This is a case study of an actual Cash Basis Secondary Ledger implementation. Oracle has introduced Secondary Ledgers functionality which allow a different accounting method such as Cash Basis and IFRS. This session
will take an in-depth look into the Secondary Ledger functionality in Oracle R12. The challenges presented by
legacy systems, the unique design of the SubLedger Accounting rules to meet those challenges and the
lessons learned will be discussed in detail.
1. Tales from the Battle Front:
How a Secondary Ledger was
implemented against all odds
Prithis Das – Dynamique Solutions LLC
NCOAUG | March 12, 2015
2. Presenter’s background - Prithis Das
• In the Oracle EBS arena since 1997
• Over 22 years of business process improvement experience
• Consulting experience with Big 5 and other major organizations
• Oracle Certified Specialist in General Ledger
• Chartered Accountant and Management Accountant from India
• Authored and presented papers on Subledger Accounting, Web ADI, Reports
Manager at several OAUG and local events
• Currently on a major R12 enhancement assignment
• Contact:
• Cell: +1.630.3649457
• Email: prithis.das@dynamique.us
• Linked In: www.linkedin.com/in/prithisdas/
• Web: www.dynamique.us
Dynamique Solutions LLC
6. Case Study Background
• 120 + year old Engineering company
• Preferred consultants for major power utilities across the world
• Revenues from large consulting projects
• Oracle Applications customer since 1997
• General Ledger, Receivables, Payables, Purchasing, HR, Assets
• Projects is maintained on a custom-developed Projects system with interfaces to EBS
• Currently on 12.1.3
• Significant number of legacy systems with interfaces with Oracle EBS
• Single Ledger
• Accrual basis
• Need to maintain Cash-basis books
• Cash-basis financial statements maintained on spreadsheets
• Several interfaces post directly into General Ledger, skipping Subledgers
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8. Business Requirements
• Secondary Ledger with Cash Basis accounting method
• Cash transactions should be posted automatically into Secondary Ledger
• Common Chart of Accounts, Calendar
• Accounting Adjustments for External systems posting directly into GL
• Secondary Ledger needs only 2 segments
• Balancing segment (Company)
• Natural Account segment
• Other segments can be populated with a dummy “999…” value
• Fixed Assets to post into Cash Basis Ledger for all transactions
• Not standard Cash Basis functionality in Oracle
• Prepayments must be accounted to expense accounts when they are paid
Dynamique Solutions LLC
10. Solution Overview
Business Requirement Solution
Cash transactions should be posted
automatically into Secondary Ledger
Secondary Ledger with Cash Basis as the Accounting Method
- Seeded Cash Basis accounting method as a starting point
Common Chart of Accounts, Calendar Setup Secondary Ledger with the same COA, Calendar
Accounting Adjustments for Legacy
systems posting directly into Oracle GL
Account Derivation Rules for Secondary Ledger
Secondary Ledger needs only 2
segments
ADRs with Rules for Balancing and Natural Account segments
Remaining segments deriving constant “dummy” values
Cross Validation Rules adjusted to accommodate new CCIDs
with “dummy” values
Fixed Assets to post into Cash Basis
Ledger
New Tax Book linked to Secondary (Cash Basis) Ledger
GL Posting allowed to Secondary Ledger
Prepayments must be accounted to
expense accounts when they are paid
Custom Account Derivation Rules
Disabling of some standard functionality to use custom
solution
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17. Accounting Calendar issue
• Missing Date issue in Calendar
• First attempt to configure a new Secondary Ledger resulted in a show-stopper
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18. Accounting Calendar issue
• Missing Date issue in Calendar
• Caused due to missing date 29-Feb-2000
• Oracle gave a datafix in 2000 which apparently fixed the issue
• However, issue still affects creation of new Ledgers in R12
