Subledger Reconciliation

Oracle Financials Release 12 Close Process and Reconciliation

1

Safe Harbor StatementThe following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decision. The development, release, and timing of any features or functionality described for Oracles products remains at the sole discretion of Oracle.

2

AgendaFinancials Period Close and Reconciliation Process Changes and Dependencies Close Process for Financials products How to identify and resolve reconciliation differences in EBS R12 Financials Recommended practices Summary Q&A

3

Financials Period Close and ReconciliationWhat is the importance of reconciliation at period close? Effective management of account reconciliation activities greatly increases executives ability to proactively identify and resolve issues that could result in misstatements in financial accounting and reporting records and lead to substantial write-offs.How to Improve Account Reconciliation Activities White Paper by Price Waterhouse http://www.pwc.com/extweb/pwcpublications.nsf/doci d/F5C72129D2DD9D5985257367006606EC4

Financials Period Close and ReconciliationWhat do organizations expect from ERP systems? Increase data quality and auditability Improve reporting capabilities Reduce reconciliation effort by streamlining the closing process Reduce staff for reconciliation; enable staff to focus on proactive business operations Produce reliable financial statements & reports, reducing misstatements & write-offs5

Process Changes and Dependencies Release 12

6

EBS Release 12 Business ProcessCreate Accounting Subledger Accounting General Ledger

Projects

Inventory

Other

Cash Mgmt

Payables

Assets

IntercompanyPurchasing Receivables

7

Process Change - CloseRelease 11iTransactions

Release 12Transactions DistributionsProduct Period Close

Distributions

Balancing Lines SLA JournalsProduct Period Close

Balancing Lines GL Journals

GL Journals GL Balances GL Balances

8

Close DependenciesPO Inv AP PA AR OM CE XTR GL FA

9

Process Change - Reconciliation11iTransactionsTransactional Reports

R12Transactions Distributions Balancing Lines Balancing Lines SLA Journals

Distributions

GL Journals

Accounting Reports

GL Journals GL Balances

GL Balances

10

Close Process for Financials Products Release 12

11

Close Process General Steps1. 2. 3. 4. 5. 6. Complete transactions Create accounting Reconcile transactions Post to General Ledger Reconcile accounting Close period

12

Close Check Lists Oracle Financials Products Release 12

13

Oracle Cash ManagementClose Checklist 1. Load & reconcile bank statementsa. Auto-Reconciliation Execution Report

2. Resolve exceptions 3. Create miscellaneous transactions* 4. Resolve unreconciled linesa. Bank Statement Detail Report b. Transactions available for Reconciliation Report

5. Reconcile to General Ledger*a. GL Reconciliation Report b. Account Analysis Report for Cash Account* Highlights a changed process in Release 12

14

Oracle TreasuryClose Checklist 1. 2. 3. 4. 5. Complete daily trading activities Perform revaluation Generate accrual and amortization Generate journals Transfer journals to General Ledger

15

Oracle Receivables1. 2. 4. 5. 6. 7. 8. Close Check List Complete transactions Review unapplied receipts Reconcile receipts to bank statement Change period status to Close Pending Create accounting* Review Unposted Items Report* Reconcile transaction activity*a. b. c. d. e. Transaction Register Sales Journals Receipt Register Receipt Journals Report Journal Entries Report

* Highlights a changed process in Release 1216

Oracle ReceivablesClose Check List 9. Reconcile outstanding customer balances*a. b. c. d. e. f. g. Aging Report (last period) Transaction Register Adjustments Register Invoice Exceptions Applied Receipts Register Unapplied Receipts Register Aging Report (this period)

10. Post Receivables transactions in General Ledger* 11. Print invoices 12. Print statements* Highlights a changed process in Release 1217

Oracle ReceivablesClose Check List 13. Reconcile Receivables activity to General Ledger*a. b. c. d. AR Reconciliation Report AR-GL Reconciliation Report Third Party Balances Report Account Analysis Report

14. Close Receivables period*a. Subledger Close Exceptions Report b. Change Period Status to Closed c. Open Next Period

15. Tax reporting 16. Print dunning** Highlights a changed process in Release 1218

Oracle PayablesClose Check List 1. Complete transactionsa. Invoices On Hold Report

2. 3. 4. 5.

Approve invoices Complete payments Reconcile payments / bank statements Resolve potential accounting issues*a. Create accounting b. Journal Entries Report c. Unaccounted Transactions Report

6. Post Payables transactions in General Ledger* 7. Review accounting*a. Payables Accounting Process Report b. Posted Invoices Register c. Posted Payments Register * Highlights a changed process in Release 1219

Oracle PayablesClose Check List 8. Unaccounted Transactions Sweep* 9. Close Payables perioda. Subledger Period Close Exceptions Report*

10. Accrue un-invoiced receipts 11. Reconcile Payables activity to General Ledger*a. AP Trial Balance Report* (Account definition, Data Mgr Program) b. Third Party Balances Report* c. Account Analysis Report*

12. Tax reporting 13. Mass addition transfer to Oracle Assets* Highlights a changed process in Release 12

20

Oracle AssetsClose Check List 1. Complete transactionsa. b. c. d. e. Additions Adjustments Retirements Transfers Reinstatements

2. 3. 4. 5. 6. 7.

