SLA
SLA Part 1 - Why SLA
SLA is a module which now sits between
the SubLedgers like AP/AR etc and the General Ledger. Have a look at this
diagram below. As you will notice, SLA
can act as a mediator between the subledgers and Oracle General Ledger.
Before we progress, some terminologies of R12 must be revisited. In 11i we had set of books, and in R12 we call them Ledgers. Likewise in R12 we also have secondary ledgers and reporting ledgers. Hence from 11i perspective think of Ledger as Set of Books. As for Subledger, a Subledger is nothing but a module like AP/AR/PO/Inventory etc.
In the diagram below, the second scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.B.C.D. In such case, if SLA module is not customized, then the very same A.B.C.D combination will be passed to Oracle General Ledger via theSLA . And before you wonder... Yes, SLA module has its own set of tables to capture these
accounting entries.
Before we progress, some terminologies of R12 must be revisited. In 11i we had set of books, and in R12 we call them Ledgers. Likewise in R12 we also have secondary ledgers and reporting ledgers. Hence from 11i perspective think of Ledger as Set of Books. As for Subledger, a Subledger is nothing but a module like AP/AR/PO/Inventory etc.
In the diagram below, the second scenario is explained whereby let's say that payables module generates a charge account segment combination for an invoice distribution line as A.B.C.D. In such case, if SLA module is not customized, then the very same A.B.C.D combination will be passed to Oracle General Ledger via the
Please see the image below.
In the image above, SLA passes to GL whatever value is fed by the Subledger, in this case A.B.C.D
There are cases where
The most important application however of the SLA is its ability to create shadow journals that contain different values or differing credit/debit entries for the transactions. This is the main reason why
Therefore in this article you have
learnt the different usages of Subledger accounting.
SLA Part 2 Entities - Event Class - Event Types
For Payables, an INVOICE transaction and a PAYMENT transactions are known as ENTITIES within
Entities can be subdivided into various "Event Classes", for example Credit Memo, Debit Memo, Expense Reports, Invoices etc.
Further to this, against the Event classes we define Event Types, for example, whenever your Invoice is validated or cancelled or adjusted, you may want some specific accounts in the General Ledger to be impacted. Event types are therefore the types/list of events against transactions which you wish to account for in General Ledger.
This is explained in the diagram below.
Each entity is identified by unique identifier or primary key from the underlying tables.
The Journal
Line Definition "defines" how the entire journal is built. To
create any journal, one of the key things is to
get the CCID
or the code combination of segments. SLA needs
to know where this CCID will be coming from. You also need to know whether
this CCID will be debit or this CCID will go into credit. Therefore you not
just require the CCID, but you also need to decide whether a specific CCID will
be debited or credited. In SLA , the "Journal Line Type" will specify
whether the accounting entry is credit or debit. Also, you can then
"attach something called an ADR to this Journal Line Type". The ADR
returns the final code combination. Therefore Journal Line type will leverage
the JLT+ADR to know which CCID is crediting and which CCID is debiting in the
journal.
For each and every application there is a combination of event class and event type. Depending upon the combination of event class and event type the accounting gets triggered. The standardSLA out of the
box from Oracle meets your requirement by 90%. For example you can fetch the
standard accounting from payables or receivables options. However where these
standard seeded accounting do not suffice, you can go and modify SLA to meet your business needs.
There is something called as Journal Entry Description. When a transaction is transferred as a journal, then every journal has credit/debit and description. The journal has description at header and also at line level. The JED allows you to generate the description of the Journal at both header and line level. For example you may want Customer Name or Customer Number in the journal description for a journal that is initiated from Oracle Receivables module. Using JED inSLA you can build header or line
level descriptions.
