Oracle® Fusion Applications Project Management Implementation Guide 11g Release 1 (11.1.4) Part Number E20384-04

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15 Common Project Configuration: Define Subledger Accounting Rules

This chapter contains the following:

Creating Accounting Method: Explained

Creating Subledger Journal Entry Rule Sets: Explained

Creating Conditions: Examples

Journal Line Rules: Explained

Account Rules: Explained

Creating Account Rules: Points to Consider

Creating Description Rules: Explained

Creating Supporting References: Explained

Define Subledger Application and Sources

Creating Accounting Method: Explained

Accounting methods group subledger journal entry rule sets together to define a consistent accounting treatment for each of the accounting event classes and accounting event types for all subledger applications. The grouping allows a set of subledger journal entry rule sets to be assigned collectively to a ledger.

For example, a subledger accounting method entitled US GAAP can be defined to group subledger journal entry rule sets that adhere to and comply with US Generally Accepted Accounting Principles (GAAP) criteria.

By assigning a different subledger accounting method to each related ledger, you can create multiple accounting representations of transactions.

Accounting rules can be defined with either a top down, or a bottom up approach. When defining subledger accounting rules from the top down, you will initially define the accounting method followed by components of each rule, which will need to be assigned to it. When defining subledger accounting rules from the bottom up, you will initially define components for each rule and then assign them as required.

The Create Accounting process uses the accounting method definition with active journal entry rule set assignments to create subledger journal entries.

When an accounting method is initially defined, or after modifying a component of any accounting rule associated to the assigned journal entry rule set, its status changes to Incomplete.

The accounting method must be completed, by activating its journal entry rule set assignments, so that it can be used to create accounting.

The following definitions are utilized to define the journal entries, and are applied as updates to the accounting method:

• Updates to the predefined accounting method

• Assignment of journal entry rule sets for an accounting event class and/or accounting event type from the accounting methods page

• Assignment of accounting methods to ledgers

• Activation of subledger journal entry rule set assignments

Updates on Predefined Accounting Method

You may update a predefined accounting method by end dating the existing assignment and creating a new assignment with an effective start date.

Assignment of Journal Entry Rule Set for Accounting Event Class and Accounting Event Type

You create the assignment of a journal entry rule set for an accounting event class and accounting event type using the accounting method page.

The following should be considered for assigning rule sets:

• If the accounting method has an assigned chart of accounts, you can select journal entry rule sets that use that same chart of accounts, or that are not associated with any chart of accounts.

• Select an option to assign existing journal entry rule sets or define a new one.

Assignment of Accounting Methods to Ledgers

If the accounting method has an assigned chart of accounts, it may only be used by ledgers that use the same chart of accounts.

If the accounting method does not have an assigned chart of accounts, the accounting method can be assigned to any ledger.

Activation of Subledger Journal Entry Rule Set Assignments

You can activate the subledger journal entry rule set assignments from the Accounting Method page. You can also submit the Activate Subledger Journal Entry Rule Set Assignments process to validate and activate your accounting setups.

Fusion Setup Flow

The figure below shows the relationship of components making up an accounting method as described in the above text.

Creating Subledger Journal Entry Rule Sets: Explained

Subledger journal entry rule sets provide the definition for generating a complete journal entry for an accounting event.

Select the option to define the subledger journal entry rule set for a particular accounting event class or accounting event type.

If you are using multiple ledgers to meet divergent and mutually exclusive accounting requirements, you can vary journal entry rule sets by ledger. Each of the subledger journal entry rule sets can meet a specific type of accounting requirements.

For example, use US Generally Accepted Accounting Principles (GAAP) oriented subledger journal entry rule sets for a ledger dedicated to US GAAP reporting, and French statutory accounting conventions for a ledger dedicated to French statutory reporting. These two sets of definitions have differences based on the setup of the various components that make up their subledger journal entry rule sets.

Seeded subledger journal entry rule sets are provided for all Oracle subledgers. If specific requirements are not met by seeded subledger journal entry rule sets, users can create new ones of copy the seeded definitions and then rename and modify the new copied definitions and their assignments.

Subledger journal entry rule set assignments can be made at two levels, header and line. The following are the subcomponents of a subledger journal entry rule set:

• Description rules

• Journal line rules

• Account rules

• Supporting references

Assignment at Header Level

Header assignments define subledger journal header information and line assignments define journal line accounting treatment.

