How Do You Account for That?

- Oracle Payables 11i

Lauren Scott
Oracle Corporation

Introduction How Do You Account for That? - Business

Reasons Behind the Change
In release 11i, Oracle Payables introduces a new
accounting model to support the creation and retention The new accounting architecture that Oracle Payables
of accounting entries in the Payables subledger. This has introduced with release 11i allows for more
paper discusses why this change was made, and how it flexibility as new features are introduced in future
affects the accounting and period close processes in releases. However, these changes in 11i were not made
Payables. This paper is primarily an overview of the just for the purpose of improving the product
new functionality, however, a review of the architecture. There were many functional
functionality in previous releases is provided as a basis enhancements in the area of accounting which Oracle
for reference. Examples of the accounting entries Payables development had been asked to make, and
created by the new model in release 11i are provided. A many of them were not possible without this kind of
brief technical overview of the key data model changes architectural foundation.
is provided at the end of this paper.
For example, there were desired enhancements in the
This paper should be most useful to current users of area of prepayment functionality that needed to be
Oracle Payables who are interested in understanding made. Prior to release 11i, the application of a
the accounting changes made in release 11i and who prepayment created some less than desirable accounting
want to plan for their upgrade to the new release. such as creating an accounting entry for the cash
account. This and other problems could be addressed
Scope of This Paper with the new accounting model.

This paper describes accounting in the Oracle Payables Another area which needed enhancement was the
subledger and integration with Oracle General Ledger. future dated payment functionality. Issues included the
Accounting transactions where Oracle Payables inability to cleanly account for the maturity of a future
integrates with other subledgers are not in the scope of dated payment, and the inability to simultaneously use
this paper. Transferring accounting data to non-Oracle the future dated payment feature and create accounting
general ledgers is not in the scope of this paper. A good when a payment was cleared or reconciled.
familiarity with the Oracle Payables product is assumed
as features referenced are not described in detail unless General improvements needed to be made to the
they are new to the accounting model. accounting that Payables created. For example, in
release 11i, there is now a single accounting entry
This paper assumes accrual basis accounting for its created to accounts such as liability, cash clearing,
discussion. Where relevant, a mention of the cash, and discount (if system level). Prior to this
accounting impact for cash basis accounting is release, one accounting entry was created to these
included, but only where specifically noted. accounts corresponding to each invoice distribution.
This was somewhat cumbersome and made
Other features which have accounting impact but are reconciliation more difficult for users.
outside of the scope of this paper include:
. Encumbrance accounting Another business reason behind the change was the
. Automatic Offsets support of improvements in accounting for currency
. Accrual on receipt gains and losses. Some countries needed to be able to
. Tax accounting account for gain or loss only at the time of payment
. Future dated payments clearing. Prior to the new accounting model in release
Where relevant, a mention of the accounting impact of 11i, this would have been very difficult to support.
one of these features may be made, but only where Another enhancement in this area is support for the
specifically noted. calculation of gain or loss at the desired level. Oracle

© Copyright 2000, by Oracle Corporation

Payables can now support the calculation at the In the Accounting region of the Payables Options setup
payment level or the payment line level. window there are two options in the Cash Clearing
This is not an exhaustive overview of all the business region. The first is called “Allow Reconciliation
reasons for the introduction of this new accounting Accounting”. If this is enabled, it means that if Oracle
architecture, but it should serve to point out that there Cash Management is used to clear and/or reconcile
are some important benefits to users of the Oracle payments, accounting entries are created for those
Payables product. This change is also consistent with reconciled payments.
the future direction of Oracle Financials. In future
releases all of the subledgers which create accounting The other is called “Allow Future Payment Method”. It
will move to this new subledger accounting model. is not possible to select both of these options because
Oracle Payables development will also be doing more future dated payments use the account setup as the cash
work in this area to improve and enhance the clearing account. Although future dated payments are
architecture it now has in release 11i. outside the scope of this paper this is worth pointing
out since this is not the case in 11i. In 11i a separate
Review of Accounting in Prior Releases account is supported for future dated payments so this
option is not needed.
A review of the way accounting works in Payables prior
to release 11i is included here to serve as a basis for Also worth noting in this Accounting region is the
understanding the new accounting model discussed in setup area called “Journal Entry Creation”. This setup
the following sections. When there are references to controls defaults for the submission of the Payables
specific forms, fields, reports, or programs, they are the Transfer to General Ledger process for how it creates
release 11 names. entries in the gl interface. For the accounts in this setup
region it is possible to specify an “Audit” or “No
Before 11i, there is no accounting in the Payables Audit” option. The Audit option means that the
subledger. Accounting information is inherent in a accounting information is created in detail in the gl
Payables document, but there is not always a way to see interface, and this in turn means that drill down is
the information (for example, an invoice price variance available from the journal entries in Oracle General
for a purchase order matched invoice). Accounting for Ledger back to the details in the Payables subledger.
Payables transactions is created by a concurrent process The No Audit option creates summary entries, and drill
- the Payables Transfer to General Ledger program. down is not available. (Note that there is a setup step in
This is a very complex program which pulls Oracle General Ledger to enable drill down. The
information out of the transaction tables, creates Import Journal References option must be enabled in
accounting entries, and places them in the gl interface. the Journal Sources window for Payables.)
From there the general ledger process Journal Import
creates journal entries and imports them as unposted Although the drill down functionality provides some
journal entries into Oracle General Ledger. good accounting detail there is not the opposite
functionality in Payables. That is, it is not possible to
There are some setup options to point out which control inquire on a particular transaction and easily see the
various aspects of the accounting which is created. accounting for that transaction.

