contents xi

14 Creating a Bank Transfer Authorizing a Bank Transfer Calculating Interest on Bank Accounts Creating Journal Entry Rules Setting Up Transaction Subtypes Setting Up Payment Templates Cashflows Creating Bank Statement Cashflows from Bank File Creating Bank Statement Cashflows from Bank File (continued) Agenda Reconciliation Integration Oracle Receivables and Payables Oracle Payroll, Treasury, and General Ledger Oracle Payments Single European Payments Area (SEPA) Credit Transfer SEPA Credit Transfer: Bank Identifier Code (BIC) Validation SEPA Credit Transfer: International Bank Account Number (IBAN) Validation SEPA Credit Transfer: Enable Reconciliation at Payment Group Level SEPA Credit Transfer: Reconciliation logic for Manual Reconciliation SEPA Credit Transfer: Reconciliation logic for Automatic Reconciliation AutoReconciliation Setting Up Bank Transaction Codes Bank Statement Open Interface Importing Bank Statements Bank Statement Validation Bank Statement Interface Errors Entering Bank Statements Manually Reconciling Bank Statements Automatically Reconciling Bank Statements Manually Creating Miscellaneous Transactions Recording a Bank Transmission Error Recording Transactions from External Systems Open Interface Manually Clearing and Unclearing Clearing and Reconciling Transactions in Oracle Payables Clearing and Reconciling Transactions in Oracle Receivables Transferring Entries to Your General Ledger AutoReconciliation Matching Adjustment Method Manual Reconciliation Matching Agenda Cash Forecasting Cash Forecasting Advantages Cash Forecast Template Generating a Cash Forecast Cash Forecasting by Transaction Currency Cash Forecasting by Temporary Labor and Fixed Price Services Agenda Cash Positioning Agenda Cash Management Reports Batches Available for Reconciliation Report Quiz Summary Oracle Governance, Risk and Compliance Suite Overview R12.x Oracle Financial Applications Overview Table of Contents xii

15 Oracle Governance, Risk and Compliance Suite Overview Agenda Objectives Oracle's GRC Solution Oracle GRC Intelligence (GRCI) Oracle GRC Manager (GRCM) Oracle GRC Controls (GRCC) Oracle Fusion Middleware for GRC Oracle GRC Intelligence (GRCI) Features Oracle GRC Manager (GRCM) Features GRC Controls Overview Internet Expenses Overview Internet Expenses Overview Objectives Agenda Overview Advantages of Using Oracle Internet Expenses Agenda Expense Reporting Process Expense Report Emport Program Agenda Expense Management Agenda Expense Reporting Methods Online Using Credit Card Disconnected Expense Reporting Agenda Expense Reporting Features Entering Foreign Currency Expenses Expense Reporting Features Agenda Descriptive Flexfields Product Features Online Policy Compliance Per Diem and Mileage Location and VAT Setup Short Paying and Adjusting Expense Reports Audit Management and Automation Product Features Agenda Workflow Processes Expenses Workflow Process Agenda Oracle Projects Integration Oracle Grants Accounting Integration Oracle Approvals Management (AME) Integration Other Product Integration Summary Lease Management Overview Lease Management Overview Objectives Agenda Overview Lease Management in the Oracle E-Business Suite Lease Management CRM Applications Lease Management ERP Applications R12.x Oracle Financial Applications Overview Table of Contents xiii

16 Optional Integration for Additional Lease Management Functionality Opportunity to Booking Invoice to Termination Asset Return to Disposal Period Open to Period Close and Inquiry to Resolution Summary Trading Community Architecture Overview Trading Community Architecture (TCA) Overview Objectives Agenda Overview TCA Origins TCA Principles TCA Recognition TCA Evolution Customer Data Management (CDM) CDM Product Family Customer Data Hub Customer Data Spoke Customer Data Librarian Customers Online CDM Training Overview: TCA Fundamentals Course CDM Training Overview: TCA Enabling Infrastructure CDM Training Overview: Customers Online CDM Training: Customer Data Librarian CDM Training: Customer Data Hub (The Solution) TCA Model Summary Treasury Overview Treasury Overview Objectives Agenda Oracle Treasury: A Complete Solution Oracle Treasury: An Integrated Solution Manage Global Financial Exposure Improve Visibility & Efficiency Treasury Overview Integration Straight Through Processing Capabilities Enhanced Regulatory Compliance Expanded Bond Functionality Cash Positions and Forecasting Automatic Bond Rate Resetting Bank Account Update Program Cash Pooling Across Legal Entities Summary Oracle Enterprise Project Management Solution Overview Oracle Enterprise Project Management Solution Overview Objectives Agenda Oracle Enterprise Project Management Solution Oracle Project Foundation Oracle Project Costing Oracle Project Billing Oracle Project Resource Management Oracle Project Management R12.x Oracle Financial Applications Overview Table of Contents xiv

17 Oracle Project Collaboration Oracle Project Portfolio Analysis Oracle Daily Business Intelligence for Projects Example Projects Business Flow Agenda Oracle Projects Integration with Other Oracle Applications Oracle Projects Integration with Other Oracle Applications (continued) Oracle Product Lifecycle Management Oracle Assets Oracle Asset Tracking Oracle Cash Management Oracle General Ledger Oracle Grants Accounting Oracle Human Resources Oracle Internet Expenses Oracle's Governance, Risk and Compliance Suite Solution Oracle Inventory Oracle Master Scheduling/MRP and Supply Chain Planning Oracle Payables (Accrual) Oracle Payables (Cash) Oracle Purchasing Oracle Project Contracts Oracle Project Manufacturing Oracle Receivables Oracle Sales Oracle Shipping Execution Oracle Subledger Accounting Oracle Time & Labor Oracle Workflow Summary Oracle Project Costing Overview Oracle Project Costing Overview Objectives Agenda Oracle Project Costing and Integration Overview of Projects and Tasks Project Classes and Project Types Overview of Project Templates Organizing a Project Structure Basic Project Information Burden Schedules for Costing Organization Overrides Project Currency Currencies and Expenditures Costing Currency Options Agenda Controlling Expenditures Overview Project Statuses Task Chargeable Status Transaction Dates Transaction Controls Exclusive and Inclusive Transaction Controls Allowable Charges for Each Transaction Control Determining if an Item is Chargeable Agenda Costing Flow: Enter Expenditures R12.x Oracle Financial Applications Overview Table of Contents xv

18 Expenditures Overview Pre-Approved Batch Expenditure Entry Flow Overview Enter Pre-Approved Batches Upload Expenditure Batches from Microsoft Excel Upload Contingent Worker Timecards Agenda Costing Flow: Import Transactions Overview of Transaction Sources Overview of Transaction Import Costing Flow: Distribute Costs Cost Distribution Processing Flow Determining Costs Burden Cost Calculations AutoAccounting: Distribution Programs Cost Distribution Concurrent Programs Agenda Costing Flow: Create Accounting Integration with Oracle Subledger Accounting Generating Cost Accounting Events AutoAccounting: Generate Accounting Events Creating and Transferring Accounting Oracle General Ledger Journal Import Agenda Integration with Oracle Purchasing and Oracle Payables Integration with Oracle Internet Expenses Integration with Oracle Time & Labor Integration with Other Applications Agenda Allocations and AutoAllocations Asset Capitalization Asset Capitalization: Capitalized Interest Cross Charge Budgetary Controls and Budget Integration Summary Oracle Project Billing Overview Oracle Project Billing Overview Objectives Agenda Oracle Project Billing Agenda Contract Projects Overview of Projects and Tasks Overview of Project Templates Project Classes and Project Templates Defining Project Templates Defining Projects Project Classes and Project Types Billing Information Tab Billing Assignments Tab Distribution Rules Tab Customers Default Top Task Customer Project Contact Information Currency Options Revenue in Foreign Currency Bill Rates R12.x Oracle Financial Applications Overview Table of Contents xvi

19 Customer Billing Retention Defining the Retention Level and Terms Billable Status Control Billable Transaction Control Agenda Overview of Agreements Overview of Project Funding Example: Agreements and Funding Agreements and Funding Process Flow Generating Invoices and Revenue Accrual Agenda Project Revenue Overview Methods of Revenue Accrual Hard Limit Processing Overview Revenue Process Flow to GL Revenue Flow Generate Draft Revenue Creating Revenue Distribution Lines Generate Revenue Accounting Events Create Accounting Review Project Revenue Detailed Accounting Transactions View Accounting Lines Accrue-Through Date Releasing Revenue Agenda Invoice Concepts Hard Limit Processing for Invoices Overview of Accounting Dates Review of Billing Amounts Methods of Invoicing Overview of Invoice Flow Generating Invoices Invoice-Related Setup Steps Defining Invoice Formats Defining Invoice Print Method Interfacing Invoices to Oracle Receivables Invoice Flow to Oracle Receivables Viewing Invoices in Oracle Receivables Accounting Transactions Agenda Interproject Billing Agenda Integration with Oracle Project Contracts Summary Oracle Property Manager Overview Oracle Property Manager Overview Objectives Agenda Oracle Property Manager: An Overview Who can Use Oracle Property Manager Flow of Information in Oracle Property Manager Managing Properties and Locations Managing Space Assignments Managing Leases Managing Rent Agreements R12.x Oracle Financial Applications Overview Table of Contents xvii

20 Paying or Billing Rent Summary istore Overview istore Overview Objectives Agenda Overview Integration with E-Business Suite Applications Benefits of Oracle istore istore: Shopping Carts istore: Checkout and Ordering istore: Checkout and Ordering (continued) istore: Home Page istore: Home Page (continued) Summary Oracle Payments Overview Oracle Payments Overview Objectives Agenda Oracle Payments Overview Integration with E-Business Suite Applications Features of Oracle Payments Features of Oracle Payments (Contd.) Summary R12.x Oracle Financial Applications Overview Table of Contents xviii

21 Preface Profile Before You Begin This Course Working experience with Oracle Applications Prerequisites There are no prerequisites for this course. How This Course Is Organized This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations and written practice sessions reinforce the concepts and skills introduced. Copyright Oracle All rights reserved. R12.x Oracle Financial Applications Overview Table of Contents xix

22 Related Publications Oracle Publications Title Part Number Oracle Financials Concepts Guide E Additional Publications System release bulletins Installation and user s guides Read-me files International Oracle User s Group (IOUG) articles Oracle Magazine Copyright Oracle All rights reserved. R12.x Oracle Financial Applications Overview Table of Contents xx

23 Typographic Conventions Typographic Conventions in Text Convention Element Example Bold italic Glossary term (if The algorithm inserts the new key. there is a glossary) Caps and lowercase Courier new, case sensitive (default is lowercase) Initial cap Italic Quotation marks Uppercase Buttons, check boxes, triggers, windows Code output, directory names, filenames, passwords, pathnames, URLs, user input, usernames Graphics labels (unless the term is a proper noun) Emphasized words and phrases, titles of books and courses, variables Interface elements with long names that have only initial caps; lesson and chapter titles in crossreferences SQL column names, commands, functions, schemas, table names Click the Executable button. Select the Can t Delete Card check box. Assign a When-Validate-Item trigger to the ORD block. Open the Master Schedule window. Code output: debug.set ( I, 300); Directory: bin (DOS), $FMHOME (UNIX) Filename: Locate the init.ora file. Password: User tiger as your password. Pathname: Open c:\my_docs\projects URL: Go to User input: Enter 300 Username: Log on as scott Customer address (but Oracle Payables) Do not save changes to the database. For further information, see Oracle7 Server SQL Language Reference Manual. Enter user_id@us.oracle.com, where user_id is the name of the user. Select Include a reusable module component and click Finish. This subject is covered in Unit II, Lesson 3, Working with Objects. Use the SELECT command to view information stored in the LAST_NAME column of the EMP table. Arrow Menu paths Select File > Save. Brackets Key names Press [Enter]. Commas Key sequences Press and release keys one at a time: [Alternate], [F], [D] Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del] Copyright Oracle All rights reserved. R12.x Oracle Financial Applications Overview Table of Contents xxi

24 Typographic Conventions in Code Convention Element Example Caps and Oracle Forms When-Validate-Item lowercase triggers Lowercase Column names, table names SELECT last_name FROM s_emp; Passwords PL/SQL objects DROP USER scott IDENTIFIED BY tiger; OG_ACTIVATE_LAYER (OG_GET_LAYER ( prod_pie_layer )) Lowercase italic Uppercase Syntax variables SQL commands and functions CREATE ROLE role SELECT userid FROM emp; Typographic Conventions in Oracle Application Navigation Paths This course uses simplified navigation paths, such as the following example, to direct you through Oracle Applications. (N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve This simplified path translates to the following: 1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches Summary. 2. (M) From the menu, select Query then Find. 3. (B) Click the Approve button. Notations: (N) = Navigator (M) = Menu (T) = Tab (B) = Button (I) = Icon (H) = Hyperlink (ST) = Sub Tab Copyright Oracle All rights reserved. R12.x Oracle Financial Applications Overview Table of Contents xxii

25 Typographical Conventions in Oracle Application Help System Paths This course uses a navigation path convention to represent actions you perform to find pertinent information in the Oracle Applications Help System. The following help navigation path, for example (Help) General Ledger > Journals > Enter Journals represents the following sequence of actions: 1. In the navigation frame of the help system window, expand the General Ledger entry. 2. Under the General Ledger entry, expand Journals. 3. Under Journals, select Enter Journals. 4. Review the Enter Journals topic that appears in the document frame of the help system window. Copyright Oracle All rights reserved. R12.x Oracle Financial Applications Overview Table of Contents xxiii

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27 ebusiness Suite Overview Chapter 1 ebusiness Suite Overview Chapter 1 - Page 1

28 ebusiness Suite Overview ebusiness Suite Overview Chapter 1 - Page 2

29 Objectives ebusiness Suite Overview Chapter 1 - Page 3

30 Agenda ebusiness Suite Overview Chapter 1 - Page 4

31 Key Business Flows Key Business Flows Oracle business flows are a collection of application components designed for end-to-end business processes. They identify the critical business processes an organization utilizes to support a complete business strategy for managing operations, customers, suppliers, partners, and employees. Rather than being focused around a specific application s features or functionality or one organization s activities, Oracle business flows map business processes across multiple organizations and many applications to represent a streamlined, efficiently integrated information flow throughout business organizations and across geographies. ebusiness Suite Overview Chapter 1 - Page 5

32 Forecast to Plan Forecast to Plan: Applications Daily Business Intelligence provides integrated management reporting and analysis and information access through self-service, single, Web-based customizable home page. Features include key performance measurements, operating alerts, and drill down from summarized information directly to transactional data. Order Management creates and manages sales order (quote) information via Internet. Features include Web store, telesales order, reservation and scheduling, pricing model, shipment support, flexible order hold, discount, freight, and other detailed order information. Demand Planning creates consensus forecasts based on marketing, sales, operations, and manufacturing. Features include service parts and demand class forecasting, line of business-specific demand plans, configure to order, consumable materials planning, preserve forecast adjustments, and internal collaboration. Advanced Supply Chain Planning (ASCP) creates constraint-based or optimized plans. Features include global forecasting, shipping, receiving, carrier, and supplier capacity calendars, order configuration, consumable materials and co-product planning, master scheduling, and planner productivity. ebusiness Suite Overview Chapter 1 - Page 6

33 Procure to Pay Procure to Pay: Applications Assets streamlines the tracking, depreciation, and maintenance scheduling of assets. Cash Management reconciles payments and forecasts cash outflows. Payables records invoices and make payments. iexpenses provides self-service submission, approval, and management of expenses online. General Ledger records inventory, fixed assets, payables liability, expenses and payments. Purchasing sources, requisitions, and procures goods and services. iprocurement provides self-service requisitioning and web-based deployment to quickly find goods and services, add them to their shopping cart, and perform checkout. isupplier Portal provides secure online supplier collaboration capabilities for suppliers to easily perform common supplier business functions. Sourcing provides a central repository for purchasing information and workflow-based automation, conducting online negotiations and reducing sourcing cycle time. Inventory sets up inventory and expense items and records inventory activity such as receipts of inventory, returns and corrections. ebusiness Suite Overview Chapter 1 - Page 7

34 Daily Business Intelligence provides integrated management reporting and analysis and information access Not shown: - ebusiness Tax: Consists of a tax knowledge base, a variety of tax services that respond to specific tax events, a set of repositories (for tax content and tax recording) that allow you to manage your local tax compliance needs in a proactive manner, as well as the ability to integrate with external tax content providers through a single integration point - Subledger Accounting: Provides centralized rules and a common repository, and global control of your accounts - Multi-Organization Access Control: Provides role based access to Operating Units, and allows you to perform multiple tasks across operating units without changing responsibilities ebusiness Suite Overview Chapter 1 - Page 8

35 Demand to Build Demand to Build: Applications Material Requirements Planning (MRP) creates requisitions to replenish inventory. Work in Process (WIP) provides transactions, materials, resources, costs, job, and schedule progress through a combination of manufacturing methods. Features enhanced are component picking, scheduling, electronic records and signatures, discrete workstation, quantity override during backflush, outside processing, and mobile manufacturing. Cost Management supplies cost information for optimized planning Capacity calculates your capacity load ratio by resource or production line, making sure you have sufficient capacity to meet your production requirements. Bill of Material (BOM) stores items lists associated with a parent item and item relation to its parent. Daily Business Intelligence Purchasing/iProcurement Inventory Order to Cash (Order Management) Advanced Supply Chain Planning (ASCP) ebusiness Suite Overview Chapter 1 - Page 9

36 Campaign to Order Campaign to Order Flow Note: The slide reflects the front end functionality, not the the complete backend integration with many of the shared entities. Discoverer creates market customer base segments to a target segment. For example, Market Segment = All Repeat Customers, Target Segment = Males 35+ years old. Marketing creates a marketing campaign to target a particular audience and is executed via Web, , sales calls, or other channels. Scripting creates a script to walk the sales agent through a particular offer and makes it available to all inbound agents from the Sales application. The audience receives or phone calls and reads an advertisement. In Advanced Inbound, they place a call to an 800 number directing to the inbound call center and the call is routed to an appropriate sales agent. In Sales, the sales agent launches a script to walk them through the offer details. In the Order to Cash flow, the sales agent creates a quote that is passed to Order Management or into the Order to Cash business flow. Campaign to Order also uses Daily Business Intelligence. ebusiness Suite Overview Chapter 1 - Page 10

37 Click to Order Click to Order: Applications Note: The slide reflects the front end functionality, not the the complete backend integration with many of the shared entities. Inventory stores the products and services to be sold in the store as items. istore, the focal point of Click to Order, helps a company do business on the web using Business to Consumer (B2C) and/or Business to Business B2B) models. JTA provides user management functionality to the store to create and manage users. Marketing has the emerchandizing module to advertise and make product recommendations within the store; creates campaigns involving discounts created in Pricing. Sales avails of saved shopping carts as leads. Pricing determines the item price and sees if there are modifiers that can be applied to the it. Quoting quotes a saved shopping cart and can call Pricing to determine the price. Order to Cash orders istore to communicate via the Order Capture Foundation APIs to Order Management (Order Fulfillment). Daily Business Intelligence ebusiness Suite Overview Chapter 1 - Page 11

38 Order to Cash Order to Cash: Applications Cash Management reconciles deposits, corrections, and adjustments and forecasts cash inflows and outflows. Receivables books receivables for shipped goods and services. ireceivables helps review account information, pay bills, dispute invoices online, reduce billing and collections cost structure with automatic routing and processing, eliminating intermediaries or paper-based claims management General Ledger records receivables, revenue, and cash receipts. Purchasing/iProcurement requisitions drop shipments and/or back to back orders. Order Management ships goods and provides services. Inventory Daily Business Intelligence Not shown: - ebusiness Tax: Consists of a tax knowledge base, a variety of tax services that respond to specific tax events, a set of repositories (for tax content and tax recording) that allow you to manage your local tax compliance needs in a proactive ebusiness Suite Overview Chapter 1 - Page 12

39 manner, as well as the ability to integrate with external tax content providers through a single integration point - Subledger Accounting: Provides centralized rules and a common repository, and global control of your accounts - Multi-Organization Access Control: Provides role based access to Operating Units, and allows you to perform multiple tasks across operating units without changing responsibilities ebusiness Suite Overview Chapter 1 - Page 13

40 Contract to Renewal Contract to Renewal Flow Note: The slide reflects the front end functionality, not the the complete backend integration with many of the shared entities. istore receives an order that can have a sales contract created for it. Upon checkout, the customer can accept or negotiate the sales contract terms. From Quoting, a sales representative can create a quote for a customer and a sales contract from the quote for further negotiation. Sales Contracts creates sales contracts. From Quoting, the quote is sent to Order to Cash flow for booking and fulfillment. If the item purchased has an attached warranty or a purchased extended warranty, a service contract will be created when it is instantiated in the customer s install base. Through Service Contracts, a warranty or service contract can be purchased and billed if the item the customer wants a warranty for was not purchased from the deploying merchant. Accounts Receivable invoices for the item, item with extended warranty, or just the service contract. Daily Business Intelligence ebusiness Suite Overview Chapter 1 - Page 14

41 Request to Resolution Request to Resolution Flow Note: The slide reflects the front end functionality, not the the complete backend integration with many of the shared entities. The dashed lines ( ) show some of the additional options to resolve a service request. Customers purchased a product from a merchant who has implemented isupport and log into isupport, where they can view and update their Installed Base. In the Installed Base, the products you own will manually or automatically show for that customer account. Products must exist in Inventory to add them automatically or manually. You can search for a solution using Knowledge Management or submit a service request. Teleservice is used by the merchant s support personnel. Order Capture Foundation APIs: From isupport or Teleservice, you can also create Return Material Authorized (RMA), which is submitted to the Order Fulfillment cycle. Order Fulfillment can also refer to the Order to Cash flow, where an order is credited with line types for a return. Daily Business Intelligence ebusiness Suite Overview Chapter 1 - Page 15

42 Project to Profit Project to Profit: Applications General Ledger records the accounting activity. Payables/iExpenses record project-related invoices. Receivables/iReceivables record progress billings. Purchasing/iProcurement record committed costs. Assets capitalizes assets. Payroll records project-related labor. Daily Business Intelligence Not shown: - ebusiness Tax: Consists of a tax knowledge base, a variety of tax services that respond to specific tax events, a set of repositories (for tax content and tax recording) that allow you to manage your local tax compliance needs in a proactive manner, as well as the ability to integrate with external tax content providers through a single integration point - Subledger Accounting: Provides centralized rules and a common repository, and global control of your accounts ebusiness Suite Overview Chapter 1 - Page 16

43 - Multi-Organization Access Control: Provides role based access to Operating Units, and allows you to perform multiple tasks across operating units without changing responsibilities ebusiness Suite Overview Chapter 1 - Page 17

44 People to Paycheck People to Paycheck: Applications HRMS manages human resources-related activities. Payroll manages payroll. Cash Management reconciles payroll. General Ledger records labor expense. Daily Business Intelligence ebusiness Suite Overview Chapter 1 - Page 18

45 Quiz Answer: c ebusiness Suite Overview Chapter 1 - Page 19

46 Quiz Answer: 2 ebusiness Suite Overview Chapter 1 - Page 20

47 Summary ebusiness Suite Overview Chapter 1 - Page 21

48 ebusiness Suite Overview Chapter 1 - Page 22

54 Purpose of General Ledger Purpose of General Ledger Oracle General Ledger is the central repository of accounting information. The main purposes of a general ledger system are to record financial activity of a company and to produce financial and management reports for people inside and outside the organization to make decisions. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 6

55 General Ledger Capabilities General Ledger Capabilities Through Oracle General Ledger, you can: Record and review accounting information Import data from subsidiary ledgers or enter journals to record actual or budget transactions directly into Oracle General Ledger Enter encumbrance journals to track encumbrances through the purchase process and to control spending against budgeted amounts Review account balances online or through reports Adjust accounting information Correct actual, budget, and encumbrance information Revalue and translate balances denominated in foreign currencies Consolidate balances from multiple ledgers Analyze accounting information Integrate Oracle General Ledger with OBI Standard Edition, or Web ADI to simplify the budgeting and forecasting process Quickly prepare what if analyses and pro forma reports Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 7

56 Functions and Features Functions and Features Information Access You can access information stored in the General Ledger through online inquiries or reporting and analysis tools. Oracle General Ledger is the repository of your organization s financial information. Financial Controls You use security features to control access to specific areas and functions of General Ledger. Data Collection You collect data from Oracle subledgers and non-oracle feeder systems. Financial Reporting and Analysis You select from a variety of standard reports and listings. You use the Financial Statement Generator to build customized reports with reusable report objects. Use Web ADI (Web Applications Desktop Integrator) Report Manager to view reports and drilldown on balances within a spreadsheet environment. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 8

57 General Ledger Accounting Cycle General Ledger Accounting Cycle 1. Open period 2. Create/reverse journal entries 3. Post 4. Review 5. Revalue 6. Translate 7. Consolidate 8. Review/correct balances 9. Run accounting reports 10. Close accounting period Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 9

58 Journal Entry Functions Journal Entry Functions Using Oracle General Ledger, Oracle subledgers, and Web ADI, you can perform the following journal entry functions: Create journal entries in Oracle General Ledger or use Web ADI (Application Desktop Integrator) to enter journals from a spreadsheet. Import journal entries Post journal entries Inquire on account information and journal entries Drill down to subledgers Run reports Reverse journal entries Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 10

59 Sharing Ledgers Across Oracle Applications Sharing Ledgers across Oracle Applications Many elements of an Oracle General Ledger Ledger are shared with other Oracle applications. Oracle subledgers share the following from Oracle General Ledger: Chart of accounts, value sets, segment values, security rules, and cross-validation rules used to record the accounting for transactions Enabled currencies, conversion rate types, and daily rates used to convert foreign currency transactions Calendar, periods and period types used as the basis for the subledger accounting periods Journal entry sources and categories used to record information about the origination and purpose of transactions Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 11

60 Accounting Entries Interface Information Accounting Entries Interface Information Purchasing: Accrual of receipts not invoiced, purchase orders, final close, cancellations Cost Management: Cycle count and physical inventory adjustments, receiving transactions, delivery transactions, intercompany transfers, sales order issues, internal requisitions, subinventory transfers, cost of goods sold (COGS). Work In Process: Material issues or backflush to WIP, completions, returns, resource and overhead transactions, cost update. Payroll: Salary, deductions and taxes. Projects: Cost distribution of labor and non-labor, revenue. Payables: Invoices, payments, realized gain and loss, invoice price variance. Assets: Capital and construction in process asset additions, cost adjustments, transfers, retirements, depreciation, reclassifications Receivables: Invoices, payments, adjustments, debit memos, credit memos, cash, chargebacks, realized gain and loss SLA (not shown): Enables a unified process to account for subledger transactions and post data to General Ledger, and to provide a consistent view when drilling down from General Ledger to subledger transactions. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 12

61 Subledger Integration Subledger Integration Create Accounting Process The parameters you use when you submit the Create Accounting program determine how accounting entries are transferred to the ledgers in your general ledger. Accounting can be created in draft, final or final and post mode. You can transfer subledger accounting entries in summary or detail. Regardless of the option you choose, you can always drill down to the subledger to view the details that build the general ledger balances. Create Accounting Draft If you submit the Create Accounting in Draft mode, you can review the subledger accounting entries generated for your Payables transactions. If any accounting is incorrect, you can update the transaction in Payables to correct the accounting before you create final accounting. Create Accounting Final Run the Create Accounting process in Final mode to generate your final subledger accounting entries. Once you generate final accounting, they must be posted from the General Ledger. Create Accounting Final and Post Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 13

