Accounting Methods Builder

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First Release Version: 12.0

The Accounting Methods Builder (AMB) functionality creates and modifies Subledger Journal Line setups and Application Accounting Definitions. These Application Accounting Definitions define the journal entries that enable an organization to meet specific fiscal, regulatory, and analytical requirements. These definitions are then grouped into Subledger Accounting Methods and assigned collectively to a ledger.

The AMB includes the following features:

• Accounting Options that determine different characteristics of the journal entry
• Journal Descriptions that appear on the Subledger Journal Header and Lines, which provide additional information about the journal entry
• Account Derivation Rules to construct the accounts for a Subledger Journal Entry Line
• Conditions that determine when Subledger Journal Entry Accounts and Lines are created

The AMB includes journal entry setup components to configure each of the following elements:

• Journal Line Types: Control Journal Entry Line options such as balance type, side, and summarization
• Journal Entry Descriptions: Control the description for the Journal Entry Headers and Lines
• Account Derivation Rules: Control the derivation of Accounting Flexfield combinations for the Journal Entry Lines

The following are the components of the Accounting Methods Builder

• Line Types
• Journal Entry Descriptions
• Mapping Sets
• Account Derivation Rules
• Journal Line Definitions
• Application Accounting Definitions
• Subledger Accounting Methods

The journal entry setup components are associated with Journal Lines Definitions that are attached to Application Accounting Definitions. Grouping detailed Subledger Accounting Definitions for different kinds of transactions into consistent sets will address different accounting needs. To use application accounting definitions, they must be included in a Subledger Accounting Method and then assigned to a ledger.

Accounting Methods Builder Process Steps

1. Define Journal Line Types - Set up Journal Line types for a particular event class and determine the characteristics of the Subledger Journal Entry Lines.

2. Define Journal Entry Descriptions - Define the Journal Entry Description for the Subledger Journal Entry. Descriptions are assigned to the Journal Header and Lines.

3. Define Mapping Sets - A Mapping Set is used in the Account Derivation Rules setup. The Mapping Set translates the input accounting values to the output Accounting Flexfields.

4. Define Account Derivation Rules - Account Derivation Rules determine the Accounting Flexfields for Subledger Journal Entries.

5. Define Journal Lines Definitions - Journal Lines Definitions group and assign Journal Line Types, Account Derivation Rules, and Journal Entry Descriptions into a complete set of journal entries within an Event Class or Event Type. Journal Lines Definitions Sets may be shared across application accounting definitions for the same application.

6. Define Application Accounting Definitions - Application Accounting Definitions group Journal Lines Definitions and Header Assignments for Event Classes and Event Types.

7. Define Subledger Accounting Methods - Group Application Accounting Definitions comply with a common set of accounting requirements into a Subledger Accounting Method. Each Subledger Accounting Method can be assigned to one or more ledgers.

Transaction and Accounting Charts of Accounts

Transaction Chart of Accounts - The Transaction Chart of Accounts is the chart of accounts for the Primary Ledger and is referenced when users enter Accounting Flexfields for their transactions. Values for Accounting Flexfield sources, stored in the transaction objects, are taken from the Transaction Chart of Accounts. The Transaction Chart of Accounts source values are the input in the AMB Account Derivation Rules and Conditions.

Accounting Chart of Accounts - The Accounting Chart of Accounts creates the Accounting Flexfields for Subledger Journal Entries and is taken from the ledger for which the journal entries are created. The creation of all journal entries by Subledger Accounting is always done in the context of the Accounting Chart of Accounts.

Note - The Transaction and Accounting Charts of Accounts are always the same for the Primary Ledger. They can be different in cases where users create Secondary Multiple Ledgers.

Events

Accounting Events represent transactions that have a financial accounting impact. Accounting Events are categorized into Event Types. Event Types are grouped into Event Classes that in turn are grouped into Event Entities.

Additional Journal Sources

Additional Journal Sources available to Application Accounting Definitions can be extended to fit the particular needs of the organization. New Additional Journal Sources should be created and built using the seeded sources.

Accounting Attributes

The Accounting Attribute can determine the Accounting Attribute Assignment from the Event Class, the Journal Line Types or Application Accounting Definitions. The accounting program uses Accounting Attributes values to create Subledger Journal Entries. Each Accounting Attribute is associated with a Journal Header or a Journal Line. Accounting Attributes have Journal Sources assigned at the Event Class level. The accounting program derives the values of Accounting Attributes by looking at the Journal Sources that are assigned to them.