The process to close an accounting period has also

changed in release 11i, so a review of that process is
also provided here. The rules to close a period in
Payables prior to release 11i are:
. All payment batches must be confirmed
. All invoices must be transferred to general ledger
. All payments must be transferred to general ledger
Before invoices can be transferred to general ledger
they must be approved by the Payables Approval
process. Before payments can be transferred to general
ledger they must pass through the Confirm process.
Typical steps to close a period in Payables are:

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. Import all invoices and/or expense reports from in three regions: Accounting Methods, Transfer to GL,
interface tables and Payment Accounting.
. Run Approval
. Review the Posting Holds Report to identify invoices
which cannot be transferred to general ledger
. Correct the invoice transactions; rerun Approval
. Review the Expense Distribution Detail Report
(Some users review this report for particular accounts
before they close a period; they can identify and
correct any issues prior to their close) Accounting Methods
. Confirm any outstanding payment batches
. Run the Payables Transfer to General Ledger
program
. Optionally run the Unposted Invoice and Payment
Sweep (some accounting rules allow this - others do
not)
. Close the Payables period
. Reconcile

How Do You Account for That? -

Overview of New Accounting Model in 11i

Now in release 11i, Oracle Payables creates and stores

accounting entries in the subledger. Accounting entries
are created based on a particular accounting event, for This region corresponds to the Accounting region in
example, the creation of an invoice, or the payment of release 11. Notice that the section with the account
an invoice. These accounting entries are available for audit options has been removed. With the new
view and analysis even before they are transferred to accounting model, these options are no longer needed.
the general ledger. There is a new program to create When the accounting entries are transferred to the gl
the accounting entries - the Payables Accounting interface, a link is automatically created. This means
Process. that full drill down to the payables accounting entries is
always available from Oracle General Ledger, no
The Payables Transfer to General Ledger is a new matter the level of summarization. (Note that the same
program. Although it retains the same name, it is a Import Journal References option in Oracle General
new, much simpler program. It is now truly just a Ledger must be enabled to allow drill down.)
transfer program. It takes the accounting entries created
in Payables and transfers them to the general ledger The upgrade from a prior release to 11i retains the
interface, with the capability of doing summarization if setup in place for the accounting method/s.
desired. The general ledger Journal Import process
remains the same. Transfer to GL

There is some new and some changed setup for how the
accounting controls and options work in release 11i.
New forms are provided to view the accounting in the
subledger and to correct accounting creation errors if
necessary. Details on all of these new and changed
features are provided in the following sections.

Setup

Oracle Payables has some new and some changed setup

which controls how accounting works in release 11i.
The core of the changes is in the Payables Options form

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 . When Payment is Issued
This new region controls the default values for the . When Payment Clears
parameters of the Payables Transfer to General Ledger . or both can be selected
program. This assists users in ensuring that they This setup has dependencies on the Account for
consistently transfer their accounting entries to the Payment setup and vice versa. For example, if the
general ledger interface in the same way. If the “Allow Account for Payment When Payment is Issued option is
Override at Program Submission” parameter is not chosen then the Account for Gain/Loss When
disabled, then an accounting manager can safely Payment is Issued can not be chosen.
delegate the submission and monitoring of this process
to staff while still ensuring control. The Calculate Gain/Loss setup controls the calculation
level for the accounting entry for any gain or loss on a
Also, those who use the MRC (Multiple Reporting payment transaction.
Currencies) feature in release 11i can transfer There are two options available:
accounting entries for the reporting sets of books and . For Each Invoice
the primary set of books at the same time. . For Total Payment
Prior to release 11i, Payables did not offer this choice.
Payment Accounting Gain or loss was calculated for each invoice on a
payment. The upgrade from a prior release does not
automatically choose one of these options - it is left to
the user to determine what is appropriate for his or her
business.

A detailed discussion of the setup relevant to Future

Dated Payments is out of the scope of this paper.

Accounting Events

The 11i Payables accounting model uses the new

concept of accounting events. An accounting event is
an event that might require accounting for a
transaction, for example, a payment. The type of event
This new region controls various options for the controls the accounting that is created for a transaction
accounting of payments. The Account for Payment and how that accounting appears in the subledger.
option controls the timing of when accounting is
created for a payment. There are three options The eleven accounting events in Payables are divided
available: into two document classes, invoices and payments. You
. When Payment is Issued can specify a document class when you create or view
. When Payment Clears accounting entries.
. or both can be selected
If both options are selected then the same functionality The accounting events for the invoice document class
is provided as in prior releases when the “Allow are:
Reconciliation Accounting” feature was enabled. That . Invoice Event
is, accounting will be created at both the time the . Invoice Adjustment Event
payment is issued and at the time when the payment is . Invoice Cancellation Event
cleared and/or reconciled in Oracle Cash Management. . Prepayment Application Event
The upgrade from a prior release to 11i enables both of . Prepayment Unapplication Event
these options if the “Allow Reconciliation Accounting” The accounting events for the payment document class
feature was enabled. are:
. Payment Event
The Account for Gain/Loss setup controls the timing of . Payment Maturity Event
when accounting is created for the recognition of gain . Payment Adjustment Event
or loss on a payment transaction. . Payment Cancellation Event
There are three options available: . Payment Clearing Event

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. Payment Unclearing Event AP Liability 200 300

Invoice Event There are many other examples of accounting for an

invoice event, but one other to point out here is the
The invoice event occurs when a new, approved invoice accounting created for an invoice matched to a
is accounted. This event creates accounting entries for purchase order when accrual on receipt is used. The
each of the accounts associated with the invoice following example assumes an invoice for one item
distributions and to the liability account of the invoice. with an invoice price of 105 and a purchase order price
of 103:
The accounting entry created for a simple invoice with
one distribution in the functional (accounting) currency
is: Account Debit Credit
AP Accrual 103
Account Debit Credit Invoice Price Variance 2
Charge 100 AP Liability 105
AP Liability 100
Now with the ability to view the accounting for an
The accounting entry created for an invoice with invoice event online in Oracle Payables, users are able
multiple distributions in the functional currency is: to see this complete entry for their invoice transaction.