62 Run the Create Accounting process in Final and Post mode to generate your final subledger accounting entries. Once you generate final accounting, you cannot correct the accounting. Instead, you must enter correcting transactions in Payables. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 14

63 Reporting and Analysis Reporting and Analysis Online account and transaction analysis: Drilldown to account balances and journal entries to their source. Standard reports and listings: Oracle General Ledger provides over 70 different standard reports and listings to help you view financial and non-financial information. Financial Statement Generator reports: Through FSG, you can create custom financial statements without programming. Web ADI Report Manager: You can select amounts from spreadsheet-based FSG reports and drill into the underlying financial information within Oracle Applications. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 15

64 Interface Data Transformer (IDT) Interface Data Transformer (IDT) The Interface Data Transformer (IDT) makes importing of data from external feeder systems into Oracle General Ledger or Oracle Global Consolidation System fast and easy. The IDT reduces the manual effort required to convert disparate data formats into a format that Oracle recognizes and accepts. IDT takes data from external feeder systems that have been loaded into the GL_INTERFACE table and transforms it into the proper format for import into Oracle General Ledger based on rules you define. Instead of having to manually map the values from the external system into a format acceptable by the target system, you can create transformation rules and apply them to the external data to have them automatically mapped for you. Each time you import data, you can simply reapply the same rules. By defining reusable rules, you can reapply the same rules each time you transfer data from external systems into Oracle General Ledger or Global Consolidation System. You can even use conditions to control when transformation rules are applied. You can feel safe that the data is valid and will not corrupt your existing data because IDT validates the imported data for you every time. IDT is very flexible. It can be used for data import purposes outside of GL and GCS. Because IDT uses meta data to specify the structure of the interface table, you can use IDT as a generic transformation tool to transform data in any interface table as long as you specify the interface table structure in the meta data. The transformation rule sets transform any data Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 16

65 from a source to a target, regardless of the table structure of the source or target table. By applying conditions, you can address those special circumstances and control when the transformation rules should be applied. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 17

66 IDT Responsibility and Data Menus IDT Responsibility and Data Menus Access the Interface Data Transformer using the Interface Data Transformer responsibility. You can: Define and update Rule Sets Submit the GL Interface Data Transformer program Correct errors in the GL_INTERFACE table via the Correct Journal Import window Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 18

67 IDT Transformation Rule Sets IDT Transformation Rule Sets The web-interface allows you to define a Transformation Rule Set. The transformation rule set is a set of instructions that instructs the Interface Data Transformer on how to transform the data from the external system. You have several options, such as using Lookup Tables, PL/SQL Functions, or String Functions. When you load the external data into the GL_INTERFACE table, you apply a transformation rule set to transform the data into something recognized and accepted by Oracle General Ledger. You can also use this for importing into the Oracle Global Consolidation System. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 19

68 Open Integration with External Processing Open Integration with External Processing Oracle General Ledger allows you to integrate your external processing needs with the General Ledger application using Business Events. The Business Event System was first introduced by Oracle Workflow, which is an application service that leverages the Oracle Advanced Queuing (AQ) infrastructure. The Business Event System consists of the Event Manager, which lets you register subscriptions to events that are significant to your systems. Then with event activities, you can model business events within the workflow process. This allows you to customize Oracle General Ledger processes without having to make costly, time-consuming modifications to the standard code. You can choose what type of actions you want performed when a business event occurs. This allows you to automate certain business processes to reduce laborintensive tasks and streamline your operations. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 20

69 Open Integration with External Processing: GL Business Events Open Integration with External Processing: GL Business Events Period Opened occurs when a period is first opened. Period Closed occurs when a period is closed such as you can create an event subscription for this event that executes a script to check for any unposted journals in the GL Journals table. Period Re-Opened occurs when a closed period is re-opened. Because many companies are sensitive about updating prior period balances, you could create an event subscription that sends a notification to the Controller before it s too late and financial statements need to be restated. Account Disabled occurs when an account is disabled in the GL Accounts window or by the Inherit Segment Value Attributes program. Create a custom event subscription that runs a program to see if the disabled account exists in any subledger transactions to be posted to GL to avoid errors during the journal import process when subledgers are transferring data to GL. Journal Import Started occurs when a journal import process is initiated. Journal Import Completed occurs when the journal import process completes. If you import many journals, you could create a subscription that sends notifications when this event occurs. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 21

70 Posting Completed occurs when the posting process has completed to inform you that balances have been updated and reports can be generated. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 22

71 Open Integration with External Processing Benefits Open Integration with External Processing Benefits Flexibility of E-Business Suite Processes: By using Business Events, you can configure the E-Business Suite to adhere to your own business processes, rather than modify your processes to adhere to the Suite. Because these business events come pre-defined, all you need to create is the event subscription or action that you want to take place when the event occurs. This allows you to customize significant GL processes without having to create the events yourself which may not survive upgrades or is not supportable. Automation: Automation is another benefit achieved with Business Events. Its integration with Oracle Workflow allows you to tie common GL processes with processes outside of GL. Disabling an account in GL, and then automatically checking subledger transaction tables for any pending transactions is the best example of this. This translates into huge efficiency gains and allows you to run your entire business in an automated fashion. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 23

72 Advanced Global Intercompany System (AGIS) Advanced Global Intercompany System (AGIS) AGIS allows you to define intercompany and intracompany balancing rules through consistent application of Intercompany Accounts and Intracompany Balancing Rules in both Subledger Accounting and General Ledger. The balancing rules support encumbrance journals. Efficiency is increased since unbalanced encumbrance journals can be automatically balanced using intercompany and intracompany balancing rules. AGIS: Generates subledger invoices Controls transaction entry with the Intercompany Calendar Has fully configurable approval rules Has a flexible security model Has centrally defined intercompany accounts Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 24

73 AGIS Features AGIS Features With Advanced Global Intercompany System, you enter intercompany transactions at the GL level, as well as create intercompany invoices in AP and AR. Intracompany Balancing is used consistently across Subledger Accounting and General Ledger to balance journals within a legal entity. You can also balance cross-entity journals by defining Intercompany Accounts for the legal entities that act as trading partners. The balancing rules support encumbrance journals too. Unbalanced encumbrance journals can be automatically balanced using intercompany and intracompany balancing rules. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 25

74 AGIS Journals Balancing Process AGIS Journals Balancing Process For Intracompany journals, the Journal Mode is used to determine the interaction between balancing segment values on a journal. In this example, companies refer to balancing segment values. 1 to 1: Is where only two companies or balancing segment values are used in the journal. One with a net debit balance and the other with a net credit balance. 1 to Many: Is where one company has a net debit balance, and two or more companies have a net credit balance. The debit balancing segment is the driving segment, or the segment with which all the other balancing segments are trading. Many to 1: Is where one company has a net credit balance, and two or more companies have a net debit balance. The credit balancing segment is the driving segment. Many to Many: Is where two or more companies have a debit balance and two or more companies have a credit balance. Because there is no automated way to determine the trading relationships on this type of journal, Many to Many journals must balance using a clearing company (another balancing segment with which each balancing segment balances) or using the Default Rule. The balancing API handles all situations, even if there is a mixture of both Intercompany and Intracompany lines on the transaction, it follows the correct rules when it generates the Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 26

76 AGIS Implementation Considerations Implementation Considerations The GL Posting program and the Create Accounting program in Subledger Accounting call the AGIS Balancing API to balance journal lines across balancing segment values. If the balancing segment values represent different legal entities, then the Intercompany Accounts are used. If the balancing segment values are assigned to the same legal entity, then Intracompany Balancing Rules are used to balance the journal. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 28

78 Elements Elements Chart of Accounts - Your chart of accounts is the account structure you define to fit the specific needs of your organization. - You can choose the number of account segments as well as the length, name, and order of each segment. Accounting Calendar - An accounting calendar defines an accounting year and the periods it contains. - You can define multiple calendars and assign a different calendar to each Ledger. Currencies - You select the functional currency for your Ledgers as well as other currencies that you use to transact business and report in. - General Ledger converts monetary amounts entered in a foreign currency to functional currency equivalents using supplied rates. Subledger Accounting Method - Legal entities that operate in different countries or industries can have different accounting standards. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 30

79 - For example, one legal entity uses the accrual method of accounting and another uses the cash basis of accounting. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 31

81 Chart of Accounts Chart of Accounts In Oracle General Ledger, you build a chart of accounts using accounting flexfields, with the following benefits: Flexibility: You can design a flexible account structure that meets your reporting needs and anticipates the way you run your organization in the future. Creating multiple rollups: You can summarize accounting information from multiple perspectives by creating rollup groups. Using ranges: With a well-planned account structure, you can use ranges to group accounts in reports, specify security and cross-validation rules, define summary accounts and reporting hierarchies. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 33

82 Business Requirements Business Requirements Identify the aspects of your business that you need to track and analyze. Pay specific attention to aspects that span several applications. If all the details for an item is contained in one application or a group of tightly integrated applications, you retain the detail in the application itself. Do not add extra segments to the accounting flexfield structure for detail that is tracked in your subledgers. For example, if you are using Oracle Projects, do not include a project segment in your accounting flexfield. Conversely, if you capture details in multiple applications that all pass data to Oracle General Ledger, consider including other elements, such as product, in the accounting flexfield. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 34

83 Creating Vertical Structures Creating Vertical Structures Consider summarizing your data according to your management structure. Create a separate segment for the lowest level in the accounting flexfield. Strive to use parent rollups within a single segment for reporting, rather than creating additional segments in the accounting flexfield. For example, a child value of Company reports to Western Region which reports to European Division. Only Company is a posting level account in the accounting flexfield. Set up Western Region as parent of Company and Western Division as parent of European Region. If your company reorganizes frequently, use parent/child relationships for maximum flexibility. A child value can be in multiple parents. It is better to create new parent structures than to modify existing structures because changes can effect historical reporting. For example, if the Western Region contained five companies, reported year end results, and then had two more companies moved into its child range, then historical reports ran after the two additional companies were added would show different results. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 35

84 Defining Hierarchies Defining Hierarchies Child segment values Post journals and enter budgets directly to child segment values. Assign ranges of children to "parents. Parent segment values Use parents to sum associated child accounts balances. Any segment with children beneath it and with its own parent above it, is considered a parent by Oracle General Ledger. You cannot post journals or enter budgets directly for parent segment values. Assign ranges of child values to parent values to create summations for running reports, MassAllocations, or MassBudgeting. You can create parent segment values for independent segments with limitations when used with dependent segments. The Dependent validation type limits using parent values with MassAllocations, MassBudgeting, and FSG. The only parent value available for dependent segments is an all inclusive parent that includes all the values of the value set. Technical Note Summary accounts may use the segment value 'T' in one or more of the segments. Define T for every accounting flexfield segment when creating summary accounts. This value is a parent value even though its children are not specifically assigned. Use char as the format type for all segments of the accounting key flexfields because of the value "T." Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 36

85 Account Hierarchies Account Hierarchies Use various flexible parent/child account hierarchies to view your business according to product lines, geographical regions, organizational lines, or any other combination of factors you deem important. Create your hierarchy with as many vertical and horizontal levels as you need to effectively analyze your business or business segment. It is better to create new parent structures than to modify existing structures because changes can effect historical reporting. Note that Oracle General Ledger treats all segment values that have the Parent check box selected as parents even if they don't have children assigned and does not allow direct posting or budgeting to these values. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 37

86 Building the Chart of Accounts Structure Building the Chart of Accounts Structure The decisions you make when designing your chart of accounts are very important. Making changes in the future to the structure of your chart of accounts is difficult and not recommended. Plan carefully to create an account structure that meets the current needs of your organization and anticipate future requirements. Tailor your account structure for your industry and reporting requirements. Choose the number of segments, as well as the length, name, and order of each segment. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 38

88 Defining and Assigning Value Sets Defining and Assigning Value Sets (N) Setup > Financials > Flexfields > Validation > Sets 1. Define a Value Set: A value set defines the boundaries for the attributes that you assign to a key or descriptive flexfield segment. It controls what types of values can be used as Accounting Flexfield segment values. It determines the attributes of your segments such as length, zero-fill, right-justify, alphanumeric, and value security. It also controls how validation is performed. For example, with independent validation, a list of values must be created and used. 2. Assign Value Sets to Segments: Assign one value set to each Accounting Flexfield segment. 3. Share the same value sets across multiple ledgers to facilitate consolidation: You can use the same value set more than once within the same Accounting Flexfield structure, as noted in the diagram above, where the same values set is used for the Balancing and Intercompany segments. Note that changing the attributes of a value set affects all of the Accounting Flexfield segments using that value set. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 40

89 Defining the Accounting Flexfield Structure Defining the Accounting Flexfield Structure Each Ledger can have its own Accounting Flexfield structure. 1. Define your account structure in the Key Flexfield Segments window. - (N) Setup > Financials > Flexfields > Key > Segments 2. Select the appropriate symbol in the Segment Separator field. 3. Select dynamic insertion for new account combinations to be entered. Without dynamic insertion, account combinations must be defined using the GL Accounts window. 4. Select cross-validation rules to control the creation of account combinations. 5. You can also select the flexfield structure and compile changes made to an accounting flexfield. - Enter a name, description, column and segment number for each segment. Segment numbers must be sequential for the accounting key flexfield, beginning with 1. - To prevent changes to the Accounting Flexfield structure definition, select the Freeze Flexfield Definition check box. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 41

90 Defining the Accounting Flexfield Structure Defining the Accounting Flexfield Structure 1. Set Validation Information for Segments - Assign a value set to each segment. - Always select the flexfield security check box for each segment. - Enter a default value from the list of values or enter another value. - Select the Required check box and the Displayed check box. 2. Select Different Sizes for the Segment Display - Choose the number of characters to be displayed for the flexfield segment value and its description in the Display Size and Description Size fields. - In the Concatenated Description Size field, choose the number of characters to be displayed for each segment value description that makes up the account combination. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 42

91 Defining the Accounting Flexfield Structure Defining the Accounting Flexfield Structure In the Flexfield Qualifiers window, assign qualifiers to individual accounting key flexfield segments: Natural Account: Each Accounting Flexfield structure must contain only one natural account segment. When setting up the values, you will indicate the type of account as Asset, Liability, Owner's Equity, Revenue, or Expense. Balancing Account: Each structure must contain only one balancing segment. Oracle General Ledger ensures that all journals balance for each balancing segment. Cost Center: This segment is required for Oracle Assets. The cost center segment is used in many Oracle Assets reports and by Oracle Workflow to generate account numbers. In addition, Oracle Projects and Oracle Purchasing also utilize the cost center segment. Intercompany: General Ledger automatically uses the intercompany segment in the account code combination to track intercompany transactions within a single Ledger. This segment has the same value set and the same values as the balancing segment. Secondary Tracking Qualifier Management Segment Qualifier Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 43

92 Management Reporting and Security Management Reporting Security There is a new management segment qualifier for the chart of accounts. Typically, you would qualify a segment to be the management segment if that segment has management responsibility. For example, a line of business, cost center, or product line. The added benefit of using a management segment is that you can now secure management segment values using data access sets. So you can grant read only or read and write access to specific management segment values to prevent certain managers from viewing and updating data for cost centers, lines of business, or product lines outside of their management authority. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 44

93 Management Reporting and Security Example Management Reporting Security Example Example: This is the cost center organizational hierarchy. Director A has cost center OU97, Director B has OS69 and Director C has OX53. By assigning the cost center segment as the management segment, read and write access can be secured to certain management segment values based on the cost center manager. For example, Director A has read and write access to only cost center OU97. Director A does not have access to Director B s or Director C s cost center or to the Vice President s cost center. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 45

94 Management Reporting and Security Example Management Reporting Security Example The Vice President, on the other hand, would have full read and write access to cost center 0683 which is the parent of the direct reports. Thus, the Vice President has full access to all direct reports data. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 46

95 Defining Segment Values Defining Segment Values (N) Setup > Financials > Flexfields > Key > Values Use the Segment Values window to enter values for each segment you create. These are the values that you use when building your account code combinations. Note that you must create the segments and account structure before performing this step. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 47

96 Secondary Tracking Segment Secondary Tracking Segment Use the a secondary tracking segment to nominate a segment in your chart of accounts to act as your secondary tracking segment. Any segment, except the balancing segment or natural account segment, can be specified as the secondary tracking segment. Once you choose which segment you want as the secondary tracking segment, its value is paired with the balancing segment value when generating account balances for the Retained Earnings account, Unrealized Gains or Losses account, and the Cumulative Translation Adjustment account. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 48

97 Secondary Tracking Segment Benefits Secondary Tracking Segment Benefits A secondary tracking segment provides better audit and analysis capabilities. You now have more visibility into the detailed components of Retained Earnings, CTA, and Unrealized Gains and Losses. Instead of tracking these accounts by a balancing segment alone, you can track them by the balancing and another segment of your choice, such as Department, Line of Business, or Cost Center. It also provides better control and consistency of similar transactions because this option is set at the Ledger level instead of through a profile option. By being able to nominate any segment other than your primary balancing segment or natural account segment to act as your secondary tracking segment, you have greater flexibility in tracking accounts by pairs of segments. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 49

98 Selecting Account Combinations Selecting Account Combinations The default setting for an account code combination is selected. Once created, an account code combination cannot be deleted. To discontinue using an account code combination, simply deselect the Enabled check box for the account. You can also use the effective date to select or deselect the combination. For example, if you have a new department as of January 1, 2002, you can create an account code combination with an effective date of 01-JAN-2002 and the account combination becomes enabled on that date. This means you have the flexibility to create the account combinations in advance. Additionally, you can control the following attributes from the GL Accounts window: Preserved Type Effective Dates Allow Posting Allow Budgeting Alternate Account Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 50

99 Using Dynamic Insertion Using Dynamic Insertion Set the Allow Dynamic Inserts Option. You have the option to add account combinations automatically as you enter them in transactions, including when you define a Ledger. This option is controlled by the Allow Dynamic Inserts check box located on the Key Flexfield Segments window. Alternately, you can require all accounts to be define manually in the Accounts Combinations window. Frequently, companies select dynamic insertion while they are entering historical data from a legacy system. They then deselect the feature to ensure tighter control over the creation of new account combinations. Note that if you are defining an accounting flexfield for Oracle Projects, you must define your segment with the Allow Dynamic Inserts option set to Yes. For more information, refer to the Oracle Projects User Guide. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 51

100 Defining Cross-Validation Rules Defining Cross-Validation Rules Cross-validation controls the value combinations you can create when setting up Accounting Flexfield combinations. A cross-validation rule defines whether a value of a particular segment can be combined with specific values of other segments. It is different from segment validation, which controls the values you can enter for a particular segment. Use crossvalidation rules to prevent the creation of combinations that should never exist, combinations with values that should not coexist in the same combination. For example, you can assign rules to prevent the product combination with administrative departments. Defining and Revising Cross-Validation Rules: Because cross-validation rules validate only new accounts, you should define and select them prior to entering accounts. Revise cross-validation rules at any time, but remember that they only prevent the creation of new invalid account combinations. Combining Segment Values: New accounts must pass every selected cross-validation rule to be valid. Cross-validation rules do not affect existing accounts. Using Cross-Validation with Dynamic Insertion: Select dynamic insertion in the Key Flexfield Segments window for users to define new account combinations of segment values. If dynamic insertion is not selected, you can only enter new account combinations of segment values using the GL Accounts window. Cross validation rules Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 52

101 are important even if dynamic insertion is not enabled to prevent creating invalid combinations accidentally. Specifying Cross-Validation Rules: To enter cross validation rules, navigate to the Cross Validation Rules window. (N) Setup > Financials > Flexfields > Key > Rules Enter the error message that should be displayed if the rule is violated: Include the rule name in the error message for easy identification. Enter the segment name most likely to cause this cross-validation rule to fail; Oracle General Ledger moves the cursor to this segment whenever a new account combination violates this cross-validation rule. Defining Cross-Validation Rule Elements: Select Include or Exclude and specify a range of accounts for each rule. Oracle General Ledger excludes all accounts that are not explicitly included. Exclude rule elements always override Include rule elements. Create a universal Include statement that includes all possible accounts, then specify Exclude statements. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 53

102 Defining Cross-Validation Rules Defining Cross-Validation Rules Note that defining many rules with few elements is clearer than defining few rules with many elements. Always have one universal Include element and one or more restricting Exclude elements. To help maintain cross-validation rules, have your system administrator add the following reports to your General Ledger responsibility: Cross-Validation Rule Violation Report: This report provides a listing of all the previously-created flexfield combinations that violate your cross-validation rules. You can also choose to have the report program actually disable the existing combinations that violate your new rules. Cross-Validation Rules Listing Report: This report lists all the cross-validation rules that exist for a particular flexfield structure. This is the information you define using the Define Cross-Validation Rules form, presented in a multiple-rule format you can review and keep for your records for a given flexfield structure. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 54

103 Defining Flexfield Security Rules Defining Flexfield Security Rules (N) Setup > Financials > Flexfields > Validation > Security > Define To prohibit certain users from accessing specific segment values, you can define flexfield security rules and assign those rules to the responsibility of the restricted users. For example, you can create a security rule that grants a user access only to his or her own department. Accounting Flexfield segment values must pass every assigned flexfield security rule for a user's responsibility before the value can be selected by the user. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 55

104 Accounting Calendar Accounting Calendar Through Oracle General Ledger, you can define multiple calendars and assign a different calendar to each Ledger. For example, you can use a monthly calendar for one Ledger, and a weekly calendar for another. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 56

105 Defining Period Types Defining Period Types Oracle General Ledger uses the year type to determine the year to assign to a period name in the accounting period system. When defining new period types, do the following: Select Calendar to use the year in which an accounting period begins for the period name. Select Fiscal to use the year in which your fiscal year ends for the period name. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 57

106 Accounting Period Statuses Accounting Period Statuses Never Opened: You cannot enter or post journals. Future Enterable: You can enter journals, but you cannot post. The number of future enterable periods is a fixed number defined in the Ledger window. You can change the number of Future Enterable periods at any time. Open: You can enter and post journals to any open period. An unlimited number of periods can be open, but doing so may slow the posting process and can confuse users entering journals. Closed: You must reopen Closed periods before you can post journals. You should manually close periods after finishing your month-end processing. Permanently Closed: Permanently Closed periods cannot be reopened. This status is required to archive and purge data. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 58

108 Selecting Currencies Selecting Currencies To select or deselect a currency, open the Currencies window. (N) Setup > Currencies > Define For more information, refer to the Oracle General Ledger User Guide or the R12 General Ledger Financial Management Fundamental Topic Multi-Currency or the Advanced Topic Multiple Reporting Currencies. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 60

109 Creating a Ledger Creating a Ledger Ledger Considerations Minimize the number of future enterable periods to prevent users from accidentally entering journal entries in an incorrect period. Ensure that all currencies you use, including the statistical journal (STAT) currency, are defined and selected prior to entering transactions in your Ledger. Define responsibilities for a Ledger for appropriate levels of forms security. Considerations for Multiple Companies Sharing Ledgers Define account structure, accounting calendar, functional currency, and Ledger. Create the account flexfield structure. Define the company segment as the balancing segment with multiple values. Define the Ledger and assign the options you want to use for the Ledger. Set up a separate company segment value for your eliminating entries, which you can post to this elimination company segment without reversing later. Set up a parent company segment value that includes (as children) all of the company segment values that you want to consolidate. You can include the eliminating entries that you set up previously. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 61

110 For example, if you want to consolidate companies 01 through 07 and your eliminating entries are made to company 08, define a parent company 09 whose children are companies 01 through 08. Include the parent company in a rollup group, and then define summary templates with this rollup group. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 62

111 Accounting Setup Manager Accounting Setup Manager Components consist of: Legal Entities: Legal entities can be manually assigned to a ledger and balancing segment values can optionally be mapped to legal entities to help you identify transactions by legal entity during transaction and journal processing. You can access multiple legal entities and ledgers when you log into Oracle General Ledger using a single responsibility. This improves processing efficiency by reducing the need to switch between responsibilities when trying to access data for different ledgers or legal entities. Balancing Segment Values: Optionally mapped to legal entities to identify transactions by legal entity during transaction and journal processing. One Primary Ledger Operating Units Reporting Currencies Secondary Ledgers Pre-Update Diagnosis Report: Shows inconsistent and incomplete setup and gives you opportunity to correct before upgrade. Post-Update Diagnosis Report: Displays results of upgrade. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 63

112 For example, a Pre-Update Diagnosis Report might say: The following subledger level reporting currencies were updated from reporting ledgers that have inconsistent currency conversion options for different products and/or operating units. Accounting Setup Manager does not support different conversion options by different products and operating units. If you change the currency conversion options for a subledger level reporting currency, then those changes will be synchronized across all products and operating units that use that subledger level reporting currency. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 64

113 Ledger Options Ledger Options Note: Many ledger options are set using the Accounting Setup Manager Select suspense posting: Posts out-of-balance journal entries to a suspense account you specify. Enter a suspense account. If you do not select this feature, you can only post journal entries that balance. Balance intracompany journals: Posts out-of-balance intracompany journal entries, which are automatically balanced against a specified intracompany account. Select the Balance Intracompany Journals check box. Enter the intracompany account(s) in the Intracompany Accounts window. If you do not select this feature, you can only post intracompany journal entries that balance by balancing segment, usually the company segment. Use budgetary control: Using budgetary control for your Ledger, you can set budgetary control options for an assigned account range. You can only assign budgetary control options to account ranges with your functional currency and a budget entry type of Entered. Select track rounding differences: Tracks rounding differences in currency conversions. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 65

114 Ledger Options Ledger Options Select Journal Approval: Uses the Journal Approval feature in your Ledger. When Journal Approval is selected and a journal entry's source requires approval, the journal must be approved first by the appropriate management level. If Journal Approval is not selected, approval is not required, even if the journal source requires approval. Select Journal Entry Tax: Manually enters taxable journal entries in General Ledger. When you select this feature for a Ledger, the system automatically calculates associated tax amounts and generates tax journal lines. Specify Ledger accounts: You must specify a Retained Earnings account when defining a Ledger. You can set up other special accounts depending on your preferred functionality. - Retained Earnings Account: General Ledger posts the net balance of all income and expense accounts from the prior year to this account when you open the first period of a fiscal year. - Suspense Account: If you choose to allow posting of out-of-balance journal entries, General Ledger automatically posts the difference to this account. If you have multiple companies or balancing entities within a Ledger, General Ledger automatically creates a suspense account for each balancing entity. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 66

115 Ledger Options Ledger Options Rounding Differences Account: Specify an account to track rounding differences that occur during currency conversions. Select this feature if your foreign currency transactions include different balancing segments to represent multiple companies. General Ledger automatically creates a rounding differences account for each balancing segment. - Cumulative Translation Adjustment Account: If you translate your functional currency balances into another currency for reporting, r if you revalue foreign currency-dominated balances, you must specify a translation adjustment account. - Reserve for Encumbrance Account: Posts the difference of out-of-balance encumbrance entries. - Net Income Account: General Ledger uses this account to capture the net activity of all revenue and expense accounts when calculating the average balance for retained earnings. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 67