The image below describes the end result journal that is produced bySLA
For each and every application there is a combination of event class and event type. Depending upon the combination of event class and event type the accounting gets triggered. The standard
There is something called as Journal Entry Description. When a transaction is transferred as a journal, then every journal has credit/debit and description. The journal has description at header and also at line level. The JED allows you to generate the description of the Journal at both header and line level. For example you may want Customer Name or Customer Number in the journal description for a journal that is initiated from Oracle Receivables module. Using JED in
The image below describes the end result journal that is produced by
In JLT Journal Line Type, you can specify whether the entry is for credit or debit side. The Journal Line Type also provides options to do accounting for Gain/Loss of Foreign currency transactions. Further to that you can specify if
ADR - We specify how the account combination must be generated. We tell the system how we want the CCID should be built and transferred to the general ledger. You can either transfer the standard account as calculated within Subledger(AP or AR or PA etc) or the account generated from Subledger can be modified or replaced via ADR configuration within
Further to this, when defining ADR, you can specify the conditions under which a specific segment or CCID is returned. These conditions are like IF Conditions.
It is good to remember that the "Journal Line Definition=JED+JLT+ADR"
This is visible from the screenshot as shown below
You will notice that two "Journal Line Types" have been attached to this Journal Line Definition. The first journal line type assignment creates a credit line in the journal and the second journal line type assignment creates a debit line in the journal.
By now you would have understood the significance of Journal Line Definition. However you might be wondering how this Journal Line Definition gets associated with a Subledger transaction. For example, how does Oracle E-Business Suite decide which specific Journal Line Definition should be used when a specific event takes place against an invoice in Oracle Payables. In other words, how will
SLA Part 4 - Application Accounting Definitions
In this Part 4, you will see how the "Journal
that gets constructed using Journal Line Definition" is associated with an
underlying transaction in the respective module.
As seen in the image above, the Application Accounting Definitions [AAD] is attached to one or more Journal Line definition [JLD].
Effectively it means that AAD = JLD for an Event Class+ Event Type combination = ADR+JED+JLT for an Event Class+ Event Type combination
As a thumb rule, you must remember that each Application Accounting Definition [AAD] belongs to a module. Therefore if you have one Ledger implemented [ 11i Set Of Books] and two modules implemented like AP and AR, then you will have 2 AAD's defined, i.e. one for Payables and another for Receivables.
In the above picture only one Event Class of Invoice is used in AAD. However in reality you will have more than one event classes like Invoices, Payments etc associated with a AAD for Payables module.
Seeded Application Accounting Definitions are provided for each module out of the box by Oracle. However if the existing definitions do not meet your business requirements, then you can copy the existing AAD's to a custom AAD, and then make alterations to the custom AAD, which means creating custom JLT, custom JED and custom ADR as appropriate. It is important to remember that you must create a custom copy of an existing SLA component before making modifications.
SLA Part 5 - Subledger Accounting Methods
As we have seen in the Part 4 of SLA, the Application
Accounting definition is used to decide two things
a. When a specific event within Subledger example Payables or Receivables becomes eligible for Accounting
b. How the journal is constructed.
However, each Primary Ledger[ 11i equivalent of primary set of book] and also each secondary ledger should be able to generate Journals as per their respective legislator requirements for all the modules implemented. This is where "Subledger Accounting Method" [SLAM] comes into the play. If you recollect from previous article, Application Accounting Definition is connected to only one module like Payables or Receivables etc. However a Ledger[11i SOB equivalent] needs accounting entries to be processed across many modules. Hence SLAM provides an umbrella to join accounting entries from various modules so that they can be channelled through to Oracle General Ledger. In other words a SLAM is a collection of accounting definitions for various modules in Oracle Apps. A SLAM is then attached to the Ledger[11i equivalent of Set Of Books].
Therefore the flow of accounting entries appears as shown below
The flow represented in simple equation appears as below
Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Liability Lines-->[JED+JLT+ADR]
Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Expense Lines-->[JED+JLT+ADR]
In order to assign the SLAM to a ledger, go to the General Ledger Super User responsibility and click on menu as shown below.
Click on update against the ledger
Attach the SLAM to this ledger
You can also modify the SLA accounting options using the two screenshots as shown below
a. When a specific event within Subledger example Payables or Receivables becomes eligible for Accounting
b. How the journal is constructed.
However, each Primary Ledger[ 11i equivalent of primary set of book] and also each secondary ledger should be able to generate Journals as per their respective legislator requirements for all the modules implemented. This is where "Subledger Accounting Method" [SLAM] comes into the play. If you recollect from previous article, Application Accounting Definition is connected to only one module like Payables or Receivables etc. However a Ledger[11i SOB equivalent] needs accounting entries to be processed across many modules. Hence SLAM provides an umbrella to join accounting entries from various modules so that they can be channelled through to Oracle General Ledger. In other words a SLAM is a collection of accounting definitions for various modules in Oracle Apps. A SLAM is then attached to the Ledger[11i equivalent of Set Of Books].
