Sub Ledger Accounting (SLA) is a Rule-Based accounting engine that defines how journal entries are generated in sub-ledger transactions in Oracle sub-ledger applications. However, SLA also supports external applications generating accounting information which ultimately needs to be transferred to Oracle General Ledger. Before we get into SLA we need to know few of the basic concepts like event types, event class, etc.
Event Class - classifies transaction types for accounting rule purposes. E.g. in Payables, following are possible event classes: Invoice, Debit Memo, Prepayments, Refunds and Payments.
Event Type - for each transaction type, defines possible actions with accounting significance. E.g. in Payables, following are possible event classes: AP Invoice Events – Validation, Adjustment and Cancellation. Similarly we will have event types for other event classes.
In most of the cases we would not need to customize SLA and accounting features will work same as 11i. Some of the typical business scenarios where we would need to customize SLA in Payables are as follows:
- To have a different Liability account based on Operating Unit for which the invoice is entered.
- To have different natural account (expense) based on different Invoice Type and Invoice Line type.
- To have different natural account (expense) and different liability account based on different criteria like supplier type, entering currency, pay group, etc.
- The cost center segment of Invoice distribution Liability account shall be picked from the Invoice distribution Account while the other segment values from the Liability account defined at supplier site.
To cater to some of the above requirements we can use other alternatives like using distribution sets also. But setting up a custom SLA for such scenarios is an easier approach with lower user maintenance. I will try and show a simple scenario of how to derive custom accounting for a business scenario using SLA in Oracle Payables.
Business Scenario: We need to define different liability account (natural account segment) based on Supplier Type so that business can track the liability by supplier type. The other segment values will default from supplier site. I am limiting this example to only one supplier type “Contractor". The objective would be to have a different natural account for Liability account for invoices of supplier type "Contractor" alone, while for other supplier types the normal liability account should default.
Step1: First define a mapping set for various supplier types.
Step2: Define ADR (Account Derivation Rules)
Step3: Define JLD (Journal Line Definition)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Journal Line Definitions
Step 4: Setup AAD (Application Accounting Definition)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Application Accounting Definition
Step 5: Setup SAM (Subledger Accounting Methods)
Navigation: Setup > Accounting Setups >Sub Ledger Accounting Setups > Accounting Methods Builder > Methods and Definitions > Subledger Accounting Methods
Step 6: Assign the custom SAM to Primary Ledger
Verification of new SLA rule:
Create an invoice for supplier type ‘Contractor’ and create accounting