Case Study – Sub-Ledger Accounting

Introduction

This section is aimed to guide you through the definition of rules to account for a Payables invoice. The environment to be used does not have the adequate ledger setup to accommodate each user to be able to create accounting using her/his own rules. Remember that a primary or secondary ledger can have a single accounting method effective at any given date for a given application. Therefore, with a single primary ledger definition (Vision Operations, USA), it will not be possible for all users to create accounting concurrently for the same ledger. We will be concentrating on the definition of the rules in this class.

Define Rules to Account for Payables Invoices

Exercise 1 - Copy and Modify Flow

Task

Using the seeded Payables definitions, copy and create your own rule to account for an invoice. Your rule should:

- Have your own description on the liability line,

- Have a separate liability line for each invoice line, i.e. not summarized.

Detailed Steps

Copy the seeded journal line definition Accrual, Invoices All and perform the following changes for your copy:

1. Define a journal entry description to be used on the liability line. The description should contain your name as a constant and the supplier name. It should appear only on invoices having invoice date of February 21, 2007.

Responsibility: Payables, Vision Operations

Navigation: Setup -> Accounting Setup -> Accounting Methods Builder -> Methods and Definitions -> Journal Line Definitions

Field ValueJournal Description Code Enter a code. Journal Description Name Enter a name. Enabled YesTransaction Chart of Accounts

Null

Description Enter a description for this component you are defining; can leave null.

Priority 1Details This is what will show on the liability

line as the description. Define such that your name as well as your supplier’s name is displayed.

Conditions Define a condition such that this

description is used only when invoice date is February 21, 2007.

2. Liability lines of the entry should not be summarized i.e. there should be a liability entry for each invoice line. To accomplish this, copy the seeded journal line type “Liability, Basic”, and modify it such that journal entry lines with matching criteria are not merged.

3. Modify your copied JLD to use above components.

4. Copy and modify the seeded Payables application definition Accrual Basis to use your JLD.

5. Modify the Subledger Accounting Method Standard Accrual to de-activate the seeded Payables AAD and activate yours as of February 1st, 2007.

Solution

Navigation: Setup -> Accounting Setups -> Subledger Accounting Setup -> Accounting Methods Builder -> Journal Entry Setups -> Journal Entry Descriptions

1. Your description should look like below:

Figure 1 –JED for Liability Line

Figure 2 - JED Detail

Figure 3 - JED Condition

2. To ensure that liability lines with matching criteria (GL account, accounting class being a few of many. For the full list, please refer to the SLA Implementation guide) are not merged into a single line and that the granularity of the invoice lines are preserved, set the Merge Matching Lines option to “No” on your JLT. In order to make the definition easier, instead of creating the JLT from scratch, use the copy functionality on the seeded JLT Liability, Basic and change the desired option. Your JLT should be similar to below:

Figure 4 – New Liability JLT

3. Remove or de-activate the seeded Liability, Basic JLT from your copied JLD, and assign your JLT, instead. Do not forget to assign your description to this JLT, as well as the same account derivation rule as was on the seeded JLT that you removed/de-activated. Your JLD should look like below:

Figure 5 – New Invoice JLD

4. Copy the seeded AP AAD; replace the JLD for the event class Invoice with your own. Remember to validate your AAD; the validation will check for inaccuracies in the setup and compile the code to create accounting per these rules. Your AAD should look like below:

Figure 6 – New AP AAD

5. Copy the seeded Standard Accrual SLAM, put an end-date of January 31st, 2007 on the seeded Payables AAD. Add a new row and activate your AAD as of February 1st, 2007. The SLAM should look like below:

Figure 7 - Modified SLAM

Exercise 2 Create Flow

Task

Define an AAD for the accounting chart of accounts Operations Accounting Flex, such that it will generate a journal entry:

- Only for the validation of AP invoices,

- with only item expense and liability lines i.e. no tax, freight etc,

- booking the liability line to the account: 01-000-2220-0000-000,

- booking the expense line to the distribution account on the invoice line, but with the account segment value overwritten with 7740.

Detailed Steps

Define the following components and build your SLAM:

1. Liability JLT: Copy your liability JLT defined in the previous exercise and modify it such that lines with matching criteria are merged. Call your Liability JLT <FIN_XX>_LIABILITY_MERGED

2. Expense JLT: to create a line for invoice lines of type Item,

Field ValueEvent Class InvoicesLine Type Code Enter <FIN_XX>_INVOICE_EXPENSE Accounting Class - Item Expense.

