The Oracle Lease and Finance Management accounting process is the result of the integration of several different applications within the Oracle E-Business Suite. In Oracle Lease and Finance Management, a transaction is created, associated to a newly generated subledger journal, and posted to the primary ledger. The following table describes a high level overview of this process.
| Step | Application | Description |
|---|---|---|
| Create Transaction | Oracle Lease and Finance Management | You create an accounting transaction. |
| Accounting Event | Oracle Lease and Finance Management | Oracle Lease and Finance Management evaluates the accounting templates and creates an accounting event. |
| Create Subledger Journal | Oracle Lease and Finance Management | Oracle Subledger Accounting takes the accounting event data and transaction sources, evaluates accounting definitions, and creates a subledger journal. To create a subledger journal, you must run the Create Accounting program in Oracle Lease and Finance Management. |
| Create Primary Ledger Journal | Oracle General Ledger | The subledger journal is transferred to the primary ledger and the process creates the Oracle General Ledger journal. |
Oracle Lease and Finance Management lease and loan contract transactions can be accounted in different applications of the E-Business Suite. The following sections describe the different categories of Oracle Lease and Finance Management transactions.
Transactions such as booking, rebook, accrual, and termination are created in Oracle Lease and Finance Management. Oracle Lease and Finance Management creates an accounting event corresponding to each transaction. The accounting events are processed by running the Create Accounting concurrent program to create a subledger journal. After the subledger journal is created, you must run the Oracle General Ledger transfer program to transfer the subledger journal to Oracle General Ledger for posting.
For more information on Oracle Lease and Finance Management transaction accounting, see Oracle Lease and Finance Management Subledger Accounting Flow.
Billing and credit memo transactions created in Oracle Lease and Finance Management are interfaced to Oracle Receivables to generate invoices and credit memos. Receipts entered in Oracle Lease and Finance Management through the Manual Receipt or Batch Receipt methods, or in Receivables through the Lockbox method, are created in Receivables. You can use any of the methods to create a receipt in Receivables and apply it to the contract invoices. Receipt application and invoice adjustment transactions are also created in Receivables.
All Receivables transactions are accounted in Receivables. After transaction data is imported into Receivables, you must run the Create Accounting program in Receivables to create a subledger journal. After the subledger journal is created, you must run the Oracle General Ledger transfer program to transfer the subledger journal to Oracle General Ledger for posting.
For more information on Oracle Lease and Finance Management transaction accounting, see Oracle Lease and Finance Management Subledger Accounting Flow.
Oracle Payables transactions such as funding, disbursements, and debit memos created in Oracle Lease and Finance Management are interfaced to Oracle Payables to generate Payables invoices or debit memos. Payments are created in Oracle Payables.
After transaction data is imported into Oracle Payables, you must run the Create Accounting program in Oracle Payables to create a subledger journal. After the subledger journal is created, you must run the Oracle General Ledger transfer process to transfer the subledger journal to Oracle General Ledger for posting
For more information on Oracle Lease and Finance Management transaction accounting, see Oracle Lease and Finance Management Subledger Accounting Flow.
Asset-related transactions resulting from any operation on a contract or asset in Oracle Lease and Finance Management are created in Oracle Assets in the corporate book that is associated with the primary ledger in Oracle Lease and Finance Management. Examples of the asset transactions created are asset addition, asset adjustment, and retirement. When asset transactions are created in Oracle Lease and Finance Management, corresponding transactions are created in Oracle Assets. Depreciation transactions are created in Oracle Assets by running the Run Depreciation program in Oracle Assets.
After transactions are created in Oracle Assets, you must run the Create Accounting program to create a subledger journal in Oracle Assets. After the subledger journal is created, you must run the Oracle General Ledger transfer program to transfer the subledger journal to Oracle General Ledger for posting.
For more information on Oracle Lease and Finance Management transaction accounting, see Oracle Lease and Finance Management Subledger Accounting Flow.
The primary components of the accounting process in Oracle Lease and Finance Management are as follows:
Ledgers
Subledger Accounting
Source Transactions and Accounting Sources
A ledger is a set of accounting information for a legal or business entity. Each ledger is associated with a chart of accounts, calendar, currency, and subledger accounting method for which accounting information is recorded
The primary ledger is the main accounting representation. A primary ledger can have secondary ledgers associated with it. Secondary ledgers are an alternative representation of the accounting with a different accounting treatment than the primary ledger for a legal or business entity.
Multiple ledgers can be defined and grouped in a ledger set. For more information on ledgers, see Oracle General Ledger User Guide.