• Calendar Validation report does not catch the issue
• Calendar was fine for existing Ledger
• Calendar could not be used for new Primary or Secondary Ledger
• Our design was based on using the same Calendar, Chart of Accounts
• Sev1 SR was opened with Oracle
• Oracle issued datafix to correct the Calendar
Dynamique Solutions LLC
20. Business Requirements
• Secondary Ledger with Cash Basis accounting method
• Cash transactions should be posted automatically into Secondary Ledger
• Common Chart of Accounts, Calendar
• Accounting adjustments for External systems posting directly into Oracle GL
• Secondary Ledger needs only 2 segments
• Balancing segment (Company)
• Natural Account segment
• Other segments can be populated with a dummy “999…” value
• Fixed Assets to post into Cash Basis Ledger for all transactions
• Not standard Cash Basis functionality in Oracle
• Prepayments must be accounted to expense accounts when they are paid
Dynamique Solutions LLC
21. Business Requirement – AccountingAdjustments - Receivables
External
Client
Invoicing
System
Oracle
Receivables
Oracle
General
Ledger
Interface
Revenue Journals
Receipts
InvoicesInvoices
Dynamique Solutions LLC
22. Business Requirement – AccountingAdjustments
Receivables example
Primary Ledger
Accrual Basis
Secondary Ledger
Cash Basis
Standard Oracle Client’s Instance Standard Oracle Client’s Instance
Revenue Journals
Import from Client
Invoicing System
Dr. Receivables
Cr. Revenue
AR Invoice Dr. Receivables
Cr. Revenue
Dr. Receivables
11010
Cr. Revenue 11010
Cash Receipt
(when payment is
due)
Dr. Cash
Cr. Receivables
Dr. Cash
Cr. Receivables
11010
Dr. Cash
Cr. Revenue
Dr. Cash
Cr. Receivables
11010
ADR
Dr. Cash
Revenue 32899
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23. Solution – Accounting Adjustments (AR)
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Receivables Default
Cash Basis” AAD
Dynamique Solutions LLC
24. Solution – Accounting Adjustments (AR)
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Receivables Default
Cash Basis” AAD
Configure a new Journal Line
Definition
- Copy of “Receipt – Basis Journal
Lines Definition”
Dynamique Solutions LLC
25. Solution – Accounting Adjustments (AR) Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Receivables Default
Cash Basis” AAD
Configure a new Journal Line
Definition
- Copy of “Receipt – Basis Journal
Lines Definition”
Configure a new Journal Line
Type
- Replace Receipt Application to
Revenue
Dynamique Solutions LLC
26. Solution – Accounting Adjustments (AR) Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Receivables Default
Cash Basis” AAD
Configure a new Journal Line
Definition
- Copy of “Receipt – Basis Journal
Lines Definition”
Configure a new Journal Line
Type
- Replace Receipt Application to
Revenue
Dynamique Solutions LLC
27. Solution – Accounting Adjustments (AR)
Solution
Configure a new Account
Derivation Rule
- Account segment
- XXSL Receivables Account
Replaced by Revenue
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28. Solution – Accounting Adjustments (AR)
Solution
Configure a new Account
Derivation Rule
- Account segment
- ADR: XXSL Receivables Account
Replaced by Revenue
- Use a Constant (Revenue)
account = 32899
Dynamique Solutions LLC
32. Business Requirement – AccountingAdjustments
Payables example
Primary Ledger
Accrual Basis
Secondary Ledger
Cash Basis
Standard Oracle Client’s Instance Standard Oracle Client’s Instance
Labor cost Journals
Import from Projects
Accounting System
to Oracle GL
Dr. Labor Expenses
Cr. Payroll Clearing
Payroll Journals
Import from Payroll
(ADP) system to
Oracle GL
Dr. Payroll Clearing
Cr. Net Payroll
Cr. Employee FICA
……
Cr. Etc.
AP Invoices Dr. Net Payroll
Dr. Employee FICA
….
Cr. Payables Liability
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33. Business Requirement – AccountingAdjustments
Payables example
Primary Ledger
Accrual Basis
Secondary Ledger
Cash Basis
Standard Oracle Client’s Instance Standard Oracle Client’s Instance
Payment of AP
Invoices to ADP
Dr. Payables Liability
Cr. Cash
Dr. Net Payroll
Dr. Employee FICA
….