Account Debit Credit Invoice Adjustment Event

Charge 100
Charge 50 The invoice adjustment event typically occurs when an
Charge 50 accounted invoice is adjusted in some way. An
AP Liability 200 example of a common adjustment is reversing one
distribution line entered in error to an incorrect charge
Note the summarized entry to the liability account. This account and entering a correcting line. This event
is an enhancement in release 11i. This is different in creates accounting entries for the adjusting lines.
the case of using the automatic offsets feature. If the
automatic offsets feature is used, then the same invoice The accounting entry created for a simple invoice
example above yields the following accounting entry: adjustment in the functional currency is:

Account Debit Credit Account Debit Credit

Charge (Co 01) 100 Charge (in error) 100
Charge (Co 02) 50 Charge (correction) 100
Charge (Co 03) 50
AP Liability (Co 01) 100 Another example of an adjustment is the case where an
AP Liability (Co 02) 50 increase is needed to the amount of an invoice, and the
AP Liability (Co 03) 50 increase is charged to one or more associated charge
accounts. The accounting for an adjustment to increase
an invoice by 100 looks just like the accounting for an
If an invoice is entered in foreign currency, the
invoice event:
accounting entries for the invoice event are created in
both the foreign and functional currency. The following
example assumes an invoice for 200 foreign currency Account Debit Credit
units (FX) which converts to 300 in functional currency Charge 100
units (exchange rate of 1.5): AP Liability 100

Account Debit Credit Debit Credit The accounting date (GL date) is part of what controls
(FX) (FX) how events are accounted. If an invoice is entered with
Charge 100 150 multiple distribution lines, and some of the distribution
Charge 50 75 lines have different accounting dates, then the lines
with the earliest accounting date are accounted as an
Charge 50 75

© Copyright 2000, by Oracle Corporation

invoice event while the lines with the later accounting
date are accounted as an invoice adjustment event. The next event is the entry of the invoice to which the
prepayment is applied. The accounting process first
Invoice Cancellation Event creates the invoice event even if the prepayment has
already been applied:
The invoice cancellation event occurs when an
accounted invoice is cancelled. The cancellation Account Debit Credit
feature automatically adjusts the invoice amount to Charge 600
zero, and reverses all invoice distribution lines. If the Charge 200
invoice lines were matched to a purchase order, the Charge 200
match is also reversed. AP Liability 1000

The accounting entry created for the cancellation of a

simple invoice with one distribution in the functional
currency is: Next the prepayment application event is created:

Account Debit Credit Account Debit Credit

Charge 100 AP Liability 500
AP Liability 100 Prepaid Expense 500

To understand other examples of accounting for the The prepayment application event relieves the liability
invoice cancellation event, the invoice event accounting account for the amount of the applied prepayment, and
examples can be reviewed. Note that a corresponding it credits the prepaid expense account for the amount
invoice cancellation event would effectively reverse the applied.
accounting entries.
For anyone familiar with the accounting of prepayment
In cash basis accounting the three events just discussed, applications in prior releases, it is clear that the
invoice, invoice adjustment, and invoice cancellation, accounting in release 11i is improved.
do not exist. These are not cash events as no payment is
involved. Note that although this event is modeled as part of the
document class of invoices, this event does exist in cash
Prepayment Application Event basis accounting. The reason for this is that the
prepayment application is effectively a payment (partial
This event accounts for the application of a prepayment or full) of the invoice to which it is applied.
to an invoice. It is helpful to provide the accounting
event sequence for a typical prepayment entry, invoice Prepayment Unapplication Event
entry, and then prepayment application to make the
events clear in this case. The following example is a This event accounts for the unapplication of a
500 prepayment which is paid and then applied to a prepayment to an invoice. Just as a prepayment can be
1000 invoice as a partial payment. applied to an invoice, there is also a way to unapply
that prepayment. If this is done, then accounting entries
The entry of a prepayment into Oracle Payables is are created to reverse the accounting of the prepayment
accounted as an invoice event since a prepayment is application.
modeled as a type of invoice.
The accounting for the unapplication of the prepayment
Account Debit Credit applied in the example above is:
Prepaid Expense 500
AP Liability 500 Account Debit Credit
Prepaid Expense 500
Without discussing the payment event, note that the AP Liability 500
payment of the prepayment relieves the liability in this
case so that 500 remains in the prepaid expense Payment Event
account.

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 Discount Taken 18
The payment event occurs when a new payment is
issued and accounted. This event creates accounting Note the summarized entries to the cash clearing and
entries to relieve the liability of the invoice and to discount accounts. This is an enhancement in release
charge the cash clearing or cash account, depending on 11i. This is different in the case of using the automatic
the system setup options. offsets feature. If the automatic offsets feature is used,
then a similar payment event yields the following
This event occurs when the Payment Accounting option accounting entry:
“Account for Payment When Payment is Issued” is
enabled. If the system is set up to account for any gains Account Debit Credit
or losses at the time of payment issue, this accounting AP Liability (Co 01) 100
event also creates those accounting entries. For the AP Liability (Co 02) 100
following examples, assume that the setup used is to Cash Clearing (Co 01) 91
account for payments at both issue and clearing, and to
Cash Clearing (Co 02) 91
account for gain or loss at the same time.
Discount Taken (Co 9
01)
The accounting entry created for the payment of a
Discount Taken (Co 9
simple invoice in the functional (accounting) currency
02)
is:
There are many other examples of accounting for a
payment event, but one other to point out here is the
Account Debit Credit
accounting created for multiple payments made for the
AP Liability 100
same foreign currency invoice. When the final payment
Cash Clearing 100
is made on an invoice, Payables ensures that the
liability is fully relieved, even if the sum of the
If an invoice is entered and paid in foreign currency, functional currency amounts of the payments does not
there may be a currency gain or loss realized at the time add up to the functional currency amount of the
of accounting for the payment event. In the foreign liability. This is handled by creating the necessary entry
currency example in the invoice event section, the to the rounding account. This example is for an invoice
invoice was for 200 foreign currency units (FX) which in the amount of 20.08 foreign currency units (FX)
converted to 300 in functional currency units (exchange converted to 2.01 functional currency units. So the
rate of 1.5). Using the same example, now the payment liability for the invoice was booked as 2.01.
is made for 200 foreign currency units (FX) which
converted to 340 in functional currency units (exchange A first payment is made for the invoice in the amount
rate of 1.7). The accounting entries are created in both of 10.04 foreign currency units (FX) converted to 1.00
currencies by the payment event: functional currency units and accounted as follows
(assume no gain or loss for simplicity):
Account Debit Credit Debit Credit
(FX) (FX) Account Debit Credit Debit Credit
AP Liability 200 300 (FX) (FX)
Realized Loss 40 AP Liability 10.04 1.00
Cash Clearing 200 340 Cash Clearing 10.04 1.00

