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Oracle Cash Management User Guide
Release 12.1
Part Number E13483-04
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Accounting

This chapter covers the following topics:

Subledger Accounting (SLA) Introduction

You can automatically create accounting entries for Bank Account Transfers and Bank Statement Cash Flows in Cash Management using the Oracle Subledger Accounting (SLA) architecture. This chapter is largely dedicated to describing the principles of the automated accounting. In addition to automated accounting, you can create manual journal entries in Cash Management, if you need to account for business events not related to Bank Account Transfers and Bank Statement Cash Flows..

Oracle Subledger Accounting is a rule-based accounting engine that centralizes journal entry creation across the E-Business Suite. Acting as an intermediate step between a subledger application, such as Oracle Cash Management, and Oracle General Ledger, Oracle Subledger Accounting creates journal entries for subledger transactions and transfers them to Oracle General Ledger.

Oracle Subledger Accounting allows multiple accounting representations for a single business event, resolving conflicts between corporate and local fiscal accounting requirements. With subledger accounting you retain the most granular level of detail in the journal entries, with different summarization options in the General Ledger, allowing full auditing and reconciliation capabilities.

Each transaction in Oracle Cash Management has a number of accounting events associated with it. Oracle Cash Management provides a set of predefined accounting rules that Oracle Subledger Accounting uses to create journal entries for each accounting event. In addition to the seeded setup, you can define your own detailed accounting rules using a centralized accounting setup in a common user interface. Journal entries can be created on a trial or final basis. Once the journals are created, you can view them in the transaction windows in Oracle Cash Management. Similarly, you can drill down from the journal entry in Oracle General Ledger to the source transaction in Oracle Cash Management.

For definitions, common setup steps and further information about Subledger Accounting, see: Subledger Accounting Options Setup Pages, Oracle Subledger Accounting Implementation Guide.

Accounting Events

Accounting events represent occurrences that have a financial accounting impact. Accounting events are captured when transactions are committed or processed.

In Oracle Subledger Accounting, accounting events are categorized into event types. Event types are grouped into event classes that in turn are grouped into event entities. The overall grouping of these components is called an event model. The Oracle Cash Management accounting event model is predefined for you, and includes each Cash Management transaction type (event class) and its lifecycle. You should understand the Cash Management accounting event model because the model classifies Cash Management accounting events, which are the basis for creating subledger accounting.

At the foundation of the event model, Cash Management predefines event entities. An event entity enables Oracle Subledger Accounting to handle the accounting for similar business events in a consistent manner. The event entity in Cash Management is Cash Flow.

Each event entity is associated with one or more event classes. An event class represents a category of business events for a particular transaction type or document. Event classes group similar event types and enable the sharing of accounting definitions. An event type represents a business operation that you can perform for an event class. An accounting event has both an event class and an event types that affect how the Create Accounting program determines the subledger accounting for it. Event types provide the lowest level of details for storing accounting definitions.

Cash Management provides a predefined set of event classes and event types for each accounting event entity.

Cash Flow Event Entity

This table describes the event classes and types that Payables predefines for the Cash Flows Event Entity.

Event Class Event Type Seeded Accounting Definitions
Bank Account Transfers Bank Account Transfer Cancelled No
  Bank Account Transfer Cleared Yes
  Bank Account Transfer Settled No
  Bank Account Transfer Uncleared Yes
Bank Statement Cash Flows Bank Statement Cash Flow Canceled Yes
  Bank Statement Cash Flow Recorded Yes

Bank Account Transfer Settled event is raised when the bank account transfer reaches the Settled status. If the bank account transfer is canceled, then the Bank Account Transfer Cancelled event is raised. If you create journal entries for the Bank Account Transfer Settled event and then cancel the bank account transfer, the Bank Account Transfer Cancelled event will produce reversing journal entries. If, however, you cancel bank account transfer even before creating journals for the Bank Account Transfer Settled event, then no journals will be created for the bank account transfer at all.

Similarly, the Bank Account Transfer Cleared event is raised when you manually or automatically clear the bank account transfer cash flows. If the bank account transfer cash flow is un-cleared, then the Bank Account Transfer Uncleared event is raised. If you create journal entries for the Bank Account Transfer Cleared event and then un-clear the bank account transfer cash flow, the Bank Account Transfer Uncleared event will produce reversing journal entries. If, however, you un-clear bank account transfer cash flow even before creating journals for the Bank Account Transfer Cleared event, then no journals will be created for the bank account transfer cash flow at all.