Therefore the flow of accounting entries appears as shown below
The flow represented in simple equation appears as below
Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Liability Lines-->[JED+JLT+ADR]
Ledger Defined in GL-->SLAM-->AAD--> [Event Class and Event Type]-->Expense Lines-->[JED+JLT+ADR]
In order to assign the SLAM to a ledger, go to the General Ledger Super User responsibility and click on menu as shown below.
Click on update against the ledger
Attach the SLAM to this ledger
You can also modify the SLA accounting options using the two screenshots as shown below
SLA
Part 6 - Overall SLA Diagram
The overall flow of the SLA
can therefore be depicted as shown in image below.
Overall, when you create new definitions inSLA , you can
follow the bottom up model.
Overall, when you create new definitions in
The parallel flow on top, as shown in image below is
to ensure both a Credit and Debit line gets created for a Journal.
In this article we will create a Journal Line
Definition. You will basically apply the steps learnt thus far into practical
implementation.
However to create a Journal Line Definition, we need to create the following
1. Journal Entry Description for journal line description
2. Journal Line Type to mainly define credit or debit
3. Account Derivation Rules for CCID used in journal line
Therefore typically, two set of JED,JLT and ADR’s are required, with one set each for Credit line, and the other set for the debit line.
In this article, we will create these three components.
Go to a subledger like Payables and within theSLA
menu as shown below, you can open the Journal Enty Description screen. Click on
New to create a new JED.
However to create a Journal Line Definition, we need to create the following
1. Journal Entry Description for journal line description
2. Journal Line Type to mainly define credit or debit
3. Account Derivation Rules for CCID used in journal line
Therefore typically, two set of JED,JLT and ADR’s are required, with one set each for Credit line, and the other set for the debit line.
In this article, we will create these three components.
Go to a subledger like Payables and within the
Create a new Journal Entry Description named ANIL_JED. We will use this for generating the Journal Line Description for both the credit and the debit lines.
The journal line description can be constructed by clicking on Details button. The description of the journal line can be a static text or dynamic text based on database sources within
Here we are using the Supplier Name to construct the journal line description.
In addition to the dynamic journal line text,
For example
IF CONDITION1=TRUE, then Journal Line Description should be abcd
ELSE IF CONDITION2=TRUE, then Journal Line Description should be defg
Click on condition button to define the condition
After defining the Journal Entry description, now we can create Journal Line Type named ANIL_JLT_CREDIT for the credit line of the journal.
Specify the Transfer to GL in Summary or Detail mode. Also specify Merge, as explain in image below
Use the Payables setup option as source to build condition for JLT
In this example, we want to build a condition for “Journal Line Type” eligibility depending upon whether in the Payables Options Screen has Automatic Offset Method is set to None or Balancing or Account. In the above condition, we have placed an OR condition.
You can for example also build a condition based on Invoice Distribution type as shown below.
Next we need to define the Account Derivation Rule
Here we are creating an account derivation rule for the credit line.
An ADR can either return a full CCID or a specific segment. The values can be sourced either statically or from existing seeded dynamic sources in
We are stating that this specific ADR named ANIL_LIABILITY_ADR will return a constant value in company segment
In the above image you will see that the value for Company segment can be derived from the corresponding value set.
As below, it is also possible for the specific ADR to return a full segment combination. In fact you can specify conditions within an ADR. When CONDITION1=TRUE then segment combonation a.b.c.d is returned or when CONDITION2=TRUE then d.e.f.g combination is returned for your account.
For the debit side, we are saying that the Account segment must always be 7450
The conditions can be defined. But conditions as evaluated as per the priority.
Finally we create a Journal Line Definition.
Here everything hangs together, JLTJLD,ADR=Journal Line Defnition
As shown below, we are saying that the CCID for the Credit Line of the journal will be calculated from ANIL_LIABILITY_ADR
And the CCID for the debit line will be calculated by the CCID value in Invoice Distribution line, with the specific segment from Account segment being replaced as per ANIL_EXPENSE_ADR.