Cr. Cash
ADR
Dr. Labor Expenses
Cr. Cash
Dynamique Solutions LLC
34. Solution – Accounting Adjustments (AP)
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Cash Basis” AAD
Configure a new Journal Line
Definition XXSL Cash,
Payments All
- Copy of “Cash, Payments All”
Dynamique Solutions LLC
35. Solution – Accounting Adjustments (AP)
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of “Cash Basis” AAD
Configure a new Journal Line
Definition XXSL Cash,
Payments All
- Copy of “Cash, Payments All”
Configure a new Journal Line
Type
- Replace Item Expense JLT
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36. Solution – Accounting Adjustments (AP)
Solution
Configure a new Account Derivation
Rule
- Account Segment
- XXSL Item Expense Distribution
Account - Cash Basis
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37. Solution – Accounting Adjustments (AP)
Solution
Configure a new Account Derivation
Rule
- Account Segment
- XXSL Item Expense Distribution
Account - Cash Basis
Create Mapping Sets between
Payroll Liability Accounts and Labor
Expense Accounts
Dynamique Solutions LLC
38. Solution – Accounting Adjustments (AP)
Solution
Configure a new Account Derivation
Rule
- Account Segment
- XXSL Item Expense Distribution
Account - Cash Basis
Create Mapping Sets between
Payroll Liability Accounts and Labor
Expense Accounts
Create Conditions to drive the ADRs
Dynamique Solutions LLC
39. Solution – Accounting Adjustments (AP)
Solution
Configure a new Account Derivation
Rule
- Account Segment
- XXSL Item Expense Distribution
Account - Cash Basis
Create Mapping Sets between
Payroll Liability Accounts and Labor
Expense Accounts
Create Conditions to drive the ADRs
Put “Catch-all” ADR at the bottom,
and one-off ADRs at the top in order
of priority
- Catch-all ADR will not have
conditions
Dynamique Solutions LLC
42. Business Requirements
• Secondary Ledger with Cash Basis accounting method
• Cash transactions should be posted automatically into Secondary Ledger
• Common Chart of Accounts, Calendar
• Accounting Adjustments for Legacy systems posting directly into Oracle GL
• Secondary Ledger needs only 2 segments
• Balancing segment (Company)
• Natural Account segment
• Other segments can be populated with a dummy “999…” value
• Fixed Assets to post into Cash Basis Ledger for all transactions
• Not standard Cash Basis functionality in Oracle
• Prepayments must be accounted to expense accounts when they are paid
Dynamique Solutions LLC
43. Solution – Fixed Assets
• Standard Cash SLAM does not account for Fixed Assets
There are no inflows or outflows
of Cash in an Asset transaction
(Depreciation, Adjustment,
Retirement)
Purchase of an asset has already
been part of the Payables
process
The client required accounting of
Assets in the Secondary Ledger
(Cash Basis) for Tax purposes
using different depreciation
methods.
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44. Solution – Fixed Assets
• Existing Tax Book cannot be re-assigned to post to the Secondary Ledger
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45. Solution – Fixed Assets
• Alternate Ledger could not be the Secondary (Cash Basis) Ledger
“List of values contains no entries”.
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46. Solution – Fixed Assets
• Solution to meet Business Requirement
Custom Cash Basis Subledger
Accounting Method (SLAM)
Based on Oracle’s “Standard Cash” accounting method
Add the “Assets Standard Accounting”
AAD to the custom SLAM
Else, Oracle will not know how to account for Assets
transactions in the Secondary (Cash Basis) ledger.
Setup new Tax Book in Assets module Associate to the Corporate Book which posts to the
Primary Ledger
Allow GL Posting
Assign the Secondary (Cash Basis) ledger for posting
Migrate all assets from the old Tax
Book to the new Tax Book
This amounts to a re-implementation of the Tax Book
Run Initial Mass Copy and Periodic Mass copy to process
assets in the new Tax Book
Process new Tax Book till current month
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47. Solution – Fixed Assets
• Custom Cash-Basis SLAM based on Standard Cash
Add the “Assets Standard
Accounting” AAD to the SLAM.
Else, Oracle will not know how to
account for Assets transactions in
the Secondary (Cash Basis)
ledger.