Accounting for discounts is also handled by this event. A second payment is made for the invoice in the
This example assumes that the discount method is the amount of 10.04 foreign currency units (FX) converted
system account. This is an example of a payment for an to 1.00 functional currency units and accounted as
invoice in the functional currency, where the invoice follows:
amount is 200 and a discount of 18 is taken. This
example is for the payment of an invoice which has Account Debit Credit Debit Credit
multiple invoice distributions. (FX) (FX)
AP Liability 10.04 1.00
Account Debit Credit Cash Clearing 10.04 1.00
AP Liability 200 AP Liability .01
Cash Clearing 182

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 Rounding .01 accounted. This includes any gains or losses, discounts,
etc. Then the event creates new payment accounting for
Payables creates the last two entries when it finds that the newly paid invoice or invoices.
the second payment is the final payment and yet the full
2.01 of the liability is not relieved. The following illustrates the accounting that takes place
during a payment adjustment event. The starting point
Payment Maturity Event is the existing accounting created when an invoice was
recorded paid by a manual payment. This example uses
The payment maturity event occurs only for future the same foreign currency invoice and payment from
dated payments and if the system setup is to account for the sections on the invoice and payment events.
payments at issue time. When future dated payments
are issued, they are accounted by the payment event, The invoice was for 200 foreign currency units (FX)
just as for standard payments. The payment maturity which converted to 300 in functional currency units
event happens when the future dated payments reach (exchange rate of 1.5). The payment was made for 200
their maturity - that is, they become negotiable foreign currency units (FX) which converted to 340 in
documents. functional currency units (exchange rate of 1.7). The
accounting entries were created in both currencies by
To understand the accounting created by the payment the payment event:
maturity event, first an example is needed of the
accounting for the payment event of a future dated
payment. Here is the accounting for a simple 100
payment in the functional currency:
Account Debit Credit
AP Liability 100
Future Dated Payment 100 Account Debit Credit Debit Credit
(FX) (FX)
Note that rather than hitting a cash clearing or cash AP Liability 200 300
account, the accounting for the issue of a future dated Realized Loss 40
payment is entered to the designated future dated Cash Clearing 200 340
payment account. The amount is held in this account
until the payment becomes negotiable. Now it is realized that the invoice recorded by this
manual payment was recorded in error. It happened
When the payment status changes from “Issued” to that the invoice selected was for the same 200 amount
“Negotiable” then the payment maturity event occurs as the invoice that should have been recorded. Using
and is accounted as follows: the Payables adjustment functionality, the incorrect
invoice (1) is selected to be returned to unpaid status,
Account Debit Credit and the invoice which should have been recorded as
Future Dated Payment 100 paid (2) is now correctly recorded. The accounting for
Cash Clearing 100 the event is:

Now that the future dated payment is negotiable, the Account Debit Credi Debit Credit
future dated payment account is relieved and the (FX) t (FX)
appropriate entry is made to the cash clearing account. AP Liability (1) 200 300
Realized Loss (1) 40
Cash Clearing 200 340
Payment Adjustment Event
(1)
AP Liability (2) 200 300
A payment adjustment event occurs when any of the
invoices recorded as paid by a manual payment are Realized Loss (2) 40
changed. Payables has a feature which allows this type Cash Clearing 200 340
of adjustment. If an adjustment like this is made, then (2)
the accounting event creates reversals of the accounting
done when the original payment of the invoices was Payment Cancellation Event

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This event creates accounting entries for the void of a
payment. A void of a payment cancels the payment This accounting event may also handle any accounting
document and sets the invoices on the payment back to for currency gains or losses. If setup is such that there
unpaid status. The accounting entries generated are the is no accounting for gain or loss at the time a payment
opposite of what are created for a payment event. is issued, but rather only at the time a payment clears,
then the accounting for the payment clearing event
Here is the example of a 182 payment and 18 discount creates the necessary accounting entries.
taken (discount charged to a system account):
In the foreign currency example in the invoice event
Account Debit Credit section, the invoice was for 200 foreign currency units
AP Liability 200 (FX) which converted to 300 in functional currency
Cash Clearing 182 units (exchange rate of 1.5). Using the same example,
Discount Taken 18 now the payment is made for 200 foreign currency
units (FX) at the same conversion rate since no gain or
If this payment is voided, and then accounting is loss will be calculated until the payment clears. The
created, the accounting for the payment cancellation accounting entries are created in both currencies by the
event appears as follows: payment event:

Account Debit Credit Account Debit Credit Debit Credit

AP Liability 200 (FX) (FX)
Cash Clearing 182 AP Liability 200 300
Discount Taken 18 Cash Clearing 200 300