116 Linking a Ledger to a Responsibility Linking a Ledger to a Responsibility Predefined and Customized Responsibilities Oracle General Ledger predefines several responsibilities that determine users' access to a specific Ledger and allows users to run specific programs or perform specific functions. You can define unique responsibilities that include different reports and functions. You can assign appropriate responsibilities to users according to their job requirements and your data security demands. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 68

118 Account Hierarchy Manager Account Hierarchy Editor You can use Oracle s Account Hierarchy Manager (AHM) to view and maintain your General Ledger accounts. With drag-and-drop ease, you can create, maintain, simulate, view, and print actual and hypothetical account hierarchy structures in a variety of formats. You can make all changes to the account structure through the Account Hierarchy Manager. After saving, these changes are automatically reflected in Oracle GL for use in all reports, windows, and programs. You can also change reporting structures and hierarchies for comparison purposes by using AHM in conjunction with Financial Statement Generator (FSG) reports to look at the financial results for your organization is different ways. With the Account Hierarchy Manager, you can: View Accounting Flexfield structure hierarchies Change hierarchies to reflect organizational changes Create new parent or child segment values Copy existing hierarchies to create new ones Change segment value descriptions using the Modify Node Descriptions window Save changes to the database Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 70

119 Security Definitions Security Definitions Following is a list of definitions that have this security available: MassAllocation and MassBudget Formulas FSG Reports and Components Accounting Calendars Transaction Calendars AutoPost Criteria Sets AuoReversal Criteria Sets Budget Organizations Chart of Accounts Mappings Consolidation Definitions Consolidation Sets Elimination Sets Ledgers Recurring Journals and Budget Formulas Rate Types Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 71

121 Replacement for Disabled Accounts Replacement for Disabled Accounts This feature helps prevent errors due to disabled or end-dated accounts when interfacing data to General Ledger and creating the accounting in Subledger Accounting. You may designate an alternate account for your disabled or end-dated accounts. Subledger accounting and General Ledger then use the alternate account when processing. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 73

122 Control Accounts Control Accounts Control accounts are accounts that can only be used by Oracle subledgers, such as Oracle Payables, Receivables, and Inventory. Control accounts cannot be used to enter manual entries in GL. By specifying an account as a control account, you can ensure that their balances are consistent with General Ledger balances for the same account combination. This allows you better control by ensuring that only the authorized sources are using specific accounts. This also improves reconciliation because it prevents imbalances from occurring between the subledger balances and GL balances. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 74

123 Account Analysis & Drilldown Account Analysis & Drilldown You can view the balances of multiple detail or summary accounts in a single page and drill down to supporting journal entries and subledger transactions all within a browser window. You can control the display of your data by choosing from various layouts, specifying your sort criteria, or defining filters to only retrieve balances that meet your specific conditions. After fine-tuning your personal search criteria, you can even save the search criteria for future use. These features give you immediate access to your live general ledger data so that you have the information you need to make better business decisions. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 75

124 Accounting and Reporting Sequencing Accounting and Reporting Sequencing Sequential numbering supports sequencing requirements in geographies such as Asia, Latin America, and Europe. Journal Sequencing options include: Accounting Sequencing: Automatically assigns a sequence number to General Ledger journal entries that are posted in General Ledger. There s also an option to sequence subledger journals when they are completed in Subledger Accounting. Reporting Sequencing: Use to sequence both General Ledger journals and subledger journals when the General Ledger period is closed. This feature replaces the Accounting Engine (AX) legal sequencing and Libro Giornale features. You can assign mutually exclusive sequences based on ledgers or reporting currencies, journal sources, journal categories, and balance types. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 76

125 Accounting and Reporting Sequencing Benefits Accounting and Reporting Sequencing - Benefits With the journal sequencing options, you meet legal requirements in different geographies, such as Europe, Asia and Latin America. Fiscal authorities can now easily verify the completeness of a company s accounting records. You have flexibility in choosing how to sequence journals based on different criteria. You do not need to worry about localizations. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 77

127 Subledger Accounting (SLA) Overview Subledger Accounting (SLA) Overview All Oracle Applications products use the same: Set of accounting rules Posting engine Design subledger accounting tables SLA provides standard features that link accounting across multi-transactional business flows: Automated derivation of accounting information (accounting flexfield, analytical criteria etc.) from the accounting for prior transaction in the business flow AP Trial Balance type reporting for any transitory account across accounting flows SLA provides a common and consistent data model across all subledger applications. Reports and inquires can be used to extract data from any subledger application. SLA takes advantage of a common data model to deliver generic extracts of subledger accounting (including analytical criteria) that you can use with BI Publisher (in other words, the extract contains all the columns associated with a subledger journal journal entry header, line and associated GL balance). Output from the extracts can be fed into Analytical applications, external reconciliation and audit tools. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 79

128 Subledger Accounting Subledger Accounting Subledger Accounting is mainly a rule-based accounting engine that centralizes accounting for Oracle E-Business Suite products, as well as provides an accounting toolset and repository for third-party applications. It is not a separate product in itself, but is Oracle s engine catering to the accounting needs of both Oracle and external modules. Together with ledger support, it 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. You can access multiple legal entities and ledgers when you log into Oracle General Ledger using a single responsibility. This improves processing efficiency by reducing the need to switch between responsibilities when trying to access data for different ledgers or legal entities. By maintaining a full link between the transaction and accounting data, it allows powerful reconciliation and auditing capabilities. Because it provides the setup and inquiry UI and data model for accounting across modules, it enables consistency in reporting, analysis, and user experience. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 80

129 Subledger Accounting Definition Subledger Accounting Definition Oracle Subledger Accounting: Enables corporations to comply with corporate, local and managerial accounting and audit requirements via increased control, visibility and efficiency. Increases control by storing a complete and balanced journal entry for each subledger transaction and GL date. Provides detailed drilldown and audit information captured for each journal entry line. Stores journal entries in a common data model therefore is a single source of truth for all accounting, reconciliation and analytical reporting. Stores the articulated balance sheet side of every entry and cross references it to the business transaction s evidentiary document. Simplifies business transactions and reconciliation from General Ledger through Subledgers to the documents. Facilitates exercising internal control and policy by implementing accounting rules you define. The rules refer to system data from many sources, and can be tailored very finely by document type and document line. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 81

130 Streamlines the close by providing a common posting engine, so that all subledger products and non-oracle products can transfer controlled and summarized data to the General Ledger using a standard methodology and auditable, reviewable process. Improves efficiency by speeding period close, simplifying business and regulatory changes and making acquisitions easier Increases management visibility by supporting multiple parallel accounting representations. Defines and implements corporate accounting policies globally; free from limitations imposed by local fiscal reporting requirements. Allows accounting policies to be created once and deployed many times. Minimizes maintenance and eliminates of duplicate accounting policies Enables business users to control all aspects of journal entries including debits and credits; accounting flexfields, descriptions and GL date Gives you control over the definition of your journal entries. You can define the following components of journal entries: - GL Dates - Entry Descriptions - Line Descriptions - Amounts (accounted and gain/loss) - Accounts: rules can be created for either the entire account combination orfor individual segments based upon constants or from transaction information - Journal Lines: side, summarization, type - Reconciliation References The definition of these components can be based upon information from subledger applications such as transaction or setup values. Conditions may be used to determine how and when many of these components are used, and to create defaults. Setups can be quickly copied and altered to modify seeded definitions. Multi-language support is available for journal entry descriptions. For each setup, Oracle Subledger Accounting stores information to determine whether it was seeded or completed by the user allowing customers to take advantage of upgrades without worrying about overwriting their customized setups. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 82

131 Subledger Accounting Engine Subledger Accounting Engine Control accounting entries for all entities Easy definition and maintenance of rules Drilldown to fully auditable and transparent entries Simplify account reconciliation SLA provides SOX-like management of your transaction accounting rules: versioning, librarianship, auditing, review, clarity. Each event derives it s accounting from its relevant data, you can assemble and validate the rules in a straightforward manner. It also includes a set of seeded rules as well. Rather than generating balanced entries during the posting process, as some products do, all bookkeeping is balanced first, and schedules supporting such control accounts as Receivables, Payables and Inventory are produced automatically, greatly facilitating reconciliation. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 83

133 Simultaneous Opening and Closing of Periods Simultaneous Opening and Closing of Periods Responsibility: System Administrator Navigation: Concurrent > Requests > (B) Submit a New Request > Choose Open Period You can open and close periods across multiple ledgers simultaneously by using Ledger Sets. You can submit open and close processes from the Concurrent Manager or the Submit Request form. When specifying the open or close program, you can specify a ledger to have the periods for all ledgers in the ledger set be opened or closed. You can use a gapless close period program, which allows you to specify a target period to close. Any open periods between the last closed period and the target period are closed You can use the Permanently Close Period program to permanently close a period. Note that to permanently close a period, the period s status must be closed Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 85

134 Simultaneous Year-End Closing Journals Simultaneous Year-End Closing Journals Responsibility: System Administrator Navigation: Concurrent > Requests > (B) Submit a New Request > Close Process - Create Income Statement Closing Journals Navigation: Concurrent > Requests > (B) Submit a New Request > Close Process - Create Balance Sheet Closing Journals Through the use of ledger sets, you can run the two closing journals programs for one or more ledgers simultaneously. Run the Income Statement Closing Journals program to transfer year-end revenue and expense accounts to the Retained Earnings account for multiple ledgers in a single submission. Run the Balance Sheet Closing Journals program to close out the YTD balances of balance sheet accounts across multiple ledgers at once. Data Access Set security ensures that only users with full read and write access to ledgers can successfully submit the programs. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 86

135 Simultaneous Currency Translation Simultaneous Currency Translation Navigation: Currency: Translation Another feature you can leverage through the use of Ledger Sets is Translation, which allows you to translate balances for multiple ledgers simultaneously. You can do this through the Translate balances form or by submitting the Translation program from the Submit Request form. This allows you to more efficiently schedule your translation process during your critical close. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 87

136 Financial Reporting Across Ledgers Financial Reporting Across Ledgers Navigation: Reports : Request : Financial -> Individual Reports From the Run Individual Reports form you can specify a single ledger or a ledger set at runtime when generating FSG reports. To leverage the use of ledger sets with FSG reports, you must define a ledger set with a default ledger assigned. Running standard reports with ledger sets does not require a default ledger be assigned to the ledger set. When you submit your FSG or standard report request, specify the ledger set and a separate report will be run for each ledger in the ledger set. You can also run reports in the Single Request Submission (SRS) form. Navigation: Concurrent : Request : (submit a new request) Program - Run Financial Statement Generator The parameters for the Run Financial Statement Generator program that you submit from the Submit Request form are the same as in the Run Individual Reports. You can specify a single ledger or a ledger set when submitting FSG reports from the Submit Request form. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 88

138 Performing Journal Entry Functions Performing Journal Entry Functions Using Oracle General Ledger, Oracle subledgers, and Oracle Web ADI, you can perform the following journal entry functions: Create journal entries in Oracle General Ledger or use Web ADI to enter journals from a spreadsheet Import journal entries Post journal entries Inquire on account information and journal entries Drill down to subledgers Run reports Reverse journal entries Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 90

139 Types of Journal Entries Types of Journal Entries Within Oracle General Ledger, you can work with the following types of journal entries: Manual Journal Entries: The basic journal entry type is used for most accounting transactions. Examples include adjustments and reclassifications. Reversing Journal Entries: Reversing journal entries are created by reversing an existing journal entry. You can reverse any journal entry and post it to the current or any future open accounting period. Recurring Journal Entries: Recurring journal entries are defined once, then are repeated for each subsequent accounting period you generate. You can use recurring journal entries to define automatic consolidating and eliminating entries. Examples include intercompany debt, bad debt expense, and periodic accruals. MassAllocations: MassAllocations are journal entries that utilize a single journal entry formula to allocate balances across a group of cost centers, departments, divisions or other segments. Examples include rent expense allocated by headcount or administrative costs allocated by machine labor hours. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 91

140 Journal Creation Methods Journal Creation Methods You can create journal entries using different methods in Oracle General Ledger. Method Organization Need Procedure Manual Journal Create adjusting journal Enter debits/ credits entries and accruals manually Reversing Entries Reverse errors and revaluation Reverse encumbrances and accruals of preexisting journals Recurring Entries Create journals using fixed Create journals using skeleton, variable amounts and standard, or formula template complex formulas and with the same or similar information. MassAllocations Allocate from one account to Calculate journals using an many using a single formula allocation formula Journal Import Integrate Oracle GL Import journal entry information with other applications from feeder systems Journal Wizard Integrate Oracle GL Upload journal entries from an for journal creation an Excel spreadsheet Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 92

141 Automatic Journal Copy Automatic Journal Copy You can copy: Entire journal batches Journal batches with any status The system creates a new journal batch containing the same journal entries.you can also change the batch name, period, and/or effective date while copying the journal batch. After copying the journal batch, you can modify the unposted journals in the same manner as any manually created journals. Benefits of automatic journal copy include: Increased Journal Entry Speed: Quickly create new journals by copying an existing one Reduced Data Entry Errors: Reduce errors caused by having to manually enter new journals from scratch Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 93

142 Integrated Web-based Spreadsheet Interface Integrated Web-based Spreadsheet Interface Through the integration with Web ADI (Application Desktop Integrator), you can leverage spreadsheet functionality in Oracle General Ledger via a web-based interface. Launch the spreadsheet interface from a General Ledger responsibility. Using the Journal Wizard, you 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. You 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. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 94

143 Integrated Web-based Spreadsheet Interface Benefits Integrated Web-based Spreadsheet Interface - Benefits You can use all the features in Excel to create journals or enter budgets. You can customize layouts to configure the information you want displayed in your spreadsheet. Spreadsheets can be saved to the desktop, worked on when not connected to the network, and uploaded to Oracle Applications when back on the network. In addition, spreadsheet data can be easily saved and redistributed, making it easier to share and review work. You can also enter recurring journal entries by saving a journal worksheet, then uploading it whenever appropriate, such as every month. Another benefit is reduced costs. Because users are already familiar with Excel, you can reduce training costs because they never need to leave their desktop environment to enter journals or budgets. You can also keep IT costs down because Web ADI is centrally deploy and managed over the web. You do not have to install any client/server applications. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 95

144 Journal Components Journal Components You create a batch of journal entries by entering a batch name and optionally, a control total and description. If you do not enter batch information, Oracle General Ledger automatically creates one batch for each journal entry, defaulting the name and the latest open period. If you do not enter a batch name, you must recall the journal entry by date. Batch information is stored in the GL_JE_BATCHES table. Note that most companies use standard naming conventions for batches and journals to easily identify who entered the journal and the purpose of the journal entries. An example would be: Accrual <Initials of the person who entered the journal> today's date. Journal Header Information Identifies common details for a single journal entry, such as name, effective date, source, category, currency, description, and control total. You group all lines sharing the same currency and category into journal entries. If no journal entry-level information is entered, Oracle General Ledger assigns a default name, category, and the functional currency. Header information is stored in the GL_JE_HEADERS table. Journal Line Information Journal lines specify the accounting information for the journal entry. Total debits must equal total credits for a journal entry for all journal entries except budget journal entries and statistical journal entries. You can optionally enter description for each line. Information for journal entry lines is stored in the GL_JE_LINES table. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 96

145 Grouping Journals into Batches Grouping Journals into Batches You can enter a journal directly without creating a batch by selecting New Journal in the Find Journals window. A batch name is created using the source combined with a batch ID and system date as in Manual <BatchID><Date>. You can enter journals only in a current or future enterable accounting period. Note that if you enter a period prior to the current accounting period and the user profile Journals: Enable Prior Period Notification is set to Yes, General Ledger displays a message indicating that you are entering a prior period journal. If you post one journal entry, the entire batch posts. When using the reversing functionality, you can choose to reverse all the entries in a batch or just one journal. You can post journal entries with unbalanced debits and credits if Suspense posting is selected. The difference is posted to the suspense account. If suspense posing is not selected, you cannot post an unbalanced journal entry except for statistical or budget entries which do not have to be balanced to post. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 97

146 Manual Journal Entries Manual Journal Entries Functional currency The default currency when you open the Enter Journals window. Foreign currency journal entries - Specify the currency. - Enter conversion type: Spot, Corporate, User (enter a conversion rate), or other defined type. - Conversion date must be within the accounting period defined for the journal entry. Statistical Journal Entries: To enter a statistical journal entry, select STAT as the currency for the journal entry. Statistical journal entries can be "one-sided" entries. The debits do not need to equal credits for the journals to post. Combined Currency and Statistical Amounts: You can enter a statistical journal entry by itself or combined with currency journal amounts. Set the Journals: Mix Statistical and Monetary profile option to Yes. Define a statistical unit of measure for any natural account segment values you want to combine statistical and monetary journal entries. When entering the journal lines, use debit and credit amounts for any monetary currency. In the Statistical Amounts region, enter the statistical quantity. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 98

147 Intercompany/Intracompany Journal Entries: Enter the intercompany transaction. General Ledger automatically creates the balancing intercompany journal lines based on the accounts you defined in the Intercompany Accounts window. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 99

148 Performing Additional Journal Actions Performing Additional Journal Actions Reverse Journal: You can reverse a journal entry or batch. Select a reversal period if prompted. Select the reversal method: Switch Debit/Credit or Change Sign. Change Period: Select this button to change the period of any entry. Post: Select this button to launch the concurrent process to post a manual journal entry and update account balances. Posting is available only if the profile option Journals: Allow Posting During Journal Entry is set to Yes. Note: You can also post journal entries by navigating to the Post Journals window. (N) Journals > Post Funds Action: If you select budgetary control for a Ledger, you have the following additional actions available for manual journal entries: - Check funds - Reserve funds - View results Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 100

149 Posting Journals Posting Journals Batch Posting: Navigate to the Post Journals window to post a group of journal batches. (N) Journals > Post Manual Posting: Click Post from either the Journals window or the Batch window to post a journal batch at the time of entry, if the profile option Journals: Allow Posting During Journal Entry has been set to Yes. When you post journals, Oracle General Ledger posts all journals in a batch. You cannot post individual journal entries in a batch. (N) Journals > Enter Automatic Posting: Run the AutoPost program to post journal batches automatically based on a schedule you define. (N) Setup > Journals > AutoPost Posting Journal Batches You can post actual, budget, and encumbrance journal batches. The Posting Status for the batch must be Postable and the Period Status must be Open for the following balance types: Actual: Open period Budget: Periods in an open budget year Encumbrance: Any period up to the last period in the latest encumbrance year Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 101

150 If applicable, check the Control Total for the journal entry batch. General Ledger does not post journal batches if the total entered debits do not match the control total for the batch. Correcting Batch Posting Errors Review the batch to identify the posting error. Common explanations for unpostable batches include control total violations, posting to unopened periods, and unbalanced journal entries. Correct the specific error and post the batch. The posting status could be: Unposted Pending Processing Selected for posting Posted Error Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 102

151 Posting to a Prior Period Posting to a Prior Period You can post journal entries to a prior accounting period and to a prior fiscal year, as long as the prior period is open. When you post to a prior period, General Ledger automatically updates the beginning balances of all subsequent periods even if the period is closed. In addition, if you post a journal entry into a prior year, General Ledger adjusts your retained earnings balance for the effect on your income and expense accounts. When you finalize your activity for an accounting period, simply close the period to prevent the entry or posting of additional journal entries. Displaying Warning Messages You can require General Ledger to display a message whenever you try to enter a prior period journal so you do not accidentally enter a journal for a prior period. Have your system administrator set the profile option Journals: Enable Prior Period Notification to Yes. Having many accounting periods open affects the time required to run the posting program. Therefore, keep the number of open accounting periods to a minimum. Minimize the number of open periods to prevent errors in posting to an incorrect period. Run a Trial Balance Report whenever you post to a previous fiscal year to ensure that your Retained Earnings account is properly reconciled. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 103

152 Automatic Posting Automatic Posting To facilitate journal batch posting, you can schedule automatic posting based on parameters you specify. You can define multiple criteria sets that include a range of journal effective dates and multiple AutoPost priorities. For example, suppose after running Journal Import, you routinely post journal entries from Payables to record your payments. To automate posting these batches, you can define a set of criteria to select all unposted journal entries with a source of Payables, a category of Payments, and a balance type of Actual for all periods. You can then schedule the AutoPost program to run at the beginning of each week. Oracle General Ledger automatically selects and posts your Payables payment batches to update your cash balances. Automatic Posting allows you to share AutoPost Criteria Sets across multiple ledgers that share the same chart of accounts, calendar, and period type. This allows you to reuse a single AutoPost definition to post journals for multiple ledgers. In the same manner, AutoReversal allows you to share AutoReversal Criteria Sets across multiple ledgers. This allows you to reuse a single AutoReversal definition to reverse or to reverse and post journals for multiple ledgers. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 104

153 Performing Online Inquiries for Accounts and Journal Entries Performing Online Inquiries for Accounts and Journal Entries Oracle General Ledger provides three windows to view detail and summary information for your account balances, journal entries, and subledger accounting transactions: Account Inquiry Journal Inquiry Journal Enter Whether you start in the Journals window or the Account Inquiry window, you can take advantage of the graphical view of underlying accounting information for your transactions by accessing the T Account and Activity Summary windows. You can also drilldown to see the subledger transactions that created the journal entries through SLA. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 105

154 Reversing Journal Entries Reversing Journal Entries You can create reversing journal entries to reverse accruals, estimates, temporary adjustments, and reclassifications, or correct errors. You can reverse a journal entry in two ways: Switch Dr/Cr: Journal entry is reversed by switching the debit and credit amounts. Change Sign: Journal entry is reversed by changing the original journal amounts from positive to negative. You can reverse a journal entry in any period after the journal entry is posted. You control which responsibility can reverse journal entries directly from the Enter Journals or Enter Encumbrance window by excluding the function called Enter Journals: Reverse from the responsibility's menu. Reversing Journal Batches You can reverse a single journal entry or an entire batch of journal entries. When you reverse a batch, General Ledger creates a reversing batch with a reversing journal entry for each journal entry in the original batch. General Ledger uses the reversal method assigned to the journal category in the Journal Reversal Criteria window. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 106

155 Creating Reversing Journals Creating Reversing Journals You have two options for manually selecting journal entries for reversal: Create the reversal immediately Enter the period and generate the reversal later. Use the Reverse Batch button to immediately reverse any posted or unposted journal entry or batch in the current period or future enterable period. (N) Journals > Enter (B) Reverse Batch Use the Reverse Batch window to define a reversal period for a journal entry. Then, select the journal entry at a later time, to be reversed in the Reverse Journals window. (N) Journals > Enter (B) Review Journal (B) Reverse Use the Reverse Journals window to generate reversal journals with a predefined reversal period, such as monthly accruals, that need to be reversed at the beginning of the following period. (N) Journals > Generate > Reversal Note that if you click Reversal, the reversing journal will be created immediately. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 107

156 Reversing Journals Automatically Reversing Journals Automatically If you routinely generate and post large numbers of reversing journal entries as part of your monthly procedures for closing and opening accounting periods, you can use the Automatic Journal Reversal feature to save time and automate the process. This feature automatically reverses your previous month's accrual journal entries and automatically post them, if desired. Select AutoReverse, and optionally, AutoPost Reversal options for journal categories. Enter journals using categories with AutoReverse selected. Launch the Automatic Reversal program either by: Submitting a request from the Submit Request window to run the Automatic Reversal program for all journals that meet the submission requirements. Setting the profile option, GL: Launch AutoReverse After Open Period, to Yes. When you open the next period, the AutoReverse program finds all journal entries that have categories with AutoReverse and, optionally AutoPost, selected. It creates reversing journal entries and, optionally, posts them. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 108

157 Journal Reversal Criteria Journal Reversal Criteria (N) Setup > Journal > AutoReverse When you define journal categories, you can specify journal reversal criteria for controlling when and how your journal entries are reversed. After saving these criteria for a category, General Ledger automatically selects all journal entries that match the criteria for reversal. You may change the following journal reversal criteria assigned to a category at any time. Reversal method: Select Switch Dr/Cr or Change Sign Reversal period rule: Select a rule to determine which period to create the reversing journal entry. Choose the reversal date if the Ledger is using Average Daily Balances feature. - No default: Assigns the period you define when you manually enter your original journal entry - Same Period: Assigns the same period of the original journal entry - Next Period: Assigns the period following the period of the original journal entry - Next Non-adjusting: Assigns the non-adjusting period following the period of the original journal entry Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 109

158 - Next Day: Assigns the day that follows the original journal entry day. This appears in the list of values only if average balance processing is selected for the Ledger. For more information, refer to the Oracle General Ledger User Guide or R12 General Ledger Financial Management Advanced Topic Average Balance Processing. Select AutoReverse check box: To mark all journals using this category to auto reverse. Select AutoPost Reversal check box: Use in conjunction with the AutoReverse checkbox to post the journal after reversal. For example, to automatically reverse your previous month's accrual journal entries, assign the following journal reversal criteria: - Category: Accrual - Method: Switch Dr/Cr - Reversal Period: Next Period - Select the AutoReverse check box - Select the AutoPost Reversal check box Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 110

159 Journal Reversal Criteria Journal Reversal Criteria To submit a request to automatically reverse journals, select one of the following options to automatically reverse qualified journal entries: Run the Open Period program to launch the Automatic Reversal program. Note that if you do not want reversals to be generated when a period is opened, set the Profile Option, GL: Launch AutoReverse After Open Period, to No. Navigate to the Submit Requests window. Run the Automatic Reversal program. (N) Reports > Request > Standard All reversal journal entries with AutoReverse and AutoPost selected are generated and posted according to the reversal criteria that you define. The Automatic Reversal program reverses only journal entries with a balance type of Actual. You cannot use this program to reverse Budget or Encumbrance type journal entries. Budget and encumbrance journal entries must be manually reversed. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 111

160 Journal Reversal Benefits Journal Reversal Benefits 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 ensures that the account balances will always agree with General Ledger. If you need to reverse a subledger journal, then you should do so in Subledger Accounting or the subledger application. You also can no longer reverse unposted journals. This ensures data integrity and better auditability. In the past, 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. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 112

161 Recurring Journals Recurring Journals You can also create recurring journals using foreign currencies. This is useful if you need to create foreign currency journals that are recurring. 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. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 113

162 Recurring Journal Types Recurring Journal Types Skeleton Journals Skeleton journals have varying amounts in each accounting period. You define a recurring journal entry without amounts, then enter the appropriate amounts each accounting period. There are no formulas to enter, only account combinations. For example, you can record temporary labor expense in the same account combination every month with varying amounts due to fluctuations in hours. Standard Journals Standard journals use fixed account combinations and amounts each accounting period. You enter a journal using constants. For example, record monthly auto lease expenses with constant amounts charged to the same account. Formula Journals A formula entry is a recurring entry that uses formulas instead of amounts to calculate amounts. For example, calculate rent expense based on end-of-month headcounts. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 114

163 Formula Recurring Journals Formula Recurring Journals When creating Formula Recurring Journals, create a formula for each journal line. Each formula can contain an unlimited number of steps. The steps can use any combination of amounts, account balances, and/or operators. The operators that can be used are: Enter: To enter the amount or balance from the account listed in the appropriate account. Add: To add the amount or account balance in the previous line to this line. Subtract: To subtract the amount or account balance in the previous line from this line. Multiply: To multiply the last amount or account balance by the number entered on this line. Divide: To divide the last amount or account balance by the number entered on this line. Note: If the formula yields a positive amount, your account will be debited. If your formula yields a negative amount, your account will be credited. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 115