Important: Each bank account transfer produces two cash flows: an outflow for the source bank account and an inflow for the destination bank account. Since you clear bank account transfers by bank account, the clearing status of cash flows originated from the same bank account transfer can be different. Thus, accounting events are raised and tracked at the cash flow level.

Bank Statement Cash Flow Recorded even is raised when the concurrent program creates a bank statement cash flow. If the bank statement cash flow is canceled, then the Bank Statement Cash Flow Cancelled event is raised. If you create journal entries for the Bank Statement Cash Flow Recorded event and then cancel the bank statement cash flow, the Bank Statement Cash Flow Cancelled event will produce reversing journal entries. If, however, you cancel bank statement cash flow even before creating journals for the Bank Statement Cash Flow Recorded event, then no journals will be created for the bank statement cash flow at all.

Accounting Definitions

The following accounting definitions are seeded. You can modify the seeded definitions and/or add your own definitions for additional accounting events.

Application: Cash Management

Definition Code: CE_STANDARD_ACCOUNTING

Definition Name: Cash Management Standard Accounting

Enabled: Check mark (Yes)

Event Class: Bank Account Transfers

Event Type: Bank Account Transfer Canceled

Create Accounting: Blank (No)

Locked: Blank (No)

Journal Lines Definition Assignments: Blank (No)

Event Class: Bank Account Transfers

Event Type: Bank Account Transfer Cleared

Create Accounting: Check mark (Yes)

Locked: Blank (No)

Journal Lines Definition Assignments: Bank Account Transfer Clearing Lines Definition

This definition will produce the following journal entry lines per cash flow when the cash flow is cleared and the accounting program is run:

  1. Debit the bank charge amount (if any) to the GL account indicated in the bank account setup under Account Controls: General Controls: Bank Charges.

  2. Debit the bank error amount (if any) to the GL account indicated in the bank account setup under Account Controls: General Controls: Bank Errors.

  3. Debit the FX charges amount (if any) to the GL account indicated in the bank account setup under Account Controls: General Controls: Foreign Exchange Charges.

  4. Credit cleared bank account transfer amount to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Outflow; OR Debit cleared bank account transfer amount (minus bank charge amount, bank error amount and FX charge amount, if any) to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Inflow.

  5. Debit cleared bank account transfer amount (minus bank charge amount, bank error amount and FX charge amount, if any) to the Cash-in-Transit GL account defined in Intracompany Rule setup (for intracompany transfer) OR Intercompany Receivable Account for this Trading Partner (for intercompany transfer), if the cash flow direction is Outflow; OR Credit cleared bank account transfer amount to the Cash-in-Transit GL account defined in Intracompany Rule setup (for intracompany transfers) OR Intercompany Payable Account for this Trading Partner (for intercompany transfer), if the cash flow direction is Inflow.

Bank Account Transfer Business Requirements

The following section describes the business requirements for Bank Account Transfers.

Event Class: Bank Statement Cash Flows

Event Type: All

Create Accounting: Check mark (Yes)

Locked: Blank (No)

Journal Lines Definition Assignments: Bank Statement Cashflow Journal Line Definition

This definition will produce the following journal entry lines per cash flow when the cash flow is created by the concurrent program based on the bank statement line and the accounting program is run:

  1. Credit bank statement cash flow amount to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Outflow; OR Debit bank statement cash flow amount to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Inflow.

  2. Debit bank statement cash flow amount to the GL account indicated in the Bank Statement Cash Flow Mappings window, if the cash flow direction is Outflow; OR Credit bank statement cash flow amount to the GL account indicated in the Bank Statement Cash Flow Mappings window, if the cash flow direction is Inflow.

The same definition will produce the following journal entry lines per cash flow when the accounted bank statement cash flow is cancelled and the accounting program is run:

  1. Debit bank statement cash flow amount to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Outflow; OR Credit bank statement cash flow amount to the GL account indicated in the bank account setup under Account Controls: General Controls: Cash, if the cash flow direction is Inflow.

  2. Credit bank statement cash flow amount to the GL account indicated in the Bank Statement Cash Flow Mappings window, if the cash flow direction is Outflow; OR Debit bank statement cash flow amount to the GL account indicated in the Bank Statement Cash Flow Mappings window, if the cash flow direction is Inflow.