Payment Clearing Event When the payment clears, the 200 foreign currency
units are converted to 340 in functional currency units
The payment clearing event occurs when a payment is (exchange rate of 1.7). The accounting entries are
cleared or reconciled in Oracle Cash Management, and created in both currencies by the payment clearing
the system is set up to account for payments when they event:
clear (one of the payment accounting options reviewed
in the Setup section). Account Debit Credit Debit Credit
(FX) (FX)
Here is an example of the accounting created at both Cash Clearing 200 300
payment issue and payment clearing. Accounting at Realized Loss 40
payment issue for a 182 payment with a 18 discount Cash 200 340
taken (discount charged to a system account):
Payment Unclearing Event
Account Debit Credit
AP Liability 200 The payment unclearing event occurs when a cleared or
Cash Clearing 182 reconciled payment is reversed in Oracle Cash
Discount Taken 18 Management - in effect the payment is “uncleared”.
The accounting entries created simply back out the
Now at the time of payment clearing the accounting accounting created by the payment clearing event.
entry created is: If at the time of payment clearing the accounting entry
created was:
Account Debit Credit
Cash Clearing 182 Account Debit Credit
Cash 182 Cash Clearing 182
Cash 182
Effectively this accounting moves the cleared or
reconciled payment out of the cash clearing account Now at the time of the payment unclearing the
and debits the cash account now that the cash has been accounting created is:
issued by the bank.

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 Account Debit Credit journal category to each entry. When the Payables
Cash Clearing 182 Transfer to General Ledger is run it works by
Cash 182 transferring journal categories. The details are
explained in the section about transferring accounting
entries to gl.
Payables Accounting Process
Like other concurrent programs, the Payables
Oracle Payables has introduced a new concurrent Accounting Process can be setup to run on a periodic
program in release 11i to create the accounting entries basis. The business needs of the accounting department
for the subledger transactions. It is called the Payables should be reviewed to determine how frequently to run
Accounting Process. The process creates accounting this process. Now that the Payables Transfer to General
entries in all sets of books. When the program runs, it Ledger simply transfers created accounting entries, the
produces an output report that has two sections - an Payables Accounting Process must be run before the
audit and an exceptions section. The audit section transfer can be run. This means that as often as the
shows the detail of all accounting entries created by the transfer was run before, now both the accounting
process. The exception section shows the detail of any process and the transfer need to be run. (The need to
accounting entries that were created with errors. This account and transfer more often is likely if other Oracle
might happen if the process finds that an account has products like Assets and Projects are used. They require
been de-activated in general ledger after the time it was that Payables data be transferred to general ledger
entered in the payables subledger. before it can flow to their interfaces).

Program parameters include a date range of There are two ways to link these processes to simplify
transactions to be accounted, and the document class to their submission. One way is within the Payables
be accounted (invoices, payments, or both). An optional Accounting Process. Two parameters can be used:
Validate Accounts parameter can be selected. If this Submit Transfer to GL and Submit Journal Import. If
parameter is selected and if an accounting entry has an Yes is chosen for the Submit Transfer to GL parameter,
account that is no longer valid in the general ledger, then the options set up in the Transfer to GL region of
then the accounting entry will receive an “accounted the Payables Options window are called for this
with error” status. It is a good idea to select this option submission. Based on those options it may or may not
because accounting entries with errors can be reviewed be possible to choose to submit Journal Import. (See the
and corrected before submitting the Payables Transfer Setup section of this paper for detail). The second way
to General Ledger process. Another optional parameter is to create a Request Set using standard Oracle
can summarize the audit section of the report. This is Applications functionality.
useful when accounting for large volumes of data that
does not need to be reviewed in detail. Oracle Payables also provides the option to create
accounting for a single transaction online from the
The process works as follows. First it checks the Invoices and Payments windows, or for an invoice or
accounting rules in the setup options. Then it locks the payment batch from the Invoice Batches and Payment
transaction data to be accounted, based on the Batches window. This option may be helpful when in a
parameters submitted to the concurrent program. The testing phase or if a specific transaction needs special
next step is the creation of the accounting events for processing.
each transaction to be accounted. Once the events are
created then the accounting for the events is created.
New Accounting Inquiry and Update Forms
There is a sequencing to the accounting that is
managed by the program. For example, before a
Now that Oracle Payables creates and stores accounting
payment can be accounted, the invoices on the payment
in the subledger it is also possible to inquire on and
must be accounted. After the accounting entries are
view the accounting created for payables transactions.
created, they are validated against general ledger
There is a new form provided in release 11i which
accounts if that option was chosen. Then the
shows a variation of accounting information depending
transactions are updated as accounted and the process
on where the form is accessed.
is complete.
A new main menu heading has been added to the
One other thing to mention about the process is that
Oracle Payables navigator called “Accounting”. One of
when it creates the accounting entries it assigns a

© Copyright 2000, by Oracle Corporation

the options in this menu is “View Accounting Lines”. transferred to the general ledger interface. It did not
When this is chosen, the new View Accounting Lines truly mean that the accounting had been posted. In
window opens. When called from the navigator it is release 11i, Oracle Payables has tried to move away
possible to inquire on any range of accounting data, from using the terms “post” or “posted” whenever
such as across documents, periods or accounts. possible and instead refers to accounting as transferred
to general ledger. This has been done in order to be
more precise about what has happened with the
Payables transaction data.