Assign distribution lines to all assets Calculate gain/loss Run depreciation* Create accounting* Rollback depreciation* for adjustments Run depreciation* to close the period21


Oracle AssetsClose Check List 8. Create accounting * 9. Post Asset transactions in General Ledger* 10. Reconcile Assets & General Ledger*a. Reserve Ledger Reports 1) General Ledger Reserve Report 2) Tax Ledger Reserve Report 3) Account Reconciliation Reserve Ledger Report b. Balances Reports 1) Cost Detail/Summary 2) CIP Detail/Summary 3) Reserve Detail/Summary 4) Revaluation Detail/Summary c. GL Reports 1) Journals Posted/Unposted 2) Account Analysis * Highlights a changed process in Release 1222

Oracle General LedgerClose Check List 1. Ensure next period is Future Enterable or Open 2. Import & post SLA & feeder systems*a. Import journals 1. Journal Import Execution Report 2. Delete journals in Error 3. Correct via Correct Journal Import Data 4. Re-import b. Post journals

3. Post all journals (after correcting posting errors) 4. Run and review journals reports 5. Run the Period Close Exceptions Report ** Highlights a changed process in Release 12

23

Oracle General LedgerClose Check List6. Run revaluation 7. Run translation 8. Reconcile Intercompany* 9. Close General Ledger period 10. Consolidate Ledgers* 11. Run final reports


24

How to Indentify and Resolve Reconciliation Differences

25

Identify and Resolve Reconciliation DifferencesBy creating and putting in place appropriate reconciliation and information management processes, and improving organization, training and automation, companies can gain assurance over their general ledger balances.From How to improve account reconciliation activities white paper by Price Waterhouse http://www.pwc.com/extweb/pwcpublications.nsf/docid/F5C72129D2DD9D5985257367006606EC

26

Subledger Accounting ReconciliationThe most important step of the Month End Close RECONCILIATION !

Do I still need my hat and magnifying glass in R12?

27

New Functionality in Release 12Subledger Accounting InquirySubledger Journal Entries Accounting Events Supporting Reference Balances

28

New Functionality in Release 12

Subledger Accounting ReportsSubledger Journal Entry Report Subledger Account Analysis Payables Third Party Balances Open Account Balances Listing

29

Subledger Journal Entry InquiryAccounting Entries on a Control Account

Ability to view Detailed Transaction and Full Journal Entry Outcome can be exported to Excel

30

Journal Entries Report

Detailed Header & Line information for Subledger and General Ledger journal entries by Source & Category

31

Account Analysis Report

Transactions transferred to & posted to a GLaccount for a period or range of periods

More information in description possible through SLA functionality

32

Third Party Balances Report

Third Party Balances for Third Party Control Accounts

33

Open Account Balances ListingDefinition Open Account Balances Listing can be defined by Segment or Accounting Flexfield

34

Open Account Balances Listing SummaryMultiple output formats available: Detail/Summary by Accounts/Third Party.

Report to be added

GL balance and Subledger Balance side by side35

Open Account Balances Listing - DetailShows only Open Transactions. AP Invoice of $20869.50 has One Payment of $10000 applied. Transaction is still Open.

36

Example: Payables Reconciliation Open Account Balances Listing Report

Third Party Balance Report

GL Account Inquiry

37

Example Payables ReconciliationDifference in our example is 668,286 645,146 = 23,140

Difference Open Account Balances Listing Report Third Party Balances Report Accounted on control account instead of expense account for the expenditure of the payables invoice Can be found through SLA Journal Entry Inquiry

38

Subledger Journal Entry InquiryItem Expense erroneously posted to control account Accounting Class is NOT Liability (invoice expense erroneously posted to liability) Option to view Detailed Transaction and Full Journal Entry Outcome can be exported to Excel

Total 23,140.0039

Example Payables ReconciliationDifference in our example is 645,146 630,350 = (14,796)

Difference Third Party Balances Report GL Account Balance Entry on payable account through other source (webadi, other interfaces) Can be found through GL Account Inquiry making use of folder functionality

40

Interface Entries on a Control AccountUser defined folder to query entries for sources not equal to Payables

41

Recommended Practices Release 12

42

Recommended PracticeImprove Subledger Reconciliation at Period End

Run accounting for subledger transactions daily

Review and resolve exceptions listed in Subledger Accounting Program report daily

43

Subledger Accounting Program ReportErrors & Solution Suggestion

Error message and solution suggestion44

Recommended PracticeImprove Subledger Reconciliation at Period End

Import all subledger transaction journals in General Ledger daily

At period end run the Subledger Period End Close Exception report

45

Subledger Period Close Exception ReportIncomplete: Not ready for accounting, Run Subledgers validation programs!

Invalid: Accounting errors, re-account! reFinal: Accounted in SLA, not available in GL. Run Transfer Journal Entries to GL!

Unprocessed: Transactions exist but have as yet not been accounted.46

Recommended PracticeBenefit

Resolve exceptions quickly so that exceptions are not left to slow down the period-end close

47

SummaryCHALLENGES CAPABILITIES VALUE

Increase data quality

Centralized repository

and auditability Reduce reconciliation

for subledger accounting entries Exceptions reporting

Easy to analyze subledger data from a single place Faster identification of reconciliation differences Lower risk of misstatements and write-offs Enable staff to focus on pro-active business operations

effort Improve reporting

and subledger accounting inquiry New subledger

capabilities Streamline close

accounting reports Period Close

process

Exceptions Report

48

More Information on EBSOracle.comhttp://www.oracle.com/ For collateral, webcasts, podcasts, partner network, solutions catalog, and more

MetaLink: E-Business Suite R12 Information CenterAlerts, Announcements, Documentation, Online Training (TOIs), Installation and Upgrade

http://search.oracle.com

Oracle UniversityInstructor-led Training

MetaLink: Advisor Webcast Program50+ Live Webcasts on Release 12 MetaLink / Knowledge / Tools and Training / Training (Web Seminars)

49

Q U E S T I O N S A N S W E R S

50

Documents

Subledger Reconciliation