Oracle Subledger Accounting provides a common accounting infrastructure for accounting setup for accounting transactions in the Oracle E-Business Suite and is a repository for subledger journal information. For information on subledger accounting, see Oracle Subledger Accounting Implementation Guide.
Transactions are generated in E-Business suite applications like Oracle Lease and Finance Management, Oracle Receivables, and Oracle Payables. The transactions are accounted in subledger using the accounting setup and transaction information. The accounting source is pieces of transaction information that is available for configuring accounting for the transaction and deriving the entire subledger journal. The flexibility of Oracle Lease and Finance Management allows multiple accounting configurations to meet the differing requirements of lessors.
For more information on Oracle Lease and Finance Management accounting configuration, see Oracle Lease and Finance Management Implementation Guide.
Oracle Lease and Finance Management has the flexibility to configure accounting for many different business scenarios depending upon the requirements of the lessor. Before initiating the setup of Oracle Lease and Finance Management accounting, lessors should review the following key accounting considerations to determine their best option.
Should transactions be accounted in a single ledger or in multiple ledgers?
Can the account code be derived based on a limited number of sources associated with the accounting template, or will additional sources beyond those associated with the accounting template be required?
For a general overview of accounting in Oracle Financials applications, see Accounting with Oracle Financials Applications, Oracle Financials Concepts Guide.
Lessors can operate within a single country or in multiple countries. If you are operating in a single country, all transactions may be accounted in a single ledger.
However, when you operate in multiple countries, you can account for the lease and loan contract transactions in more than one ledger. For example, one ledger may be used to generate financial reports in the country where the contract is executed, and another ledger for financial reports in the country where the worldwide headquarters are based.
For accounting in a single ledger, define one primary ledger in Oracle General Ledger. For accounting in multiple ledgers, define one primary ledger with multiple secondary ledgers in Oracle General Ledger.
Customers upgrading from prior versions will have the set of books automatically converted into a Primary Ledger.
Lessors may have different requirements for deriving their account codes. You may require a large number of lease elements for configuring account codes or you may prefer limited configurability and predefined values for account codes. To provide for these different requirements, Oracle Lease and Finance Management provides the following two accounting options:
Accounting Template Set (ATS): Lessors preferring to use predefined account codes for different lease transactions should choose this accounting option. Account codes will be derived using Oracle Lease and Finance Management's Accounting Template Lines functionality. Customers upgrading from prior versions will have the accounting option default in as ATS.
Account Method Builder (AMB): Lessors requiring more flexibility in deriving account codes should choose this accounting option. You can set up accounting rules in Account Method Builder, and these rules will use the accounting sources of Oracle Lease and Finance Management to create the necessary accounting.
Some lessors require review of the accounting trial balance for each contract. All accounting created in Oracle Lease and Finance Management, Oracle Receivables, Oracle Payables, and Oracle Assets can be reviewed at the contract level with Oracle Subledger Accounting's Supporting Reference functionality by defining the contract number as the supporting reference, and associating it with each subledger journal.
The additional setups to be done for this functionality are detailed in the Oracle Subledger Accounting Implementation Guide.
For information on Supporting Reference, see the Oracle Subledger Accounting Implementation Guide.
Oracle Lease and Finance Management provides the following two options for deriving accounting codes:
Accounting Template Set (ATS)
Account Method Builder (AMB)
The accounting option can be changed one time from ATS to AMB. However, once the option is set as AMB, it cannot be changed to ATS. During new implementation, the default value for accounting option is AMB.
Account codes are derived for Oracle Lease and Finance Management transactions using the Accounting Template Set. Accounting codes are defined on the Accounting Template Lines. The codes can be predefined or derived by using the Account Generator.
The account codes derived in Oracle Lease and Finance Management are sent to Oracle Subledger Accounting as default accounts. Seeded AMB setup is designed to derive the default account code supplied by Oracle Lease and Finance Management as the source for the accounting transaction.
For greater flexibility in deriving account codes, lessors can select the AMB accounting option. This option allows lessors to set up accounting rules in the Accounting Method Builder. These rules can use the Accounting Sources of Oracle Lease and Finance Management to provide a greater number of lease elements for configuring account codes.
With the AMB accounting option, Oracle Lease and Finance Management Accounting Template Lines are not used. Instead, lease-specific accounting sources are used to derive account codes. Accounting from Oracle Receivables, Oracle Payables, and Oracle Assets can also use lease-specific accounting sources. If the accounting option is set to AMB, you cannot change to the ATS accounting option.