Now in both the Invoices and Payments windows there

is a new field called “Accounted”. The value in this
field shows as “Yes”, “No”, or “Partial”. This helps
indicate that there is accounting available for view on a
transaction. Along with this the “Posted” field in the
Distributions subwindow of the main Invoices window
has been renamed “Accounted”. Most rules in prior
releases about whether or not a “posted” invoice or
payment could be adjusted now apply to an accounted
invoice or payment.
The data retrieved is displayed in the form of a
As covered in the section on the Payables Accounting
balanced accounting entry. It can also be viewed in a T-
Process, sometimes an accounting entry can be created
account format or in an alternate currency if using
with an accounting status of “Error”. In this case there
reporting sets of books.
is a new form available to allow correction of the error.
The form can be accessed from the navigator under the
Versions of this same window are available in the main
new Accounting menu heading. The menu path and
Payables transactions windows - Invoices and
window name are the same - Update Accounting
Payments. If opened in the Invoices window to see the
Entries.
accounting for an invoice transaction, the window title
is “View Invoice Accounting”. If opened in the
Typically this form is used when the Payables
Payments window to see the accounting for a payment
Accounting Process is run with the option to “Validate
transaction, the window title is “View Payment
Accounts”. If the process finds that any of the accounts
Accounting”. All of these windows use the standard
are not valid in general ledger then the accounting
Oracle Applications folder functionality, allowing them
entries are created with an error status, and appear on
to be easily modified to best suit the typical inquiry
the exceptions report. The report is reviewed and
needs of a business.
decisions are made as to how to correct the accounts.
There are a few fields to point out on the screenshot of
Then this new form is opened and the correct account
this inquiry window. In the lower right hand region
information is entered in the blank account field.
there is a field called “Event Type”. This displays the
accounting event that generated the particular
accounting line being viewed. Also in that same area is
a field called “Transferred to GL”. This displays a Yes
or No value depending on whether or not the
accounting line has been transferred to the general
ledger interface.

This last field is useful to point out because this

information is no longer found on the main Invoices
window. In prior releases there was a field in the
Invoices window called “Posted”. It would display Yes,
No, or Partial (if part of the invoice had been
transferred to general ledger). This terminology was a
bit problematic because what it really meant was
whether or not the accounting for the invoice had been

© Copyright 2000, by Oracle Corporation

The Update Accounting Entries form can also be used accounting entries against the current account status in
as an inquiry form if desired. general ledger. If invalid accounts are found, the entries
are not transferred. If this option is not used, then
Although encumbrance accounting is outside the scope Journal Import automatically validates the accounts.
of this paper, one enhancement to point out in this area All of the “Audit/No Audit” choices for all of the
is a new inquiry window made available in release 11i account type parameters have been replaced by one
to view the encumbrances for a particular invoice. The parameter called “Transfer to GL Interface”. Options
new window is called View Encumbrances and can be for this parameter are: In Detail, Summarize by
accessed via the navigator in the new Accounting menu Accounting Date, and Summarize by Accounting
area. It can also be accessed via the Tools menu option Period.
when in the Invoices window and inquiring on a
particular transaction. Once the data is transferred to the general ledger
interface, the process remains the same. The Journal
This new window gives users better visibility into the Import process takes the data in the interface and
accounting for their encumbrance entries. This type of creates unposted journal entry batches, headers, and
inquiry was not available in Oracle Payables in prior lines in Oracle General Ledger. From there the journal
releases. entries can be posted to update the account balances.

Transferring Accounting Entries to GL Release 11i offers enhanced drill down capabilities
from Oracle General Ledger to the subledgers. As
As already noted, Payables Transfer to General Ledger mentioned earlier, it is now possible to transfer all
is a new process designed to transfer and optionally accounting entries in summary to gl, while still
summarize the accounting entries in the Payables retaining the ability to drill down from all accounts.
subledger to the general ledger interface. When viewing a journal with the source of Oracle
Payables, drill down to Oracle Payables can be chosen.
The process works by transferring accounting data in a A new window has been created for the drill down, and
selected date range and in a selected journal category. the window title and the information displayed vary
The accounting entries are assigned a journal category depending on which journal category is being reviewed.
at the time they are created. This category can be The three window titles are: Payables Invoice
viewed in the accounting inquiry windows. There are Accounting (from the Purchase Invoices category),
three journal categories: Purchase Invoices, Payments, Payables Payment Accounting (from the Payments
and Reconciled Payments. All of the invoice accounting category), and Payables Reconciled Payment
events are created with a journal category of Purchase Accounting (from the Reconciled Payments category).
Invoices. All of the payment accounting events, except
for the payment clearing and the payment unclearing
events, are created with a journal category of Payments.
The payment clearing and unclearing events are created
with the journal category of Reconciled Payments.
There are several differences between the program
parameters in prior releases and the parameters in
release 11i. A new parameter - “Transfer Reporting
Book(s)” - has been added to simplify the transfer
process if MRC (Multiple Reporting Currencies) is
used. The “Post Through Date” parameter has been
replaced by two parameters - “From Date” and “To
Date”. The “To Date” parameter used alone works just
like the old parameter. However, now the two
parameters can be used together to transfer a more All of these windows use the standard Oracle
precise range of accounting entries. The “Journal Entry Applications folder functionality, allowing them to be
Category” parameter was renamed to the more accurate easily modified to best suit the typical inquiry needs of
“Journal Category”. The list of values displayed is the a business. From these windows it is simple to drill
list of the three types of Payables journal categories. A down to more detail - to view the transaction or to view
new parameter, “Validate Accounts”, checks the the transaction accounting.

© Copyright 2000, by Oracle Corporation

 This report does not produce an audit section of the
Reports detail that has been transferred to the general ledger. If
that information is needed, then the Payables
Since the new accounting model affected all of the Accounting Entries Report can be run for a particular
accounting in Oracle Payables, any reports that submission of the Payables Transfer to General Ledger
displayed accounting information in prior releases were to get the audit detail.
reviewed and changed as needed. Some new reports
were needed to support the new accounting model. And The report output from the new transfer replaces the
some reports were made obsolete. A list of obsolete Accounts Payable Journal Entry Audit and Exception
reports can be found in the technical overview section. Reports.
The other reports are discussed here.
Unaccounted Transactions Report
New Reports
This new report is available to help review problems
Payables Accounting Process Report with invoices and payments which can not have
accounting created for them due to some problem. It
This report is automatically produced by the Payables will be useful to review this report after running the
Accounting Process. The audit section of the report Payables Accounting Process in order to see what
shows the detail of the accounting entries created by the transactions could not be accounted and why.
process. The exceptions section of the report shows the
detail of any accounting entries created with an error. It The report is organized by the reason why accounting
is possible to run the report in a summarized version in can not be created. For example, invoices must be
which case the audit section shows totals only. approved by the Payables Approval process before they
can be accounted. So invoices that have not yet been
Payables Accounting Entries Report approved are grouped together on this report with the
exception of “Unapproved”. This report also shows
This report is similar to the output produced by the transactions that have holds that do not allow
Payables Accounting Process; however it can be run on accounting. Note that holds which did not allow
its own to report on accounting entries that meet posting in prior releases now do not allow accounting
specific criteria. It allows greater flexibility in reporting in release 11i.
- for example it can be run just for accounting entries
that have or have not been transferred to general This report replaces the Posting Holds Report. It
ledger. It is also possible to run this report to get the improves upon the old report in several ways. One way
details of accounting entries created by a particular run is that it shows both invoice and payment transactions
of the Payables Accounting Process. Similarly, this rather than just invoices. For example, if a payment can
report can be run to see the detail of what accounting not be accounted due to a missing exchange rate, that
entries were transferred to GL during a particular run transaction is identified by this report.
of the Payables Transfer to General Ledger program. Payables Account Analysis Report

