By Jose F. Bastidas

Oracle customers around the globe eagerly awaited the release of Oracle E-Business Suite Release
12 for several years. Oracle R12 was touted as being a genuinely globalized release. Since Oracle R12 became publically available on January 31, 2007, many customers have migrated to a complete Oracle R12 environment by upgrading, implementing (or re-implementing). As an Oracle Financial Consultant for more than ten years, I think Oracle R12 finally addresses some fundamental financial weaknesses from prior versions. Across our customer base and the projects I’ve worked on, the most well-received features and functions in Oracle EBS R12 Financials are related to new centralized functions to manage Ledgers and Legal Entities, Sub ledger Accounting, Taxes, Intercompany, and AR/AP Netting functionality.

This two-part article will discuss the most important new features and functions.

Ledgers and Legal Entities

Oracle EBS 11i GL is configured to support one or many Legal Entities. 11i OU’s are associated with these Legal Entities through Oracle Sets of Books. The Set of Books is defined by the famous 3 C’s (driven by Oracle GL configuration) – Chart of Accounts, Currency, Calendar.

In R12, the concept of Ledgers and Ledger Sets replaces Sets of Books. Ledgers are now associated with the 4 C’s – Chart of Accounts, Currency, Calendar, *Accounting Convention. In addition, R12 Ledgers now associate Oracle OU’s to Oracle Legal Entities. The advantage here is that a ledger can be used to post transactions in one or many Legal Entities originating from a single transaction. Additionally, this single transaction can drive subsequent entries/transactions into various Legal Entities, OUs, and Primary and Secondary Ledgers by configuring and utilizing “Accounting Setup Manager.”

*Note: The concept of accounting conventions indicates the accounting standards your company follows, for example, International Accounting Standards (IAE), International Financial Reporting Standards (IFRS), USGAAP, etc.

Subledger Accounting (SLA)

In 11i, Oracle Subledgers such as Projects, Receivables and Payables offer functionality to configure how
Oracle generates the values for each accounting segment in the Chart of Accounts. This configuration depends on variables such as the type of transaction, the organization where the transaction originates, and the product or service for which revenue/cost will be accounted for. Once accounting rules are defined for each subledger, Oracle will post the transaction directly to GL without an opportunity to modify, split or change the accounting beforehand. This problem is now solved in R12 using Subledger Accounting (SLA). Oracle Subledger accounting (SLA) is essentially an accounting hub. It derives all attributes required to account for Oracle General Ledger transactions. In R12, SLA derives essential accounting attributes such as entered amount, accounted amount, date, currency code, etc., along with complex features like Ledger, Code Combination ID, and Periods. After
deriving these accounting attributes, the transactions are moved to GL from SLA. Thus in R12 sub ledger transactions do not move directly to GL without passing first through SLA. SLA provides flexibility to manage the entire accounting rule from a single place and establishes a single source of truth for GL.