Oracle Lease and Finance Management fully integrates with Oracle Subledger Accounting so that you can create accounting for your lease contract transactions. Oracle Subledger Accounting is an intermediate step between several Oracle applications, including Oracle Lease and Finance Management, Oracle Payables, Oracle Receivables, and Oracle Assets, on one side and Oracle General Ledger on the other. Oracle Subledger Accounting creates the Oracle General Ledger journals for subledger journal entries and transfers the accounting to Oracle General Ledger. Oracle Subledger Accounting stores a complete and balanced subledger journal entry in a common data model for each business event that requires accounting. In addition, Oracle Subledger Accounting can create more than one accounting representation for each transaction.
Oracle Subledger Accounting provides a uniform approach to accounting that enables you to configure accounting rules for applications that require accounting. It includes a common user interface and a set of programs that can generate accounting for Oracle applications. When you set up rules in Oracle Subledger Accounting, you can define the types of journal lines, descriptions, and account codes used for each journal line. Oracle Subledger Accounting partitions data by application, while storing the information in a common model.
Oracle Lease and Finance Management generates transactions and accounting events for each transaction, and the Create Accounting Process takes the accounting event and generates the subledger journal entries using the accounting sources and accounting setup information. For more information on Oracle Lease and Finance Management accounting options, see Oracle Lease and Finance Management Accounting Options.
For an overview of subledger accounting in Oracle Financials, see Oracle Subledger Accounting in Oracle Financials, Oracle Financials Concept Guide.
For a detailed explanation of Oracle Subledger Accounting business process, see the Oracle Subledger Accounting Implementation Guide.
Oracle Lease and Finance Management generates accounting events for transactions that have a financial accounting impact. The Create Accounting process generates subledger journal entries for the accounting events. For example, when a contract is booked, the booking transaction is generated. When the transaction is generated, Oracle Lease and Finance Management creates an accounting event for the booking of the transaction. Next, you run the Create Accounting process to generate accounting entries for the accounting events in Oracle Subledger Accounting.
Oracle Lease and Finance Management has seeded the Application Event Model. Oracle Lease and Finance Management creates accounting events for each transaction using the Oracle Lease and Finance Management event model. Oracle Subledger Accounting processes the accounting events to generate subledger journals based on the AMB setup for the components of an event model. The same event model is also used by Oracle E-Business Tax for tax determination and tax calculation. The event model has the following three components.
Event Entity
Event Class
Event Type
An accounting event entity enables Oracle Subledger Accounting to handle the accounting for similar business events in a consistent manner. Oracle Lease and Finance Management predefines the following seven accounting event entities.
Contracts
Transactions
Assets
Investor Agreements
Asset Management Quotes
Sales Quotes
Tax Schedule Requests
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. For example, some of the event classes that Oracle Lease and Finance Management predefines within the event entity Contracts include Booking, Rebook, and Termination. 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 type that affect how the Create Accounting process determines the subledger accounting. Event types provide the lowest level of detail for storing accounting definitions. For example, the Oracle Lease and Finance Management event class Booking is subject to six types of business operations that are represented by the following event types: Booking Create, Booking Cancel, Booking Delete, Booking Update, Booking Tax Override, and Booking Reverse.
Oracle Lease and Finance Management provides a predefined set of event classes and event types for each accounting event entity. The following tables describe the relationship between Oracle Lease and Finance Management transactions and the Oracle Lease and Finance Management Event Entity Model.