Setup Affecting Accounting Event Details

Window Option or Field Values
System Parameters (Cash Management Transactions tab : Accounting Region) Exchange Rate Type List of values of user-defined exchange rate types
System Parameters (Cash Management Transactions tab : Accounting Region) Bank Statement Cash Flow Rate Date Cash Flow Date
GL Date
Cleared Date
Bank Statement Date
System Parameters (Cash Management Transactions tab : Accounting Region) Bank Transfer Rate Date Cash Flow Date
Actual Value Date
Cleared Date
Bank Statement Date
GL Date
Statement Line Date
Transfer Date
Manage Bank Accounts: Account Controls: General Controls: Cash User-selected GL account
Manage Bank Accounts: Account Controls: General Controls: Cash Clearing User-selected GL account
Manage Bank Accounts: Account Controls: General Controls: Bank Charges User-selected GL account
Manage Bank Accounts: Account Controls: General Controls: Bank Errors User-selected GL account
Manage Bank Accounts: Account Controls: General Controls: Foreign Exchange Charges User-selected GL account
Account Controls: Reconciliation Controls: Auto Reconciliation Tolerances: Cash Flows: Foreign Tolerance Differences Charges
Errors
FX Charges
Account Controls: Reconciliation Controls: Auto Reconciliation Tolerances: Cash Flows: Tolerance Differences Charges
Errors

Accounting Examples

The following examples demonstrate journal entries created with the seeded accounting setup.

Example #1

Bank account transfer related cash flow (outflow) is automatically cleared when the Bank Account 1 Bank Statement is auto-reconciled and the Create Accounting concurrent program is run. The following journal entry is created.

Note: In the following two tables, GL Date = Clearing Date.

GL Account Debit Credit
GL #1 (Bank Account 1 Cash)   105
GL #2 (LE Cash-in-Transit) 100  
GL #3 (Bank Account 1 Bank Charges) 3  
GL #4 (Bank Account 1 Bank Errors) 2  
GL #5 (Bank Account 1 Foreign Exchange Charges)    

Bank account transfer related cash flow (inflow) is automatically cleared when the Bank Account 2 Bank Statement is auto-reconciled and the Create Accounting concurrent program is run. The following journal entry is created.

GL Account Debit Credit
GL #6 (Bank Account 2 Cash) 100  
GL #2 (LE Cash-in-Transit)   100
GL #8 (Bank Account 2 Bank Charges)    
GL #9 (Bank Account 2 Bank Errors)    
GL #10 (Bank Account 2 Foreign Exchange Charges)    

Both bank account transfer related cash flows (inflow and outflow) are automatically un-cleared when the Bank Account 1 Bank Statement is un-reconciled, the Bank Account 2 Bank Statement is un-reconciled, and the Create Accounting concurrent program is run. The following journal entries are created.

Note: In the following two tables, GL Date = Un-Clearing Date.

GL Account Debit Credit
GL #1 (Bank Account 1 Cash) 105  
GL #2 (LE Cash-in-Transit)   100
GL #3 (Bank Account 1 Bank Charges)   3
GL #4 (Bank Account 1 Bank Errors)   2
GL #5 (Bank Account 1 Foreign Exchange Charges)    
GL Account Debit Credit
GL #6 (Bank Account 2 Cash)   100
GL #2 (LE Cash-in-Transit) 100  
GL #8 (Bank Account 2 Bank Charges)    
GL #9 (Bank Account 2 Bank Errors)    
GL #10 (Bank Account 2 Foreign Exchange Charges)    

Example #2

Bank Statement Cash Flow Creation program is run, and then the Create Accounting concurrent program is run. The following journal entry is created.

Note: In the following two tables, GL Date = Bank Statement Line Transaction Date.

GL Account Debit Credit
GL #1 (Bank Account 1 Cash)   100
GL #11 (Bank Statement Cash Flow Mappings for Bank Account 1) 100  

Cash flow created in previous step is manually deleted, and then the Create Accounting concurrent program is run. The following journal entry is created.

GL Account Debit Credit
GL #1 (Bank Account 1 Cash) 100  
GL #11 (Bank Statement Cash Flow Mappings for Bank Account 1)   100

Foreign Exchange Conversion Examples

The following combinations of ledger currency, bank account currency and transaction currency are supported when creating bank account transfers.

Source Bank Account      
  Ledger Currency Bank Account Currency Transaction Currency
  Currency 1 Currency 1 Currency 1
Destination Bank Account      
  Ledger Currency Bank Account Currency  
  Currency 1 Currency 1  
  Currency 2 Currency 1  
  Currency 2 Currency 2  
Source Bank Account      
  Ledger Currency Bank Account Currency Transaction Currency
  Currency 1 Currency 1 Currency 2
Destination Bank Account      
  Ledger Currency Bank Account Currency  
  Currency 1 Currency 1  
  Currency 1 Currency 2  
  Currency 2 Currency 2  
Source Bank Account      
  Ledger Currency Bank Account Currency Transaction Currency
  Currency 1 Currency 2 Currency 2
Destination Bank Account      
  Ledger Currency Bank Account Currency  
  Currency 1 Currency 2  
  Currency 2 Currency 2  
  Currency 1 Currency 1  

Example #1

Bank Account Transfer

Bank Account 1 Setup:

Bank Account 2 Setup:

Destination Bank:

Bank account transfer related cash flow (outflow) is automatically cleared when the Bank Account 1 Bank Statement is auto-reconciled and the Create Accounting concurrent program is run. The following journal entry is created.