166 Journal Line Reconciliation Journal Line Reconciliation With this feature, you can automatically reconcile journal lines that should net to zero, such as suspense accounts, or payroll and tax payable accounts in countries like Norway, Germany, or France. You can selectively cross-reference transactions in General Ledger with each other by entering reconciliation reference information at the journal line level. When the balance for a group of journals is zero, the journals can be automatically marked as reconciled. Using Journal Line Reconciliation results in faster close cycles because it eliminates the need to perform manual reconciliations. No country-specific localizations are needed. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 118

168 Budgeting Budgeting Budgeting in Oracle General Ledger (GL) Create an unlimited number of budgets or forecasts. Control user access to budgets. Create budget organizations to mirror the various levels of your company s organization and to control user access to the budget information. Create master-detail budgets. Budgeting with Applications Desktop Integrator (Web ADI) Enter budget amounts in the familiarity of a spreadsheet, then upload your budget data to General Ledger. Downloads both budget or actual amounts and use to calculating new budget amounts, then be upload the new budget amounts into Oracle General Ledger. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 120

169 Budgets Budgets Budgets help you manage your business by projecting revenues and expenses by: Estimating account balances for a specified range of periods Comparing estimated amounts with actual balances and determine variances Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 121

171 Available Methods Available Methods Oracle General Ledger provides a variety of tools to create, maintain, and track your budgets: Upload budget amounts from an Excel spreadsheet. Create an unlimited number of budgets or forecasts. Control user access to budgets. Create budget organizations to mirror the levels of your company's organization and to control user access to budget information. Structure your budget into an unlimited number of levels. Create master-detail budgets. The following applications can be used: - Manual budgets created in the Oracle General Ledger Application - Uploaded budgets created in the Web ADI Budget Wizard - Uploaded budgets from non Oracle systems or applications Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 123

173 Define Budget Organizations Define Budget Organizations Through budgeting hierarchies, you can control budgeting authority and easily identify budgets that exceed control limits. You can also perform top down budgeting and identify where the discrepancies are. Contain ranges of accounts that make up the budget. Represent departments, cost centers, divisions, or other groups for which you enter and maintain budget data. Choose from the following options: - ALL budget organization - Password to restrict access Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 125

174 Entry Methods Entry Methods Enter Budget Amounts Use a quick, manual approach for adjustments. Use budget rules to base amounts on prior actuals or budgets. Enter Budget Journals Create an audit trail of amounts entered. Use the Web ADI Budget Wizard Create a new budget in an Excel spreadsheet or download an existing budget to an Excel spreadsheet for modification, and then upload the revised budget to Oracle General Ledger. Upload Budgets Upload budget data from an external source. Create Budget Formulas Create standard or formula recurring entries. Use this for complex allocations. Create MassBudget Journals Quickly create budget allocation entries from a single formula to match your actual allocations. Transfer Budget Amounts Transfer fixed amounts or a portion of a budget balance from one account to another. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 126

175 Creating Journals Creating Journals When you define a budget, you choose whether to require budget journals for your budget. If you select the Require Budget Journals flag for your Ledger, this option will already be selected and cannot be changed. When you require budget journals, you can only use budget entry methods that create journals, namely budget journals, MassBudgets, budget transfers, consolidation of budget balances, and the Web ADI Journal Wizard. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 127

176 Loading with Web ADI Loading with Web ADI Web ADI includes the Budget Wizard and Journal Wizard to simplify your budgeting work with Oracle General Ledger. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 128

177 Budget Wizard: Overview Budget Wizard: Overview Use the Budget Wizard within Oracle General Ledger's Web ADI to automatically build a budget spreadsheet based on the budgets and budget organizations you set up within Oracle General Ledger. The Budget Wizard provides an Excel spreadsheet-based budget entry screen which facilitates simple data entry and modeling in a disconnected environment. With the Budget Wizard, you can Download existing budget balances from Oracle General Ledger or create a new budget. Enter your new budget balances manually, or use formulas and models. Automatically graph your budgets and compare budget and actual balances using a variety of graph styles. Save a budget spreadsheet on your PC and work on it at any time, including using it for future years. When you are satisfied with your budget, you can automatically upload your new budget balances into Oracle General Ledger. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 129

179 Foreign Currency Concepts Foreign Currency Concepts Conversion: Conversion refers to foreign currency transactions that are immediately converted at the time of entry to the functional currency of the Ledger in which the transaction takes place. Revaluation: Revaluation adjusts asset or liability accounts that may be materially understated or overstated at the end of a period due to a significant fluctuation in the exchange rate between the time the transaction was entered and the end of the period. Translation: Translation restates an entire Ledger or balances for a company from the functional currency to a foreign currency. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 131

180 Conversion Conversion You can enter foreign currency journal entries directly in the Enter Journals window or you can enter foreign currency journals in a Microsoft Excel worksheet created in the Journal Wizard and take advantage of the spreadsheet's functionality. If you specify a foreign currency, conversion date, and conversion rate type when entering journals, General Ledger automatically displays the daily rate. Daily rates are defined to convert the entered foreign currency to your functional currency for the specified date and rate type. General Ledger calculates functional debit and credit equivalents by multiplying the debits and credits entered in a foreign currency by the retrieved daily rate. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 132

181 Conversion Example Conversion Example Conversion uses a daily rate that you enter at the time of journal entry or that is derived from the rates that have been entered in the Daily Rates table in Oracle General Ledger. When you post foreign currency transactions, Oracle General Ledger maintains a separate balance for accounts entered in a foreign currency and their equivalent balances in the functional currency. Through the conversion functionality, you can: Segregate portions of an account balance by the different currencies used in each transaction. Specifically identify the source currencies of transactions, a key component of performing proper revaluation of the balance. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 133

182 Revaluation Revaluation You revalue balance sheet account balances denominated in a foreign currency to reflect the change in the foreign currency rate from the date a transaction is entered and the reporting date in compliance with SFAS 52 (U.S.). Example: The value of the receivable in Euro never changed. The original receivable transaction was entered in Euro and converted to 550 U.S. Dollars. Upon revaluation, the exchange rate changed. The original receivable still stands at 1000 Euro. The converted amount changes to 600 U.S. Dollars. The difference, 50 U.S. Dollars is posted to the Unrealized Gain/Loss Account. At the beginning of the following period, the revaluation journal is reversed. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 134

183 Revaluation Example Revaluation Example At the end of the accounting period, the revaluation process creates an unposted journal to record the change in the converted balances to the Unrealized Gain/Loss Account. The journal is posted and then reversed at the beginning of the next reporting period. In this example: The original journal amount entered in Euro remains the same. At period end, the exchange rate has changed to.81 US Dollars. The receivable is still 10,000 Euro, but is now $8,100 US Dollars. The offset of $100 US Dollars is recorded in the Unrealized Gain account. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 135

184 Translation Translation Translate actual and budget balances from functional currency to foreign currencies for online inquiries, reports, and consolidations. For average balance processing, you can translate average balances and standard balances. Run translation after completing all journal activity for an accounting period. If you post additional journal entries or change your translation rates after running translation for a period, you must retranslate. Note: If you change the account segment value s account type and retranslate your actual account balances, you must reenter or change the period end and period average exchange rates for the periods that you want to retranslate. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 136

186 Currency Rates Manager Description Currency Rates Manager Description The Currency Rates Manager is a tool that allows you to easily manage your daily and historical rates inside a new interface. The Currency Rates Manager benefits global companies that maintain multiple currencies and conversion rates by: Helping to maintain consistency among different currency conversion rates. Minimizing intercompany imbalances that could occur during intercompany eliminations of foreign currency transactions due to exchange rate differences. Easing the maintenance of daily rates and historical rates by providing a spreadsheet interface. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 138

187 Currency Rates Manager Features Currency Rates Manager Features When maintaining Daily Rates, you can automatically upload daily rates from a spreadsheet or manage daily rates within the web-based interface to quickly upload multiple rates at once. You can even use cross rate rules to automatically calculate the cross rates between 2 or more currencies. Cross rate rules use pivot currencies and contra currencies. A pivot currency is the central currency used in a cross rate rule definition. Contra currencies are additional currencies that have a rate relationship with the pivot currency. For example, if you assign a pivot currency of USD with contra currencies of EUR and Yen, when you define rates for any two currencies, such as USD to Euros and USD to Yen, the Cross Rate Rules will automatically calculate the rate between Euros and Yen and the inverse, Yen to Euros. This helps maintain consistency between different currency combinations and reduces having to create every currency combination manually. For Historical Rates, you can both upload and download historical rates via a spreadsheet interface. Added security is provided to ensure that historical rates are only uploaded to open periods. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 139

188 Currency Rates Manager Benefits Currency Rates Manager Benefits One of the benefits of using Currency Rates Manager is its easy-to-use interface. The webbased interface provides a browser look-and-feel, while the spreadsheet interface allows you to manipulate conversion rates within a familiar desktop environment. The spreadsheet interface allows you to quickly upload a large volume of daily and historical rates more efficiently. The ability to download historical rates to a spreadsheet enables you to modify the rates, if necessary, and copy them from one Ledger to another for ease of maintenance. Cross Rate Rules enforce consistency across currency rates. Because Cross Rate Rules automatically calculate the cross rates between two or more currencies, it reduces the likelihood of currency rate discrepancies. This ensures that intercompany transactions across multiple currencies are accounted for with consistent rates, minimizing the effect of exchange rate differences. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 140

189 Cross-Ledger and Foreign Currency Allocations Cross-Ledger and Foreign Currency Allocations A single responsibility can access data for multiple ledgers. MassAllocations allows you to create cross-ledger allocations where the data from one or more source ledgers can be allocated to one or more target ledgers. One example of this is allocating corporate or regional expenses to local subsidiaries when each subsidiary has its own ledger. You can also create allocations in foreign currencies. When specifying the calculation lines, you can also choose different currency options. One currency option is to allocate existing converted amounts for the foreign currency balance. The second option is to calculate the converted amount for allocation based on a rate type provided. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 141

190 Cross-Ledger and Foreign Currency Allocations Benefits Cross-Ledger and Foreign Currency Allocations Benefits You can save time by creating a single allocation definition that can be executed for multiple ledgers instead of creating a different allocation for each ledger individually. You have flexibility when defining MassAllocations. You can allocate amounts across different ledgers. You also have flexibility when allocating foreign currency amounts because you can select the treatment for converted amounts. These features allow you to manage your allocation process across your entire enterprise rather than according to your accounting setup. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 142

191 Entered Currency Reporting and Analysis Entered Currency Reporting and Analysis Entered ledger currency balances are tracked separately from the foreign entered and converted balances. You can use the entered ledger currency amounts for viewing balances for the purposes of currency valuation and hedging. FSG reporting Navigation: Reports > Request > Standard, Submit the request called Program - Publish FSG Report Online account inquiry Navigation: Inquiry > Account Recurring Journals Navigation: Journals : Define > Recurring Mass Allocations Navigation: Journals : Define > Allocation Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 143

192 Entered Currency Reporting and Analysis Entered Currency Reporting and Analysis Example: Assume a ledger and the ledger currency is USD. Two journals are entered and posted; one in 1,000 US Dollars, and another in 500 British Pounds that gets converted to 1200 US Dollars. You 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 are not included in the balance. You can still retrieve all balances in USD, both the entered as well and the converted. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 144

193 Entered Currency Reporting and Analysis Benefits Entered Currency Reporting and Analysis Benefits You have better information about your currency to perform currency valuations and hedging. You also have flexibility in creating allocations because you can allocate amounts based on entered ledger currency balances instead of only total ledger currency balances. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 145

195 Consolidations Consolidations The consolidation process combines the financial results of different companies, typically combining subsidiary accounting information into a parent company for reporting purposes. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 147

196 Consolidating Data in Multiple Instances Consolidating Data in Multiple Instances For companies that do not share the same instance, you can revalue and translate subsidiary amounts to normalize the currency to the parent's functional currency, run a trial balance in the subsidiary Ledger and use the trial balance to create journal entries in a spreadsheet, and use the Web ADI Journal Wizard to upload the journal entry created in the spreadsheet data to a dummy Ledger defined in the parent company's instance. Note that you define and match the structure of the dummy Ledger like any other Ledger. As an alternative to the Web ADI extract, you can also use SQL*Plus, load the flat file contents into the GL_INTERFACE table, and then upload the data into the GCS instance using journal import. This method requires support from your MIS department. After you have all the data in a single instance, you can use GCS to map accounts from your dummy Ledger to your parent Ledger, transfer data, create eliminating entries, and consolidate results. Note that the same concepts apply for non-oracle Instances. If you have subsidiary data using non-oracle systems, you can map and load the data through Web ADI or SQL*Plus into the GL Interface table. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 148

197 Consolidation Workbench Consolidation Workbench The Consolidation Workbench provides feedback on the state of the consolidation process, keeping you informed about each subsidiary's consolidation status. It also monitors subsidiary account balances for any changes that occur after the subsidiary data has been transferred to your parent Ledger. Consolidation Sets You can even create consolidation sets which launch multiple consolidations in a single step for overall streamlining of the consolidation process. Consolidation Hierarchies You can create consolidation hierarchies, or multilevel hierarchies and view your consolidation hierarchies using a graphical Consolidation Hierarchy Viewer. State Controller From the Consolidation Workbench you can access the State Controller, a color-coded navigation tool, to guide you through the consolidation. Find Consolidation Processes window This works with the Consolidation Workbench to help you find consolidation and elimination processes. It refreshes data displayed in the Consolidation Workbench. When you generate, post, or reverse consolidation journals, click Find in this window to refresh the data displayed or you can do a View > Find All from the menu bar. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 149

198 Consolidation Workbench Consolidation Workbench (N) Consolidation > Workbench Enter a query in the Find Consolidation Processes window. The Consolidation Workbench displays the results. To narrow the search for a consolidation process, enter search criteria in as many of the following fields as you like: Parent: Parent Ledger Parent Period: Consolidation period Balance Type: Actual, Balance, or Any Mapping Set: Group of mappings Mapping: Single mapping Subsidiary: Subsidiary Ledger Status: Consolidation status Elimination Set: Fully reciprocal elimination entries Elimination Status: List of eleven different status of eliminations Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 150

199 Consolidation Mapping Consolidation Mapping (N) Consolidation > Define > Mapping Select a Consolidation Method Run the consolidation to create consolidation journal entries in the parent Ledger. Select Balances This consolidates actual, average, translated, budget, or statistical balances, excluding journal entry detail, and balances from your subsidiaries' summary accounts. The resulting consolidation journal entries includes the account balances for all the subsidiaries that were run. For example, if a subsidiary had five transactions in the sales account balance, the consolidation journal entry includes only the balance of the sales account. Select Transactions This consolidates actual journal entry detail from a subsidiary Ledger and individual journal entries and makes incremental updates if new journals are entered after consolidation. You can transfer and post the additional journal entry, updating the consolidated balances. The resulting consolidation journal entries include transactions for all the subsidiaries that are run. For example, if a subsidiary has five transactions booked to the sales account, the consolidation journal entry includes the summation of all five transactions. For each transaction to be listed in the parent Ledger as five separate transactions, run the transfer five separate times. You can only use this method for ledgers of the same functional currency. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 151

200 Consolidation Mapping Consolidation Mapping (N) Consolidation > Define > Mapping If you selected average balance processing, you define your parent as a non-consolidation Ledger with average balances selected. Enter a Currency Enter the currency to use for the consolidation. This is the same as the functional currency for the parent. You can also select STAT. Consolidate Ledgers with Average Balance Processing Selected For average balance processing, optionally select a default Usage type such as standard, average, or both to transfer standard, average, or both balances to the parent Ledger. You can create separate consolidation mappings for standard and average balances, if you want to use different mapping rules to get different levels of detail. For example, you might map standard balances to view consolidated totals for each cost center or average balances to view consolidated totals for each company. Note that the standard defaults if you choose Transactions as the consolidation method. For more information, refer to the Oracle General Ledger User Guide or the R12.1 General Ledger Financial Management Advanced Topic Average Balance Processing. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 152

201 Streamlined Consolidation Mappings Streamlined Consolidation Mappings Navigation: Setup : Accounts > Chart of Accounts Mapping A chart of accounts mapping is a set of instructions for mapping accounts or entire account segments from one chart of accounts to another chart of accounts. You can use chart of accounts mapping for consolidation purposes and for secondary ledgers. You can define mappings between charts of accounts instead of between ledgers, 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. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 153

202 Consolidation Mappings Consolidation Mappings Chart of accounts mappings may be used with the Global Consolidation System for the purposes of consolidation, or they may be used to propagate journals and balances from the primary ledger to secondary ledgers defined in the Accounting Setup Manager. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 154

203 Consolidation Mappings Consolidation Mappings Examples of the options you have when mapping two charts of accounts. You can assign a single value that will be used for the target segment. You can copy all values from a source chart of accounts segment to the same values in your target segment And you can use rollup rules to map a range of values from one chart of accounts segment to a target segment value. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 155

204 Consolidation Mappings Benefits Consolidation Mappings Benefits With Chart of Accounts Mappings you can reduce setup and maintenance for increased efficiency. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 156

205 Mapping Rules Mapping Rules Select a Mapping Rule: Select a mapping rule to specify how to consolidate balances or transactions from your subsidiary to your parent. Your choices include segment rules, account rules, or a combination of both. Segment rules are preferable to account rules for the following reasons: - Defining consolidation mapping is quicker and easier. For example, if your parent account has only three segments, you can map an entire subsidiary's chart of accounts with just three segment rules. - Running consolidations based on segment rules is faster than those based on account rules. Change Mapping Rules: Save your work after you have set up your consolidation mapping. Once saved, you cannot modify your rollup rules, except to change the parent and subsidiary segment detail values. To change a rollup rule, delete it and create a new one. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 157

206 Using Account Mapping Rules Using Account Mapping Rules Account Rules: Enter the subsidiary accounts and parent account to which you want to map each subsidiary account range. Example 1: Map subsidiary account to account in your parent Ledger. Example 2: Map the entire range of subsidiary accounts through to account in your parent Ledger. Run new consolidations in audit mode to ensure that your account mappings are correct. Through the audit mode, you can run several audit reports to help you verify that your mappings are set up correctly. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 158

207 Using Segment Mapping Rules Using Segment Mapping Rules Segment Rules Enter the parent segment name to which each subsidiary is mapped, an Action, and the Subsidiary segment name. For example, you can map your subsidiary's Department segment to your parent's Cost Center segment. You can use only one action for each parent segment. Mapping Rule Actions Rule / Description Copy Value From Copies all values in your subsidiary segment to the same values in your parent segment. The segments do not have to use the same value set, but must use the same segment values. Assign Single Value Assigns one specific value that is used for the parent segment. You must enter the value that the parent chart of accounts use. Use this rule when your parent account has more segments than your subsidiary account. Use Rollup Rules From Maps values from your subsidiary segments to your parent segments using the rules specified in the Rollup Rules region. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 159

208 Using Segment Rollup Rules Using Segment Rollup Rules There are four rollup rules possible: Transfer Level Using Results Detail Detail Ranges Maps range of detail values from subsidiary Ledger into one detail value in parent Ledger. Detail Parent Maps a parent value from subsidiary ledger into a detail value in parent ledger. Summary Parent Maps a subsidiary segment parent value into a segment value in parent ledger to consolidate balances from the summary account associated with the subsidiary segment parent value. This rollup rule can only be used with the balances consolidation method. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 160

209 Using Segment Rollup Rules Using Segment Rollup Rules Transfer Level Using Results Summary Parent Ranges Maps one or more ranges of subsidiary segment parent values into a segment value in parent Ledger. This consolidates balances from the summary accounts associated with the subsidiary segment parent values. This rollup rule can only be used with the balances consolidation method. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 161

210 Hierarchy Viewer Hierarchy Viewer (N) Consolidation > Workbench (B) State Controller (B) Mapping Set (B) View Consolidation Hierarchy This displays your consolidation structure in a graphical format. You can easily access your consolidation structure, mapping, parent/subsidiary relationship, and Ledger information, even for complex, multilevel consolidations that include intermediary parents. You launch the Consolidation Hierarchy Viewer from the Consolidation Mapping Set window to display your multilevel consolidation structure in a graphical format. You can expand or collapse the hierarchy. You can review consolidation hierarchies by: Ledger Only: Displays your hierarchy using only the company's Ledger name plus the three components that make up that Ledger: the currency, calendar, and chart of accounts structure. Sets and Mappings Only: Displays your hierarchy using only the consolidation mapping rules name that comprises the mapping set. Both: Displays your hierarchy using both the company's Ledger name and components and the mapping rules name. Note that you can only view consolidation hierarchies for consolidations in a mapping set. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 162

211 Preparing Subsidiary Data Preparing Subsidiary Data Revalue balances If any of your ledgers have balance sheet accounts that have foreign currency balances, revalue the balances to reflect the impact of any changes in exchange rates. Post the resulting revaluation journal. Translate balances Click State Controller's Translation Status to check the current status of your subsidiary translations. If any subsidiary ledgers use a functional currency different from your parent, translate the account balances before transferring the subsidiary data to the parent Ledger. Run Translation in the subsidiary Ledger the first time. Do subsequent runs from the Translation Status window. Run reports Run a trial balance report for each subsidiary Ledger, using the parent Ledger' functional currency. - Run after revaluation and translation have been processed in the consolidation currency. - Review the trial balance to ensure the data is accurate. - Use these reports to reconcile subsidiaries to the parent. - If subsidiary data has been translated, review the trial balance to ensure the data is accurate. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 163

212 Posting Consolidation Journal Entries Posting Consolidation Journal Entries After you have transferred subsidiary data to the parent Ledger, do the following: Run Journal Import, if not chosen as a consolidation run option. Review the unposted consolidation. Post the consolidation journal entries in the parent Ledger. This launches a concurrent process. Request standard or FSG reports to review the consolidated results. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 164

213 Creating Eliminating Entries Creating Eliminating Entries Use the Automatic Intercompany Eliminations to create elimination sets for fully reciprocating eliminations. For example, use elimination sets to fully offset each subsidiary's Intercompany Payables and Intercompany Receivables accounts. Use Oracle General Ledger's journaling features to do the following: - Create recurring journal entries for eliminations that are not fully reciprocated to create formula-based eliminations that only partially offset intercompany transactions, such as minority interest eliminations. - Create standard journal entries to eliminate intercompany balances. - Create elimination journal entries in Application Desktop Integrator (Web ADI). Use the power of Excel to enter elimination entries, link worksheets, and create complex calculations. You can upload them from Web ADI, then post them in Oracle General Ledger. If you want to segregate elimination entries from operational accounting entries, you should create a single elimination company. For example, if you have Company 01, 02, and 03, create a fourth elimination company, such as Company 99. Enter all eliminating entries using the elimination company. Then you can report consolidated results before and after eliminations. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 165

215 Reporting Options Reporting Options Reporting Function Legend OI Online Inquiry Std Standard Reporting FSG Financial Statement Generator Rpt Mgr Report Manager BIS - Business Intelligence System OBI Oracle Business Intelligence - Standard Edition Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 167

216 Financial Statement Generator Financial Statement Generator You can define custom financial reports, such as income statements and balance sheets, online with complete control over the rows, columns, and content of your report. You can control headings, descriptions, format, and calculations in addition to the actual content. The reusable report components make building reports quick and easy. You can copy a report component, make minor edits, then apply the report component to a new report without having to create a new report from scratch. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 168

217 Defining Row Sets Defining Row Sets A single row set can be used for many different reports. For example, Row Set A above is used for an Income Statement with current information for Company 1. It can also be used to produce an Income Statement by Division, such as in the second example above, or for any other entity (company, group, or cost center), or for the same entity with a yearly comparison column. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 169

218 Defining Column Sets Defining Column Sets Column sets define the format and content of columns in your financial reports. They include headings and subheadings, currency assignments, amount types, exception conditions, and calculation columns for totals. You can define columns one by one as you do for row sets, or you can build a column set graphically. When you define a column set, you indicate which Oracle General Ledger balance type you want to include in the column. Although you normally assign accounts to your rows, you can also assign an individual account combination or range of account combinations to each column. You can define calculations to perform a variety of complex computations in your report and to reference other columns in the report. You can define a new column set, copy information from an existing column set, or use one of the standard column sets provided by Oracle General Ledger. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 170

219 Defining Ad Hoc Reports Defining Ad Hoc Reports To run ad hoc reports, you select report objects and other report parameters during the report submission process. With predefined report, you can run the report with the parameters you saved in the report definition or you can change the parameters at runtime. Note that if you change the parameters at runtime, FSG will not save them in the stored report definition. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 171

220 E-Business Intelligence E-Business Intelligence (BIS) BIS is an executive information system in the Oracle ebusiness Suite providing a framework for corporate performance management and continuous process improvement for timely delivery and accurate information. It can analyze the back and front office data from Oracle ebusiness Suite, including ERP applications (Financials, Human Resources, Purchasing, Operations, Manufacturing, CRM) and applications supporting Sales, Service, Customer, Marketing, and Interaction Center (Call Center). You can set targets to meet strategic objectives, monitor company performance, receive notifications when performance is out of tolerance, and respond immediately by taking corrective actions. BIS components are integrated with an alert and workflow mechanism to proactively communicate operational performance for management to drill from high level financial data into detail based on selected dimensions ledgers, operating units, cost centers, and product groups. General Ledger provides the following seven informative reports in BIS: Revenues Report, Expenses Report, Profit Margin Report, Contribution Margin Report, Current Ratio Report, Earnings Per Share (EPS) Report, and Summary Analyst Report. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 172

221 Oracle Business Intelligence Oracle Business Intelligence OBI is an intuitive ad-hoc query, reporting, analysis, and Web-publishing tool that empowers business users at all levels of the organization to gain access to information from data marts, data warehouses, and online transaction processing systems. Report builders and analysts can create, modify, and execute ad hoc queries and reports. More casual users can view and navigate through pre-defined reports and graphs. OBI provides a business view to hide the complexity of the underlying data structure. It enables users to focus on solving business problems instead of data access issues. OBI s key characteristics include: Working on Oracle 8i and 9i Built-in structure for BIS Inclusion of operations data Application of defined security rules Non multi-dimensional table use of rows and columns Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 173

222 XBRL Financial Reporting Features XBRL Financial Reporting Features FSG supports XBRL. XBRL Financial Reporting is an open specification for software that uses extensible Markup Language (XML) data tags, together with taxonomy, to describe business reporting, including financial information. XBRL Taxonomy is a vocabulary or dictionary created to a standard, and compliant with the XBRL specification. This allows you to more easily report on business information in a standard format used by different industries. You can create XBRL instance documents using FSG and publish them to interested parties, such as regulatory bodies. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 174

223 XBRL Financial Reporting Features XBRL Financial Reporting Features You can create XBRL reports or instance documents using Financial Statement Generator. You load your XBRL Taxonomies into your Oracle instance using a standard program. Next, you define a FSG Row Set and specify taxonomy for the row set. You then link the XBRL element from the taxonomy for each row in your row set. Finally, you generate a FSG report that uses that Row Set. By choosing the XBRL Output Option, FSG creates the XBRL instance document for you. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 175