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48. Solution – Fixed Assets
• Tax Type Cash Asset Book with GL Posting Allowed
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49. Solution – Fixed Assets
• Process Assets in Both Asset Books to post to both Ledgers
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51. Business Requirements
• Secondary Ledger with Cash Basis accounting method
• Cash transactions should be posted automatically into Secondary Ledger
• Common Chart of Accounts, Calendar
• Accounting Adjustments for Legacy systems posting directly into Oracle GL
• Secondary Ledger needs only 2 segments
• Balancing segment (Company)
• Natural Account segment
• Other segments can be populated with a dummy “999…” value
• Fixed Assets to post into Cash Basis Ledger for all transactions
• Not standard Cash Basis functionality in Oracle
• Prepayments must be accounted to expense accounts when they are paid
Dynamique Solutions LLC
52. Solution – Prepayments
Primary Ledger
Oracle “Standard Accrual” Basis
Secondary Ledger
Cash Basis
When Prepayment invoice is created
DR Prepayment
Cr AP Liability
When Prepayment invoice is created
No accounting
When Prepayment invoice is paid
DR AP Liability
CR Cash
When Prepayment invoice is paid
DR Expense
CR Cash
When Standard invoice is entered and
matched to Prepayment (each month)
DR Expense
CR Prepayment
When Standard invoice is entered and
matched to Prepayment (each month)
No accounting
Business Requirement
• Prepayments must be accounted to expense accounts when they are paid
• Even if expensed over multiple periods in Primary Ledger, expensed
when paid (fully in first period) in Secondary Ledger
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55. Solution – Prepayments
Primary Ledger
Oracle “Standard Accrual” Basis
Secondary Ledger
Oracle “Standard Cash” Basis
When Prepayment invoice is created
DR Prepayment
Cr AP Liability
When Prepayment invoice is created
No accounting
When Prepayment invoice is paid
DR AP Liability
CR Cash
When Prepayment invoice is paid
DR Prepayment
CR Cash
When Standard invoice is entered and
matched to Prepayment (each month)
DR Expense
CR Prepayment
When Standard invoice is entered and
matched to Prepayment (each month)
DR Expense
CR AP Liability
DR AP Liability
CR Prepayment
Standard Oracle – does not meet specific business requirement
Dynamique Solutions LLC
56. Solution – Prepayments
Create new Subledger Accounting Method
(SLAM)
Copy from “Standard Cash”
Create Account Derivation Rule (ADR) to
debit Expense when Cash flows out
- Payments Event Class
Use Prepayment Account on Supplier to drive
the Expense account
Use Mapping Sets:
- Prepayment A/C AAA = Expense A/C PPP
- Prepayment A/C BBB = Expense A/C QQQ
Use Condition:
- To determine which Mapping Set is to be
used
Disable standard Journal Line Type “Prepaid
Expense - Cash Basis”
Setup Mapping Sets and Conditions
Solution to meet Business Requirement
Dynamique Solutions LLC
57. Solution – Prepayments
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of Cash Basis AAD
Dynamique Solutions LLC
58. Solution – Prepayments
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of Cash Basis AAD
Configure a new Journal Line
Definition
- Copy of Cash, Payments All JLD
Dynamique Solutions LLC
59. Solution – Prepayments
Solution
Configure a new Subledger
Accounting Method
- Copy of Standard Cash
Configure a new Application
Accounting Definition
- Copy of Cash Basis AAD
Configure a new Journal Line
Definition
- Copy of Cash, Payments All JLD
Disable “Prepaid Expense –
Cash Basis” Journal Line Type
(JLT)
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60. Solution – Prepayments
Solution
Create new JLT replacing
“Prepaid Expense – Cash Basis”
Create new ADR to replace
Prepayment account with
Expense account
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61. Solution – Prepayments
Solution
Create new JLT replacing
“Prepaid Expense – Cash Basis”
Create new ADR to replace
Prepayment account with
Expense account
Create Mapping Sets for groups
of Prepayment accounts and
Expense accounts
Dynamique Solutions LLC
62. Solution – Prepayments
Solution
Create new JLT replacing
“Prepaid Expense – Cash Basis”
Create new ADR to replace
Prepayment account with
Expense account
Create Mapping Sets for groups
of Prepayment accounts and
Expense accounts
Multiple mapping sets used
instead of single mapping set to
facilitate grouping of similar
Prepayment accounts
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63. Solution – Prepayments
Solution
• Condition to dictate which
Mapping Set (and therefore
which Expense account) to
be used
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68. Other Implementation Considerations
• Over 50 ADRs (mostly in Payables, few in Receivables) were required to
re-class accounts from Primary Ledger to Secondary Ledger
• Many of these ADRs used Mapping Sets and Conditions
• No custom sources were used for the ADRs
• Initial balances for Secondary Ledger were uploaded through WebADI
• Financial Statement Generator Reports were created/updated to report on
the Secondary (Cash Basis) Ledger
• Ledger Set was setup along with Data Access Set to give certain
responsibilities access to both Ledgers
• “Parallel run” for first quarter to verify that Secondary Ledger was
accounting cash transactions correctly.
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