- This value will be on the entry line and is used to categorize lines, primarily for reporting purposes.

Name Enter a name. Rounding Class - Enter the same value as in

Accounting Class.- Along with the Rounding Reference,

this value is used to determine at what level transaction rounding should be performed (advanced topic).

Description Enter a description for the component you are defining; can leave null.

Enabled YesBalance Type Actual, as we are not looking to create

budget or encumbrance entries.Side Debit. Expense amount should be

debited to the expense account.Switch Debit/Credit - No.

- Determines if the side on a line with a negative amount should be switched and the negative made positive, or both the negative and the side preserved. For example, an amount of -100 may generate an

entry line with DR -100 or CR 100.Merge Matching Lines - No.

- Determines if lines with matching criteria should be merged into a single line.

Subledger Gain/Loss - No.- Will this JLT be used to create an

exchange gain/loss line calculated by the transacting application for the primary ledger (advanced topic)?

Transaction Chart of Accounts

- Null.- Used in interpreting or converting

an accounting flexfield source carrying a value from the transaction for the primary ledger (advanced topic).

Business Flow Method - None.- Determines if certain attributes of

the journal line should be inherited from another line. For example, for a liability line, copy the BSV from the corresponding expense line in the same entry; or, on a payment, back out from the same liability account that was used on the invoice of this payment (advanced topic).

Business Flow Class - Null.- Used together with the above when

Prior Entry is selected.Multiperiod - None.

- Determines if/how a payment should be recognized as expense over multiple accounting periods (advanced topic).

Transfer to GL - Summary.- Determines whether the lines should

be transferred to GL in the same level of granularity as in SLA or summarized by accounting flexfield and other criteria.

Conditions Define a condition such that this JLT is used only for invoice lines with distribution type = Item.

Accounting Attribute Assignments

- Review the sources assigned to the accounting attributes to be used in deriving values for this journal entry line.

- Uncheck the Event Class Default box for the attribute Party Identifier, and select Invoice Supplier Site Identifier from the list of values. This will result in the journal entry line showing the party site identifier as both the party and the party site. Note that you can change the event class default only if there have been multiple source assignments to an

accounting attribute on the event class level.

Note: This may not work in our current training environment

3. Liability ADR: a constant based ADR deriving accounting flexfield 01-000-2220-0000-000, defined for accounting chart of accounts Operations Accounting Flex,

Field ValueRule Code Enter a code. <FIN_XX>_LIABILITYRule Name Enter a name. <FIN_XX> Liability

AccountEnabled YesDescription Enter a description for the component

you are defining; can leave null.Chart of Accounts-Transaction

- Null- Used in interpreting or converting

an accounting flexfield source carrying a value from the transaction for the primary ledger (advanced topic).

Chart of Accounts-Accounting

- Operations Accounting Flex- Will allow defining constant values

by validating against the COA.Output Type FlexfieldPriority 1Value Type ConstantValue 01-000-2220-0000-000

4. ADR for invoice distribution account: already exists as seeded rule (see the ADR Invoice Distribution Account attached on the JLT Item Expense JLT on seeded JLD Accrual, Invoices All),

5. ADR for account segment: a constant based ADR deriving value 7740 for account segment, defined for accounting chart of accounts Operations Accounting Flex,

Field ValueRule Code Enter a code. <FIN_XX>_EXPENSERule Name Enter a name. <FIN_XX> Expense

AccountEnabled YesDescription Enter a description for the component

you are defining; can leave null.Chart of Accounts-Transaction

- Null- Used in interpreting or converting

an accounting flexfield source carrying a value from the transaction for the primary ledger (advanced topic).

Chart of Accounts-Accounting

- Operations Accounting Flex- Will allow defining constant values

by validating against the COA.Output Type Segment – AccountPriority 1Value Type ConstantValue 7740

6. JED (optional): you can use the JED already defined in the previous exercise,

7. JLD for invoice validation event type: defined for accounting chart of accounts Operations Accounting Flex:

- Assign the liability JLT from step #1 and the liability ADR from step #3. Note that this ADR will determine the value for all the segments of the accounting flexfield.