A header assignment includes the following:

• Accounting date (required)

• Accrual reversal accounting date (optional)

• Description rule (optional)

• Supporting references (optional)

Assignment at Line Level

You can define multiple subledger journal entry rule sets for an accounting event class or accounting event type. A single journal entry is generated per accounting event per ledger using the line assignments from the journal entry rule set assigned to the accounting event class or accounting event type.

The following can be assigned to a journal entry line:

• Journal line description rule

• Journal line rule

• Account rule

• Supporting references

Assignment of Description Rules

If a description rule is defined with sources, the sources must also be assigned to the accounting event class that is assigned to the journal entry rule set. The description rule may be assigned at either the header or line level of the journal entry or to both levels.

Assignment of Journal Line Rules

When assigning the journal line rule, you must identify the line type: Gain, Loss, Gain or Loss, Credit, or Debit. The journal line rule must be assigned to the same accounting event class as the one assigned to the subledger journal entry rule set.

When assigning a journal line rule that is enabled for accounting for a business flow, the account combination and certain accounting attribute values are copied from its related journal line having the same business flow class as the current line. Optionally, copy the description rule into the current line instead of assigning a separate description rule.

When assigning a journal line rule that is enabled to copy from the corresponding line within the same journal entry, you have the option to copy the account combination, the segment value, or the line description from the corresponding line into the current line.

Assignment of Account Rules

The account rule assignment will define which accounts will be used for the subledger journal line. If the account rule is setup with a chart of accounts, it must have the same chart of accounts as the one assigned to the journal entry rule set. When account rules are defined with sources, the sources must also be assigned to the accounting event class that is assigned the journal entry rule set.

There are two types of account rules:

• Account Combination Rule: Assign an account combination rule to derive the account combination.

• Segment Rule: Assign a segment rule to derive a specific segment of an account. For example, a cost center or a natural account segment.

Assignment of Supporting References

Supporting references may be assigned at the header or line level of the journal entry to capture transaction values on the journal entry header or lines. If the supporting reference segments are assigned multiple sources, at least one source must also be assigned to the accounting event class that is assigned the journal entry rule set.

Creating Conditions: Examples

The following illustrates an example of defining an account rule with a condition.

Example 1: Custom Real Estate Application Account Rule Condition Example

This is an example to define an account rule for assignment for a loan journal line. The account rule has two priorities, a mapping set and a constant.

• The first priority will create an output for an account based on the mapping set rule definition.

  • A condition is created on the first priority rule. This rule will only be used if the condition below is met.

    • The condition is Credit Status must not be null.

    • The accounts derived from the mapping set rule will be used if the Credit Status has a valid value. Otherwise, the accounts derived from the entered constants value from the second priority will be used.

The following table describes the setup of the condition on the first priority:

The second priority will create an output from a constant value (0.9100030.50034206331.0.0.0). There is no condition associated with the second priority.

Example 2: Oracle Fusion Assets Account Rule Condition Example

This is an example of a rule for a capital purchase. The rule is to be applied only if the distribution account cost center is the same as the liability account cost center and the asset tracking option is Yes. This condition can be expressed as:

• Where Distribution Cost Center = Liability Cost Center and Asset Tracking option = Yes

The following tables describe the setup of the condition:

The following two rows of data are used in the accounting event, to which the account rule and condition applies.

Account Rule Condition Example: Accounting Event Data

In the Accounting Event Data table above, assume the cost center segment is the second segment. When the account rule with this condition is used to derive the account for the transaction, the account rule is applied to derive the account of Invoice 1 only. For Invoice 2, even though the assets tracking option is set to Yes, the cost center for the Distribution account and Liability account are not the same. Both conditions must be met in order for the rule to apply.

Journal Line Rules: Explained

Journal line rules are defined within the context of accounting event classes. A journal line rule can be used in a subledger journal entry rule set that has the same event class. You may also assign conditions to the journal line rule.

Journal Line Rules

Journal line rules are assigned to journal entry rule sets.

To create a journal line rule, select values for options such as:

• Side (Debit, Credit, Gain or Loss)

  For example, when an Oracle Fusion Payables invoice is generated, the liability account should normally be credited. The journal line rule must therefore specify the Side option as Credit. On the other hand, the payment of the Payables invoice must be accounted with a debit to the liability account. A separate journal line rule must be defined to create this debit line.

