GENERAL LEDGER

In this chapter, you have been introduced to the Oracle Financials Applications. The chapter began by giving an overview exams that comprise the Oracle Certified Applications Consultant/Oracle Financials R11 certifications. There are two such certifications: Procurement and Order Fulfillment. Both certifications require the same first two exams—Financial Management and Applied Technology—and both cover Oracle General Ledger and Oracle Assets as their core modules. For the third exam, the certification tracks diverge into two options: Procurement and Order Fulfillment. Procurement includes Oracle Purchasing, Oracle Payables, and Oracle Cash Management as subsidiary modules. Order Fulfillment includes Oracle Order Entry, Oracle Receivables, and Oracle Cash Management as subsidiary modules.

Next, you proceeded to an overview of the software components you must know to pass the certification exams. This began with Oracle General Ledger, which is the central repository of all accounting journals. These accounting journals are posted in Oracle General Ledger to update account balances. Accounting entries come from Oracle Assets to cover additions, capitalization, depreciation, retirements, reinstatements, revaluations, tax-accumulated depreciation adjustments, and CIP-related entries. Accounting entries come from Oracle Receivables to cover receivables, receipts, and invoice distributions (revenue, unbilled receivables, unearned revenue, tax, and freight). Accounting entries come from Oracle Purchasing and Oracle Payables to cover receipt accruals, invoice distributions (expense, inventory, work in process), payables liability, and disbursements.

The next section described the functionality of Oracle Financial Management suite, which includes Oracle General Ledger and Oracle Assets. Oracle General Ledger handles general accounting activities such as setting up Charts of Accounts and fiscal calendars; entering and posting actual, budget, or encumbrance journals; supporting multiple currencies as functional or reporting currencies; and entering budgets and enforcing budgetary control in mandatory or advisory mode. You can also use Oracle GL to enter, generate, and approve intercompany transactions; perform formula- or statistic-based cost accounting; consolidate between Sets of Books and Charts of Accounts; and generate user-defined financial reports.

Oracle Assets also provides a rich assortment of features. It can track asset attributes such as asset number, serial number, tag number, asset description, and date placed in service, as well as asset transactions such as additions, cost adjustments, transfers, and retirements. Oracle Assets can maintain construction-in-process (CIP) assets and capital budgets, and it handles fixed-rate, life-based, and unit-of-productions methods of depreciation. In addition, it can perform different types of tax accounting for assets, using different depreciation schedules of assets on the corporate book and tax books. Finally, it supports special tax accounting options such as adjusted current earnings (ACE) and investment tax credits (ITC).

When information is shared between Oracle Applications modules, three types of tables are used: master tables, setup tables, and transaction tables. Master tables contain relatively static data shared within and across Oracle Applications modules, such as accounts, suppliers, customers, items, and assets. Setup tables store data that is rarely shared among applications, and transaction tables contain daily transaction records—the finest “grain” of data in the system. Setup and transaction tables are usually not shared; when they are, their code_combination_id column is used as a foreign key in the other tables.

All Oracle Applications modules share the same Application Desktop. The Application Desktop consists of the toolbar and the Navigator window. The toolbar is a row of buttons that invoke the most frequently used functions of the menu bar: Navigate To, Save, Clear Record, Delete Record, Folder Tools, and List of Values. The Navigator window consists of several subcomponents: the menu bar, Functions/Document Alternative region, Function window, Document window, function buttons, Close Other Forms checkbox, and Top Ten list. The menu bar contains seven pull-down menus: Action, Edit, Query, Go, Folder, Special, and Help menus. The Functions/Document Alternative region is analogous to dialog-box tabs in a standard windowing environment. It lets you decide between the Function window—which lists all available functions—and the Document window, which lists all user-captured documents. The Navigator window’s function buttons allow you to manipulate the list of available functions. The Close Other Forms checkbox causes all open forms to close when you invoke any new function. The Top Ten list enables you to invoke ten user-defined functions by pressing keys 0 through 9.

The last section of this chapter gives a “10,000-foot overview” of issues to consider when implementing Oracle Applications. You must first understand your organization’s structure in terms relevant to Oracle Applications. You must define each business group, legal entity, operation unit, inventory organization, and company. Each business group will have its own employee master table. If you have two business groups, the first group will not be able to see the second group’s employee-related data (including purchase orders). A legal entity is an organization with its own employer tax identification number. Each operating unit gets its own set of payables, receivables, cash management, order entry, and purchasing transactions data. Each inventory organization has its own data for inventory, capacity, engineering, master scheduling, bill of materials, work in process, and material requirement planning.

Your next decision will have to do with what packages and functionality each organization needs, and whether that functionality should be centralized or decentralized. Once you have decided that, you can determine your rollout strategy: all at once (big bang approach) or in groups of one or more package (phased approach). If you decide on the phased approach, you will need to identify the phases, along with any necessary temporary interfaces.