| Event Entity | Event Class | Oracle Lease and Finance Management Transaction Type | Event Type | Accounting Enabled | Tax Enabled |
|---|---|---|---|---|---|
| Transactions | Accrual | Accrual | Accrual Create | Yes | No |
| Transactions | Accrual | Accrual | Accrual Reverse | Yes | No |
| Transactions | General Loss Provision | General Loss Provision | General Loss Provision Create | Yes | No |
| Transactions | General Loss Provision | General Loss Provision | General Loss Provision Reverse | Yes | No |
| Transactions | Specific Loss Provision | Specific Loss Provision | Specific Loss Provision Create | Yes | No |
| Transactions | Specific Loss Provision | Specific Loss Provision | Specific Loss Provision Reverse | Yes | No |
| Transactions | Receipt Application | Receipt Application | Receipt Application Create | Yes | No |
| Transactions | Principal Adjustment | Principal Adjustment | Principal Adjustment Create | Yes | No |
| Assets | Asset Relocation | Asset Relocation | Asset Relocation Create | No | Yes |
| Assets | Asset Relocation | Asset Relocation | Asset Relocation Cancel | No | Yes |
| Assets | Asset Relocation | Asset Relocation | Asset Relocation Delete | No | Yes |
| Assets | Asset Relocation | Asset Relocation | Asset Relocation Tax Override | No | Yes |
| Assets | Asset Relocation | Asset Relocation | Asset Relocation Update | No | Yes |
| Contracts | Booking | Booking | Booking Create | Yes | Yes |
| Contracts | Booking | Booking | Booking Reverse | Yes | No |
| Contracts | Booking | Booking | Booking Cancel | No | Yes |
| Contracts | Booking | Booking | Booking Delete | No | Yes |
| Contracts | Booking | Booking | Booking Tax Override | No | Yes |
| Contracts | Booking | Booking | Booking Update | No | Yes |
| Contracts | Rebook | Rebook | Rebook Create | Yes | Yes |
| Contracts | Rebook | Rebook | Rebook Reverse | No | Yes |
| Contracts | Rebook | Rebook | Rebook Cancel | No | Yes |
| Contracts | Rebook | Rebook | Rebook Delete | No | Yes |
| Contracts | Rebook | Rebook | Rebook Tax Override | No | Yes |
| Contracts | Rebook | Rebook | Rebook Update | No | Yes |
| Contracts | Release | Release | Release Create | Yes | Yes |
| Contracts | Termination | Termination | Termination Create | Yes | No |
| Contracts | Upfront Tax | Upfront Tax | Upfront Tax Create | Yes | Yes |
| Contracts | Upfront Tax | Upfront Tax | Upfront Tax Reverse | Yes | Yes |
| Contracts | Asset Disposition | Asset Disposition | Asset Disposition Create | Yes | No |
| Contracts | Evergreen | Evergreen | Evergreen Create | Yes | No |
| Contracts | Split Asset | Split Asset | Split Asset Create | Yes | No |
| Investor Agreements | Investor | Investor | Investor Create | Yes | No |
| Sales Quotes | Sales Quote | Sales Quote | Sales Quote Create | No | Yes |
| Tax Schedule Requests | Tax Schedule | Tax Schedule | Tax Schedule Create | No | Yes |
| Asset Management Quotes | Estimated Billing | Estimated Billing | Estimated Billing Create | No | Yes |
Accounting sources are pieces of information that Oracle Subledger Accounting uses to determine how to create accounting for an accounting event. Sources are a key component for setup in the Account Method Builder (AMB). You use sources to provide information about transactions to Oracle Subledger Accounting. For example, Oracle Lease and Finance Management predefines such sources as Contract Number, Book Classification, Transaction Type, and others
Oracle Lease and Finance Management assigns each set of sources to either an event entity or an event class to make them available for the creation of subledger journal entries. The sources assigned to the event class are available for all the event types associated with the event class.
Oracle Lease and Finance Management also assigns the predefined sources to accounting attributes. Accounting attributes are values that the Create Accounting process requires to create subledger journal entries. The Create Accounting process uses the sources assigned to the accounting attributes to determine the values of the accounting attributes.
You can use the Accounting Methods Builder to review source assignments and accounting attribute assignments for each event class. For additional information on AMB, see Oracle Subledger Accounting Implementation Guide.
When a transaction is created in Oracle Lease and Finance Management for an event class, Oracle Lease and Finance Management determines the values for each source that is assigned to the event class and makes them available at the time of journal entry generation. The Create Accounting program uses source values to evaluate the setup for the components of the Application Accounting Definition in AMB to create the subledger journal.
Oracle Lease and Finance Management seeds a wide variety of sources to provide maximum flexibility in creating accounting definitions. Using these seeded sources, you can create unique accounting definitions to match your accounting needs.
Following is an example of how source values can be used to derive accounting: The Accounting Rule defined by the user:
If Sales Representative = John Smith, Account code to default as 50016
If Sales Representative = Peter Jackson, Account code to default as 50018
Based on the above accounting rule, if the transaction has a source value for the Sales Representative as John Smith, then the account code used is 50016.
Oracle Lease and Finance Management provides the two accounting options of ATS and AMB. When the accounting option is ATS, the Oracle Lease and Finance Management Accounting Template Set is used to derive the account codes. These account codes are then passed, along with the transaction, as a source value. Subledger journals are created using seeded accounting rules in Oracle Subledger Accounting and the default account codes.