225 GL Standard Reports Integration With BI Publisher GL Standard Reports Integration With BI Publisher Oracle General Ledger s Account Analysis, General Journals and Trial Balance standard reports are integrated with BI Publisher. Using BI Publisher allows you to leverage the formatting features of a word processing application to design the layout of your report. You can personalize your report by changing fonts, adding images, inserting headers and footers, creating borders, changing column widths, and reordering/adding/deleting columns. This enables you to create professional-quality reports directly from the general ledger, which ensures the integrity and auditability of the information. For more information on all formatting features, refer to the BI Publisher User Guide. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 177

226 Simultaneous Accounting for Multiple Reporting Requirements Simultaneous Accounting for Multiple Reporting Requirements Companies that are global in nature and that have operations in different localities often have multiple reporting requirements. These companies and their subsidiaries often need to satisfy the accounting and reporting requirements for each country as well as those of the parent company. This involves performing accounting in accordance with accounting principles and standards of multiple countries and in different currencies, charts of accounts, and/or calendars. The reporting requirements can also be statutory in nature, and one subsidiary may even need to satisfy multiple sets of statutory requirements. Copyright Oracle, All rights reserved. Accounting to Financial Reporting Chapter 2 - Page 178

237 Procure to Pay Flow Overview Chapter 3 Procure to Pay Flow Overview Chapter 3 - Page 1

238 Procure to Pay Flow Overview Procure to Pay Flow Overview Chapter 3 - Page 2

239 Objectives Procure to Pay Flow Overview Chapter 3 - Page 3

240 Agenda Procure to Pay Flow Overview Chapter 3 - Page 4

241 Procure to Pay Flow Procure to Pay Flow Assets streamlines the tracking, depreciation, and maintenance scheduling of assets. Cash Management reconciles payments and forecasts cash outflows. Payables record invoices and make payments. Payments provide a configurable engine to disburse and receive payments iexpenses provides self-service submission, approval, and management of expenses online. General Ledger records inventory, fixed assets, payables liability, expenses and payments. Purchasing sources, requisitions, and procures goods and services. iprocurement provides self-service requisitioning and web-based deployment to quickly find goods and services, add them to their shopping cart, and perform checkout. isupplier Portal provides secure online supplier collaboration capabilities for suppliers to easily perform common supplier business functions. Sourcing provides a central repository for purchasing information and workflow-based automation, conducting online negotiations and reducing sourcing cycle time. Procure to Pay Flow Overview Chapter 3 - Page 5

242 Inventory sets up inventory and expense items and records inventory activity such as receipts of inventory, returns and corrections. Daily Business Intelligence provides integrated management reporting and analysis. Procure to Pay Flow Overview Chapter 3 - Page 6

243 Purchasing Integration Purchasing Integration Oracle Payables Accounting for matched purchase orders, suppliers, procurement cards, purchase orders Oracle Projects Project, task, expenditure type, expenditure organization Oracle General Ledger Sets of books, exchange rates, accounting flexfield, currency, charge account combinations Oracle Cash Management Cash forecasting Oracle e-commerce Gateway Inbound 856, 857 (Advance Shipping Notice, Advance Shipping and Billing Notice) Inbound 843 (Response to request for quotation) Inbound 832 (Quotation) Outbound 850, 860 (Purchase order, change order) Oracle Advanced Supply Chain Planning (ASCP) Requisitions created based on actual and forecast demand Material Requirements Planning (MRP) Requisitions created based on actual and forecast demand Procure to Pay Flow Overview Chapter 3 - Page 7

244 Purchasing Integration Purchasing Integration Oracle Human Resources Employees (requestors and buyers), organizations (Receiving), locations, hierarchies (Approval) Oracle Workflow Approval process, Account Generator, notifications Oracle Alert Expiration and release alerts Oracle Quality Inspection plans, inventory, units of measure, item information Oracle Inventory Items, demand, receipts Oracle isupplier Portal (isp) Record purchase order acknowledgments and reschedule Promised-By dates View agreed amounts and released amounts for blanket purchase agreements View purchase order, revision history, RFQs, expected deliveries Create and view ASNs and ASBNs View receipts, returns, overdue receipts, quality results, and inspection details View and maintain order modifiers Set processing lead time, minimum order quantities and fixed lot multiples Forecast shipment schedules; search and view supplier items Procure to Pay Flow Overview Chapter 3 - Page 8

245 View invoice and payment information Procure to Pay Flow Overview Chapter 3 - Page 9

246 Purchasing Integration Purchasing Integration Oracle Assets Suppliers Oracle WIP Receipts, requisitions generated from outside processing Oracle Order Management Internal requisitions, demand, drop shipments Oracle Sourcing Collaborative RFQs, auctions Oracle CBC Commitment budgetary control (CBC), dual budgetary control, enhanced funds checking and reservation Oracle Consigned & Vendor Managed Inventory Supplier consigned inventory, vendor managed inventory, both enabled through isupplier portal Procure to Pay Flow Overview Chapter 3 - Page 10

247 Procure to Pay Lifecycle Procure to Pay Lifecycle Sourcing Request for quote Supplier selection Contract negotiations and awards Catalog content management Ordering Requisition and purchase order generation Purchase order management and fulfillment Payment Reporting and Analysis Supplier performance Commodity analysis Internal compliance Robust intelligence gathering Decision support Procure to Pay Flow Overview Chapter 3 - Page 11

248 Process functionality Procure to Pay Flow Overview Chapter 3 - Page 12

249 Oracle Procure to Pay Process Oracle Procure to Pay Process Demand The procurement process generates and manages requests for the purchase of goods. The demand for purchase items may be a one-time event or may recur in either predictable or random time intervals. Source The procurement sourcing process covers the business activities related to the search, qualification, and selection of suitable suppliers for requested goods and services. Order The procurement ordering process includes purchase order placement by the buying organization and purchase order execution by the supplying organization. Receive The receipt process acknowledges that a purchase order has been duly executed. For orders of physical goods, it will typically include the receipt, inspection and delivery of the goods to inventory or to another designated location. For orders of services, it will typically consist of a notification from the requester or the approving person that the service has been performed as agreed. Pay The payment process consists of those activities involved in the payment for ordered goods and services. Procure to Pay Flow Overview Chapter 3 - Page 13

250 Introduction to Legal Entities Introduction to Legal Entities Legal Entities are used throughout the Procure to Pay process. For example: Oracle Corporation is registered in the state of Delaware and is considered a Legal Entity with a legal structure. A legal structure represents how you model your company from a legal perspective and is determined by the government of the territory in which you do business. Oracle Corporation has several establishments registered to do business; for example, Redwood Shores, CA, and Reston, VA. This differs from an operating structure where operating units represent how the company is organized from an operations perspective. For example, Oracle Corporation Headquarters (Operating Unit) is comprised of Development, Consulting, and Finance. These operating units are determined internally to optimize how the business is run. Procure to Pay Flow Overview Chapter 3 - Page 14

251 RFQs and Quotations RFQs and Quotations Through Purchasing, you can create a request for quotation (RFQ) from requisitions, match supplier quotations to your RFQ, automatically copy quotation information to purchase orders, generate reports to control RFQs, and evaluate supplier responses. You can also: Enter quotations manually, copy from an RFQ, import with the Purchasing Documents Open Interface or the e-commerce Gateway, and receive quotations electronically. Identify requisitions requiring supplier quotations and automatically create an RFQ. Create an RFQ with or without approved requisitions to plan for future procurements. Record supplier quotations from a catalog, telephone conversation, or RFQ response. review, analyze, and approve supplier quotations to reference on purchase orders and requisitions. You can evaluate your suppliers based on quotation information. Receive automatic notification when a quotation or RFQ is expiring. Review quotation information online when creating purchase orders or requisitions and copy specific quotation information to a purchase order or requisition. Source the items for which you negotiated purchase agreements automatically. If you created sourcing rules and Approved Supplier List entries for the items, you can enter supplier information automatically in the Requisitions window when creating requisitions. Place supplier information for items onto blanket purchase order releases. Procure to Pay Flow Overview Chapter 3 - Page 15

252 Requisitions Requisitions Requisitions represent demand for goods or services. Requisitions for goods and services are generated by applications including Inventory, Work in Process (WIP), Material Requirements Planning (MRP) and Order Management, may be entered manually through Purchasing windows or using iprocurement, and may be imported from external systems. Through Purchasing, you can do the following: Provide online requisitions or limit the user access to the system, centralize your purchasing department, and source your requisition with the best suppliers. Ensure that you obtain the appropriate management approval before creating purchase orders from requisitions. Create, edit, and review requisitions online. Enter supplier data, delivery instructions, multiple accounting distributions, and notes to buyers, approvers, and receivers. Review the current requisition status, action history, approval authority, and process stage. Route requisitions according to your approval structure and set authorization limits by amount, charge account, item category, and location. Review and approve requisitions that need your approval. Procure to Pay Flow Overview Chapter 3 - Page 16

253 Requisitions Requisitions See the full requisition detail and review the action history before approving a requisition. Print requisitions (with status Approved, Cancelled, Rejected, In Process, Pre-Approved, and Returned) for off-line review and approval. Track the status of requisitions through the approval process. Automatically source requisitions from outstanding blanket purchase agreements or quotations you have received from suppliers. Create requisitions quickly and easily for commonly purchased items. Provide attachments as notes on requisition headers and lines. Assign requisition lines to buyers. Review buyer assignments for requisition lines. Forward all requisitions awaiting approval from one approver to an alternate approver. Reroute requisitions from one approver to another within your security and approval constraints. Source goods from your own inventory with internal requisitions. Procure to Pay Flow Overview Chapter 3 - Page 17

254 Suppliers Suppliers You must define a supplier before performing most activities within Purchasing and Payables. You optionally enter a recommended supplier on a requisition. You need a supplier to issue a request for quotation. You use that same supplier when you enter a quotation. You need supplier information for purchase orders. You receive goods or services from suppliers. You return goods to suppliers. You must pay the supplier for the goods or services purchased. Set up suppliers to record information about individuals and companies you purchase goods and services from. You can also enter employees you reimburse for expense reports. You can designate supplier sites as pay sites, purchasing sites, RFQ only sites, or procurement card sites. For example, for a single supplier, you can buy from several different sites and send payments to several different sites. Most supplier information automatically defaults to all supplier sites to facilitate supplier site entry. However, you can override these defaults and have unique information for each site. Procure to Pay Flow Overview Chapter 3 - Page 18

255 Purchase Orders Purchase Orders Purchasing supports four types of purchase orders: Standard, Blanket, Contract and Planned. You can manually create purchase orders or search approved requisitions and add them to purchase orders. You can import standard purchase orders through the Purchasing Documents Open Interface in a status of Incomplete or Approved. You can automate purchase document creation using PO Create Documents workflow to automatically create a Blanket purchase agreement release or Standard purchase order upon requisition approval. After creating purchase orders, you submit them for approval, to check if the submitter has sufficient authority to approve the purchase order. After document approval, you may sent the purchase order to your supplier via printed document, EDI, fax, , isupplier Portal, and XML. After sending the purchase order or release to your supplier, you authorize to ship goods at the times and to the locations that have been agreed upon. Purchase documents may be created by: Buyers using the AutoCreate window Importing them using the Purchasing Documents Open Interface The Create Releases program (Blanket releases), automatically Workflow (blanket releases or standard purchase orders), automatically Procure to Pay Flow Overview Chapter 3 - Page 19

256 Purchase Orders Purchase Orders With Purchasing, you can do the following: Review all of your purchases with your suppliers to negotiate better discounts. Create purchase orders simply by entering a supplier and item details. Create standard purchase orders and blanket releases from both online and paper requisitions. Create accurate and detailed accounting information so that you charge purchases to the appropriate departments. Review the status and history of your purchase orders at any time for all the information you need. Record supplier acceptances of your purchase orders. Always know whether your suppliers have received and accepted your purchase order terms and conditions. Copy purchase orders. Procure to Pay Flow Overview Chapter 3 - Page 20

257 Receiving Receiving Using Purchasing, you can process in-transit shipments, receipts due to customer returns and from suppliers, other warehouses, or inventory organizations. You can search for expected receipts based on a purchase order or a customer return recorded in Order Management and then process them to their final destination whether it is Inventory, Expense or Shop Floor. You can control the ordered items through receiving, inspection, transfer, and internal delivery and the quantity, quality, and internal delivery of received items. You can use routing controls at the organization, supplier, item, or order level for material movement. You can define receiving tolerances at the organization, supplier, item, and order level, with he lowest level overriding previous levels, and for receipt quantity, on-time delivery, and receiving location. You can also do the following: Assign looser tolerances to low-value items and set enforcement options to ignore, warn the user, or reject transactions violating tolerances. Use blind receiving for accuracy, with the quantity due for each shipment not showing and quantity control tolerances being ignored, Express and Cascade receiving for quick processing and Advance Shipping Notices (ASNs) to save time in processing receipts. Record receipt of unordered items based on your item, supplier, or organization defaults and receipt of predefined substitute items and services and labor. Procure to Pay Flow Overview Chapter 3 - Page 21

258 Invoicing Invoicing Once you ve received goods or service from your supplier, you will also receive an invoice, which you can record invoices in a number of different ways. With Payables, you can: Import/Enter invoices manually, either individually or in batches. Use the Invoice Gateway for rapid, high-volume entry of standard invoices and credit memos that are not complex and do not require extensive online validation. Automate invoice creation for periodic invoices using the Recurring Invoice functionality. Use iexpenses to enter employee expense reports using a web browser. Record credit card/procurement card invoices from transactions the credit card issuer sends to you in a flat file. Record Project related expense reports. Import EDI invoices processed with the e-commerce Gateway. Import lease invoices transferred from Property Manager. Match invoices to purchase orders to ensure you only pay what you re supposed to be paying for. Procure to Pay Flow Overview Chapter 3 - Page 22

259 Payment Payment Once invoices are validated, they can be paid. Payables provides the information that you need to make effective payment decisions, stay in control of payments to suppliers and employees, and keep your accounting records up-to-date so that you always know your cash position. It handles every form of payment, including checks, manual payments, wire transfers, EDI payments, bank drafts, and electronic funds transfers. It is integrated with Cash Management to support automatic or manual reconciliation of your payments with bank statements sent by the bank. With Payables, you can: Ensure duplicate invoice payments never occur. Pay only invoices that are due, and automatically take the maximum discount available. Select invoices for payment using a wide variety of criteria. Record stop payments. Record void payments. Review information on line on the status of every payment. Process positive pay. Procure to Pay Flow Overview Chapter 3 - Page 23

260 Quiz Answer: b Procure to Pay Flow Overview Chapter 3 - Page 24

261 Quiz Answer: a, b, c, d, e, f Procure to Pay Flow Overview Chapter 3 - Page 25

262 Quiz Answer: b Procure to Pay Flow Overview Chapter 3 - Page 26

263 Summary Procure to Pay Flow Overview Chapter 3 - Page 27

264 Procure to Pay Flow Overview Chapter 3 - Page 28

265 Suppliers Overview Chapter 4 Suppliers Overview Chapter 4 - Page 1

266 Suppliers Overview Suppliers Overview Chapter 4 - Page 2

267 Objectives Suppliers Overview Chapter 4 - Page 3

268 Agenda Suppliers Overview Chapter 4 - Page 4

270 Overview Overview You must define a supplier before performing most activities within Purchasing and Payables. You optionally enter a recommended supplier on a requisition. You need a supplier to issue a request for quotation. You use that same supplier when you enter a quotation. You need supplier information for purchase orders. You receive goods or services from suppliers. You return goods to suppliers. You must pay the supplier for the goods or services purchased. Set up suppliers to record information about individuals and companies you purchase goods and services from. You can also enter employees you reimburse for expense reports. You can designate supplier sites as pay sites, purchasing sites, RFQ only sites, or procurement card sites. For example, for a single supplier, you can buy from several different sites and send payments to several different sites. Most supplier information automatically defaults to all supplier sites to facilitate supplier site entry. However, you can override these defaults and have unique information for each site. Suppliers Overview Chapter 4 - Page 6

271 How Oracle Products Use Supplier Information How Oracle Products Use Supplier Information Suppliers can be set up from many different applications, but the data is stored in a single repository called the Trading Community Architecture (TCA). TCA provides a single, common definition that can be used to identify customers, suppliers, and organizations that provide you with goods or services, and are in turn, a customer of your own products or services. The TCA repository stores the key elements that define an organization, identity, business locations, and key contacts, so that different Oracle products use a common trading partner definition. Applications that share supplier information are: Purchasing Purchasing uses supplier defaults, such as freight terms and shipping details, on requisitions, purchase orders, requests for quotations, etc. Payables Payables uses supplier defaults, such as method of payment and bank account information, during invoice entry and payment processing. Assets Assets maintains the supplier name and number for each asset record. Property Manager Suppliers Overview Chapter 4 - Page 7

272 Property Manager exports lease invoices for suppliers to Payables so they may be paid. Multiple Organization Access Control (MOAC) If you are using multiple organization support feature, you cannot enter the following information at the supplier level, only at the supplier site level: Liability Account Prepayment Account Distribution Set Inv Tax Code Future Dated Payment Account Trading Community Architecture All supplier information is defined in Trading Community Architecture. isupplier Portal isupplier Portal allows you to grant access to suppliers to review order, receipt, and payment details for the supplier. Suppliers can enter planned (with PO) or unplanned (without PO) invoices and update supplier information. Suppliers Overview Chapter 4 - Page 8

273 Flow of Default Values Flow of Default Values Defaults set at higher levels flow down to lower levels where you can override them. Defaults reduce data entry by providing default values based on corporate policy. Optional defaults (especially the higher level ones) should be left blank if you frequently override them. Purchase order matched invoices will receive defaults from the purchase order you specify when you match. Note: Changes to default values affect only new records, not existing records. For example, if payment terms in the Payables Options window are reset to Net 30 from Net 45, new suppliers will have a default of Net 30. Existing suppliers will have terms of Net 45. Suppliers Overview Chapter 4 - Page 9

275 Suppliers in the Trading Community Architecture (TCA) Suppliers in the Trading Community Architecture (TCA) By representing Suppliers as part of the trading community, you have access to TCA features, including: Data Librarian Function & Processes Integrated Enrichment Capabilities including D&B Address Validation Data Consistency Ease of Data Maintenance Suppliers Overview Chapter 4 - Page 11

276 TCA Security by Functional Areas TCA Security by Functional Areas TCA security presents a clear distinction between the supplier s company details and terms and controls for the trading relationship. Managing the attributes specific to particular functional areas such as Oracle Payables, Purchasing and Receiving can be controlled with the use of Function Security. You can add new locations or relationships with additional operating units You can modify a quick update page with those values most often updated for faster maintenance Additional tax and legal registrations provide key information to meet reporting and compliance needs The supplier UI also includes a Survey section that provides administrators with access to the results of questionnaires that the supplier has been asked to complete, either during selfregistration or as part of profile maintenance through isupplier Portal. Purchasing Category assignments further designate the type of goods and services the supplier will provide. Suppliers Overview Chapter 4 - Page 12

278 Suppliers Page Suppliers Page You can create and update supplier information, and manage supplier profile from a common Suppliers page. The Suppliers page provides a central area where you can search for suppliers and provide quick updates to key supplier information. You can also view a TO DO list, which provides a list of pending supplier requests which the suppliers have submitted through Oracle isupplier Portal. Suppliers Overview Chapter 4 - Page 14

279 Supplier Record Structure Supplier Record Structure For every supplier, you can create an unlimited number of supplier sites with different addresses and contacts. You can buy from several different sites while sending the payments to only one site. Define how supplier sites can be used with the following options: Pay - You can import/enter invoices for and make payments to the site. Primary Pay - Default pay site for invoice entry and import. Purchasing - You can create purchase orders for the site. RFQ Only - You can create request for quotations in Purchasing for the site. You cannot create purchase orders for an RFQ Only site. Procurement Card - You can purchase goods or services using a procurement card. Primary Pay - With multiple pay sites, one site can be designated the primary, which defaults in the Invoices window to speed the invoice entry process. Payables Open Interface Import uses this site to import an external invoice with no specified site. Designate a site as an RFQ Only site during the beginning of negotiations with a supplier. If you decide to use the supplier, designate the supplier site as a Purchasing site by deselecting the RFQ Only option and selecting the Purchasing Site option. For each supplier site, you can enter contact information (name, address, telephone) specific to that site. Contact information is for your reference only. Suppliers Overview Chapter 4 - Page 15

280 Enter/Update Suppliers Enter/Update Suppliers Purchasing Responsibility (N) Supply Base > Suppliers Or (N) Buyer Work Center > Suppliers Payables Responsibility (N) Suppliers > Entry Set up suppliers in the Suppliers page to record information about companies and individuals from whom you purchase goods and services. You can also enter employees whom you reimburse for expense reports. When you enter a supplier that does business from multiple locations, you enter common supplier information (supplier quick update information) only once, and you enter supplier sites for each location (supplier address). For example, for a single supplier, you can buy from several different addresses and send payments to several different addresses. Suppliers can have multiple addresses and each address can be used by an operating unit through a supplier site record. Most supplier information defaults to supplier sites. However, you can override the values that default if necessary. After you define suppliers, you can use them when you import/enter invoices and create purchasing documents. Suppliers Overview Chapter 4 - Page 16

281 Supplier Level Versus Site Level Entry Supplier Level Versus Site Level Entry Notice that information on the Organization, Contact Directory, Business Classification, Products and Services, Surveys, Receiving, and Payment Details pages is entered only at the supplier level. Information on the Address Book page is entered only at the supplier site level. Assuming the Multiple Organization Support feature has been enabled, the Accounting page is also entered only at the site level. Suppliers Overview Chapter 4 - Page 17

282 Supplier Site Settings Supplier Site Settings Recall the default value hierarchy flow. Entries made at the supplier level will default to the supplier site level. Defaulted information can be either accepted or overwritten with sitespecific values. In the example above, notice that Tokyo and New York have payment terms of Net 30 and a Pay Date Basis of Due. Paris, however, has payment terms of 2/10, Net 30 and a Pay Date Basis of Discount. Suppliers Overview Chapter 4 - Page 18

283 Avoiding Duplicate Suppliers Avoiding Duplicate Suppliers Before setting up new suppliers or new sites, enter a query or use Find to verify that the supplier or site does not already exist. You identify potential duplicate suppliers through the following methods: Perform a Find or query on the supplier name Submit and review the Suppliers Report Submit and review the Supplier Audit Report to obtain a listing of suppliers whose names are the same up to a specified number of characters Submit the 1099 Suppliers Exception Report to obtain a listing of suppliers with the same taxpayer ID. Solid naming conventions are key to avoiding duplicate entries. Avoiding duplicate supplier entry can benefit your company by: Preventing duplicate invoices and payments Providing accurate supplier reporting Improving system performance If duplicate entries are found, consider using the Supplier Merge functionality to correct and consolidate records. Suppliers Overview Chapter 4 - Page 19

285 Key Reports Reports Suppliers Report Review supplier, supplier site, and supplier site contact information. Supplier Audit Report Review supplier names that are similar, to help identify potential duplicate suppliers. Supplier Payment History Review supplier payment history, including voided payments, for a supplier or a group of suppliers. Supplier Paid Invoice History Review the supplier invoice history, including discount and partial payment information, for a supplier or a group of suppliers. Supplier Mailing Labels Create mailing labels for supplier sites. Purchase Order Header Updates Report Review purchase orders updated by the Supplier Merge Process. Supplier Merge Report Review the suppliers, sites, and invoices updated by the Supplier Merge Process. Supplier Customer Netting Report Review the net balance in Payables and Receivables for any suppliers or customers who have the same NIF or VAT code. Suppliers Overview Chapter 4 - Page 21

286 Key Reports Key Reports Supplier Open Balance Letter Create a supplier open balance letter. You can use this report for auditing purposes or to periodically inform your suppliers of open balances. Invalid PO Supplier Notice Use this report to inform suppliers that you placed an invoice on hold because they did not provide a purchase order number for matching or you could not use the purchase order number they provided. Payables creates a notice for each supplier with invoices to which you have manually applied an Invalid PO hold. Accounts Payable Trial Balance Report Use this report to verify that total accounts payable liabilities in Payables equal those in the general ledger. You can use this report to review all negative supplier balances. To do this, choose No for the Summarize Report parameter, and Yes for the Negative Balances Only parameter. Invoice Aging Report Use this report to view your unpaid invoices and information about invoice payments due within four time periods you specify in the Aging Periods window. Open Items Revaluation Report Use this report to revalue the balances of your open items. Open items in this report are all invoices, including prepayments, credit memos, and debit memos, that are unpaid as of the last date of the revaluation period you specify. Suppliers Overview Chapter 4 - Page 22

288 Merge Suppliers Merge Suppliers Purchasing Responsibility (N) Supply Base > Supplier Merge Payables Responsibility (N) Suppliers > Supplier Merge Use Supplier Merge functionality to combine two or more suppliers or sites identified as duplicates. Decide whether they will be merged or copied to the new supplier. Copied sites will be added as a new site to the target supplier. Merged sites will be combined with the named site of the target supplier. The resulting site names for each supplier after the merger must be unique within that supplier. For example, the request to copy a site named TX-DALLAS to a supplier with an existing site name would result in duplicate site names for the same supplier. You will be required to rename one of the sites to a new name to complete the merge. You need to decide what effect the merge will have on existing purchase orders and invoices. For purchase orders, you indicate whether you want all or none of the existing purchase orders to be updated with the new supplier/site names. For invoices, you can indicate whether you want all, only unpaid, or no invoices to be updated with the new supplier/site names. Suppliers Overview Chapter 4 - Page 24

289 Data Example - Supplier Merge Data Example - Supplier Merge Because the CA-REDWOOD site of Oracle Corp will be merged into the existing CA- REDWOOD site of Oracle Corporation, it will not result in an additional, duplicate named site for Oracle Corporation. The FL-ORLANDO site has been selected for copying as a new site to Oracle Corp. It also will result in a uniquely named site for Oracle Corporation. If there already was a FL-ORLANDO site for Oracle Corporation, and it turns out that the supplier has two sites in Orlando, then the merge process would have to be preceded by first adjusting the name of one or the other. You may decide to append a -2 to the FL-ORLANDO site of Oracle Corporation. After the merge completed, Oracle Corporation would have a FL- ORLANDO and a FL-ORLANDO-2 site. For best auditing results, transfer both paid and unpaid invoices to a new supplier and site so you can identify duplicate payments easily. Also, transfer purchase orders to a new supplier and site so all invoice and purchase order information refers to the same supplier. Note that the supplier merge process is permanent. Suppliers Overview Chapter 4 - Page 25

291 Responsibility for Supplier Entry/Maintenance Responsibility for Supplier Entry/Maintenance You must determine where the operational responsibility for supplier entry and maintenance should be assigned. Typical options are within either the Accounts Payable or Purchasing departments. While many people throughout the organization will use established supplier records, typically only a few people within the assigned department add/maintain supplier records. The level of staffing requirements for this function must be determined based on volume and effort. Proper placement of the responsibility must consider good internal control policies/practices and proper segregation of duties. You may wish to consult with your internal or external auditors prior to making a final decision on these issues. Suppliers Overview Chapter 4 - Page 27