For example, if the CCID in AP_INVOICE_DISTRIBUTION equates A.B.C.D.E.F then your journal line debit entry will be A.B.7450.D.E.F
In the previous part of this SLA article, you have learnt creation of the Journal Line
Definition. Now it is time to create AAD, which is "Application Accounting
Definition".
The purpose of AAD inSLA is to dictate
which "Journal Line Definition" must be used when a specific event
takes place against a specific type of transaction in a specific module like
Payables or Receivables. If you recollect, the "Journal Line
Definition" definition creates a Credit Line and the Debit Line of a
Journal.
Oracle ships out of the box an AAD for every simply module/application that usesSLA .
Hence for each application like AP,AR,PA,PO etc there will exist an existing AAD in the Subledger Modules. However, for this example we will create a new AAD for Payables.
In the previous article you created a Journal Line Definition that is responsible for constructing a Journal. However, in AAD screen you will specify when the Journal Line Definition will be used. In this case, as per the image below, we are stating that journal line definition ANIL_JLD should be used for creating journal whenever any event occurs against an Invoice in Payables.
The purpose of AAD in
Oracle ships out of the box an AAD for every simply module/application that uses
Hence for each application like AP,AR,PA,PO etc there will exist an existing AAD in the Subledger Modules. However, for this example we will create a new AAD for Payables.
In the previous article you created a Journal Line Definition that is responsible for constructing a Journal. However, in AAD screen you will specify when the Journal Line Definition will be used. In this case, as per the image below, we are stating that journal line definition ANIL_JLD should be used for creating journal whenever any event occurs against an Invoice in Payables.
You can also click on "Header Assignment" button in AAD to attached "Journal Entry Description" [JED] which dictates how the Journal Header description will be constructed. If you recollect, in Journal Entry Description, we concatenate static text and dynamic content from SLA Sources[mapped to DB columns or pl/sql functions] so as to construct a description for Journal Line or Journal header.
In this article we have seen that AAD is created for each module. However, in any implementation there is a need to perform accounting for all the modules. "APPS2FUSION UK" might be running Payables and Receivables and also Project Accounting. Hence we need to create a SLAM-Subledger Accounting Method.
Using AAD we specify the Journal creation rules per module. In SLAM we specify how the Journals must be built for the entire organization "APPS2FUSION UK" across Payables and Receivables and Project Accounting. The company "APPS2FUSION UK" will have a legal entity in
In previous article we have seen
that in SLA , the "Application Accounting
Definition" is created for each module in EBusiness Suite. However, in any
implementation there is a need to perform accounting across various different
modules.
For example, a company named "APPS2FUSION UK" might be
running Payables and Receivables and also Project Accounting. Hence we need to
create a SLAM [Subledger Accounting Method] that will take care of generating
the Accounting journal lines for each of the module. Hence a SLAM is
nothing but a grouping of all the AAD's possibly for a given chart of account.
Using AAD we specify the Journal creation rules per module. In SLAM we specify the applications/modules for which the Journals must be built for the entire organization such as "APPS2FUSION UK" across Payables and Receivables and Project Accounting. The decision of whether the journal must be created is delegated to the AAD. As for how the journal is constructed and how the accounts are derived is delegated to the Journal Line Definition.
The company such as "APPS2FUSION UK" will have a legal entity inUK
In the image below we are creating a SLAM named ANIL_SLAM, and attaching the AAD named ANIL_PAYABLES. This is a simplistic example, because in reality you will have the AAD's of other applications like Receivables , Project Accounting, Fixed Assets etc attached to the SLAM as well.
Using AAD we specify the Journal creation rules per module. In SLAM we specify the applications/modules for which the Journals must be built for the entire organization such as "APPS2FUSION UK" across Payables and Receivables and Project Accounting. The decision of whether the journal must be created is delegated to the AAD. As for how the journal is constructed and how the accounts are derived is delegated to the Journal Line Definition.
The company such as "APPS2FUSION UK" will have a legal entity in
In the image below we are creating a SLAM named ANIL_SLAM, and attaching the AAD named ANIL_PAYABLES. This is a simplistic example, because in reality you will have the AAD's of other applications like Receivables , Project Accounting, Fixed Assets etc attached to the SLAM as well.