• Merge Matching Lines: To summarize subledger journal entry lines within each subledger entry. Journal entry lines with matching criteria are merged.

• Accounting Class

  • Select an accounting class to classify journal entry lines.

  • For example, when a validated Payables invoice is accounted, the Item Expense and Liability journal lines are created. In this case, the journal line rules used in the accounting rules are assigned Item Expense and Liability accounting classes respectively.

• Conditions: To restrict the use of a journal line rule by controlling when a particular journal line rule is used by the Create Accounting process.

• Accounting Attributes: When creating a journal line rule, accounting attribute assignments are automatically established based on the default accounting attribute assignments for that journal line rule's accounting event class. You can override this default mapping of standard sources to accounting attributes. The list of values for the source override includes all sources assigned to the accounting attribute for the event class associated with the journal line rule.

• Advanced Options

  • The Subledger Gain or Less Option: Applies only to amount calculations for the primary ledger. Gain or loss amounts are not converted to reporting currency or non-valuation method secondary ledgers. If the option is selected, the journal line holds the gain or loss amounts calculated by the subledger.

    The gain or loss amount is calculated as the difference in applied amounts due to fluctuations in exchange rates based upon conversion to the ledger currency. Foreign exchange gain or loss amounts occur when two related transactions, such as an invoice and its payment, are entered in a currency other than the ledger currency, and the conversion rate fluctuates between the times that the two are accounted.

  • The Rounding Class Option: Along with the transaction rounding reference group journal lines together and calculates transaction rounding. Subledger transaction rounding differences can occur when a transaction has multiple related applied-to transactions, such as when a Receivables invoice has multiple associated receipts.

  • The Link Journal Lines Option: Determines whether the journal line rule is set up to establish a link between the accounting of transactions that are related both within the same application, and across applications. The alternatives are described in this table:

Defining Conditions for Journal Line Rules

You may set conditions to specify whether the journal line rule will be used to create a subledger journal entry line. If the conditions are true, the line rule is used to create a subledger journal entry line. Use sources to create these conditions.

For example, you can set up a condition that will create a journal line to record tax, only if there is tax for an invoice. The line type and account class mentioned here are examples of sources.

• The condition for a Payables invoice tax journal line rule could be:

  • Where Line Type = Tax

  • When this condition is true, there is tax for a payables invoice line. A journal entry line is created to record the accounting impact of the tax.

• Similarly, the condition for a Oracle Fusion Receivables invoice tax journal line rule could be:

  • Where Account Class = Tax

  • In this case, if there is an account class of Tax, the journal line is used to record the accounting impact of the tax.

Another example is a condition that creates a journal line for freight when there are freight charges on an invoice.

Journal line rule conditions determine whether a journal line rule and its associated account rules and description rules, are used to create the subledger journal entry line.

Account Rules: Explained

Account rules are used to determine the accounts for subledger journal entry lines. In addition, you can specify the conditions under which these rules apply. Using these capabilities, you can develop complex rules for defining accounts under different circumstances to meet your specific requirements. You can define account rules for an account, segment, or value set.

Account Rules by Account

Define account rules by account to determine the entire account combination. For example, an account rule defined by account can be used to determine the complete supplier liability account in Oracle Fusion Payables.

Account Rules by Segment

Define segment rules to derive a specific segment of the general ledger account. For example, a particular segment like the company segment can be determined from the distribution account. Another segment can be determined with the use of a constant value. Creating the account one segment at a time offers greater flexibility, but also requires more setup.

Use both segment based and account based rules to derive a single account. Segment specific rules are used, where they are defined, and take the remaining values from an account based rule. For example, you can select an account rule which is for all segments and also separately select a rule which is for one particular segment. Segment specific rules take precedence over the all segments account based rule.

Combine account rules with segment rules. In this case, the segment value is derived from the segment rule to override the corresponding segment of the account. However, if the segment rule has conditions associated with the priorities and none of the conditions are met, no override occurs and therefore, the segment value is derived from the account rule.

Account Rules by Value Sets

In the absence of a chart of accounts, you may define account rules based upon value sets. This enables you to share the same rule between more than one chart of accounts if the segments in these charts of accounts share the same value set.

Sharing Account Rules across Applications

You may share account rules across applications in the following ways.