292 Supplier Naming Conventions Supplier Naming Conventions Supplier and supplier site naming conventions are critical to the efficiency of the purchasing and payables operations. Examples of administrative inefficiencies and increased costs due to a poorly maintained supplier list are: You issue more purchase orders or releases than necessary. If pricing is on a noncumulative basis, volume discounts may be lost when you are entitled to them. You issue more payments than necessary, resulting to a larger reconciliation effort. You may review volume purchases with suppliers above a defined dollar amount to identify better price negotiations. If you erroneously entered a supplier twice, you might miss them when, separately, they don t exceed the amount, than if you entered correctly as a single supplier, they exceed the amount. A poorly maintained supplier list can cost higher organizational volume discounts and administrative costs associated with maintaining a larger supplier list. Include all interested parties in the development of supplier naming conventions. For example, when implementing with a phased approach, maybe Assets is scheduled for Phase 2 of your implementation, but you should still consult all parties to ensure organizational, immediate, and long term system implementation goals are considered above individual unit goals. Agree upon naming conventions, document them, and obtain authorized sign-off. Suppliers Overview Chapter 4 - Page 28

293 Supplier Naming Convention Examples Supplier Naming Convention Examples Provide the exact spelling for suppliers whose names are easily misspelled. Duplicate suppliers are often found for companies such as IBM or AT&T, which may be spelled out or entered with or without spaces or punctuation. Document the spelling for your top ten suppliers to ensure closer management of critical suppliers. Locate supplier records by: Using a standard case, whether it is all capital letters or title case. Using approved abbreviations, even if sufficient space is available to spell out the word. For example, use Inc for Incorporated or Co for Company. Standardizing rules of punctuating. You may eliminate punctuation due to the limited number of characters available for the suppler name and the supplier site name. Consider brief structure for the site name, given 15 characters available. An example of a possible structure for the site name might include the following: SS-CCCCCCCC-## Sequentially assigned number to accommodate multiple sites in the same city Eight character city name/abbreviation Two digit federal post office abbreviation Refer to the your local Postal Service s web site for address standards applicable to your business when determining address standards to obtain lower pricing on your postage costs due to properly addressed mail produced directly from the system. Suppliers Overview Chapter 4 - Page 29

294 Supplier Conversion Methodology Supplier Conversion Methodology Without an open interface, you must determine how to convert your current supplier records into Oracle. Oracle advises not writing directly to base tables using SQL*Plus or other programming tools. Since supplier record volumes may require an automated interface, consider using automated data loader tools to enter records from spreadsheets into normal data entry windows while the system updates the appropriate tables. Depending on the total conversions, record volumes, available resources, and time, you need to determine which conversions will be automated or manual. You can automate conversion of 3,000 records for one implementation, but manual for another. You may need temporary keying staff to assist with data entry for manual conversions. Review any conversion into the applications with Oracle Support to avoid negative licensing/support issues. Review your current supplier file to identify which records will be converted. You may convert only suppliers you are in business with in the past three years or five years. Consider your agreed upon supplier and site naming conventions discussed to update your supplier records before conversion, ensuring only clean data is entered into the new system. Review the available standard supplier reports to determine whether they can adequately support and reconcile your conversion. You may need to develop additional reports. Suppliers Overview Chapter 4 - Page 30

295 Fax or Setup Fax or Setup You have the option of communicating approved purchasing documents to your suppliers by printed document, facsimile, or . Printed document You produce printed purchasing documents by submitting the Printed Purchase Orders Report or Printed Change Orders Report in either landscape or portrait format. Facsimiles If you have installed CommercePath or any facsimile software that is compatible with the CommercePath Fax Command Language (FCL), Purchasing can automatically send facsimiles of the Printed Purchase Order Report (Portrait and Landscape) and Printed Change Orders Report (Portrait and Landscape). If you intend to forward documents to suppliers by , you provide the proper address on the Supplier Sites window of the General tab. You can also have a document copy mailed to your enterprise by entering the appropriate address in the PO: Secondary Address profile option. You need to log into this address to resend the . Generic terms and conditions can be appended on the e- mail PO body by putting them in a text file. You can identify the directory location and the file name by setting the profile options PO: In File Path and PO: Terms and Conditions File Name. Suppliers Overview Chapter 4 - Page 31

297 Oracle Purchasing and the Enterprise Structure Oracle Purchasing and the Enterprise Structure Important! Oracle Purchasing documents exist within a single operating unit in the enterprise structure being discussed here. That is, you must choose the operating unit when creating a Purchasing document. MOAC Multiple Organizations Access Control (MOAC) enables companies that have implemented a shared services operating model to efficiently process business transactions by allowing you to access, process, and report on data for an unlimited number of operating units within a single applications responsibility. For each Purchasing user, this access is controlled by the profile options MO: Security Profile. In addition defaulting can be set using MO: Default Operating Unit. Suppliers Overview Chapter 4 - Page 33

298 Oracle Inventory Organizations Oracle Inventory Organizations Inventory organizations can be manufacturing facilities, warehouses or any facility where a company stocks and transacts inventory. These are important to the procurement process because they are where goods are received and stored. At least one inventory organization must be set up regardless of whether you transact inventory or not. If transacting inventory, a best practice is to set up two inventory organizations, one master and one child. This is discussed in more detail later in the Define Inventory Organizations topic. Locations Locations simply represent a physical address of a facility, office, warehouse or any place else used by the entity. Each location can be associated with one or all inventory organizations. Inventory organizations use locations to represent the address for the following: Ship to Bill to Office Site Internal Site Receiving Site Subinventory Suppliers Overview Chapter 4 - Page 34

299 Subinventories in Oracle Applications represent the physical locations within a manufacturing facility or warehouse where goods are stocked and where transactions take place. Subinventories are created within inventory organizations. Suppliers Overview Chapter 4 - Page 35

300 What is an Item? What is an Item? In Oracle Applications an item is defined as anything you make, purchase, or sell. This would include components, subassemblies, finished products, or supplies. Manufacturing also uses the term items to represent planning items that you can forecast, standard lines that you can include on invoices, and option classes you can use to group options in model and option class bills. You may sometimes see them referred to as a system item. Suppliers Overview Chapter 4 - Page 36

301 Oracle Applications That Use Items Oracle E-Business Applications That Use Items The applications in the tables above are not all inclusive but this is meant to give an understanding that the item definition is used in many different places in Oracle. Oracle Applications use a common data model and the Oracle Inventory Item definition is an example of the a common data element that is used in many applications. It is the common data element that makes the integration across E-Business suite seamless. Each of the applications use the item in different ways. How do the Oracle E-Business Applications Use Items? This list is not all inclusive, but gives a general idea of how important the item is in Oracle Applications. Inventory - The item is used to stock, plan, cost and transact. Engineering and Bill of Material - the item is used to create a bill of materials and routing as well as a component on a bill of materials. Material Planning - The planning engine makes suggestions as to discrete jobs and purchase requisitions based on supply and demand. The suggestions are for an item. Quality - Collect quality data on a item as you do move transactions in Oracle Work in Process, complete assemblies in Work in Process, receiving and inspection transactions in Purchasing. Suppliers Overview Chapter 4 - Page 37

302 Cost - Establishes a cost for the item based on one of the four perpetual costing methods (standard, average, FIFO and LIFO) and uses this as a foundation for valuing transactions. Purchasing - item is used on purchase order, requisition, request for quote, quotations and receipts. Work in Process - Create work orders for items. Receivables - Customers can be billed for an item shipped to them. Order Management - Place Sales Orders for an item. Shipping Execution - Ships an item to a customer or to another organization. Advanced Supply Chain Planning and Scheduling - Plans and schedules an item based on criteria supplied. Project Manufacturing - Transacts on a item that is linked to a project and task through purchase order receipts, work order transactions, and inventory transactions. Sales - Create quotes for an item. Depot Repair - Create non-standard work orders for an item. Manufacturing Scheduling - Schedules a work order or job for an item based on material and resource constraints; resource instances are created as items. Enterprise Asset Management - Create asset activities, asset groups and re-buildables using the item definition in Oracle Inventory. Suppliers Overview Chapter 4 - Page 38

303 Quiz Answer: b Suppliers Overview Chapter 4 - Page 39

304 Quiz Answer: a Suppliers Overview Chapter 4 - Page 40

305 Quiz Answer: a Suppliers Overview Chapter 4 - Page 41

306 Quiz Answer: b, c Suppliers Overview Chapter 4 - Page 42

307 Quiz Answer: a, b, c Suppliers Overview Chapter 4 - Page 43

308 Summary Suppliers Overview Chapter 4 - Page 44

309 Purchasing Overview Chapter 5 Purchasing Overview Chapter 5 - Page 1

310 Purchasing Overview Purchasing Overview Chapter 5 - Page 2

311 Objectives Purchasing Overview Chapter 5 - Page 3

312 Agenda Purchasing Overview Chapter 5 - Page 4

314 Item Attributes Item Attributes Purchasing Responsibility (N) Items > Master Items Items have attributes which represent characteristics of an item. Items can be inventory items, they can be stockable, orderable, shippable, planned, have a lead time, purchased, and costed as well as many other attributes. Additionally, an item can be a piece of equipment or a vehicle. There are approximately 200 item attributes, so there are tabbed regions on the item master window which divide the attributes into functional areas. Those tabs with a few examples are as follows: Main - attributes such as unit of measure, type of item Inventory - inventory item, stockable and transactable, item controls Bill of Material - BOM type Costing - is the item costed? Purchasing - purchased, purchasable, list price Receiving - receipt routing, over receipt tolerance Physical Attributes - size, weight, truck, collateral General Planning - make or buy, inventory planning Purchasing Overview Chapter 5 - Page 6

315 MRP/MPS Planning - MRP vs. MPS planned, order modifiers, time fences Lead Time - processing, variable, fixed Work in Process - build in WIP, supply type, over completion tolerance Order Management - ordered, orderable, ATP Invoicing - invoiced, invoiceable Service - support service, serviceable product Web Option - orderable on the web All the attributes used together tell Oracle how the item can be used to execute business processes. Deciding on how to set item attributes is very important when implementing Oracle Applications. Companies need to think carefully about how their items are used and how they want to use them in Oracle. For complete details on items, item attributes, item statuses, and how all of these interact please refer to the Oracle Inventory User s Guide. Purchasing Overview Chapter 5 - Page 7

316 Item Master Organization and Child Organizations Item Master Organization and Child Inventory Organizations It is considered best practice that you create at least two inventory organizations, an item master and an inventory organization. It is not a requirement but is suggested as good business procedure. It is more difficult to add and control other inventory organizations without this structure. Item Master Organization - Usually the first inventory organization that is set up. Its single purpose is for entering items. It has no subinventories and is not used for inventory transactions. The item master can be thought of as a parts list. Child Organizations - An inventory organization with at least one subinventory that is set up for processing inventory transactions. It is not used to enter items. It gets a list of items from the master. Create as many inventory organizations as you need to meet business requirements. Items are created in the item master and assigned to the child organization(s). - Note: One item master is recommended and can cover multiple sets of books. It is much easier to add an inventory organization and assign items to the new organization Purchasing Overview Chapter 5 - Page 8

317 than it is to copy from one item master to another once the data has been entered. Carefully consider the business reasons why you need two item masters. Purchasing Overview Chapter 5 - Page 9

318 Overview of Creating an Item Overview of Creating an Item Purchasing Responsibility (N) Items > Master Items An item is created by either importing the it through an open interface or navigating to the master item form. The process in summary is as follows: 1. Give the item a name and description. 2. Establish the attributes by copying an existing item, template or enabling each attribute individually. 3. Make changes to the Primary unit of measure if necessary and any other attributes. 4. Save your work. 5. Assign the item to the appropriate organization(s). 6. Make changes to attributes at the organization level if appropriate. 7. Save your work. Purchasing Overview Chapter 5 - Page 10

319 Describing Item Attributes - Purchasing Describing Item Attributes - Purchasing Below are the purchasing attributes and a description of how they are used. Purchased: Indicate whether to purchase and receive an item. Turning this option on allows you to set the Purchasable attribute. This is an item defining attribute. If you turn this option on, the item is automatically assigned to the default category set for the Purchasing functional area. Purchasable: Indicate whether to order an item on a purchase order. You can set this only when Purchased is turned on. Turning Purchasable off allows you to temporarily restrict the ability to buy. Use Approved Supplier: Indicate whether to use only approved suppliers. If you turn this option on, Purchasing prevents you from approving a purchase order for an item if you do not use an approved supplier. Allow Description Update: Indicate whether to allow updates to the item description on a purchasing document line for an item. RFQ Required: Indicate whether to require an item quotation when requesting an item. Purchasing defaults this value on requisition lines for this item. Leave this field blank if you want Inventory to use the value defined in the Purchasing Options window for transactions involving this item. Purchasing Overview Chapter 5 - Page 11

320 Outside Processing Item: Indicate whether you can add the item to an outside processing purchase order line. You can turn this option on only if Purchased is also on. In addition, this option controls whether you can attach an item to a resource in the Resource window. Outside Processing Unit Type: Select an option to determine the quantity of an outside processing item you requisition, purchase and receive: - Assembly - You purchase an outside processing item based on the number of assemblies you ship to the supplier. - Resource - You purchase an outside processing item based on the number of assemblies times the resource usage rate or amount. Taxable: Indicate whether the supplier charges a tax. Purchasing uses the taxable status together with the tax code you associate with a location to determine whether a purchase order shipment is taxable, and what the tax code that applies to this shipment. Leave this field blank if you want Inventory to use the value defined in the Purchasing Options window for transactions involving this item. Receipt Required: Indicate whether you must receive an item before you can pay the invoice. Leave this field blank if you want Inventory to use the value defined in the Purchasing Options window for transactions involving this item. Although a receipt is required to pay the invoice, This is not the same as 3-way matching. Inspection Required: Indicate whether to inspect an item upon receipt from the supplier before paying the corresponding invoice. Leave this field blank if you want Inventory to use the value defined in the Purchasing Options window for transactions involving this item. Although inspection is required to pay the invoice, this is not the same as 4-way matching. Default Buyer: Enter the buyer assigned to purchase an item. Purchasing displays the buyer you enter here as the suggested buyer for a requisition.. Unit of Issue: Enter the unit of measure you typically use to issue the item from inventory. Purchasing uses this as the default for internal requisition lines sourced from inventory. You use units of issue to round order quantities, minimizing shipping, warehousing, and handling costs. The unit of issue must be the same for all units of measure belonging to the same unit of measure class as the primary unit of measure. Receipt Close Tolerance: Enter the percentage tolerance Purchasing uses to automatically close purchase order shipments. Purchasing automatically closes a shipment when your unreceived quantity is within the quantity tolerance percentage of the shipment. For example, if the original shipment quantity is 50, and you enter 10 here (10%), Purchasing automatically closes the shipment for receiving when you receive 45 or more. Closed for Receiving is a status change only. You can receive additional items against the shipment later. Invoice Close Tolerance: Enter the percentage tolerance Purchasing uses to automatically close purchase order shipments. Purchasing automatically closes a shipment when your uninvoiced quantity is within the quantity tolerance percentage of the shipment. For example, if the original shipment quantity is 50, and you enter 10 here (10%), Purchasing automatically closes the shipment for invoicing when you invoice match 45 or more. Closed for Invoicing is a status change only. You can invoice match additional items against the shipment later. UN Number: Enter the United Nations identification number. Purchasing uses UN numbers to identify specific materials (hazardous materials, for example) for international trade purposes. Hazard Class: Purchasing uses hazard classes to identify categories of hazardous materials for international trade purposes. Purchasing Overview Chapter 5 - Page 12

321 List Price: Enter the value that Purchasing uses as the default price on a purchase order, requisition, RFQ, or quotation. Receivables uses this value as the default unit selling price on a transaction. Note that this is the original inventory item price used by Purchasing and therefore should be used as a guide only. Market Price: Enter the market value for an item. Purchasing copies the market price to the purchase order lines you create. Price Tolerance: Enter the price tolerance percent, the maximum price percentage over the normal price range for an item. For example, if the tolerance percent is 5, the maximum acceptable price on a purchase order is 5% over the requisition price. Any purchase order price 5% above the requisition price is unacceptable, and you cannot approve the purchase order. Rounding Factor: Enter a number between 0 and 1. This factor determines how to round the quantity on an internal requisition that results from conversions between the requisition line unit of measure and the item's Unit of Issue. This factor insures that the unit of issue resolves to an integer, rather than a fractional amount. For example, suppose the requisition line unit of measure is each, and the unit of issue is dozen. For an internal requisition of 20 each, Purchasing converts the order quantity to 1.75 dozen. With a rounding factor of 0.6, Purchasing rounds up the order quantity to 2 dozen. (Rounding factor of 0.75 also rounds up to 2 dozen.) With a rounding factor of 0.8, Purchasing rounds down to 1 dozen. Purchasing either performs rounding automatically or advises you of the suggested quantity depending how you set your purchasing options. This attribute is controlled at the Organization level only. Expense Account: This attribute is controlled at the Organization level only. Enter the default inventory account for expense items. This attribute is used only when Inventory Asset Value is turned off. Purchasing debits this account when you receive an item into inventory only if the item is being expensed. If you receive into an expense subinventory, Purchasing uses this account first; if you do not define the account here, Purchasing uses the expense account you assigned to the subinventory. Asset Category: Enter the asset category to which the item belongs. Assets uses this to classify your fixed assets. All assets in a category share default information, such as the accounts used when you post to the general ledger. You can enter this field only if you use Assets. Internal Ordered: Indicate whether to allow an item to be ordered on an internal requisition. If you turn this attribute on, you can temporarily exclude an item from being ordered on an internal requisition by turning Internal Orders Enabled off. This is an item defining attribute. If you turn this attribute on, the item is automatically assigned to the default category set for the Purchasing functional area. Internal Orders Enabled: Indicate whether you can currently order an item internally. If you turn this attribute on, you can specify the item on an internal requisition if Internal Ordered Item is also on. If you turn Internal Ordered Item on, you can temporarily exclude an item from being ordered on an internal requisition by turning this attribute off. This attribute is optionally set by the Item Status code. Purchasing Overview Chapter 5 - Page 13

322 Defining Item Relationships - Purchasing Define Item Relationships - Purchasing Purchasing Responsibility (N) Items > Item Relationships All of the item relationships aid in helping to search for items. Use the item relationships windows to establish the following: Cross-References types For example, if you renamed your items, you might want to establish a cross reference between the old item number and the new item number. In this example, you would need to establish the type of cross reference such as old number. After the relationship is established, the user would assign the items to the type. Related and Substitute Items Use the item relationships form to establish substitute and related item relationships. The substitute items are used by purchasing when the allow substitute item functionality is needed in receiving. If the supplier ships a part that is not on the purchase order, if Allow Substitutes is valid for that item, and if the substitute relationship is established, the receiving group can receive the substitute part. Manufacturer s Part Number You can establish suppliers and their part numbers on the Manufacturer Part Numbers form and link them to your item numbers. This will aid in item search. Purchasing Overview Chapter 5 - Page 14

324 Central Procurement Central Procurement You can access global blanket agreements and global contract agreements, which reference purchase orders in many operating units. For each requesting operating unit permitted access to a given global blanket agreement or global contract, the optimal Purchasing operating unit and supplier site can be identified for placing the purchase order (PO). Similarly, when using Autocreate to create purchase orders from requisitions, buyers can choose the Purchasing operating unit and supplier site in which to create the PO. You can base financial settlement on the detailed financial flow associated with the physical flow of goods to ensure proper accounting to all operating units involved in the procurement process. Purchasing Overview Chapter 5 - Page 16

325 Central Procurement Central Procurement In a centralized or shared procurement services environment, the factory for goods needed to build finished assemblies generates demand and creates a requisition for the material. Based on a global agreement, the Shared Procurement Service center then places a PO on behalf of the factory, with a ship to location of the factory. The shared procurement service center owns the purchase contract, and is liable to the supplier for payment. The supplier builds the product and ships directly to the requesting organization, as denoted by the dashed line in the diagram above. Upon material receipt in the factory, material ownership automatically transfers through the shared procurement service center and then to the factory. The supplier invoices the shared procurement service center, who, in turn, invoices the factory, as denoted by the solid line in the diagram above. The internal invoice can be done at either the PO price or a transfer price. Note that the factory and shared procurement service center need not be in the same operating unit or even set of books. The shared procurement service center may have authored the referenced global agreement or may simply be the designated Purchasing organization for these specific goods on behalf of this specific factory. Purchasing Overview Chapter 5 - Page 17

326 Document Access Levels Purchase Requisitions: Document Access Levels In addition to the security level, you specify an access level to control what modification and control actions you can take on a particular document once you gain access. Document owners always have full access to their documents. Access level options include: View Only Accessing employees can only view the document. Only the document owner may modify or control the document. Modify Accessing employees can view, modify, freeze and close the document. Full Accessing employees can view, modify, freeze, close, cancel and finally close the document. Purchasing Overview Chapter 5 - Page 18

327 Security, Approval Limits, and Approval Routing Options Security, Approval Limits, and Approval Routing Options Document security, approval and routing is controlled by document type and powered by Oracle Workflow. Oracle Purchasing document types include the following: Requisitions - Purchase and Internal Requests for Quotations - Bid, Catalog and Standard Quotations - Bid, Catalog and Standard Purchase Orders - Standard and Planned Purchase Agreements - Blanket and Contract Releases - Blanket and Planned You cannot enter new document types; you can enter new document subtypes only for RFQs and quotations. Not all fields on the document types window apply to each document type. Through Oracle Purchasing, you control which groups of employees have access to each document type and which actions these individuals can take once they gain access. You set the security and access levels for the various document types. For each job or position, you will be able to establish approval authorization rules that define whether the person holding the job or position can approve the document. You can route documents using the employee/supervisor relationship or using position approval hierarchies. Purchasing Overview Chapter 5 - Page 19

329 Purchase Requisitions Purchase Requisitions A requisition is an optional starting point in procurement. Through requisitions, employees can enter requests for products and services, which are transmitted to the procurement staff. Requisitions within Oracle Purchasing contain information regarding the accounts that should be charged for the purchase along with details such as delivery location and approvals based upon company policies. With Oracle Purchasing/iProcurement you can: Create, edit, and review requisition information online; enter suggested supplier information, delivery instructions, multiple accounting distributions, and notes to buyers, approvers, and receivers; know who approves requisitions and whether they are in the approval, purchasing, receiving, or delivery stage. Route requisitions according to your approval structure; set authorization limits by amount, charge account, item category, and location; review and approve requisitions needing approval, full requisition detail, and action history before requisition approval. If your business process requires off-line review and approve, you can print requisitions (with status Approved, Cancelled, Rejected, In Process, Pre-Approved, and Returned). Import requisitions from other systems, such as material or distributions requirement planning applications. Transfer requisition data to the purchase order documents using automated processes. Purchasing Overview Chapter 5 - Page 21

330 Purchase Requisitions Purchase Requisitions In addition to the manual creation of online requisitions, you can use Oracle ASCP/MRP, planning applications, to generate requisitions based upon the planning requirements of your organization. Oracle Inventory can generate requisitions based upon replenishment requirements. Outside processing requirements can be generated into requisitions by Oracle Work In Process. Oracle Order Management generates requisitions based upon the need to drop ship goods to customers directly from your suppliers. Internal processes, such as internal sales orders are initiated from the requisition process as well. The internal requisition document passes information to Order Management for the shipment of goods and services within your own company. Purchasing Overview Chapter 5 - Page 22

331 Purchase Requisitions Purchasing Overview Chapter 5 - Page 23

332 Information Flow Purchasing Overview Chapter 5 - Page 24

334 Professional Buyer s Work Center Professional Buyer s Work Center The Professional Buyer s Work Center speeds up daily purchasing tasks by providing buyers with a central launch pad from where they can efficiently perform their daily tasks, such as: Viewing and acting upon requisition demand Creating and managing orders and agreements Managing contract deliverables Running negotiation events, including auctions and RFxs Managing supplier information You have the option to use either a forms-based interface or the Professional Buyer s Work Center. Purchasing Overview Chapter 5 - Page 26

335 Benefits Professional Buyer s Work Center Benefits There are several advantages to using the buyer s work center: Purchasing departments that operate as shared service centers can take advantage of accessing documents across the multiple operating units that they service without having to switch responsibilities. The web-based interface of the work center is designed to enable buyers to perform their tasks easily and quickly. One of the ways that this is achieved is by reducing the number of drilldowns buyers need to access to create purchasing documents. The work center helps buyers prioritize their tasks through the use of views. Oracle Purchasing provides several pre-seeded views, such as the ability to view all documents that are incomplete or all schedules that are past due. However, buyers can also create their own views based on their particular responsibilities. Purchasing Overview Chapter 5 - Page 27

336 User Interface User Interface Responsibility: Purchasing Navigation: Buyer Work Center > Orders The tab structure in the work center is: From the Requisitions tab, buyers can process requisition demand into purchase orders or sourcing events. In addition, buyers can view existing requisitions that are in the system. Standard Purchase Orders are created and managed in the Orders tab, while Blanket and Contract Purchase Agreements are created and managed in the Agreements tab. The Deliverables tab allows the buyer to manage deliverables from Procurement Contracts. The Negotiations tab allows the buyer to quickly and easily access Oracle Sourcing. The Suppliers tab houses information about your supply base. Purchasing Overview Chapter 5 - Page 28

338 Request for Quotation Request for Quotation A request for quotation (RFQ) is a document you use to solicit supplier quotations for those goods or services. Not all purchase requisitions require an RFQ, and you do not need a purchase requisition to create an RFQ. However, if the RFQ required check box is selected on a requisition, an RFQ is required for that requisition. Supplier Lists Although you may send an RFQ to one supplier, usually you will want to send a request for quotation to many suppliers to ensure that you get the best price and terms possible. With Oracle Purchasing you create supplier lists so that you can predefine groups of suppliers to whom you want to send RFQs. You can establish supplier list according to criteria you define, such as item, manufacturing category, geographic location or more. Purchasing Overview Chapter 5 - Page 30

340 Sourcing Rules Sourcing Rules Purchasing Responsibility (N) Supply Base > Sourcing Rules Sourcing defaults can dramatically increase operational efficiency. They can: Automatically allocate planned orders across different suppliers using percentage splits Define global or local rules for individual items and entire commodities Maintain sourcing details at supplier and site Define effective dates for each rule Assign sourcing rules at different levels using an assignment set Classify and rank multiple sources Sourcing rules define for an organization or a group of organizations replenishment sources that can be applied to specific items. With sourcing rules that are made up of multiple suppliers, you can assign allocation percentages to each supplier and rank the suppliers if the percentages are equal. Purchasing Overview Chapter 5 - Page 32

341 Create a Sourcing Rule Create a Sourcing Rule Enter an allocation percentage for each shipping organization. Allocation percentage includes the number of planned orders issued over the specified planning horizon. Your total allocation may not exceed 100% for each rank. If the allocation percentage for all shipping organizations included within a range of effectivity dates equals 100, Planning Active is checked. If planning is not active for the sourcing rule, the planning process will not use the rule. For requisitions submitted in Purchasing, the percentage allocations are completely ignored. To determine which supplier is defaulted onto the requisition, Purchasing chooses the supplier with the highest percentage regardless of the rank. When two suppliers share the same percentage and that percentage is higher than any other supplier, the rank determines which supplier defaults onto the requisition. Supplier catalogs are loaded into iprocurement with sourcing information included. If the catalog is external, a specific supplier or marketplace hosts the items so they are already linked to a supplier. Purchasing Overview Chapter 5 - Page 33