The following table describes what happens when an accounting transaction is created in Oracle Lease and Finance Management.
| Event | Description |
|---|---|
| Create Transaction | You create an accounting transaction in Oracle Lease and Finance Management and a call is made to the Oracle Lease and Finance Management accounting engine. |
| Accounting Template Evaluated | The applicable accounting template is evaluated. |
| Amount Derived From Formula | An amount is derived from a formula, if applicable. This occurs only for transactions where the amount is derived using formulas, like Booking. |
| Account Codes Derived | Since the account derivation option is ATS, the accounting engine evaluates the accounting template lines and provides the template line CCID as a source. |
| Accounting Event Created | An accounting event is created for the transaction. |
| Create Journals | To create journals, you must run Oracle Subledger Accounting's Create Accounting program. |
| Accounting Events Processed | When the Oracle Subledger's Accounting Create Accounting program is run, it identifies the accounting events that need to be processed. |
| Transaction Object Loaded | The process loads the transaction object and selects the sources. |
| Accounting Rules Evaluated | Seeded Oracle Lease and Finance Management accounting rules are evaluated. |
| Subledger Journals Created | Subledger journals are created using the Accounting Flexfield CCID from the transaction data. |
| Journal Transferred | The journal is then transferred to Oracle General Ledger. |
The following table describes the accounting flow for ATS transactions originating in Oracle Lease and Finance Management and accounted in Oracle Subledger Accounting.
| Action | Application |
|---|---|
| Create Accounting Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Evaluate Accounting Template | Oracle Lease and Finance Management |
| Derive Amount | Oracle Lease and Finance Management |
| Derive Account Codes | Oracle Lease and Finance Management |
| Create Accounting Distributions | Oracle Lease and Finance Management |
| Capture Accounting Sources (including Account Codes) | Oracle Lease and Finance Management |
| Create Accounting Event | Oracle Lease and Finance Management |
| Identify Accounting Event | Oracle Subledger Accounting |
| Select Sources | Oracle Subledger Accounting |
| Evaluate Seeded Accounting Rules | Oracle Subledger Accounting |
| Create Subledger Journal (with Oracle Lease and Finance Management Account Codes) | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
The following table describes the accounting flow for ATS transactions originating in Oracle Lease and Finance Management and interfaced to Oracle Payables.
| Action | Application |
|---|---|
| Create Billing Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Evaluate Accounting Template | Oracle Lease and Finance Management |
| Derive Account Codes | Oracle Lease and Finance Management |
| Create Distributions (with Template CCID) | Oracle Lease and Finance Management |
| Capture Accounting Sources | Oracle Lease and Finance Management |
| Populate Payables Interface Table | Oracle Lease and Finance Management |
| Submit Invoice Import Program | Oracle Payables |
| Create Invoice | Oracle Payables |
| Use CCID from Interface | Oracle Payables |
| Populate Transaction Objects with Oracle Payables and Oracle Lease and Finance Management Sources | Oracle Payables |
| Create Accounting Event | Oracle Payables |
| Identify Accounting Events | Oracle Subledger Accounting |
| Load Transaction Objects | Oracle Subledger Accounting |
| Select Source Values from Transaction Objects | Oracle Subledger Accounting |
| Use Sources and Apply Accounting Definitions | Oracle Subledger Accounting |
| Create Subledger Journal | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
The following table describes the accounting flow for ATS transactions originating in Oracle Lease and Finance Management and interfaced to Oracle Receivables.
| Action | Application |
|---|---|
| Create Billing Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Evaluate Accounting Template | Oracle Lease and Finance Management |
| Derive Account Codes | Oracle Lease and Finance Management |
| Create Distributions (with Template CCID) | Oracle Lease and Finance Management |
| Capture Accounting Sources | Oracle Lease and Finance Management |
| Populate Receivables Interface Table | Oracle Lease and Finance Management |
| Submit Auto Invoice Program | Receivables |
| Create Invoice | Receivables |
| Use CCID from Interface | Receivables |
| Populate Transaction Objects with Receivables and Oracle Lease and Finance Management Sources | Receivables |
| Create Accounting Event | Receivables |
| Identify Accounting Events | Oracle Subledger Accounting |
| Load Transaction Objects | Oracle Subledger Accounting |
| Select Source Values from Transaction Objects | Oracle Subledger Accounting |
| Use Sources and Apply Accounting Definitions | Oracle Subledger Accounting |
| Create Subledger Journal | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
When the accounting option is AMB, the Oracle Lease and Finance Management Accounting Template Lines are not used. Instead, you define accounting rules using the AMB tool in Oracle Subledger Accounting. Subledger journals are created using the source values of the transaction and the user-defined accounting rules.