• Assign an account rule from the same or a different application to a journal line rule in the subledger journal entry rule set. For example, to derive an expense account for journal line rule Expense, assign the Projects Cost Account rule owned by Oracle Fusion Projects to the Payables journal line rule Expense.

• Create an account rule based on an account rule from another application and assign it to a journal line rule. For example, you may create a new account rule Invoice Expense Account referencing Project Cost Account assigned in the Priorities region. You may attach the Invoice Expense Account rule to the journal line rule Expense in the journal entry rule set.

Account Rules and Mapping Sets

Mapping sets can be used to associate a specific output value for an account or segment. You can use mapping sets in account rules to build the account.

Account Rules Conditions

In the account rules you may specify conditions for each rule detail line. Priorities determine the order in which account rule conditions are examined. When the condition is met, the rule associated with that priority is used. Depending on which of the defined conditions is met, a different account rule detail is employed to create the account.

The Create Accounting process evaluates conditions based on the priority of the rule detail. When the condition is met, the rule detail is applied.

Creating Account Rules: Points to Consider

You can define an account rule using the following rule types:

• Account combination

• Segment

• Value set

Account Combination Rules

Set up account combination rules based upon the following value types:

1. Source Value Type: Derive the account combination by specifying a source. Sources that have been set up as accounts can be assigned to an account combination rule. Oracle Fusion Subledger Accounting then obtains the code combination identifier from the source.

2. Constant Value Type: Establish the account as a constant value.

   For example, the constant could be a completed account combination from the chart of accounts specified. An example is the account combination, 01.000.2210.0000.000. This is the simplest way to derive an account.

3. Mapping Set Value Type: Derive the account combination by referencing a mapping set. Set up a mapping set to determine the complete account combination from the chart of accounts specified.

4. Account Rule Value Type: Derive the account by referencing another account rule.

   The chart of accounts does not need to be specified when defining this type of rule. If the account rule has a chart of accounts assigned, then all the related account rules must use the same or no chart of accounts.

Segment Rules

Set up segment rules as follows:

• When a chart of accounts is specified, create a rule to derive the value for a specific segment from the chart of accounts.

• If the chart of accounts is not specified, create a rule to derive the value for an account segment with a specific qualifier.

Set up segment rules using the same methods discussed in the preceding Account Combination Rules section. By specifying different value types, users can select the way in which the segment value is derived.

Value Set Rules

Value set based rules can be created when a chart of accounts is not specified. This enables you to share the same rule between more than one chart of accounts if the segments in these charts of accounts share the same value set.

Set up value set based rules using the same methods discussed in the preceding Account Combination Rules section.

Creating Description Rules: Explained

Use descriptions rules to define the elements of a description that appears on the subledger journal entry at the header and/or the line. The definition determines both the content and sequence in which the elements of the description appear. You can assign a condition to a description rule to determine that the description is selected for display if the condition is satisfied.

Description Rule Definition

A description rule can be defined with combinations of source and literal values. If sources are used in the rule, the accounting event class associated with the sources determines in which subledger journal entry rule set the description rule can be selected and used.

Build descriptions using the available sources for the application.

The following is the description details that have been entered, using a literal and a source:

• Loan Origination Date = Origination Date

  • Literal = Loan Origination Date

  • Source = Origination Date

Assuming that the source value of the Origination Date is 11/01/11, then a journal entry that has the above description rule attached will have the description, Loan Origination Date 11/01/11.

Creating Supporting References: Explained

Supporting references can be used to store additional source information about a subledger journal entry either at the header or line level.

Sources are assigned to supporting reference segments to indicate which transaction values should be captured on subledger journal entries. The segments are grouped into one supporting reference.

Supporting references that have the option for maintain balances set to Yes, establish subledger balances for a particular source and account.

You may want to use Supporting Reference balances for supporting:

• Reconciliation back to the source systems

• Profit and loss balances by dimensions not captured in the chart of accounts

Supporting Reference Assignment

If the information requirement is purely informational, and not needed for reconciliation or balances, you may consider using description rules to store the source values.

There are several key points to consider when assigning supporting references:

• Define a maximum of five segments for a supporting reference. Assign different sources to each segment.

• Assign only one source from the same accounting event class and application to a supporting reference segment.

• Assign only supporting references with header level sources to the header level of a journal entry rule set.

• Assign supporting references with header and line level sources to the line level of a journal entry rule set.