342 Create a Sourcing Rule Assignment Create Sourcing Rule Assignment Purchasing Responsibility (N) Supply Base > Sourcing Rule Assignments Using the MRP: Default Sourcing Assignment Set profile option in the Profile Options window at the Site level. The assignment set you specify in this profile option is automatically assigned to every MPS, MRP and DRP in the organization. You can override this default when you define the material plan options, but only in Supply Chain Planning. Note: For Purchasing to use the sourcing rule, the sourcing rule must be added to the assignment set specified by the MRP: Default Sourcing Assignment Set profile option. If users add sourcing rules to any other assignment set, Purchasing will not pick them up. This is the primary reason some customers can t get their POs and requisitions to source automatically. Assign the Rule to One of Six Levels Item/inventory organization combination Item Category/inventory organization combination Category Purchasing Overview Chapter 5 - Page 34

343 Inventory organization Global Purchasing Overview Chapter 5 - Page 35

344 Levels of Sourcing Rule Assignments Levels of Sourcing Rule Assignments The assignments are listed in order of precedence. For example, sourcing rules assigned to the Item/Inventory organization level will take precedence over all others. Sourcing rules assigned to any level will override sourcing rules assignments that are Global. When an item and category are specified on a requisition, Purchasing will first look to see if an assignment exists for that item and the inventory organization for which it is being requisitioned. If an assignment is found, the sourcing rule associated with the assignment is used to determine the supplier that will default on to the requisition. Purchasing will select the supplier with the highest percent allocation, regardless of rank. If an assignment is not found, Purchasing will look to see if an assignment exists for the item. If the assignment is found, the sourcing rule associated with the assignment is used to determine the supplier that will default on to the requisition. And so on. Purchasing Overview Chapter 5 - Page 36

345 Sourcing Rules with an ASL Source Document Sourcing Rules with an ASL Source Document If an approved supplier list is defined for a specific item with a supporting source document and both sourcing rule assignments and sourcing rules are defined, the supplier and supplier site information defaults based on the sourcing rule assignment, the sourcing rule and the source document information on the approved supplier list. Purchasing Overview Chapter 5 - Page 37

347 Purchase Orders Process Purchase Orders Process Purchase order creation begins the ordering process. Oracle Purchasing helps you to create several different types of purchasing documents: standard and planned purchase orders, blanket and contract purchase agreements, blanket and scheduled releases, to meet procurement team needs, while maintaining corporate policies and standards. With Oracle Purchasing/iProcurement you can: Review all of your purchases with your suppliers to negotiate better discounts. Create purchase orders by entering a supplier and item details, such as quantity, price, service amount, and copy them. Create standard purchase orders and blanket releases from both on-line and paper requisitions. Create accounting data so that you charge purchases to the appropriate departments. Check your funds availability while creating purchase orders. Review purchase order status and history. Print purchase orders flexibly by using a number of print options. Inform your suppliers of your shipment schedule requirements. Purchasing Overview Chapter 5 - Page 39

348 Record supplier acceptances of your purchase orders. You always know whether your suppliers have received and accepted your purchase order terms and conditions. Purchasing Overview Chapter 5 - Page 40

349 Origin Purchasing Overview Chapter 5 - Page 41

350 Information Flow Purchasing Overview Chapter 5 - Page 42

351 Management Interfaces Purchase Order: Management Interfaces Requisitions Open Interface Loaded from a various sources: flat files, Oracle Inventory, Oracle Work in Process (WIP), Oracle Material Requirements Planning (MRP), and Oracle Order Management. Use the Requisition Import process to import requisitions from other Oracle or non-oracle systems. For example, send drop-ship orders from Order Management and Kanban orders from Inventory to the requisition interface table to convert into requisitions. Import project and task data from Master Scheduling/MRP through the Requisition Import, which creates a requisition line and requisition distributions for each row it finds in the interface table and then groups them according to define parameters. You can create releases each time you run the Requisition Import process. For example, when you implement planned orders as requisitions in the MRP Planner Workbench, you can automatically create releases at the same time you create requisitions. Oracle Purchasing automatically creates and optionally approves the releases for all blanket-sourced, approved requisitions as part of the Requisition Import process, not just those created by the Requisition Import run. You can place requisitions you imported on purchase orders just as you would any other requisition. Oracle Purchasing automatically sources your requisition line to a blanket agreement or catalog quotation number if the supplier for the item is in the Approved Supplier List and if sourcing rules are set up for the item. Purchasing Overview Chapter 5 - Page 43

352 Purchase Order Releases Oracle Purchasing can automatically create purchase order releases from blanket purchase agreements and planned purchase agreements based on demand indicated by requisitions for goods on those documents. Purchasing Documents Open Interface Receives price/sales catalog information and responses to requests for quotation (RFQs) electronically from suppliers in the form of blanket purchase agreement lines or catalog quotations. Oracle e-commerce Gateway imports catalog data into the Purchasing Documents Open Interface and finally into Purchasing. Receiving Open Interface Processes receipts loaded by the e-commerce Gateway, from a flat file, for example if bar-coding is used, or ASNs and ASBNs loaded through the isupplier Portal. After receipts are loaded, you run the Receiving Transaction Processor to validate them. Confirm receipts using the Confirm Receipts window or through a notification sent by the Confirm Receipts workflow before they create accruals and can be delivered to their final destination. Purchasing Overview Chapter 5 - Page 44

353 Purchasing e-commerce Capabilities Purchasing e-commerce Capabilities Oracle e-commerce Gateway handles EDI (Electronic Data Interchange) transactions. This slide identifies the purchase order related transactions. Purchase Order (850/ORDERS) and Purchase Order Change (860/ORDCHG) These transactions help your organization to send purchase orders and purchase order changes to the supplier electronically. Price/Sales Catalogue (832/PRICAT) This transaction provides suppliers with the ability to create and maintain pricing within Oracle Purchasing. Specifically, the supplier can create and update blanket purchase agreements. Response to Request for Quotation (843/QUOTES) This transaction provides suppliers with the ability to respond to request for quotations (RFQ) electronically. For details of the actual content of these transactions, see the Oracle e-commerce Gateway Implementation Guide and the spreadsheet layouts available from Oracle MetaLink. Purchasing Overview Chapter 5 - Page 45

354 Purchasing XML Capabilities Purchasing XML Capabilities Oracle XML Gateway handles XML (extensible Markup Language)transactions. This slide identifies the purchase order related transactions. Purchase Order and Release against Blanket PO (PROCESS_PO_007) Using XML to transmit Oracle Purchasing purchase orders helps a buyer to accurately and securely send purchase order information to the supplier. Purchase Order Change (CHANGE_PO_006) Buyers can also send information relating to changes made to an existing purchase order using XML. For details of the actual content of these transactions, see the Oracle Purchasing R12 XML Transaction Delivery Setup Guide. Purchasing Overview Chapter 5 - Page 46

355 Creating Purchase Orders Creating Purchase Orders Purchase Order Types Designed in Oracle Purchasing for different business requirements. Standard Purchase Order (PO) A one-time commitment to purchase goods or services. You create standard purchase orders when you know the details of the goods or services, estimated costs, quantities, delivery schedules, and accounting distributions. Planned Purchase Order (long-term) For goods or services purchase, tentative delivery schedules, and accounting distributions. Create planned releases to authorize shipment. Blanket Purchase Agreement (long-term) For stable pricing over the agreement life and flexible order quantity commitments and delivery schedules. Pricing on blanket purchase agreements can include break pricing. Use this agreement when negotiating volume discounts on individual items. Create blanket releases to authorize suppliers to ship. Contract Purchase Agreement For negotiating pricing to manage terms and conditions. Authorize suppliers to ship through standard purchase order lines referencing the contract. Contracts can be coupled with a catalog quotation to reference pricing on a per item basis. Global Agreement Helps buyers negotiate enterprise-wide pricing, business by business, then execute and manage in one central shared services environment. Access the agreement to create purchase orders leveraging the pre-negotiated prices and terms. Purchasing Overview Chapter 5 - Page 47

356 Maintaining Purchase Orders Purchasing Overview Chapter 5 - Page 48

358 Printing and Communication Printing and Communication You can define your own PO layouts, including company logos, headers, footers, and watermark. Once a document has been generated, you can transmit it using the supplier s preferred communication mode, including , fax, or regular mail. You can preview PDF PO output documents prior to approval or communication and view previous PO revisions in PDF format. Purchasing Overview Chapter 5 - Page 50

359 Document Attachments Document Attachments - Description The PDF that is generated for each purchasing document lists all of the related attachments. In addition, buyers can these attachments to suppliers. The attachments are sent as a.zip file along with the PDF. Built-in error handling assists buyers and suppliers if there are problems communicating the attachments. Purchasing Overview Chapter 5 - Page 51

360 Document Attachment Types Document Attachment Types There are no limitations to the types of attachments that can be sent to a supplier. Purchasing Overview Chapter 5 - Page 52

361 Setup Define Purchasing Options Setup Define Purchasing Options Responsibility: Purchasing Navigation: Setup : Organizations > Purchasing Options Purchasing Overview Chapter 5 - Page 53

363 Receiving Process Receiving Process With Oracle Purchasing/iProcurement, you can control ordered items through receiving, inspection, transfer and internal delivery to control the quantity, quality and internal delivery of the items. You can also: Use routing controls at the organization, supplier, item, or order level to enforce material movement through receiving, such as tem inspection and and dock-to-stock receipts. Define receiving tolerances at the organization, supplier, item, and order level, with the lowest level overriding previous levels. Define tolerances for receipt quantity, on-time delivery, and receiving location; assign tolerances to low-value items consumed at high volumes; set enforcement options to ignore, warn, or reject transactions in violation. Specify match approval levels in two-, three-, and four-way match approval levels on a purchase order line. Purchasing uses your receiving and inspection information for only you to accept and pay for ordered, received, or inspected items. Choose the three-way match approval level to receive items before payment. Choose the four-way match approval level to inspect and accept receipts before authorizing payment. Use Advance Shipment Notices (ASNs) to enter receipts in the Enter Receipts window, reducing data entry time. Purchasing Overview Chapter 5 - Page 55

364 Print the receiving and inspection documentation. For example, you can prepare for incoming receipts by printing the Expected Receipts Report to identify expected items and quantities receipts satisfying an urgent demand, plan your work, an identify and control unexpected receipts. Print summary and detail receiving transaction reports by item, supplier, purchase order number, and/or receiving date range. Track, update, and record the receipt of intransit and inter-organization shipments. Record receipt of unordered items based on your item, supplier, or organization defaults. For example, if your organization does not allow receipt of unordered items, you should not be able to enter a receipt unless it is matched to an order shipment. Automatically update related supply data, inventory balances, WIP operations, requisition and purchase order details while entering a single receiving transaction. Receive services, inventory, expense, and outside processing items using one screen. Acknowledge receipt of services by receiving amounts of the service, generally related to receipt of an invoice. Receive inventory items to expense or asset subinventories, expense items to the requestor, and outside processing to the shop floor (designated operations in your manufacturing process). Distinguish closed for invoicing from closed for receiving. Purchasing automatically closes your purchase order for receipt when it is fully received. You can manually close partially received purchase orders if you no longer expect any more receipts against them. Manage close for invoicing and close for receiving using tolerances. You can specify that when you have received a certain percentage of a shipment, Purchasing will close the receipt. This is a soft close and you can reopen the receipt. Oracle Purchasing rolls up closing to the line and header level and Closed information does not show in the Open Purchase Orders report. If there is a remaining balance, closed quantities are no longer visible as supply scheduled receipts to MRP/ATP. Decide how you accrue un-invoiced receipts. You can accrue receipts perpetually or at period-end for expense items. Oracle Purchasing uses perpetual accrual for inventory and shop floor item receipts, automatically recording accrued liability in general ledger as you enter receiving transactions and providing complete visibility and control of inventory values, accrued liabilities for inventory and non-inventory items, purchase price variances, and invoice price variances. It provides needed data to facilitate period close and inventory, purchasing, and payables reconciliation process. Oracle Purchasing and Inventory together provide perpetual visibility and control on accrued liabilities for inventory items. Inventory maintains the inventory value on a perpetual basis. Track the quantity and destination of internally delivered items You know exactly what items you receive and where to deliver them within your organization. Define which of your items require inspection. Oracle Purchasing helps you inspect received items before you move the items into stock or deliver them to the requestor. You can accept or reject items and provide detailed information about your inspection results. Purchasing lets you review your inspection results online. You can review your inspection results by receipt number, purchase order number, supplier, item, and/or transaction date range. Oracle Purchasing also provides summary and detail reports to help you analyze your suppliers performance. You can produce supplier quality reports by buyer, supplier, and item. You can use the receiving inspection register to review your inspections by receipt. Correct receiving transaction errors. Purchasing automatically updates the inventory balances if you correct the quantities of items that have already been moved into inventory. Purchasing Overview Chapter 5 - Page 56

365 Receiving in Oracle Purchasing Purchasing Overview Chapter 5 - Page 57

366 Open Interface Receiving: Open Interface Enhancements Through receiving open interface (ROI), you can manage high volume receiving environments that use barcode readers & RF devices. The following functions and transactions are available through the open interface: Acceptance and rejection of inspected goods Transfers within the receiving area Return of goods Corrections of previous receiving transactions Note that the open interface does not support unordered receipts and matching unordered receipts that were entered through the forms supported by the ROI. You can record multi-stage receiving transactions such as related receipt, transfer, and deliver transactions. You can also enter lot/serial data at any time in the receiving process. Even suppliers can enter lot/serial data on Advanced Shipment Notices (ASN) that flow through the system, thereby reducing time spent on manual entry and increasing information accuracy. For companies using container based receiving transactions or receiving transaction based on License Plate Numbers (LPN), suppliers can enter on the ASN through the open interface when they include Lot/Serial and LPN information on ASNs. The resulting in-transit shipments Purchasing Overview Chapter 5 - Page 58

367 and subsequent receipt transactions captures this data automatically, reducing manual data entry at time of receipt and increasing data accuracy. Purchasing Overview Chapter 5 - Page 59

369 Purchasing Accounting Considerations Purchasing Overview Chapter 5 - Page 61

370 Purchasing Period-End Accrual Cycle Setup: Purchasing Period-End Accrual Cycle An important example of interaction between Oracle Purchasing and Oracle General Ledge that may influence accrual setup decisions during implementation. Purchasing Overview Chapter 5 - Page 62

371 Accounting Implementation Considerations Purchasing Overview Chapter 5 - Page 63

372 Quiz Answer: a, b, c Purchasing Overview Chapter 5 - Page 64

373 Quiz Answer: a Purchasing Overview Chapter 5 - Page 65

374 Quiz Answer: a Purchasing Overview Chapter 5 - Page 66

375 Quiz Answer: c Purchasing Overview Chapter 5 - Page 67

376 Summary Purchasing Overview Chapter 5 - Page 68

377 Payables Overview Chapter 6 Payables Overview Chapter 6 - Page 1

378 Payables Overview Payables Overview Chapter 6 - Page 2

379 Objectives Payables Overview Chapter 6 - Page 3

380 Agenda Payables Overview Chapter 6 - Page 4

382 Payables Process Payables Process Note that the Payables product fits within the procure to pay process flow, including entering suppliers. Payables Overview Chapter 6 - Page 6

383 Invoice Structure Invoice Structure Invoice Header The invoice header defines the common information about the invoice: invoice number and date, supplier information, remittance information, and payment terms. If matching to a Purchase Order, the PO Number can be entered at the line level to create the common information and allow the invoice to be matched to the invoice. Information specified at the invoice header level defaults down to the line level. You can override the header level information for individual lines, as required. Invoice Lines The invoice lines define the details of the goods and services as well as the tax, freight, and miscellaneous charges invoiced by the supplier. There can be multiple invoice lines for each invoice header. The Lines tab of the Invoice Workbench captures all of the details for the invoice line necessary for accounting, as well as for cross-product integration with other Oracle E-Business Suite applications, such as Assets, Grants Accounting, Inventory, Projects, Purchasing, Property Manager, and Receivables. For each invoice, you can manually enter invoice lines, or you can automatically generate lines by matching the invoice to a purchase order shipment, pay item, or receipt. Payables Overview Chapter 6 - Page 7

384 Scheduled Payments Invoice payment details including scheduled payment date, amount and priority. Scheduled payments are created based on payment terms when the invoice header is saved. An invoice header can have one or more scheduled payments. Note: Scheduled payments are not directly related to specific invoice distributions and invoice distributions are not directly related to specific schedule payments. Distributions Distribution details include invoice accounting details, the GL date, charge accounts, and project information. An invoice line can have one or more invoice distributions. Payables Overview Chapter 6 - Page 8

385 Types of Invoices Types of Invoices Mixed An invoice type you enter for matching to both purchase orders and invoices. You can enter either a positive or a negative amount for a Mixed invoice type. Prepayment A type of invoice you enter to pay an advance payment for expenses to a supplier or employee. This is not entered on the Standard invoice form. Expense Report An invoice representing an amount due to an employee for business-related expenses. Withholding Tax An invoice you enter to remit taxes withheld to the appropriate tax authority. Interest For interest invoices, payables will automatically calculate interest for overdue invoices and create interest invoices for selected suppliers. PO Price Adjustment This invoice is for the difference in price between the original invoice and the new purchase order price. Payables Overview Chapter 6 - Page 9

386 QuickMatch You enter a purchase order number at the line level, and Payables automatically copies supplier information and when the quickmatch button is activated the invoice is matched to every open shipment on the purchase order. The invoice type of Standard is initially chosen. PO Default You enter a purchase order number on the line level, and Payables automatically copies supplier information from the purchase order. When the match button is activated matching can be performed on individual lines or shipments. The invoice type of Standard is initially chosen and after the match. Debit Memo An invoice you enter to record a credit for a supplier who does not send you a credit memo. Credit Memo A memo from a supplier representing a credit amount toward goods or services. Standard An invoice from a supplier representing an amount due for goods or services purchased. Standard invoices can be either matched to a purchase order or not matched. Transportation invoices An invoice from a supplier representing an amount due for freight charges. Retainage Release An invoice from a supplier representing an amount retained for complex payments. Payables Overview Chapter 6 - Page 10

387 Invoice Lines Invoice Lines Oracle Payables incorporates Invoice Lines into the invoice model. Adding Invoice Lines enables Oracle Payables to model the paper or electronic business document yet maintain key features that exist at the invoice distributions level. Invoice Lines support the representation of the goods or services as well as tax, freight, and other charges as lines with distributions tied to each line. Additional fields record attributes such as serial numbers and item descriptions. This feature offers the ability for line level approval and matching between an invoice line and a purchase order shipment pay item, or receipt. Furthermore, it facilitates the capture and transfer of additional, pertinent information to and from Oracle Projects and Oracle Assets. Payables Overview Chapter 6 - Page 11

388 Line Types Line Types Each invoice Line has one and only one line type. Item Records the amount a supplier charges for goods or services purchased. Tax Records the sales or other tax amount due on goods or services purchased. Freight Records the amount a supplier charges for shipping and handling. Miscellaneous Records the amount for miscellaneous expenses on an invoice. Retroitem Records the amount of expense created by Retropricing. Retro Tax Redistributes the tax as a result of Retropricing. Payables Overview Chapter 6 - Page 12

389 Distribution Types Distribution Types Each invoice distribution has one and only one distribution type. Item Records the amount a supplier charges for goods or services purchased. Tax Records the sales or other tax amount due on goods or services purchased. Miscellaneous Records the amount for miscellaneous expenses on an invoice. Payables Overview Chapter 6 - Page 13

390 Matching to a Purchase Order Matching to a Purchase Order Match your billed (invoice) items to the original purchase orders, purchase order distributions, or receipts so that you pay only for the goods or services you ordered. If you are billed for an item in excess of the amount and quantity tolerances you define in the Invoice Tolerances window, the Payables Validation process will apply a hold to the invoice. Invoice holds prevent payment. You can match a single invoice to multiple purchase order shipments and distributions, or you can match multiple invoices to a single purchase order shipment or distribution provided the supplier is the same on all purchase orders. When you match an invoice to a purchase order or receipt, Payables creates invoice distributions using the purchase order distribution accounting information. You cannot delete invoice distributions that were created through matching. If you match an invoice to the wrong purchase order, either reverse the individual distributions and then rematch to the correct purchase order, or cancel the invoice. Payables Overview Chapter 6 - Page 14

391 Match Approval Level Options Match Approval Level Options The match approval level defaults to purchase order shipment lines when the purchase order is entered. You can override the default on the purchase order shipment. If you find that you are frequently overriding this value, change the default at the supplier site level. When quantities and prices exceed specific tolerances you define, the Payables Validation process will place a matching hold on the invoice. You can configure matching holds so manual override is not possible in the Invoice Holds and Release Names window. 2-Way (Invoice to Purchase Order) Quantity billed vs. quantity ordered on shipment line Invoice unit price vs. purchase order line unit price 3-Way (Invoice to Purchase Order and Receipt) 2-Way match criteria AND Quantity billed vs. quantity received 4-Way (Invoice to Purchase Order and Receipt and Inspection) 3-Way match criteria AND Quantity billed vs. quantity accepted Note that Quantity accepted = (Quantity received - quantity rejected). Payables Overview Chapter 6 - Page 15

392 Purchase Order Shipment Match Purchase Order Shipment Match Based on the quantity invoiced, Payables prorates the match amount across all non-fully billed purchase order distributions associated with the purchase order shipments you match to. When the invoice is matched to the shipment, all 6 items will be charged to department 110. Payables Overview Chapter 6 - Page 16

393 Receipt Match Receipt Match When the invoice match option is set to Receipt for the purchase order shipment you will not be able to match unless a receipt has been processed. The Invoice Match Option defaults in the following manner: Financials options > Supplier > Supplier Site > Purchase Order Shipment. The value on the purchase order shipment controls what you match to. The value can be set to either Purchase Order or Receipt. Purchase Order - Match invoices to purchase orders. Receipt - Match invoices to purchase order receipts. Keep in mind that in order to match to a purchase order with a match approval level of receipt, the receipt must be processed before you attempt to match the invoice. The same information that is maintained on the purchase order when you use the invoice match option of Purchase Order is maintained on the purchase order when you use a invoice match option of Receipt. Match receipts to pay only for goods you receive. Exchange rate variance is likely to be smaller because the time between the receipt and invoice is less than the time between the purchase order and invoice. When you allocate freight, tax or miscellaneous charges to an invoice distribution line matched to a receipt, the acquisition cost of the material will be more accurately reflected if you are using periodic costing. Payables Overview Chapter 6 - Page 17

394 Matching to Distributions for Assets Matching to Distributions for Assets The charge account on the purchase order for an item that will be capitalized and depreciated is a balance sheet account and will be a clearing account associated with an asset category (like COMPUTER-PC) in Assets. After matching, the asset clearing account will be on the distribution for the invoice. When the asset is prepared and posted to Assets, the clearing account is cleared and the asset cost account associated with the asset category is charged for the cost of the asset. Payables transfers the asset clearing account to the general ledger and Assets transfers the clearing account clearing entry and the asset cost entry. Payables Overview Chapter 6 - Page 18

395 Invoices: Matching to Distributions for Expenses Invoices: Matching to Distributions for Expenses The charge account on the purchase order for an item that will be expensed, such as office supplies, is an income statement account. After matching, the expense account is transferred to the invoice distribution if you are accruing at period end. When accounting is transferred to the general ledger, the amount charged to the expense account can be reported on the income statement. Payables Overview Chapter 6 - Page 19

396 Invoices: Matching to Distributions for Inventory Invoices: Matching to Distributions for Inventory The purchase order charge account for an item that will be capitalized as inventory is a balance sheet account and will be a material clearing account associated with an inventory organization in Inventory. After matching, the Inventory AP Accrual account will be on the distribution for the invoice. When the receipt is processed, the AP Accrual account, uninvoiced receipts account, is credited. When booking the invoice and matching, the receipt is now invoiced and the balance in the AP Accrual account must be cleared. At receipt, Purchasing transfers or credit the accrual to the AP Accrual account. After matching, Payables transfers the clearing entry to the AP Accrual Account as part of the Payables Transfer to GL process. Amount-based Matching You can match invoices to purchase orders based on an amount only. The purchase order (PO) determines whether the invoices matching for the PO should be based on quantity or amount, instead of users matching invoices to purchase orders based always on quantity and price. The self-service invoice entry capability in Oracle isupplier Portal has also been enhanced to support this new feature. Payables Overview Chapter 6 - Page 20

397 The purchase order (PO) determines whether the invoices matching for the PO should be based on quantity or amount, instead of users matching invoices to purchase orders based always on quantity and price. The self-service invoice entry capability in Oracle isupplier Portal has also been enhanced to support this new feature. Payables Overview Chapter 6 - Page 21

398 Invoice Approval Workflow Resubmission Invoice Approval: Workflow Resubmission Enhancement Oracle Payables Invoice Approval Workflow requires the resubmission of invoices to the workflow process if the invoice amount is changed either if the invoice is already approved, or if the invoice is in the process of being approved. Payables Overview Chapter 6 - Page 22

399 Gapless Invoice Numbering for Self-Billing Invoices Gapless Invoice Numbering for Self-Billing Invoices Oracle Payables can automatically assign gapless, sequential invoice numbers to all selfbilling invoices for a supplier site, meeting certain country-specific invoice numbering requirements invoices created by the following features: ERS RTS (Automatic Debit Memo from Return to Supplier Transaction) Retroactive Pricing of Purchase Orders Payables Overview Chapter 6 - Page 23

400 Holds and Releases Holds and Releases Holds can be placed manually or by the system. They prevent payment and sometimes, invoice accounting. Payables applies holds to invoices that fail the Invoice Validation process. You release holds from invoices for invoice payment and accounting entry creation. If you manually release all holds from an invoice, you do not need to resubmit Invoice Validation before paying or creating accounting entries for it. Invoice Validation will not place an invoice on the same type of hold that you manually released. You must manually release all holds that you apply manually. System Holds These are all holds other than user-defined holds, such as Distribution Variance hold, placed by Invoice Validation if the total of the invoice distributions do not equal the invoice amount. To remove this hold, fix the problem that caused the hold to be placed and resubmit Invoice Validation. You can manually release some system holds. During Invoice Validation, Payables automatically releases system holds from invoices with corrected exception conditions. For example, you fix a distribution variance on an invoice, resubmit Invoice Validation, and Payables automatically releases the Distribution Variance hold. Payables applies some holds that you cannot release. You can use the Invoice Holds window Payables Overview Chapter 6 - Page 24

401 to view invoices with these holds, but cannot manually release these holds. To correct the exception that caused Invoice Validation to place the hold on the invoice, update the invoice or the purchase order or change your invoice tolerances, then resubmit Invoice Validation to release the holds. Payables Overview Chapter 6 - Page 25

402 Holds and Releases Holds and Releases Manual Holds You can prevent payment and, optionally, prevent accounting for an invoice by manually applying one or more holds to it. Payables provides some generic invoice holds for you but you can define your own holds based on your invoice validation needs. Payables does not automatically release holds that you apply to invoices manually. You will need to manually release those. Payables Overview Chapter 6 - Page 26

