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 Setups -> Subledger Accounting Setup
-> Accounting Methods Builder -> Journal Entry Setups -> Journal Entry
Descriptions
Field Value
Journal Description Code Enter a code.
Journal Description Name Enter a name.
Enabled Yes
Transaction Chart of Null
Accounts
Description Enter a description for this component you
are defining; can leave null.
Priority 1
Details 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.
Your description should look like below: Remember to set the condition for
Invoice Date to today's date.

Figure 1 –JED for Liability Line

Figure 2 - JED Detail

Figure 3 - JED Condition

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.
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. Modify your copied JLD to use above components.
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 and modify the seeded AP Application Accounting Definition
Accrual Basis; 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 July 31st,
2007 on the seeded Payables AAD. Add a new row and activate your
AAD as of August 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
Navigation: Setup -> Accounting Setup -> Subledger Accounting Setup -
> Accounting Methods Builder -> Journal Entry Setup -> Journal Line
Types
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
Your new liability JLT should be similar to below:

Figure 8 - New Liability JLT

 2. Expense JLT: to create a line for invoice lines of type Item,
Field Value
Event Class Invoices
Line 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 Yes
Balance 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 - Null.
Accounts - 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 - Review the sources assigned to the
Assignments 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
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

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

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 Value
Rule Code Enter a code. <FIN_XX>_LIABILITY
Rule Name Enter a name. <FIN_XX> Liability Account
Enabled Yes
Description Enter a description for the component you
are defining; can leave null.
Chart of Accounts- - Null
Transaction - Used in interpreting or converting an
accounting flexfield source carrying a
value from the transaction for the
primary ledger (advanced topic).
Chart of Accounts- - Operations Accounting Flex
Accounting - Will allow defining constant values by
validating against the COA.
Output Type Flexfield
Priority 1
Value Type Constant
Value 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),
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. ADR for account segment: a constant based ADR deriving value

7740 for account segment, defined for accounting chart of accounts
Operations Accounting Flex,
Field Value
Rule Code Enter a code. <FIN_XX>_EXPENSE
Rule Name Enter a name. <FIN_XX> Expense Account
Enabled Yes
Description Enter a description for the component you
are defining; can leave null.
Chart of Accounts- - Null
Transaction - Used in interpreting or converting an
accounting flexfield source carrying a
value from the transaction for the
primary ledger (advanced topic).
Chart of Accounts- - Operations Accounting Flex
Accounting - Will allow defining constant values by
validating against the COA.
Output Type Segment – Account
Priority 1
Value Type Constant
Value 7740
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. 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.
 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. 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
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. 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.
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.
Use the Actions button to submit online accounting for the invoice.

Figure 19 - Create Online Accounting for a Payables Invoice

2. View the accounting lines generated.
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. View the journal entry .

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. View the details of one liability line.
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. View the entry in t-account format. (Warning: this might take a long
time to appear – go for a coffee!)
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.
Use the same date, amount, and distribution accounts as in the
previous exercise.
2. On the Subledger Accounting Journal Entries page, search for the
two invoices you have entered in this exercise and the previous one.
Depending on your search criteria, multiple entries may be
returned.

Figure 25 - Search Journal Entries

3. Select the two entries and hit the Compare button.

Compare the details of the two entries, and notice the difference in
the accounts and liability line summarization.
 Figure 26 - Compare Journal Entries

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

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. Drill down to the SLA entry.
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. Drill down to the transaction.

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.
Following error will be displayed:

Figure 30 - Online Accounting Error

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

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