• Select the balances option in the definition of the supporting reference, to have balances only maintained when the supporting reference is assigned at the line level. For supporting references for which balances are maintained, you can specify whether the balances at the end of a fiscal year are carried forward to the next fiscal year.

As an example:

• A loan information supporting reference can be defined to track two segments:

  • Credit status

  • Loan contract number

Sources will be assigned to each of these segments and the source values for each of these segments will be used to create separate balances.

Define Subledger Application and Sources

Accounting Event Model: Explained

Accounting events represent transactions that may have financial significance, for example, issuing a loan and disposing of an asset. Financial accounting information can be recorded for these events and accounted by the Create Accounting process. When you define accounting events, determine from a business perspective which activities or transactions that occur in your source system may create a financial impact.

Events with significantly different fiscal or operational implications are classified into different accounting event types. Event types are categorized into accounting event classes. Accounting definitions in the Oracle Fusion Accounting Hub are based on event types. An event type must be unique within an application, process category, and event class.

Events are captured when transactions are committed in the subledgers, or they may be captured during end-of-day or period-end processing. For example, a loan is originated, possibly adjusted, interest is accrued, and then the loan is paid or canceled. The accounting events representing these activities can create one or more subledger journal entries, and subsequently link the originating transaction to its corresponding journal entries.

The following is an example of an accounting event model for a loan application:

Process Categories

A process category consists of specific event classes and the event types within those classes. To restrict the events selected for accounting, users can select a process category when they submit the Create Accounting process.

Event Classes

You can assign a transaction view, system transaction identifiers, and optionally user transaction identifiers and processing predecessors for an event class in the Edit Event Class section. The transaction view should include all columns that have been mapped to system transaction identifiers for the accounting event class as well as the user transaction identifiers.

System Transaction Identifiers

System transaction identifiers provide a link between an accounting event and its associated transaction or document. An identifier is the primary key of the underlying subledger transaction, usually the name of the surrogate key column on the transaction (header) associated with the accounting event. At least one system transaction identifier must be defined for the accounting event class.

When an accounting event is captured, system transaction identifiers, along with other required event data, are validated for completeness.

User Transaction Identifiers

User transaction identifiers constitute the user-oriented key of the underlying subledger transaction, and are typically drawn from one or more database tables. These identifiers are primarily used in accounting events inquiry and on accounting event reports, to uniquely identify transactions. You can specify up to ten columns from the transaction views that are available for inquiry and reports.

The transaction data that identifies the transaction varies by accounting event class. Accounting event reports and inquiries display the transaction identifiers and their labels appropriate for the corresponding event class. The user transaction identifiers can be displayed for an event regardless of its status. This includes the case where the accounting event has not been used to create subledger journal entries due to an error or the cases where it has not been processed. The user transaction identifier values are displayed at the time that the accounting event reports and inquiries are run. If a transaction identifier value has changed after the accounting event was captured, the accounting event reports and inquiries reflect the change.

Processing Predecessors

The processing predecessor establishes an order in which the Create Accounting process processes events selected for accounting.

Event Types

For accounting event types, specify whether their accounting events have accounting or tax impact. When the Create Accounting process is submitted, it only accounts business events that are enabled for accounting.

Register Source Systems: Critical Choices

Subledger applications can support third party control account type and calculate reporting currency amounts.

Calculate Reporting Currency Amount

If the subledger application is configured to calculate reporting currency amount, there is no need to provide reporting currency information in the transaction objects.

Additional Considerations

The following are additional considerations when creating a subledger application:

1. Determine the subledgers requirement. For example, how many subledgers are to be created? This may depend on what security your company wants to have over its accounting rules.

   • Using the same subledger allows you to share subledger accounting rules, and lets you report across all data easily.

   • Using separate subledgers provides more security across applications and less data in each process run providing better performance. Specific benefits are:

     • If you run two Create Accounting requests at the same time for different applications, they are much less likely to contend for database resources. The requests will perform better, as the indexes are tuned for running with different applications instead of running for different process categories within the same application.

     • It allows you to efficiently process different sets of data (different applications) at different times during the day instead of running it as one process.

2. Determine the transaction objects requirements. These requirements determine what source data is required to successfully create subledger journal entries from transactions that are captured in transaction objects and shared in reference objects.

3. Analyze accounting events to determine what events to capture for the subledger application.

   Create programs to capture accounting events using APIs (application programming interfaces) that are provided as follows:

   • Get Event Information APIs to get event information related to a document or a specific event.