In the above image, click on Accounting Setups, and here you can attach the SLAM to a Ledger. To remind you, in R12, the Ledger is equivalent of set of books in 11i.
In the SLA
articles Part 1 to Part 6, we understood the basic concepts of Subledger
Accounting.
In the SLA articles Part 7 to Part 9, we configuredSLA
for Payables as an example.
In this article, we will test the configuration to see the results of the configuration performed in Part 7 to Part 9 of theSLA
articles. We will also explain the results of the test.
Our SLA setup was done for Payables, hence we will create an Invoice in Payables and check the accounting entries to reconcile those against ourSLA setup.
In the SLA articles Part 7 to Part 9, we configured
In this article, we will test the configuration to see the results of the configuration performed in Part 7 to Part 9 of the
Our SLA setup was done for Payables, hence we will create an Invoice in Payables and check the accounting entries to reconcile those against our
If you recollect, we created an AAD named ANIL_PAYBLES which is attached to Oracle Payables module. This AAD will invoke JLD named ANIL_JLD to build the journal lines when an event takes place against the Payables invoice.
In the image below we are creating an Invoice from Payables responsibility and ensuring its invoice line distribution account is 01-110-6100-0000-000.
Next we click on Actions button and validate the invoice and create accounting entries.
Now check the accounting generated by clicking on menu title Reports||View Accounting as shown in the image below.
You will notice that the Debit entry of 1000 is charged to 01-110-7450-0000-000 instead of being charged to 01-110-6100-0000-000 in the Invoice Distribution Line of Payables. Please note that the third segments value of 6100 from Invoice Distribution has been replaced by 7450 from ADR named ANIL_EXPENSE_ADR as shown below.
The complete logic is described after this image.
Now, let us revisit how the credit line in the journal has been built. Typically Code Combination for the credit/liability accounting entry of the invoice line is picked from Payables Options setup of the operating unit. However in this case, in
Hence, the SLA has generated the same Credit entry CCID for the invoice, as shown in image below
Needless to say that the ANIL_LIABILITY_ADR was attached to the Journal Line Type=ANIL_JLT_CREDIT.
SLA Part 11 - Steps to Customize of SLA - Subledger Accounting
We have thus far seen the basic fundamentals and a
simplistic scenario of Subledger Accounting. In the example that we
saw, we created components required for
the SLA configuration from ground zero. That
is also known as the bottom up approach, where you build the lower level
components and then move up the chain to attach your SLA configuration to your
Ledger[11i SetOfBook equivalent in R12].
However you never ever use that approach in real life for modules such as Oracle Payables, Oracle Receivables, Oracle Cash Management, Oracle Fixed Assets or Oracle Project Accounting etc. The reason is that,SLA
comes pre-configured for all the widely used modules in the EBusiness Suite.
All the commonly used rules are already seeded into the SLA
config by Oracle, hence all you need to do is to customize those components.
Before we see the steps for customization ofSLA , let us first do some questions and
answers
Question - I can customize the account generator in Procurement and Fixed Assets. Do I really ever need to customize “Subledger Accounting” in such cases?
Answer- The pre-configuredSLA
by Oracle will use the accounts generated in respective modules as the source. The
seeded ADR's will in most cases return the very same accounts that are
generated in the respective modules. Effectively "garbage in garbage
out", or you can say "quality of the account that goes into SLA , and the same quality accounts are then sent to
General Ledger". The message from seeded SLA in most cases is “What you
feed to SLA will also be fed into the Oracle
General Ledger”. Therefore if you have already customized the account
generation workflow in the respective module then you do not require
customization in SLA . In fact, the
customizations on the seeded SLA
configurations must be kept to bare minimum. Although SLA provides you with
ability to override accounting definition, however the main reason for creation
of SLA was to implement multiple shadow
accountings against ledgers.
Question - If all the respective modules can generate accounting properly then why isSLA really needed?
Answer - Well, the main reason behind creation ofSLA itself was to create shadow journals for secondary ledger.
Please see the Part 1 in this series of articles.