The following table describes what happens when an accounting transaction is created in Oracle Lease and Finance Management.
| Event | Description |
|---|---|
| Create Transaction | You create an accounting transaction in Oracle Lease and Finance Management and a call is made to the Oracle Lease and Finance Management accounting engine. |
| Accounting Template Evaluated | The applicable accounting template is evaluated. |
| Amount Derived From Formula | An amount is derived from a formula, if applicable. This occurs only for transactions where the amount is derived using formulas, like Booking. |
| Source Values Captured | The accounting source values are captured. |
| Accounting Event Created | An accounting event is created for the transaction. |
| Create Journals | To create journals, you must run Oracle Subledger Accounting's Create Accounting program. |
| Accounting Events Processed | When the Oracle Subledger Accounting's Create Accounting program is run, it identifies the accounting events that need to be processed. |
| Transaction Object Loaded | The process loads the transaction object and selects the sources. |
| Transaction Sources Selected | The transaction sources are selected from the transaction object. |
| Accounting Rules Evaluated | User-defined accounting rules are evaluated. |
| Subledger Journals Created | Subledger journals are created using the source values passed with the transaction. |
| Journal Transferred | The journal is then transferred to Oracle General Ledger. |
The following table describes the accounting flow for AMB transactions originating in Oracle Lease and Finance Management and accounted in Oracle Subledger Accounting.
| Action | Application |
|---|---|
| Create Accounting Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Evaluate Accounting Template | Oracle Lease and Finance Management |
| Derive Amount | Oracle Lease and Finance Management |
| Capture Accounting Sources | Oracle Lease and Finance Management |
| Create Accounting Event | Oracle Lease and Finance Management |
| Identify Accounting Event | Oracle Subledger Accounting |
| Select Sources | Oracle Subledger Accounting |
| Evaluate User-Defined Accounting Rules | Oracle Subledger Accounting |
| Create Subledger Journal | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
The following table describes the accounting flow for AMB transactions originating in Oracle Lease and Finance Management and interfaced to Oracle Payables.
| Action | Application |
|---|---|
| Create Billing Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Capture Accounting Sources | Oracle Lease and Finance Management |
| Populate Payables Interface Table | Oracle Lease and Finance Management |
| Submit Invoice Import Program | Oracle Payables |
| Create Invoice | Oracle Payables |
| Populate Transaction Objects with Oracle Payables and Oracle Lease and Finance Management Sources | Oracle Payables |
| Create Accounting Event | Oracle Payables |
| Identify Accounting Events | Oracle Subledger Accounting |
| Load Transaction Objects | Oracle Subledger Accounting |
| Select Source Values from Transaction Objects | Oracle Subledger Accounting |
| Evaluate User-Defined Accounting Rules | Oracle Subledger Accounting |
| Create Subledger Journal | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
The following table describes the accounting flow for AMB transactions originating in Oracle Lease and Finance Management and interfaced to Oracle Receivables.
| Action | Application |
|---|---|
| Create Billing Transactions | Oracle Lease and Finance Management |
| Call Accounting Engine | Oracle Lease and Finance Management |
| Capture Accounting Sources | Oracle Lease and Finance Management |
| Populate Receivables Interface Table | Oracle Lease and Finance Management |
| Submit Auto Invoice Program | Oracle Receivables |
| Create Invoice | Oracle Receivables |
| Populate Transaction Objects with Oracle Receivables and Oracle Lease and Finance Management Sources | Oracle Receivables |
| Create Accounting Event | Oracle Receivables |
| Identify Accounting Events | Oracle Subledger Accounting |
| Load Transaction Objects | Oracle Subledger Accounting |
| Select Source Values from Transaction Objects | Oracle Subledger Accounting |
| Evaluate User-Defined Accounting Rules | Oracle Subledger Accounting |
| Create Subledger Journal | Oracle Subledger Accounting |
| Transfer to General Ledger | Oracle Subledger Accounting |
Any accounting event created in an Oracle application is accounted in Oracle Subledger Accounting with the entered accounting definitions. Before Oracle Subledger Accounting can be utilized, all accounting for subledgers must be set up. For detailed information on how to set up accounting definitions for Oracle Subledger Accounting, see Oracle Subledger Accounting Implementation Guide.
Large leasing business organizations with multinational operations may be required to account and report results of their operations using multiple sets of accounting principles called Generally Accepted Accounting Principles (GAAP). For example, in addition to reporting the results of operations as per the local GAAP, multinational leasing organizations may be required to prepare their accounting reports as per the GAAP applicable in the home country of the parent company for consolidation. In the leasing business, this accounting is more complex because the accounting scheme may change across different geographic regions, and the rules that determine the lease classification of the contract may also be different.