   • Create Event APIs to create accounting events, individually or in bulk.

   • Update Event APIs to update events and keep them consistent with related transaction data.

   • Delete Event APIs to delete events.

4. Determine how often to capture accounting events, populate transaction objects, and run the Create Accounting process. This may depend on the immediacy and volumes of accounting requirements in your company.

Transaction Objects: Points to Consider

You may assign transaction and reference objects for each accounting event class in the subledger application. Sources are generated based on the transaction objects and are assigned to the corresponding accounting event classes.

Sources are used to create accounting rules. Subledgers pass information to the application by populating transaction object tables. The columns in these tables are named after the source codes. Transaction and reference objects hold transaction information that is useful when creating journal entry rules for accounting. The transaction and reference objects are defined for an accounting event class so that source assignments to accounting event class can be generated using these objects.

Transaction Objects

Transaction objects refer to the tables or views from which the Create Accounting process takes the source values to create subledger journal entries. Source values, along with accounting event identifiers, are stored in the transaction objects. The Create Accounting process uses this information to create subledger journal entries.

You have several options. You can:

• Create new tables as the transaction objects and create a program to populate them.

• Use views of your transaction data as the transaction objects.

• Use your transaction data tables as the transaction objects.

The transaction objects and or views must be accessible to the Create Accounting process. Typically, an ETL (extract, transformation, and load) program is used to take values from the source system and load them into the database used by the Create Accounting process. The ETL process is done outside of the Create Accounting process.

The following are transaction object types:

• Header transaction objects

  • Implementers need to provide at least one header transaction object for each accounting event class. Header transaction objects store one row with untranslated header source values for each accounting event. The primary key of a header transaction object is the event identifier.

    Transaction details that are not translated, and whose values do not vary by transaction line or distribution, should normally be stored in header transaction objects. Examples of sources normally stored in header transaction objects include the Loan Number for a loan or the Contract Number for a contract.

• Line transaction objects

  • Line transaction objects are relevant when there are details for the accounting event that vary based upon transaction attributes. For example, a mortgage transaction for loan origination may have multiple amounts, each related to different components of the loan. There may be a loan origination amount, closing cost amounts, and escrow amounts. Each of these amounts could be captured as separate lines, along with an indication of the amount type

    Line transaction objects store untranslated line level source values. There should be one row per distribution, identified by a unique line number. The primary key of a line transaction object is the event identifier and transaction object line number. Transaction details that are not translated and whose values vary by transaction line or distribution are normally stored in line transaction objects columns. Examples include the Loan Number for a loan payment.

• Multi-Language Support (MLS) transaction objects

  • MLS transaction objects are relevant to applications that support the MLS feature. MLS transaction objects store translated source values. There should be one row per accounting event and language. The primary key of a header MLS transaction object is the event identifier and language. The primary key of a line MLS transaction object is the event identifier, transaction object line number, and language.

    Transaction details that are translated, and whose values do not vary by transaction line or distribution, are normally stored in header MLS transaction object columns. Examples include Loan Terms for a commercial loan. Implementers can avoid having to store source values in header MLS transaction objects by using value sets and lookup types.

    Transaction details that are translated, and whose values vary by transaction line or distribution, should normally be stored in the transaction object in columns defined in a line MLS transaction object.

Reference Objects

Reference objects are useful for storing information that is used for creating subledger journal entries. This information may not be directly from the source system or may be used for many entries, thus making it redundant. Use reference objects to share sources information across applications.

For example, store customer attributes, such as the customer class or credit rating in a reference object, and then, use it to account for different journal entries in a loan cycle, such as loan origination or interest accrual. Store information, such as bond ratings and terms, and use it to account for entries across the life of bonds, such as interest accruals or bond retirement.

Reference objects can either have a direct relationship to transaction objects (primary reference object), or be related to other reference objects (secondary).

Managing Accounting Sources: Critical Choices

Sources are a key component for setting up accounting rules. Sources represent transaction and reference information from source systems. Contextual and reference data of transactions that are set up as sources can be used in accounting rules definitions.

When determining what sources should be available, it is helpful to begin the analysis by considering which information from your systems is accounting in nature. Examples of sources that are accounting in nature include general ledger accounts that are entered on transactions, the currency of a transaction, and transaction amounts. Sources that are not always required for accounting rules include items that are related to the transaction for other purposes than accounting. Examples of information that may not be specifically for accounting, but which may be useful for creating subledger journal entries, are transaction identification number (loan number, customer number, or billing account number), counter party information, and transaction dates.

