Subledger Accounting (SLA) is a dynamic feature of Oracle® R12 that you can use for meeting the accounting needs of the business.
Overview
By using SLA, you can easily modify all the accounting requirements by following a few steps. In this post, I offer five easy steps to customize SLA. By implementing these steps, you can modify the accounting process according to your business needs.
Business Requirement
To illustrate with an example, assume Company ABC Ltd. has included a company, account, and cost center in their chart of account structure, and they use standard accrual at the ledger level for their accounting method.
When they enter a standard invoice in the payables module, SLA generates the following standard accounting entry:
Expense: 001.10100.0001.00000 DR (Manually entered combination)
Liability: 001.20000.0000.00000 CR (Derived from the Supplier/Supplier Site or Financial Options)
The business’s finance department wants the process to pick the Cost Center Segment from the Expense Account entered at the invoice distribution level. Thus, the third segment’s value should be changed from 0000 to 0001 on the Liability account combination.
Solution
To fulfill this business requirement, you need to customize SLA to implement the desired accounting process by using the following steps:
STEP 1: CREATE A NEW ACCOUNT DERIVATION RULE (ADR)
Select Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Method Builder > Journal Entry Setups > Account Derivation Rules.
The rule explains that SLA should pick the value from the standard Oracle source, Invoice Distribution Account, for the COST CENTER segment.
STEP 2: CREATE A JOURNAL LINE DEFINITION (JLD)
A JLD is a set of all the Journal Line Types (JLT) defined for a specific Subledger module.
Select Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Method Builder > Methods and Definitions > Journal Line Definitions.
Copy the Standard Oracle JLD and create a new JLD, as shown in the following example:
After you copy the definition, add the ADR rule you created for the COST CENTER segment in Step 1 and save the definition.
Because the example is on the Liability account, you will use the JLT as a Liability, Basic.
STEP 3: CREATE AN APPLICATION ACCOUNTING DEFINITION (AAD)
An AAD is a set of Event Classes or Event Types and JLDs.
Select Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Method Builder > Methods and Definitions > Application Accounting Definitions.
Copy the Standard Oracle AAD and create a new AAD, as shown in the following example:
After you copy the definition, add the JLD created in Step 2 and save the definition. You can individually attach the JLD to all the Event Classes. For this session, you can use Event Class as Invoices.
STEP 4: CREATE A SUBLEDGER ACCOUNTING METHOD (SLAM):
A SLAM is a group of AADs defined for the Subledger modules.
Select Payables > Setup > Accounting Setups > Subledger Accounting Setup > Accounting Method Builder > Methods and Definitions > Subledger Accounting Method.
Copy the standard Oracle SLAM (Standard Accrual) and create a new SLAM, as shown in the following image.
After you copy the definition, add the AAD you created in Step 3 against the Payables application and save the definition.
To run the Validate Accounting Definitions program for Payables, select Payables > View > Request > Submit a New Request.
STEP 5: ATTACH THE SLAM TO THE LEDGER
Select Payables > Setup > Accounting Setups > Ledger Setup > Define > Accounting Setups.
Attach the SLAM created in Step 4 and complete the Ledger setups.
Validation
To validate your SLA setup, create a new invoice, validate it, and run the Create Accounting program.
You can now see the change: The Cost Center value has been changed from 0000 to 0001 for the Liability String.
Expense: 001.10100.0001.00000 DR (Manually entered combination)
Liability: 001.20000.0001.00000 CR (Derived from the SLA)
Conclusion
In R12 Oracle, SLA is one of the most well-organized methodical approaches to confront the accounting needs that various businesses require. Understanding the requirement is the key to this process. After you have a plan ready, you can effortlessly customize the SLA by using the steps in this post to meet your business requirements by customizing SLA.