The Oracle Lease and Finance Management Multi-GAAP accounting feature addresses the varied accounting and reporting needs of the leasing business organization operating across multiple countries. The Multi-GAAP accounting feature enables multinational companies to generate two accounting representations of the contract transaction using two sets of GAAP. Multi-GAAP leverages the architecture of subledger accounting (SLA) and Ledger to generate accounting in the primary ledger and one associated secondary ledger, each automatically using different GAAP.
For example, a single contract can be an Operating Lease as per local laws and Finance Lease as per laws applicable to the parent company. With Multi-GAAP accounting, you can define accounting rules to generate accounting in primary ledger (local ledger) as per local laws and in secondary ledger (parent company ledger) as per the laws applicable to parent company.
Oracle Lease and Finance Management offers the following Multi-GAAP accounting options:
Automatic Multi-GAAP Accounting
Manual Multi-GAAP Accounting
Automatic Multi-GAAP accounting in Oracle Lease and Finance Management enables you to book a contract that is accounted in two ledgers, one primary ledger and one associated secondary ledger. This is achieved by associating the contract with a financial product which has a reporting product. The financial product determines the accounting in primary ledger and the reporting product determines the accounting in secondary ledger based on system options setups for representations and asset books. Each ledger has its own separate subledger accounting method by which contract transactions are processed for accounting. The Chart of Accounts and Currency associated with the primary and secondary ledgers must be the same due to Oracle Assets requirements.
The various processes, such as booking, billing, accrual, and terminations create transactions. Oracle Lease and Finance Management and Oracle Assets, which are registered as valuation applications in SLA, create separate transactions for each ledger. Oracle Receivables and Oracle Payables, which are registered as non-valuation applications in SLA, create a single transaction for primary ledger and all secondary ledgers.
These transactions are then processed by the Create Accounting concurrent program in the respective applications and generate subledger journals for each ledger using the subledger accounting method automatically associated to the individual ledger. Accounting in both primary and secondary ledgers is generated by Oracle Lease and Finance Management. Journals are then posted in each ledger.
Oracle Lease and Finance Management has the following two options for generating the account codes for contract transactions:
Generate Default Account Codes in Oracle Lease and Finance Management
Generate Account Codes in SLA
When you generate default account codes in Oracle Lease and Finance Management, the default account codes are derived based on the accounting template set associated with the financial product and passed to SLA as a source. The account code source, along with other sources, are is available for defining conditions in the Account Derivation Rules setup in SLA, and these rules are evaluated when transactions are processed by the Create Accounting concurrent program.
This method involves less manual intervention and cost for creating accounting in the secondary ledger compared to the manual Multi-GAAP accounting option. However, this method requires a higher maintenance cost for accounting template set setup.
You can switch to the Multi-GAAP accounting option where account codes are generated in SLA by changing the Account Derivation Method to Account Method Builder (AMB).
This section consists of the following topics:
Generate Default Account Codes in Oracle Lease and Finance Management Overview
Generate Default Account Codes in Oracle Lease and Finance Management Setup
Generate Default Account Codes in Oracle Lease and Finance Management Process
Before you can generate default account codes in Oracle Lease and Finance Management, you must complete the following setup tasks:
Set the Account Derivation Option to Accounting Template Set
Set the Secondary Representation Method to Automated Accounting
Set Up a Reporting Product Tax Book
Set Up a Financial Product with Reporting Products
For information on these set up tasks, see Accounting Options, Oracle Lease and Finance Implementation Guide.
To generate accounting in primary and secondary ledgers in Oracle Lease and Finance Management, perform the following tasks:
Author a Contract
Generate Contract Transactions
Run the Create Accounting concurrent program for both Primary and Secondary Ledgers
Transfer the accounting to Oracle General Ledger and post the Journals
This section consists of the following topics:
Generate Account Codes in SLA Overview
Generate Account Codes in SLA Setup
Generate Account Codes in SLA Process
When you generate account codes in SLA, the account codes are derived based on the subledger accounting method associated to the ledger. In this method, no account code is generated in Oracle Lease and Finance Management, and thus an Oracle Lease and Finance Management account code is not available as a source for the Account Derivation Rules setup. But all other accounting sources are available for defining conditions in the Account Derivation Rules setup, and these sources are evaluated when transactions are processed by the Create Accounting concurrent program.