403 Invoice Validation Invoices: Invoice Validation Before you can pay or account for an invoice (including prepayments), you must submit Invoice Validation for the invoice in one of three ways: System Submit the Invoice Validation program from the Submit Request window. Batch Use the Validate button in the Invoice Batches window. Online Use the Validate button in Invoice Actions window. Invoice Validation validates the matching, tax, period status, exchange rate, and distribution information for invoices you enter and automatically applies holds to exception invoices. It checks the supplier site to determine which invoice tolerance template to use. If no invoice tolerance template is specified, tolerance checking is not performed. If an invoice tolerance template is specified, Invoice Validation will check against the specific invoice tolerances template stored in the Invoice Tolerances window to determine if the invoice falls within the defined tolerances and automatically applies holds to exception invoices. If an invoice has a hold, you can release the hold by correcting the exception and then resubmitting Invoice Validation. Correct exceptions by updating the invoice or the purchase order, or change your Invoice Tolerances. Payables automatically releases the hold when the exception is no longer an issue. You can manually release certain invoice holds even if you have not resolved the matching error condition. You can do this in the Invoice Holds window. Payables Overview Chapter 6 - Page 27

404 You can identify all invoices that Payables has not yet reviewed with Invoice Validation by submitting the Invoice Register for unvalidated invoices only. You can check the validation status of an invoice online in the Invoice Overview window or the Invoices window. Payables and Oracle Alert integrate to alert the appropriate accounts payable or purchasing staff when you or Payables place an invoice on hold. Oracle Alert also provides an integrated system of alerts, messages, and message distribution to focus attention on time-sensitive or critical information and streamline the validation process. Exception reporting in Oracle Alert is accomplished using either electronic mail or paper reports. Payables Overview Chapter 6 - Page 28

405 Levels of Invoice Validation Levels of Invoice Validation System level validation Manually submit the Payables Invoice Validation process or schedule it to run periodically from the Submit Request window. Submit the Payables Invoice Validation process right before you process payments to update the status on all invoices. Payables will use the Option parameter to select unvalidated invoices for validation. Enter All to ensure you release any existing holds on invoices as well as place new holds. Otherwise, Invoice Validation reviews only those invoice distributions that were not already reviewed by Invoice Validation. Optionally, enter other criteria to submit Invoice Validation for specific groups of invoices. Batch level validation Submit Invoice Validation for one or more invoice batches from the Invoice Batches window. Batch level validation is only allowed if the Allow online validation Payables option is enabled also. Invoice level (online) validation If the Payables option to allow online validation is enabled, you can submit online validation for one or more individual invoices when an invoice must be validated and paid immediately. You can also validate related invoices for credit and debit memos by choosing Validate Related Invoices in the Actions window after you enter a credit or debit memo. Payables Overview Chapter 6 - Page 29

406 Invoice level (online) validation is only allowed if the Allow online validation Payables option is enabled also. Validation and Approval The order of the Invoice Validation process and Invoice Approval Workflow Program is based on the Approval Processing Sequence Payables option. For example, you might want to validate before you approve to create tax lines and distributions for your invoices. Payables Overview Chapter 6 - Page 30

407 Invoice Validation Concurrent Processing Invoice Validation Concurrent Processing Multiple users per organization can simultaneously run the Invoice Validation program for invoices they need to validate. This feature significantly improves performance of validating large number of invoices, instead of Oracle Payables running the program only once per organization, wherein each invoice validation instance had to complete before the next could proceed. Payables Overview Chapter 6 - Page 31

408 Invoice Processing for Contract Financing, Retainage, and Progress Terms Invoice Processing for Contract Financing, Retainage, and Progress Terms Complex payment terms and conditions for fixed price contracts are captured during the procurement contract flow. This includes options to schedule points of progress for invoicing, request an advance or progressive financing support, and record negotiated amounts to retain until completion of the purchased item, service, or project. These terms and conditions are supported in Oracle Payables when recording invoices and managing payment execution during the lifetime of the contract. Financing: Advances and Progressive Contract Financing: Advances are generally one-time prepayments made before work on the contract begins while contract financing infuses money to the supplier as work progresses. Oracle Payables ensures that the amounts financed are recovered by automatically applying financing to subsequent invoices per the specific terms captured in the purchase order. Retainage and Retainage Release: Retainage is the common practice of withholding a fixed amount / percentage of payment until all work under a contract is complete and accepted. The retainage terms are agreed upon by the buyer and supplier and are intended to make sure that the supplier finishes the work as per the contract. Retainage is also called retention or contractual withholds. At the end of the project or when agreed events have occurred, the supplier requests the amount retained and payment is made to release it. Payables automatically retains per the purchase order on invoices coming in and supports the retainage release and payment process. Payables Overview Chapter 6 - Page 32

409 Invoices for Progress: Invoices representing progress are matched to the purchase order, updating the purchase order with the progress. A percentage of the invoice may be retained and contract advances and financing may be automatically applied seamlessly bringing together the relevant contract terms with each invoicing event. In some cases, the progress is reported via a work confirmation process. Suppliers entering a work confirmation directly in Oracle isupplier Portal have a receipt recorded in Oracle Receiving. Pay on Receipt terms recorded on the purchase order are translated into a self-billed invoice, in Oracle Payables, to be paid. Payables Overview Chapter 6 - Page 33

411 Setting Up Payables for Expense Reports Payables Overview Chapter 6 - Page 35

412 Expense Reporting Process Payables Overview Chapter 6 - Page 36

413 Expense Report Import Program Payables Overview Chapter 6 - Page 37

414 Processing and iexpenses Expense Report Processing and iexpenses 1. Employee creates and submits expense report using web browser (standard) or Excel spreadsheet (disconnected) expense reporting methods. 2. Workflow notifies the employee s manager or the specified overriding approver, who reviews the expense report online. If rejected, the employee is notified via . Depending on the rejection reason, the employee may be able to modify report and resubmit using the Modify Expense Reports option on the Internet Expenses main menu. If approved, Accounts Payable sends the report for review if the report contains expenses that require original receipts and/or justification; otherwise, Accounts Payable approves the report automatically and creates payment. If required receipts are missing or policy is violated, the Accounts Payable clerk adjusts the report using the AP Expense Reports window and notifies the employee of the adjustment. 3. Once management and/or Accounts Payable approve, the AP Invoice Import program converts the expense report into an invoice, and payment is created in Oracle Payables. 4. Employee receives payment via check or direct deposit, depending on company policy/setup. Payables Overview Chapter 6 - Page 38

416 Invoice Payments Invoice Payments Payables provides a variety of features for fast, controlled payment processing. With Payables you can do the following: You can make payments from your disbursement bank accounts by printed checks, wire, or electronic payments including electronic funds transfer (EFT), electronic data interchange (EDI), and XML. Pay only invoices that are due and automatically take the maximum discount available. Note: Oracle Payables automatically reduces the discountable amount by the tax amount if you select automatic tax calculation at the Line or Tax Code level and if the discountable amount did not include tax. Select invoices for payment, using a variety of criteria, and create payments automatically. Ensure that duplicate invoice payments don t occur. Review information online for the result and status of payments. Payables Overview Chapter 6 - Page 40

417 Payment Manager Terminology Payment Terminology Document Payable. A document to be paid by the deploying company (Payer). It may represent, for example, a Payables invoice or scheduled payment. Pay Run/Payment Process Request. A pay run is a broad term, which describes the process by which a group of invoices is selected and processed for payment. It is roughly equivalent to the Release 11i concept of a payment batch. The term Pay Run is often used interchangeably with the term Payment Process Request. A payment process request is technically a request created by a source product for Oracle Payments payment services. The payment process request, which originates in the source product during the invoice selection process, contains one or more documents payable to be paid. During the payment process, the documents payable in the payment process request are built into payments. Payee. The person or organization that is being paid. For example, the supplier, employee, or customer to whom the payment is made. Payment Instruction. A payment instruction is a collection of payments, along with aggregate payment information, that is formatted. Depending on the setup, a payment instruction may be converted into a file to be printed onto checks or into a payment file that is transmitted to a payment system for further processing and disbursement. Payables Overview Chapter 6 - Page 41

418 Payment Process Profile. A payment process profile is a payment attribute assigned to documents payable, which specifies handling of the documents payable, payments, and payment instructions. Payment process profiles including specifications for payment instruction formatting and transmission. - Payment process profiles contain the following information: payment instruction formatting information transmission information payment grouping payment limits payment sorting details Payment Process Request Template. A blueprint that simplifies and expedites pay runs by pre-selecting pertinent payment data, such as general header information, payment selection criteria, payment attributes, processing instructions, and how validation failures are handled. Payment Format. A set of rules that determine how a payment instruction or settlement batch is converted into a payment file, readable by a payment system. Payment formats are registered and maintained in Oracle XML Publisher. Payment Method. A payment attribute on a document payable. The payment method indicates the medium by which the deploying company (first party payer) makes a payment to a supplier (third party payee). Examples of payment methods are checks printed in-house by the payer, checks outsourced to the bank for printing, and wires. Payables Overview Chapter 6 - Page 42

419 Using the Invoice Workbench Using the Invoice Workbench Payables automatically enters most of the payment information for you. Prerequisites Each invoice you want to pay must be validated, uncancelled, and without holds. If you use Invoice Approval Workflow, the invoice approval status must be Approved for the invoice to be selected for payment. The invoice approval status is derived from the approval status of the document maintained at the invoice header and the approval status of the invoice lines. If you select more than one invoice, the invoices must have the same supplier site and currency. Payables Overview Chapter 6 - Page 43

420 Time Zone Support Time Zone Support The Goods Received Date field in the Invoice Workbench window includes the time to support the Time Zone feature of Oracle Application Object Library (AOL). It records the time based on your legal entity s time zone. The Stopped Date and Stop Release date fields in the Payments window and the Schedule Start and End date fields in the Payment Batch Sets window that already have a date and time format will display Client time zone, rather than Server time zone if AOL s Time Zone functionality is selected. Payables Overview Chapter 6 - Page 44

421 Invoice Payment Methods Invoice Payment Methods Check A payment in a payment batch, a Quick Payment, or manual payment. Clearing Accounts for intercompany expenses when you do not actually disburse funds through banks. You do not generate a payment document with the Clearing payment method, but enter Clearing for the payment method when you enter the invoice. You can record a Clearing payment using a Manual type payment only. Electronic and Wire Methods The Electronic method enforces a supplier bank account while the Wire method does not. Use electronic payment to instruct your bank to make payment to a supplier bank account. Use wire payment to record payment when you have used a process outside of Oracle Payables system to instruct your bank to pay a supplier. Electronic Used when Payables instructs your bank to pay a supplier bank account. Typically, this communication is an electronic file in a bank-specific format that instructs your disbursement bank to pay your suppliers. Use this method whenever to generate a document that requires a supplier bank account. For example, use it if your Payables system is set up to print letters sent to your bank to request that the bank makes an electronic funds transfer directly into the supplier's bank account. Payables ensures that you have recorded supplier bank account information when you use the Electronic payment method. Payables Overview Chapter 6 - Page 45

422 Typically, when paying invoices electronically, users use a payment document with a Computer Generated disbursement type and a payment batch or Quick payment to create a payment instruction file. The payment instruction file is saved in the ap.out directory for delivery to the bank, unless one of the following features is used to automatically transmit the instruction file to the bank: e-commerce Gateway (for EDI payments), Automatic Bank Transmission, or XML Payment Processing. However, you can use localizations, custom payment methods, and payment formats to create any type of communication with your bank when you use the electronic payment method. Wire Used to manually record payment when you have used a process outside of your Oracle Payables system to instruct your disbursement bank to pay a supplier. Oracle Payables does not require supplier bank account data when using this method. When you define payment documents for these payments, you use the Recorded disbursement type because you are simply recording a payment made outside of the system and record the transaction with a manual payment. However, the system allows you to use any disbursement type. For example, some users who regularly record wire payments for multiple suppliers use payment documents with the Computer Generated disbursement type, create an electronic payment batch, and then delete the resulting electronic file. Payables Overview Chapter 6 - Page 46

423 Manual Payment Manual Payment When you create a payment outside of Payables, such as a typed check or wire transfer, you can record the payment within Payables and update the invoice or invoices that you paid. With a manual payment, you can override some payment controls of Payables. You can record a single manual payment for multiple Pay Alone invoices. You can record payment for invoices that are associated with any payment method except Electronic. You can also pay an invoice for a supplier that has the Hold All Payments option selected. Prerequisites to process manual payments in Payables: Create the payment outside of Payables. Each invoice you paid must be validated, uncanceled, without holds and must have the same currency as the payment. The bank account must have at least one payment document that uses the recorded or combined disbursement type. Payables Overview Chapter 6 - Page 47

424 Creating Quick Payments Invoice Payments: Creating Quick Payments You can create and print a computer generated payment to pay a supplier for one or more invoices. You can also create a check, save it, then print it later. If you use the EDI Outbound payment format and you use e-commerce Gateway, then you can create electronic Quick payments. When you create a quick payment you can select an invoice regardless of the payments terms and due date. For example, you can create a Quick payment for an invoice that is not yet due. Prerequisites: Enable the Allow Print Payables option. The invoice(s) must be validated, uncanceled, and without holds. If you are creating an electronic payment, you must assign supplier banks to your supplier. The bank account must have at least one payment document that uses the Computer Generated or Combined disbursement type. Payables Overview Chapter 6 - Page 48

425 Creating Quick Payments Invoice Payments: Creating Quick Payments (continued) Payment Window Type Select Quick. Bank Account Enter the Bank Account you want to make the payment from. Document Name Enter a payment document name that uses either a Computer- Generated or Combined disbursement type. Document Number Optionally, change the payment document number, which defaults to the next available number for the document name specified. Supplier/Site Name Enter either the supplier name or number and supplier site. - Adjust the address different from the supplier site to create payment and select the Allow Payment Address Change Payables option. You may need to send an expense check to a consultant working at a site away from home. - If you record voucher numbers either manually or by using Sequential Numbering, enter or review voucher information. If the payment currency is different from your functional currency, enter exchange rate information in the Payment Rate region. - If paying electronically and you have selected Allow Remit-to Account Override Payables, you can select a different Remit-to account from the list of values, which includes bank accounts assigned to the supplier with the same payment currency. Payables Overview Chapter 6 - Page 49

426 (B) Enter/Adjust Invoices - Click this button to navigate to the Select Invoices window. Payables Overview Chapter 6 - Page 50

427 Creating Quick Payments Creating Quick Payments Select Invoices Window Select the invoices you want to pay. Optionally choose Invoice Overview to see detailed information about an invoice. Return to the Payments Window Payables automatically enters the Payment Amount for you. Choose Actions to navigate to the Payment Actions window. Format and optionally print the check To format and print, first verify the payment document is in your printer, then select Print Now, optionally change the printer name, and choose OK. To format only and print the check later, select Format and choose OK. When you are ready to print, print from the Submit Requests window. You can use the Print Now option in the Actions window to print only if you print immediately after formatting. Quick Payment Restrictions: NUMBER OF INVOICES: You can only pay as many invoices as you defined for the remittance advice of the payment document. SAME SUPPLIER SITE: You can only select invoices that have the same supplier site as the payment supplier site you enter. You can, however, change the payment mailing address if the Allow Payment Address Change Payables option is selected. Payables Overview Chapter 6 - Page 51

428 PAY ALONE INVOICES: If you want to pay multiple invoices, none can be a Pay Alone invoice. PAYING IN A FOREIGN CURRENCY: You must pay in the same currency as the invoice. You can enter and pay a foreign currency invoice only if your Allow Multiple Currencies Payables option is enabled, and you have defined a multi-currency or foreign currency denominated bank account. CANNOT STOP FORMATTED QUICK PAYMENTS. You cannot stop a Quick Payment after it has been formatted. Initiating Quick Payments from the Invoice Workbench In the Invoice Workbench, you can initiate quick payment of one or more invoices or one or more scheduled payments by selecting the invoices you want to pay, clicking the actions button, and selecting the Pay in Full option to navigate to the Payments window. The Payment Type should default as Quick. Payables automatically enters most payment information for you, such as payment amount and supplier/site name. Skip invoice selection step if you were to initiate the payment from the Payment Workbench. Payables Overview Chapter 6 - Page 52

429 Invoice Payments: Formatting Payments Invoice Payments: Formatting Payments You attach a format to payment documents you define during setup. When you choose a payment document, Payables uses the associated format to create an output file that you can use to make payments. Output file format Check To print checks, attach a format program to the payment document you define that creates a flat file in the format of a check. e-commerce Gateway To transmit an EDI formatted file to the bank, attach a format program to the payment document you define that creates a flat file based on an e- Commerce Gateway map. Take this flat file and translate it to an EDI file format using an EDI translator. The EDI formatted file is sent to the bank. EFT To send electronic funds transfer (EFT) instructions to your bank, attach a format program to the defined payment document that creates an EFT formatted flat file. XML You and your bank can implement XML message delivery types from your bank to keep you informed of your XML payment s status: XML payment message receipt (Confirm BOD), payment file errors, and payment advice. Workflow sends all notifications to the user who formatted the payment. Payables Overview Chapter 6 - Page 53

431 Key Processes Key Processes Create Accounting Process The parameters you use when you submit the Create Accounting program determine how accounting entries are transferred to the ledgers in your general ledger. Accounting can be created in draft or final mode. You can transfer subledger accounting entries in summary or detail. Regardless of the option you choose, you can always drill down to the subledger to view the details that build the general ledger balances. Create Accounting Draft If you submit the Create Accounting in Draft mode, you can review the subledger accounting entries generated for your Payables transactions. If any accounting is incorrect, you can update the transaction in Payables to correct the accounting before you create final accounting. Create Accounting Final Run the Create Accounting process in Final mode to generate your final subledger accounting entries. Once you generate final accounting, you cannot correct the accounting. Instead, you must enter correcting transactions in Payables. Integration with Other Applications Payables Overview Chapter 6 - Page 55

432 Other applications that integrate with Oracle Payables such as Oracle Assets, Oracle Procurement, Oracle Projects, and Oracle Inventory now provide Payables-related accounting information to Oracle Subledger Accounting. Invoice Lines and Distribution details continue to be provided to Payables directly. Transfer Journal Entries to GL Submit the Transfer Journal Entries to GL process to transfer accounting information from Oracle Subledger Accounting to the GL Interface. The Transfer Journal Entries to GL process transfers summary or detail accounting activity for any open period into the general ledger interface. When more than one period is open, the transfer selects transactions from the first open period up to the entered transfer date, and passes the correct accounting date and financial information into the general ledger interface. Journal Import Once subledger accounting entries are transferred to the GL Interface table, use the Journal Import process to import accounting information from the GL Interface to the general ledger. Posting Journals Use the post journals process to update the account balances of your detail and summary accounts. You can post actual, budget, or encumbrance journal batches. Payables Overview Chapter 6 - Page 56

433 Period Close Overview of the Period Close At the end of each accounting period, companies must complete the closing process in Payables and reconcile Payables activity for the period. You close a Payables period after you have completed subledger accounting for transactions for the period and you have transferred the subledger accounting entries to general ledger. A week before your first period close, create a copy of the production database and then do a dry run following your period close procedures. The dry run will help you identify problems and issues well in advance of the actual period close. Payables Overview Chapter 6 - Page 57

434 Mass Additions Accounting - Periodic Accrual [Period End] Mass Additions Accounting - Periodic Accrual [Period End] 1. Enter purchase order When you enter a purchase order, accounts are created and stored with the purchase order distribution. The accounts will eventually be used as a basis for creating accounting that is sent to the general ledger. Creating a purchase order in and of itself generates no accounting that is sent to the general ledger. 2. Receive For most expenses and asset purchases (other than inventory), receipt accruals are generally processed at period end, so no accounting is transferred to the general ledger at the time the receipt is processed. 3. Period end accrual If no invoice is received and matched to the purchase order at period end, the Receipt Accruals - Period End process will generate an accrual that is transferred to the GL Interface. Run the Import Journal process to create unposted journals in the general ledger. 4. Reverse accrual Perpetual accruals (on receipt accruals) are reversed when the invoice entered in Payables is matched to the purchase order. Periodic accruals (period end accruals) are reversed when a reversing journal is created and posted in the general ledger. 5. Invoice and match Entering an invoice and matching creates a debit to the Inventory AP Accrual account to clear the liability for the uninvoiced receipt (you now have an invoice). The credit is to the AP Liability account that defaults from the supplier site if the invoice unit price is the same as the purchase order line unit price. Any difference is charged to the Invoice Price Variance account. For items with destination type of Expense, the Invoice Price Variance account will be the same as the charge account. In the case of an asset that will be capitalized and depreciated in assets, the Payables Overview Chapter 6 - Page 58

435 charge account is an asset clearing account associated with an asset category in Assets. The AP Liability account is cleared when a payment is processed. 6. Post asset to Assets The Post Mass Additions process places the asset in service. When the Create Accounting process is run in Assets, the charge account (the clearing account on the invoice distribution) is relieved and the cost account associated with the asset category is charged for the cost of the asset. Payables Overview Chapter 6 - Page 59

436 Subledger Accounting and General Ledger Subledger Accounting and General Ledger Create Accounting (1) Create subledger accounting entries online or manually using the Create Accounting concurrent program. Transfer to General Ledger (2) Transfer subledger accounting entries from Subledger Accounting into General Ledger. The Post process in General Ledger updates account balances. Once ledgers are posted, you can perform account analysis, subledger drill down and run financial statements. Payables Overview Chapter 6 - Page 60

437 Accounting Process Error Validation and Reporting Accounting Process Error Validation and Reporting Through the Oracle Payables accounting process, Oracle Payables users can fix account problems before the system creates accounting entries. When the accounting process identifies an invalid account, the accounting process does not create accounting entries for the transaction. The transaction details are still listed in an exceptions report. You review the accounting process report to see the problem account, fix the problem that is preventing the program from getting a valid account, and then resubmit the accounting process. This way, the account is correct when the accounting entry is created. The Accounting Entries Exceptions Report lists all transactions that the process tried to account for, but could not account for because of absence of important information. For example, the exchange rate was missing, a previous, related transaction was not accounted yet, or you cannot account for a payment cancellation if the payment is not yet accounted. This report raises visibility of transactions that require additional data and provides you with the information you need to ensure that all your transactions are accounted in a timely manner. Payables Overview Chapter 6 - Page 61

439 Daily Business Intelligence Daily Business Intelligence The Oracle e-business Suite delivers all the tools needed to help companies transition to become an e-business. Oracle applications are 100% Internet based. All you need to access the applications is a web browser on your desktop. But more importantly, the applications themselves have been developed with built-in support for all the new internet-enabled e- Business practices. Daily Business Intelligence (DBI) is a comprehensive management information capability of the e-business Suite that helps enables senior managers and executives get an accurate and integrated daily summary of their business. It provides the technology components that enable cross-functional analysis, daily summarization, and optimized reporting performance. It includes Oracle Portal based pages to support reporting needs for targeted management roles, with relevant and timely information presented in the form of Key Performance Indicators, Summary Portlets, and Drill Down Reports. Payables Overview Chapter 6 - Page 63

440 Daily Business Intelligence Payables Overview Chapter 6 - Page 64

442 Oracle isupplier Portal Invoice Matching Controls Oracle isupplier Portal Invoice Matching Controls Oracle Payables has a profile option that, when selected, prevents suppliers from matching a single invoice to more than one purchase order when entering invoices online in Oracle isupplier Portal. From the isupplier side, the supplier is able to include the ship from location on an ASN/ASBN. This allows automated matching of shipment lines to the corresponding delivery lines in Oracle Transportation Management, and largely reduces the need for a manual match. Payables Overview Chapter 6 - Page 66

443 Attachments Attachments In Oracle isupplier Portal Invoices, suppliers can use standard attachments functionality to include non-structured data attachments with invoices that they enter. Once the invoices are imported, Oracle Payables users can access the attachments just as they can access any other invoice attachments. Payables Overview Chapter 6 - Page 67

444 PO Number Display PO Number Display Purchase orders are are ordered numerically, with release number in the display for blanket and planned purchase order numbers. Suppliers can find the purchase orders they need to match against much more easily, speeding up the invoice entry process. Payables Overview Chapter 6 - Page 68

445 Retroactive Pricing of Purchase Orders Support Retroactive Pricing of Purchase Orders Support The retroactive pricing of purchase orders is a specialized feature for use with suppliers that agree to this pricing and invoicing relationship. It automatically generates supplier invoices to make price adjustments without having a corresponding invoice from the supplier. Therefore, in some jurisdictions, you would first need to get special dispensation from your fiscal authorities before using this feature. When using this feature, after an Oracle Purchasing user updates the price for a purchase order item, the system can create adjustment invoices in Oracle Payables for any existing invoices matched to that item. The net effect is as if each invoice had been matched at the new price. Payables Overview Chapter 6 - Page 69

446 Attachments Attachments Oracle Payables supports the attachment of supplemental files at the supplier site level. Attachments can be any type of supported file, including text files, images, HTML pages, and video clips. For example, you might want to attach a photograph of items ordered. That image can then be carried over to the invoice. This feature's functionality is identical to that currently available at the supplier level. Payables Overview Chapter 6 - Page 70

448 Payables Integration with E-Business Tax Payables Integration with E-Business Tax Oracle Payables integrates with Oracle E-Business Tax, the Oracle Applications tax engine, to provide tax services for invoices. With this integration, E-Business Tax provides a central repository for your invoice tax requirements. E-Business Tax does not provide tax services for Withholding Taxes or 1099 Income Taxes. E-Business Tax provides tax services for the following categories of Payables invoices: Standard Invoices - includes Standard, Mixed, PO Price Adjustment, Credit Memos, and Debit Memos Prepayment Invoices Expense Reports Each of these categories maps to an event class in E-Business Tax. E-Business Tax uses your tax setups as well as information from the invoice header and line level (the tax drivers) to determine the applicable taxes, tax statuses, tax rates, taxable basis, calculations, rounding, and tolerance for each invoice. The tax drivers E-Business Tax uses to calculate taxes can differ depending on the category of invoice and the parties involved. For example, for a Standard invoice in the U.S., the Location ID and Place of Supply on the invoice are used to determine the applicable State and County Sales Taxes. For more information see the tax module or the E-Business Tax User Guide. Payables Overview Chapter 6 - Page 72

449 Multiple Organization Access Control Multiple Organization Access Control Oracle Payables leverages Oracle Applications' Multiple Organization Access Control feature. Multiple Organization Access Control (MOAC) lets you define multiple organizations and the relationships among them in a single installation of Oracle Applications. These organizations can be ledgers, business groups, legal entities, operating units, or inventory organizations. Implement Multiple Organization Access Control If you implement MOAC, you can enter invoices for multiple operating units without switching responsibilities. To enter an invoice for an operating unit, enter a value in the Operating Unit field of the Invoices window (part of the Invoice Workbench). Each invoice must be for a single OU, but you can enter multiple invoices for different OUs, without changing responsibilities. Pay invoices for multiple operating units in a single pay run. Set Up Multiple Organization Access Control To set up MOAC, define the following profile options: MO Security Profile. This option controls the list of operating units that a responsibility or user can access. So you would assign the Security Profile that you just created to this profile option. If you set the this option at the responsibility level, then all users using that responsibility will have access to only the operating units available in the security profile. Payables Overview Chapter 6 - Page 73