Next, consider whether you need to store transactions and balances in more than one currency—if so, you will need multiple function currencies. If you plan to import existing data from a legacy system, determine which data—and how much of it—you will need in order to achieve the desired functionality. If the legacy data resides on different machines in your legacy system, it will need to be consolidated, and it may need to be cleaned if the legacy tables contain duplicate or dirty data. Be sure to employ a naming convention to make it very clear which data belongs to your business, and identify all certification and audit requirements ahead of time. To maintain focus during the implementation, agree on specific critical success factors and areas of improvement early in the project.

Other important implementation considerations include technical architecture, security, multiple languages support, and reporting needs. Technical architecture is important because it will impact how data is organized and what kind of hardware you will need to make the system work satisfactorily. Considering security is crucial: an unsecured system creates all sorts of problems, such as lack of data integrity. Determine what type of data must be secured, what different combinations of data access capabilities the system will need (insertion, deletion, update, and query), and what features should be secured with limited access. If your implementation will support multiple languages, consider what must change from language to language: form prompts, data, and/or reports are all options. Finally, think about your overall reporting needs, and determine what data will need to be segmented in order to group data in your reports the way you want.

Two-Minute Drill

· The Oracle core financial applications for financial management include Oracle General Ledger and Oracle Assets.

· Procurement includes Oracle Payables, Oracle Purchasing, and Oracle Cash Management.

· Order Fulfillment includes Oracle Order Entry, Oracle Receivables, and Oracle Cash Management.

· Oracle Assets sends additions, capitalization, depreciation, retirements, reinstatements, revaluations, tax-accumulated depreciation adjustments, and CIP-related accounting entries to the Oracle General Ledger.

· Oracle Procurements sends receipt accruals, disbursements, payables liability, and invoice distributions (expense, inventory, work in process) to the Oracle General Ledger.

· Order Fulfillment sends receivables, receipts, and invoice distributions (revenue, unbilled receivables, unearned revenue, tax, and freight) to Oracle General Ledger.

· Budgetary control can be enforced in two modes: mandatory budgetary control disallows entry of purchase orders and invoices if not enough budget is available, while advisory budgetary control allows purchase orders and invoices to be entered (with a warning) even if the available budget is not sufficient to cover them.

· Intercompany accounts can be set up by journal sources.

· Oracle Assets supports fixed-rate, life-based, and units-of-production depreciation. Fixed-rate and life-based depreciation can be set up to use recoverable cost or recoverable net book value as the depreciation basis.

· A CIP asset starts depreciating when you capitalize it. The date placed in service is set to the date you capitalize the CIP asset.

· Oracle Assets tracks asset attributes such as asset number, serial number, tag number, asset description, location, purchase order, invoice, components, employee assignment, the date the asset was placed in service, as well as other financial and lease information.

· Oracle Assets provides special tax-accounting options such as adjusted current earnings (ACE) and investment tax credits (ITC).

· Oracle Applications share information as a relational database. In this method, the base table is assigned a unique identifier/primary key. All other tables that reference the base table do so by recording the unique identifier/primary key as a foreign-key field in the record containing the reference.

· Master tables store static data—data that changes less frequently than transactional data. Master tables include accounts, suppliers, customers, items, and assets.

· Setup tables store setup data such as application parameters and lookup tables. They are shared within an Oracle Applications package but are seldom shared across Oracle Applications packages.

· Transaction tables store data about day-to-day operations. Transactional data includes invoices, payments, receipts, and purchase orders. They are seldom shared within or across Oracle Applications packages.

· The Application Desktop consists of a toolbar and a Navigator window.

· The Navigator window consists of a menu bar, Functions/Documents Alternative region, Function window, Document window, function buttons, Close Other Forms checkbox, and Top Ten list.

· The Close Other Forms checkbox allows you to specify whether open forms should be automatically closed when a new function is invoked.

· The Top Ten list provides shortcuts to frequently used functions by pressing keys 0 through 9.

· A folder allows you to store a user-defined query, customize the arrangement and widths of columns, change sort order, and determine what columns to show or hide.

· Each legal entity has its own employer tax identification number.

· Each operating unit has its own payables, receivables, cash management, order entry, and purchasing transactions.

· Each inventory organization has its own capacity, inventory, engineering, master scheduling, bill of materials, work in process, and material requirement planning data.

· Reporting Sets of Books or multiple Sets of Books are needed if you must maintain transactions and balances in more than one functional currency.

· Either multiple Sets of Books or multiple reporting currencies are required if you must store transactions and balances in more than one functional currency.

· Data elements commonly converted for Oracle General Ledger include journals, balances, budgets, and Charts of Accounts.

· Oracle Applications provide three types of multiple-language support: form prompts in multiple languages, data with multiple language descriptions, and country-specific processes and reports.