Provide a rich library of sources from your source systems for maximum flexibility when creating definitions for subledger journal entries.

Sources are assigned to accounting event classes by submitting the Create and Assign Sources process.

There is a distinct difference between sources and source values. Sources represent the transaction attributes used to create accounting rules. Source values are used by the Create Accounting process to create subledger journal entries based upon source assignments to accounting rules.

Sources

Sources must be created prior to creating accounting rules. This is a predefined step which must be undertaken before the application can be used to create subledger journal entries.

To set up appropriate subledger journal entry rule sets, users and those implementing need to understand the origins, meaning, and context of sources. Use business oriented names for sources to allow accountants and analysts to effectively create accounting rules.

• Enables users to easily identify a source.

• Ensures consistency in nomenclature.

Source Values

Source values are stored in transaction objects. They are the actual transaction attribute values from the source system and are used in creation of the journal entries.

Accounting Attribute Assignments: Points to Consider

The Create Accounting process uses the values of sources assigned to accounting attributes plus accounting rules to create subledger journal entries. Almost all accounting attributes have sources assigned at the accounting event class level. Depending on the accounting attribute, the accounting attribute assignment defaulted from the accounting event class can be overridden on journal line rules or subledger journal entry rule sets.

Once sources are assigned to accounting event classes, they are eligible for assignment to accounting attributes for the same accounting event classes.

The Create Accounting process uses these assignments to copy values from transaction objects to subledger journal entries. For example, you may map the invoice entered currency to the subledger journal entry entered currency.

Each accounting attribute is associated with a level:

1. Header: To be used when creating subledger journal entry headers.

2. Line: To be used when creating subledger journal entry lines.

The types of accounting attributes values are as follows:

Values that are Subject to Special Processing

You may have values that are subject to special processing or values that are stored in named columns in journal entry headers and lines.

Examples of accounting attributes are Entered Currency Code and Entered Amount.

Values that Control the Behavior of the Create Accounting Process

You may have values that control the behavior of the Create Accounting process when processing a specific accounting event or transaction object line.

An example of accounting attributes of this type is Accounting Reversal Indicator.

Minimum Required Accounting Attribute Assignments

In order to create a valid journal entry you must, at a minimum, set up the following accounting attribute assignments.

• Accounting Date

• Distribution Type

• Entered Amount

• Entered Currency Code

• First Distribution Identifier

The details and descriptions of these attributes are included in the Accounting Attributes section.

Accounting Attributes

Accounting attribute groups are represented in the tables below:

Accounted Amount Overwrite

• The accounted amount overwrite accounting attribute indicates whether the accounted amount calculated by the Create Accounting process should be overwritten by the value of the accounted amount accounting attribute. If the source value mapped to Accounted Amount Overwrite is 'Y', then an accounted amount must be provided.

Accounting Date

• The accounting date attribute is relevant to all applications. The Create Accounting process uses it to derive the accounting date of journal entries. Typically, the event date system source is assigned to the accounting date attribute.

• The Accrual Reversal GL Date accounting attribute is relevant to applications using the accrual reversal feature. Users can assign system and standard date sources to the Accrual Reversal GL Date in the Accounting Attribute Assignments page. When the Accrual Reversal GL Date accounting attribute returns a value, the Create Accounting process generates an entry that reverses the accrual entry.

Accounting Reversal

• Accounting reversal accounting attributes are relevant to applications that wish to take advantage of the accounting reversal feature. The Create Accounting process uses them to identify transaction (distributions) whose accounting impact should be reversed. For the Create Accounting process to successfully create a line accounting reversal, the accounting reversal indicator, distribution type, and first distribution identifier should always be assigned to sources. The definition of the accounting reversal distribution type and distribution identifiers mirrors the definition of the distribution identifiers.

Business Flow

• The business flow accounting attributes are referred to as 'applied to' accounting attributes. If a transaction is applied to a prior transaction in the business flow, the transaction object must populate sources assigned to 'applied to' accounting attributes with sufficient information to allow the Create Accounting process to uniquely identify a transaction object line for a prior event in the business flow. When deriving accounting data from a previous event in the business flow, the Create Accounting process searches for a journal entry line for the prior event using a combination of the 'applied to' accounting attributes and the business flow class of both journal entries.