Note: In the following table, GL Date = Clearing Date; Currency = USD.

GL Account Debit Credit
GL #1 (Bank Account 1 Cash)   100
Intercompany Receivable Account 100  
GL #3 (Bank Account 1 Bank Charges)    
GL #4 (Bank Account 1 Bank Errors)    
GL #5 (Bank Account 1 Foreign Exchange Charges)    

Bank account transfer related cash flow (inflow) is automatically cleared when the Bank Account 2 Bank Statement is auto-reconciled and the Create Accounting concurrent program is run. The following journal entry is created.

Note: In the following table, GL Date = Clearing Date; Currency = CAD.

GL Account Debit Credit
GL #6 (Bank Account 2 Cash)   117
Intercompany Receivable Account 122  
GL #8 (Bank Account 2 Bank Charges)   5
GL #9 (Bank Account 2 Bank Errors)    
GL #10 (Bank Account 2 Foreign Exchange Charges)    

Managing Journal Entries

Cash Management supports both automatic and manual creation of journal entries, as well as maintenance of those journal entries.

See: Overview of Create Accounting and Transfer Journal Entries to GL Programs, Oracle Subledger Accounting Implementation Guide and Subledger Journal Entries Overview, Oracle Subledger Accounting Implementation Guide.

Creating Journal Entries Automatically

Create journal entries for eligible accounting events generated by Bank Account Transfers and Bank Statement Cashflows by submitting Create Accounting concurrent program. The program creates and, optionally, transfers and posts journal entries to General Ledger. If you do not transfer the journals to General Ledger immediately, you can later submit Transfer Journal Entries to GL concurrent program.

Important: Final journal entries cannot be further modified in Cash Management. Please make sure you are satisfied with the draft journal entries before creating final accounting.

In addition to creating final accounting entries, the program can be run in a draft mode, in which case draft journal entries will be created. Such journals cannot be transferred or posted to General Ledger.

Creating Journal Entries Manually

Accounting entries for Bank Account Transfers and Bank Statement Cash Flows are created automatically. However, if you would like to create a journal entry that is not related to Bank Account Transfers or Bank Statement Cash Flows, you can do so manually using the Create Subledger Journal Entry page.

To create journal entries manually:

  1. Navigate to the Subledger Journal Entries page.

  2. Click Create Journal Entry.

  3. Enter Balance Type, GL Date, Ledger, Category, Description and other attributes as needed.

  4. Select GL accounts and enter debit and credit amounts.

  5. Click Save as Incomplete, if you plan to return to this entry and finalize it at a later date, or click Continue.

  6. Review your journal entry, select completion status and click Finish to validate and finalize your entry.

Transferring Journal Entries to General Ledger

You can transfer automatically created journal entries to General Ledger at the same time as you execute Create Accounting concurrent program. However, if have not done so or if you have created manual journals, you can submit Transfer Journal Entries to GL concurrent program.

Viewing Journal Entries

You can view journal entry created in Cash Management in the Subledger Journal Entries page.

To view journal entries:

  1. Navigate to the Subledger Journal Entries page.

  2. Enter search criteria and click Go.

  3. Review search results.

Updating Manual Journal Entries

You can only update manual journal entries in status Draft, Incomplete, or Error.

To update manual journal entries:

  1. Navigate to the Subledger Journal Entries page.

  2. Enter search criteria and click Go.

  3. Select journal entry and click Update.

  4. Modify journal entry as necessary.

  5. Click Save as Incomplete, if you plan to return to this entry and finalize it at a later date, or click Continue.

  6. Review your journal entry, select completion status and click Finish to validate and finalize your entry.

Deleting Manual Journal Entries

You can only delete manual journal entries in status Draft, Incomplete, or Error.

To delete manual journal entries:

  1. Navigate to the Subledger Journal Entries page.

  2. Enter search criteria and click Go.

  3. Select journal entry and click Delete.

  4. Click Yes to confirm your choice or No to keep the journal entry.