Generating account codes in SLA involves less manual intervention and cost for creating accounting in the secondary ledger when compared to the manual Multi-GAAP accounting option. However, this method requires the additional task of setting up the subledger accounting method for the secondary ledger and maintaining both subledger accounting methods for primary and secondary ledgers.
You cannot change the Account Derivation Method from AMB to Accounting Template Set.
Before you can generate account codes in SLA, you must complete the following setup tasks:
Set the Account Derivation Option to AMB
Set the Secondary Representation Method to Automated Accounting
Set Up a Reporting Product Tax Book
Set Up a Financial Product with Reporting Products
Set Up the Subledger Accounting Method for Primary and Secondary Ledger
For information on these set up tasks, see Accounting Options, Oracle Lease and Finance Implementation Guide.
To generate accounting in primary and secondary ledgers in SLA, perform the following tasks:
Author a Contract
Generate Contract Transactions
Run the Create Accounting concurrent program for both Primary and Secondary Ledgers
Transfer the accounting to Oracle General Ledger and post the Journals
You can choose to perform manual Multi-GAAP accounting in a secondary ledger. With this method, you use the Multi-GAAP Adjustment Report to determine the accounting adjustments to be manually entered in the secondary ledger. This method gives you manual control over all Multi-GAAP adjustments, but is more time-consuming. Accounting in the primary ledger is generated by running the Create Accounting concurrent program.
Manual Multi-GAAP accounting gives you manual control over the secondary ledger accounting, but requires more manual intervention.
For information on manual Multi-GAAP accounting in Oracle Lease and Finance Management, see Generate Multi-GAAP Adjustment Report.
If an operating unit is enabled for automatic accounting, then Oracle Lease and Finance Management performs additional processing to create secondary representation transactions and accounting of the secondary representation transactions in secondary ledger, along with processing the transactions created for the primary representation. The transaction type determines how the secondary representation transaction is processed and how the accounting amounts are derived.
The following table describes secondary representation transactions.
| Oracle Lease and Finance Management Transaction Types | Account Derivation Method | Secondary Representation Transaction Generated | Transaction Application | Account Codes Generated in Oracle Lease and Finance Management for Primary or Secondary Representation | Basis of Amount Determination for Secondary Representation Transaction | Sources Generated in Oracle Lease and Finance Management for Primary Representation Transaction | Sources Generated in Oracle Lease and Finance Management for Secondary Representation Transaction |
| Booking, Rebook, Termination, Release, Renewal, Asset Disposition, Split Asset, Evergreen, Formula based Accrual transaction | Accounting Template Set | Yes | Oracle Lease and Finance Management | Yes | Formula defined on the accounting template for reporting product | Yes | Yes |
| Booking, Rebook, Termination, Release, Renewal, Asset Disposition, Split Asset, Evergreen, Formula based Accrual transactions | Accounting Method Builder | Yes | Oracle Lease and Finance Management | No | Formula defined on the accounting template for reporting product | Yes | Yes |
| General Loss Provision, Special Loss Provision, Receipt Application, Principal Adjustment, Upfront tax, Investor | Accounting Template Set | Yes | Oracle Lease and Finance Management | Yes | Secondary transaction Amount is the same as the primary transaction amount | Yes | Yes |
| General Loss Provision, Special Loss Provision, Receipt Application, Principal Adjustment, Upfront tax, Investor | Accounting Method Builder | Yes | Oracle Lease and Finance Management | No | Secondary transaction Amount is the same as the primary transaction amount | Yes | Yes |
| Non-formula based Accrual transactions | Accounting Template Set | Yes | Oracle Lease and Finance Management | Yes | Formula defined on the accounting template for reporting product | Yes | Yes |
| Non-formula based Accrual transactions | Accounting Method Builder | Yes | Oracle Lease and Finance Management | No | Formula defined on the accounting template for reporting product | Yes | Yes |
| Billing (Receivables Invoices), disbursement, funding (payable invoices) Credit Memo, Debit Memo | Accounting Template Set | No | Oracle Receivables or Oracle Payables | Account codes are generated for primary but not generated for secondary representation | No secondary representation transaction generated | Limited sources are passed to AR/AP | No |
| Receivables Invoices and payable invoices | Accounting Method Builder | No | Oracle Receivables or Oracle Payables | No | No secondary representation transaction generated | Limited sources are passed to AR/AP | No |
| Receipts and payments | Accounting Template Set | No | Oracle Receivables or Oracle Payables | No | No secondary representation transaction generated | Only related Invoice sources are available at the time of application | No |