  The Applied to Amount accounting attribute is used to calculate the accounted amount and gain or loss in cross-currency applications when business flows are implemented. This attribute value is used to calculate the accounted amount when a source is mapped to the Applied to Amount attribute on a journal line type and the entered currency is different than the original currency entered.

Distribution Identifier

• Distribution identifiers accounting attributes are relevant to all applications. The distribution identifier information links subledger transaction distributions to their corresponding journal entry lines. In addition, many of the Oracle Fusion Subledger Accounting features, including accounting reversals, rely on the correct definition and storing of distribution identifiers in the line transaction objects. The distribution type and first distribution identifiers are always assigned to sources. If a transaction distribution is identified by a composite primary key, additional distribution identifiers are assigned to standard sources, as appropriate. Values for the distribution type and distribution identifiers are always stored in accounting transaction objects. The combinations of the values of the system transaction identifiers with the values of the distribution identifiers uniquely identify a subledger transaction distribution line.

Document Sequence

• The document sequence accounting attributes are relevant to applications that use the document sequencing feature to assign sequence numbers to subledger transactions. The Create Accounting process uses them to provide a user link between subledger transactions and their corresponding subledger journal entries. Assign all document sequence accounting attributes to sources or do not assign any. In addition, the Document Sequence Category Code is made available as an Accounting Sequence Numbering control attribute.

Entered Currency

• Entered currency accounting attributes are relevant to all applications. The Create Accounting process uses them to populate the journal entry line entered currency code and amounts. The entered currency accounting attributes must always be assigned to sources. The sources assigned to the entered currency accounting attributes must always contain a value. For event classes that support cross currency transactions and therefore, more than one entered currency and entered currency amount, multiple event class accounting attribute assignments are created.

Ledger Currency

• Ledger currency accounting attributes are relevant to all applications that use the Create Accounting process. The Create Accounting process uses them to populate journal entry accounted amounts. If a transaction's entered currency is different from the ledger currency, the Create Accounting process copies the conversion date, conversion rate, and conversion rate type to the corresponding journal entry lines. If the entered currency is the same as the ledger currency, the Create Accounting process ignores the conversion type and conversion rate. For event classes that support foreign currency transactions and therefore more than one exchange rate and reporting currency amount, multiple event class accounting attribute assignments are created.

Tax

• The tax accounting attributes are relevant to applications that uptake the tax initiative. The tax team uses the tax accounting attributes to link subledger transaction tax distributions to their corresponding journal entry lines. Oracle Fusion Tax specifies which tax reference values are mandatory in transaction objects and are assigned to standard sources.

Third Party

• Third party accounting attributes are relevant to subledger applications that use third party control accounts. The third party accounting attributes link suppliers and customers to their corresponding subledger journal entry lines in the supplier and customer subledgers. For all subledger transactions that represent financial transactions with third parties, all third party accounting attributes have sources assigned. If a transaction line is associated with a customer or supplier, the transaction objects need to include values for all sources mapped to third party accounting attributes for the event class.

Exchange Gain Account, Exchange Loss Account

• The Create Accounting process determines whether there is an exchange gain or loss and derives the account combination based on whether the journal line rule is defined. If the gain or loss journal line rule is defined, the account rule assigned to the journal line rule is used to determine the gain or loss account to use. If the gain or loss journal line rule is not defined, the gain or loss account assigned to the Exchange Gain Account and Exchange Loss Account accounting attributes is used.

Gain or Loss Reference

• The Gain or Loss Reference accounting attribute groups entry lines together when calculating exchange gain or loss. The accounted debit and accounted credit amounts for lines with the same gain or loss reference are combined. The total of accounted debit and total of accounted credit are compared to calculate the exchange gain or loss.

Transfer to GL Indicator

• The Transfer to GL accounting attribute is relevant to applications which create subledger journal entries that will never be transferred to the general ledger. The Transfer to GL process uses this accounting attribute to determine whether to transfer subledger journal entries to the general ledger.

  If the Transfer to GL accounting attribute is not assigned to a source, the Transfer to GL process transfers journal entries for the event class to the General Ledger.

  If the Transfer to GL accounting attribute is assigned to a source and the source is not populated, the Transfer to GL process transfers journal entries for the event class to the General Ledger.

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