Payables Transfer to General Ledger Report This report was created to assist with review of
accounting created in the Payables subledger and to
The new transfer program automatically produces assist with reconciliation of accounts to the general
report output. It has a summary section which gives ledger. It can be submitted for an accounting date range
totals of the accounting entries transferred to the gl and for a full account segment range.
interface. It has two sections which show exceptions:
one section shows accounting entries that could not be This report replaces the Expense Distribution Detail
transferred because they were in an error status, and the Report. The new report does not need a setup form as
second shows accounting entries that were accounted the Expense Distribution Detail Report did.
with no problem but are now unable to be transferred
due to a discrepancy between the accounted account Changed Reports
and the account in the general ledger.
Accounts Payable Trial Balance

© Copyright 2000, by Oracle Corporation

The Accounts Payable Trial Balance is actually a new . All transactions must be accounted
report but since the name is the same it is included in . All accounting entries must be transferred to general
the changed reports section. The new accounting model ledger
made it necessary to rewrite the trial balance report. All . All future dated payments which have reached
of the enhancements that had been outstanding against maturity in the accounting period must have their status
the report were reviewed and incorporated into the new updated to negotiable and be accounted
report. For example, there is now an option to run the
report for a single supplier. There is also an option to Optionally, unaccounted transactions can be swept to
run the report for a single liability account. the next accounting period if allowed by accounting
rules. There is a new program in 11i to support this -
Posted Invoice Register the Unaccounted Transactions Sweep. This program
can be submitted from the Control Payables Periods
This report was modified to report off the new form in both a review mode and an update mode. The
accounting entries which have been transferred to program can be called only if there are any
general ledger. This (along with the Posted Payment unaccounted transactions in the period. The report
Register) was one of the cases where the use of the output of the program looks very much like the
word “posted” was retained in 11i. Although Unaccounted Transactions Report. This new program
technically the accounting in this report has only replaces the Unposted Invoice and Payment Sweep.
transferred to general ledger and not necessarily been
posted, the existing report name seemed like the Before invoices can be accounted they must be
simplest to use. approved by the Payables Approval process. Before
payments can be accounted they must pass through the
All of the enhancements that had been outstanding Confirm process. Typical steps to close a period in
against the report were reviewed and incorporated into Payables release 11i are:
the new report. For example, there is now an option to . Import all invoices and/or expense reports from
run the report for a single liability account. There is interface tables
also an option to run the report in summary in order to . Run Approval
get totals for reconciliation purposes. . Confirm any outstanding payment batches
. Run the Update Matured Future Payment Status
Posted Payment Register program for any future dated payments
. Run the Payables Accounting Process
This report was modified to report off the new . Review the accounting process output and correct
accounting entries which have been transferred to any accounting errors
general ledger. All of the enhancements that had been . Review the Unaccounted Transactions Report to
outstanding against the report were reviewed and identify transactions which cannot be accounted
incorporated into the new report. For example, there is . Correct any transaction data and run the Payables
now an option to run the report for a single liability Accounting Process again
account. There is also an option to run the report in . Review the Payables Account Analysis Report
summary in order to get totals for reconciliation (If someone reviewed the Expense Distribution Detail
purposes. Report for certain accounts in prior releases they will
New Close Process want to review this new report in 11i)
. Run the Payables Transfer to General Ledger
The process to close an accounting period has changed . Optionally run the Unaccounted Transactions Sweep
in release 11i. The close process is reviewed here in . Close the Payables period
order to compare it with the close process in prior . Reconcile
releases. The form to control the status of an
accounting period has been renamed from “AP Technical Overview
Accounting Periods” to “Control Payables Periods”. Its
location in the navigator has also changed. It has This section is an overview of the architectural changes
moved from the Setup section into the new Accounting made to Oracle Payables to support the new accounting
section of the menu. The rules to close a period in model. It is not an exhaustive discussion of all the
Payables in release 11i are: changes made to the product, but it should serve as a
. All payment batches must be confirmed reference point for understanding the major changes. It

© Copyright 2000, by Oracle Corporation

should also help in understanding what the upgrade Update Accounting Entries (APXUPDAE)
process does and if there is impact to any custom code a View Encumbrances (APXVWENC)
business might have. View Accounting Lines
View Invoice Accounting
The key data model changes revolve around the fact View Payment Accounting
that now accounting entries are created and stored in The three above are different views of the form
the Payables subledger. Prior to release 11i, data from XLAIQACL
three tables was used to create accounting entries in the Payables Invoice Accounting
general ledger interface: Payables Payment Accounting
AP_INVOICE_DISTRIBUTIONS_ALL, Payables Reconciled Payment Accounting
AP_PAYMENT_DISTRIBUTIONS_ALL, and The three above are different views of the form
AP_RECON_DISTRIBUTIONS_ALL XLAIQDRL
(Refer to Diagram 1 at the end of this paper for a view
of the release 11 data model.) Obsolete Tables