- Assign the expense JLT from step #2 and the ADR for invoice distribution account from step #4 and ADR for account segment from step #5. Note that the former will determine the value for all the segments of the accounting flexfield, and the latter will overwrite the account segment value.

-

8. Payables AAD: defined for accounting chart of accounts Operations Accounting Flex, to generate an entry only for invoice validation events. Assign the JLD from step #7. Use the Definition Code <FIN_XX> OPERATIONS_COA_AAD.Hit the Header Assignments button, and check the source assigned to the GL Date accounting attribute. The value of this source from the transaction will determine what the GL date will be on the accounting entry. Optionally, assign a description for the header of the entry.Remember to Validate your AAD.

9. SLAM: defined for accounting chart of accounts Operations Accounting Flex, to generate accounting only for Payables application. Note that you can also assign your COA-specific AAD on a COA-generic SLAM. However, for the purposes of this exercise, define a new one, called <FIN_XX>_OPERATIONS_SLAM.

Solution

Navigation: Setup -> Accounting Setup -> Subledger Accounting Setup -> Accounting Methods Builder -> Journal Entry Setup -> Journal Line Types

1. Your new liability JLT should be similar to below:

Figure 8 - New Liability JLT

2. Your JLT for the expense line should be similar to below:(Note: You may have to set the Subledger Gain/Loss field to NO)

Figure 9 - New Expense JLT

Figure 10 - Expense JLT Condition

Figure 11 - Expense JLT Accounting Attributes

3. Your liability ADR should be similar to below:Setup -> Accounting Setup -> Subledger Accounting Setup -> Accounting Methods Builder -> Journal Entry Setups -> Account Derivation Rules

Figure 12 - Liability ADR

4. Seeded ADR Invoice Distribution Account will read the value of the source Invoice Distribution Account from the transaction, and will use the same account on the journal line.

Figure 13 - Seeded ADR for Invoice Distribution Account

5. Expense account ADR should be similar to below:

Figure 14 - Expense ADR for Account Segment

6. The JED is defined in the previous exercise.

7. Your JLD should be similar to below:Setup -> Accounting Setups -> Subledger Accounting Setup -> Accounting Methods Builder -> Methods and Definitions -> Journal Lines Definitions

Figure 15 - JLD for Invoice Validation Event

8. Your AAD should look like below:Setup -> Accounting Setups -> Subledger Accounting Setup -> Accounting Methods Builder -> Methods & Definitions -> Application Accounting Definition

Figure 16 - AAD for Operations Accounting Flex

Figure 17 - AAD Header Assignments

9. Your SLAM should be similar to below:Setup -> Accounting Setups -> Subledger Accounting Setup -> Accounting Methods Builder -> Methods and Definitions -> Subledger Accounting Method

Figure 18 - SLAM for Services Accounting Flex

Exercise 3 - Create Accounting Using Seeded SLAM with Custom AAD

Task

In the Copy and Create flow above in Exercise 1, you created your own AMB components by copying and modifying the seeded definitions. You assigned your AAD to the seeded SLAM Standard Accrual. When you create accounting for any ledger that has this SLAM assignment, the invoices will be accounted per your rules. This exercise involves entering a transaction and generating accounting for it per your definition in Exercise 1.

Detailed Steps

1. Create a standard Payables invoice for operating unit Vision Operations (USA), with 2 item lines, validate the invoice, and create online accounting in final mode to post to GL.Note: If you use Supplier number 1005, you should remove the Distribution Set name that will default into the invoice header, otherwise this will generate confusing results.

2. View the accounting lines generated.

3. View the journal entry.

4. View the details of one liability line.

5. View the entry in t-account format. (Warning: this might take a long time to appear – go for a coffee!)

Solution

1. Use the Actions button to submit online accounting for the invoice.

Figure 19 - Create Online Accounting for a Payables Invoice

2. Use the toolbar to access accounting entry for the invoice, displaying all lines generated. Note that if there are multiple representations i.e. reporting currencies and secondary ledgers, a separate entry will be generated for each; but all lines belonging to all entries will be displayed on this page.

Figure 20 - Accessing Accounting Entry from Invoice Workbench

Figure 21 - View Journal Entry Lines

3. Use the button View Journal Entry to access more details of the entry with the header information. Notice that the liability lines have not been summarized per the liability JLT definition you had created.