Now let us take the example for customization of an existingSLA definition
pre-seeded by Oracle in R12. In this example, a SLAM named STANDARD_ACCRUAL is
attached to the Ledger [Set Of Book equivalent of 11i ]. As you will notice
from the image below, many modules such as Leasing, Loans, Cash Management,
Payables etc are attached to this SLAM. However we are interested in modifying
just the Payables piece of this SLAM. Create a copy of this SLAM as shown in
the image below. We will create a SLAM named ANIL_SLAM__STANDARD_ACCRUAL which
happens to be the exact copy of SLAM named STANDARD_ACCRUAL.
Now create new entry for Payables within the copied SLAM, i.e. new SLAM will
be " ANIL_SLAM__STANDARD_ACCRUAL"
Now you have created a new SLAM. In this SLAM, end date the AAD assignment of Payables and add a new entry for Payables. Note that we still have AAD named "Accrual Basis" attached. However after we copy the "Accrual Basis" into a custom AAD, we will then return to this screen in order to replace "Accrual Basis" by custom AAD. Click on "Application Accounting Definition" button.
Now, click on copy, and this time we will copy the AAD definition named “Accrual Basis” to create a new AAD named ANIL_STD_PAYABLES_STD.
The new AAD will be called ANIL_STD_PAYABLES_STD as shown below. Click on button labelled Done to complete the Copy operation for the AAD.
Now this new AAD has been created. Before we customize this AAD, we need to ensure that this AAD has been attached to the custom SLAM that we created in Step 1 of this article.
Now, back to the SLAM screen, for the custom SLAM, for Payables AAD assignment record, we attach the custom AAD to Payables. Please note that the Payables entry that is attached to custom AAD named “Accrual Basis” has now been end dated, as shown in image below.
Now go back to AAD, by clicking on Application Accounting Definition button as per the image above.
Follow the instructions as per images below
Now copy the Journal Line Definition itself.
The image below shows how the custom/copied journal line definition will be modified. Our idea here is to attach a custom ADR for the generation of an account.
The name of the copied JLD will appear as below.
Attach the custom ADR as shown below
And now attach your custom Journal Line Definition to the custom AAD
However you never ever use that approach in real life for modules such as Oracle Payables, Oracle Receivables, Oracle Cash Management, Oracle Fixed Assets or Oracle Project Accounting etc. The reason is that,
Before we see the steps for customization of
Question - I can customize the account generator in Procurement and Fixed Assets. Do I really ever need to customize “Subledger Accounting” in such cases?
Answer- The pre-configured
Question - If all the respective modules can generate accounting properly then why is
Answer - Well, the main reason behind creation of
Now let us take the example for customization of an existing
Now create new entry for Payables within the copied SLAM, i.e. new SLAM will
be " ANIL_SLAM__STANDARD_ACCRUAL"
Now you have created a new SLAM. In this SLAM, end date the AAD assignment of Payables and add a new entry for Payables. Note that we still have AAD named "Accrual Basis" attached. However after we copy the "Accrual Basis" into a custom AAD, we will then return to this screen in order to replace "Accrual Basis" by custom AAD. Click on "Application Accounting Definition" button.
Now, click on copy, and this time we will copy the AAD definition named “Accrual Basis” to create a new AAD named ANIL_STD_PAYABLES_STD.
The new AAD will be called ANIL_STD_PAYABLES_STD as shown below. Click on button labelled Done to complete the Copy operation for the AAD.
Now this new AAD has been created. Before we customize this AAD, we need to ensure that this AAD has been attached to the custom SLAM that we created in Step 1 of this article.
Now, back to the SLAM screen, for the custom SLAM, for Payables AAD assignment record, we attach the custom AAD to Payables. Please note that the Payables entry that is attached to custom AAD named “Accrual Basis” has now been end dated, as shown in image below.
Now go back to AAD, by clicking on Application Accounting Definition button as per the image above.
Follow the instructions as per images below
Now copy the Journal Line Definition itself.
The image below shows how the custom/copied journal line definition will be modified. Our idea here is to attach a custom ADR for the generation of an account.
The name of the copied JLD will appear as below.
Attach the custom ADR as shown below
And now attach your custom Journal Line Definition to the custom AAD
.
This completes the cycle for customization of the pre-seededSLA configuration.
This completes the cycle for customization of the pre-seeded
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