Business Flows

A Business Flow is a series of logically-related business transactions and accounting, where the creation of one transaction causes the creation of additional transactions. The Business Flow Method specifies how a Journal Line obtains certain journal entry values, including Accounting Attributes for a journal entry. A Business Flow Method is assigned to a Journal Line Type.

There are three Business Flow options:

• None - no impact - Journal entries are created using the definitions and conditions assigned to the various journal entry components.

• Prior Entry - Subledger Accounting program copies the entire general ledger account and Accounting Attribute values from a previously-generated journal entry.

• Same Entry - builds the General Ledger account using segments from the offsetting entry, such as a balancing segment of the current Journal Line.

Journal Line Types

Journal Line Types are defined for a particular Event Class and assigned to a Journal Lines Definition, Account Derivation Rule, and Journal Entry Description.

The journal line type definition includes the following features:

• Determines the Transaction Rounding rules.
• Determines Actual, Budget, or Encumbrance balance type.
• Specifies whether the journal line is to be a debit, credit, or gain/loss line.
• Merges matching journal entry lines.
• Derives journal entry components from a related journal entry.
• Applies multi-period accounting to a journal line type.
• Defines conditions to restrict the use of a journal line type.
• Assigns accounting attributes.

Journal Entry Descriptions

Define the elements of a description that appear on the Subledger Journal Header and Line. Descriptions can be built using the available sources for the application. (See Journal Sources above.)

TIP The description can contain an Accounting Flexfield, invoice number, Invoice Line Number, check number or other reference. These values can be combined with a Journal Source and appear according to the sequence number of the Journal Line.

Mapping Sets

Based on the input value, Mapping Sets associate a specific output value for an Accounting Flexfield or Accounting Flexfield segment. A Mapping Set is defined in the Account Derivation Rules setup. In a Mapping Set, pairs of values are specified for each input value, a corresponding account segment, or an Accounting Flexfield output value is defined.

Account Derivation Rules

The Account Derivation Rules determine the Accounting Flexfields for a journal entry. Complex rules can be developed to define accounts under different scenarios to meet specific needs and requirements.

A rule is created by an Accounting Flexfield, segment, or value set. Creating the Accounting Flexfield one segment at a time offers greater flexibility, but requires more setup. Both Segment-based and Flexfield-based rules can derive a single account. An Account Derivation Rule can be based on an existing Account Derivation Rule from another application and can be assigned to a Journal Line Type.

An account that is end-dated or disabled, in which a substitute account is defined, will use the Create Accounting Program to access the substitute account and record the original account in the journal for audit purposes.

Accounting Flexfield Rules

Accounting Flexfield Rules are based upon three possible Value Types: * Source Value Type - an Account Code Combination identifier from the Transaction Chart of Accounts that has been setup as Journal Sources. The Account Code Combination is derived by a Journal Source, like the Distribution Account, and obtains the account by referencing the distribution Accounting Flexfield.

• Constant Value Type - an Account Code Combination defined as a constant value.
• Mapping Set Value Type - an Account Code Combination created by referencing a Mapping Set. A Mapping Set Rule determines the complete Account Code Combination.

Segment Rules

Segment Rules use the same three methods discussed for Accounting Flexfield Rules (see Accounting Flexfield rules above). Specifying different Value Types varies the way in which the segment value is derived. When an Accounting Chart of Accounts is known a rule derives a specific segment from the Accounting Chart of Accounts. If the Accounting Chart of Accounts is not known a rule to derive the value for an Accounting Flexfield Qualifier is determined.

Value Set Rules

Values Set Based Rules are created when an Accounting Chart of Accounts is not known. The setup of Values Set Based Rules uses the same three methods discussed in Accounting Flexfield Rules (see Accounting Flexfield Rules above). Additionally, the Account Derivation Rule Value Type can be used, which derives the account by referencing another Account Derivation Rule.

Note: It is strongly recommended that the seeded rules not be modified, as any seeded components can get overwritten in an upgrade. Instead, a seeded rule should be copied and then modified appropriately.

The Subledger Accounting Program evaluates each of the Conditions based on the priority of the rule details. If the evaluation is successful, then the valid account or segment value is used and no further priorities are evaluated. Each rule detail line is prioritized to determine the order in which Account Derivation Rule Conditions are examined and executed.

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• Related: GeneralLedger, SubLedgerAccounting

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Related Links: FinancialServicesAccountingHub, OtherMinorGLFeatures, PublishDocControlReport, SubLedgerAccounting

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Collaborating Authors and Reviewers: BillDaley - 20 Mar 2007