Figure 22 – View Journal Entry

4. Select the link Show for one of the liability lines to view the details. Notice the description is created per your JED.

Figure 23 - Journal Line Details and Description

5. Select the button View T-Account.

Figure 24 - View Journal Entry in T-Account Format

Exercise 4 - Create Accounting Using Custom SLAM with Custom AAD

Task

In the Copy and Create flow above in Exercise 2, you created your own AMB components including the SLAM. In order to use your SLAM, you need to assign it to the ledger you are using. When you create accounting for any ledger that has this SLAM assignment, the invoices will be accounted per your rules. This exercise involves entering a transaction and generating accounting for it per your definition in Exercise 2.

Detailed Steps

1. Create a standard Payables invoice for operating unit Vision Operations (USA), with 2 item lines, validate the invoice, and create online accounting in final mode to post to GL.

2. On Subledger Accounting Journal Entries page, search for the two invoices you have entered in this exercise and the previous one.

3. Select the two entries and hit Compare button.

4. Switch to GL responsibility and view the new journal.

5. Drill down to the SLA entry.

6. Drill down to the transaction.

Solution

1. Create an invoice with the same date, amount, and distribution accounts as in the previous exercise.

2. Depending on your search criteria, multiple entries may be returned.

Figure 25 - Search Journal Entries

3. Compare the details of the two entries, and notice the difference in the accounts and liability line summarization.

Figure 26 - Compare Journal Entries

4. Notice that the entry in GL has two lines with the expense lines summarized, whereas the entry was created in SLA with 2 expense lines to the same account. This is because

of the Transfer to GL setting on the expense JLT, which was set to Summary. Hence, during transfer to GL, lines hitting the same account are summarized into a single one, with the details being preserved in SLA. SLA entries are more detailed than the GL entries.

Figure 27 - Entry Viewed in GL

5. Using the Line Drilldown button for the debit line, you navigate to the SLA page to view the detail lines that were summarized together to create the line as seen in GL.

Figure 28 - Detail Lines in SLA

6. From the lines view, you can drill back to the transaction on Payables invoice workbench.

Figure 29 - Drilldown to Transaction

Exercise 5 - Troubleshoot Accounting Errors

Create Accounting Using Custom SLAM with Custom AAD

Task

In this exercise, you will be running diagnostics to troubleshoot an error in accounting. Use your own SLAM, AAD, and JLD for invoice validation, but replace the Item Expense JLT with the following one already defined as a template for you: “LP Item Expense (error)”. Of course, you should not be using this JLT, but copying it and creating your own exact copy with no modifications.

Detailed Steps

1. Create a standard Payables invoice for operating unit Vision Operations (USA), validate the invoice, and create accounting in final mode to post to GL.

2. When the process errors, run the Create Accounting program through SRS in batch mode so you can see the errors.

3. Enable diagnostics for your user if not already done; and run the diagnostics report.

4. Identify and fix the error.

Solution

1. Following error will be displayed:

Figure 30 - Online Accounting Error

2. Set the profile option SLA: Enable Diagnostics to Yes for your user, and submit the Transaction Objects Diagnostics program.

Figure 31 - Enable Diagnostics

3. Submit Create Accounting program for your ledger, and when completed, view the output for errors.

Figure 32 - Create Accounting Offline

Figure 33 - Error on Accounting Report

Figure 34 - Submit Transaction Object Diagnostics

4. On the output, locate the accounting attribute that the error was reported for, i.e. Accounted Amount. Notice the source and its value mapped to this attribute for the JLT that was expected to create the entry line, “Quantity Variance Amount in Ledger Currency” with no value. This shows that the accounting program was trying to create the entry line using the value of this source, and was unable to create a successful entry as the there was no value. A valid journal entry line must always have a value for accounted amount. For a list of validations on a journal entry, please see the appendix of the SLA Implementation Guide.

To fix the error, you will need to change the source mapped to this accounting attribute on the JLT that was in error, i.e. your copy of the LP Item Expense (error) JLT. Note that after modifying any component used in it, your AAD will need to be revalidated to compile the code with the new settings.

When you generate accounting after these changes (offline or online), you will see an entry successfully created.

Figure 35 - Diagnostics Report

Figure 36 - Accounting Attribute Assignments on the JLT

Figure 37 - Revalidating the AAD