Now in release 11i, three new tables are used to hold AP_PAYMENT_DISTRIBUTIONS_ALL:
the accounting entries created in Payables: Used to hold payment accounting information. The
AP_ACCOUNTING_EVENTS_ALL, table was populated when a manual or quick payment
AP_AE_HEADERS_ALL, and AP_AE_LINES_ALL. was entered or a payment batch was confirmed.
These tables are populated by the Payables Accounting AP_MC_PAYMENT_DISTS_ALL:
Process. The process creates accounting entries for Used to hold payment accounting information for
every set of books (combined basis accounting or reporting sets of books (MRC).
MRC). Data from these tables is now transferred to the AP_RECON_DISTRIBUTIONS_ALL:
general ledger interface. There is another new table Used to hold payment reconciliation information. The
which has been added to help track the activity on a table was populated when a payment was cleared or
payment: AP_PAYMENT_HISTORY. This table holds reconciled in Oracle Cash Management.
all the information for determining the payment AP_MC_RECON_DISTS_ALL:
maturity, payment clearing, and payment unclearing Used to hold payment reconciliation information for
events. reporting sets of books (MRC).
(Refer to Diagram 2 at the end of this paper for a view AP_TRIAL_BALANCE:
of the release 11i data model.) Used to hold information for the Accounts Payable
Trial Balance report.
Upgrade AP_MC_TRIAL_BALANCE:
Used to hold information for the Accounts Payable
The upgrade to release 11i converts the data in the Trial Balance report when run from a reporting set of
three distributions tables into accounting entry data in books (MRC).
the new tables. The tables
AP_PAYMENT_DISTRIBUTIONS_ALL and Obsolete Forms
AP_RECON_DISTRIBUTIONS_ALL are obsolete in
release 11i, although they are not dropped. Invalid GL Accounts (APXPDFIX):
Used to correct invalid account information and
payment distributions. Effectively replaced by the
New Tables Update Accounting Entries form.
Invoice Distributions Summary (APXGLINQ):
AP_AE_HEADERS_ALL Used as a way to look at accounting for invoice
AP_AE_LINES_ALL distributions. Replaced by View Accounting Lines
AP_ACCOUNTING_EVENTS_ALL window.
AP_ENCUMBRANCE_LINES_ALL
AP_PAYMENT_HISTORY_ALL New Reports and Programs
AP_MC_PAYMENT_HISTORY (see Reports section for details)
AP_TRIAL_BAL
Obsolete Reports and Programs
New Forms
Payables Transfer to General Ledger (APPPST)

© Copyright 2000, by Oracle Corporation

Unposted Invoice and Payment Sweep (APXSUMPS)
Accounts Payable Trial Balance (APXRTB)
Expense Distribution Detail Report (APXEDSRS)
Transaction Reconciliation Report (APXTRXRN)
Journal with GL Details Report (APXJEHIS)

Other Changes

The posted flag in the table

AP_INVOICE_DISTRIBUTIONS_ALL now means
that the distribution has been accounted. To see if an
accounting entry has been transferred to general ledger
look at the transferred flag in the AP_AE_LINES_ALL
table.

Conclusion
The new accounting model in Payables 11i has
dramatically changed the way accounting works in the
subledger. It is important to review and understand
these changes in order to make a smooth transition to
the new release.

This paper provides an overview of the new accounting

model and some details for the setup and accounting
entries created in the subledger. The reference
documentation should also be reviewed to ensure an
understanding of how to manage accounting in release
11i.

The new flexible accounting entries should prove

beneficial to users of Oracle Payables. Now the product
has an improved architecture to support building other
accounting enhancements in future releases.

About the Author

Lauren Scott is Senior Product Manager for the Oracle

Payables product. She has been working with Oracle
Financials since 1988, first as a user and then in
product development since 1997. She managed
Oracle’s US Payables and Fixed Assets operations for
six and a half years before moving to Applications.

© Copyright 2000, by Oracle Corporation

 Diagram 1 - R11 Physical Data Model

AP_TRIAL_BALANCE
(Accounts Payable Trial
Balance)

AP_CHECKS_ALL
(Payments)

AP_INVOICES_ALL
(Invoices)

AP_RECON_
DISTRIBUTIONS_ALL
(Reconciled Payments)

AP_PAYMENT_
SCHEDULES_ALL
(Scheduled Payments)

AP_INVOICE_ Transfer Program

AP_INVOICE_ PAYMENTS_ALL
DISTRIBUTIONS_ALL (Invoice Payments)
(Invoice Distributions)

GL_JE_BATCHES
Transfer Program (Journal Batches)

Transfer Program
AP_PAYMENT_
DISTRIBUTIONS_ALL
(Payment Distributions)

Transfer Program GL_JE_HEADERS

(Journal Headers)

GL_INTERFACE
(General Ledger Interface)

Journal Import

GL_IMPORT_
GL_JE_LINES
REFERENCES
(Journal Lines)
(Drilldown Link)

Journal Import

Journal Import

© Copyright 2000, by Oracle Corporation

 Diagram 2 - R11i Physical Data Model

AP_INVOICES_ALL
(Invoices)

AP_CHECKS_ALL
(Payments)

AP_INVOICE_ AP_PAYMENT_
DISTRIBUTIONS_ALL SCHEDULES_ALL
(Invoice Distributions) (Scheduled Payments)

AP_PAYMENT
HISTORY_ALL
(Payment History)

AP_ACCOUNTING
EVENTS_ALL AP_INVOICE_
(Accounting Events PAYMENTS_ALL
(Invoice Payments)

GL_JE_BATCHES
(Journal Batches)

Journal Import
AP_AE_HEADERS_ALL
(Accounting Entry
Headers)

GL_INTERFACE GL_JE_HEADERS
(General Ledger Interface) (Journal Headers)
Transfer Program Journal Import

AP_AE_LINES_ALL
(Accounting Entry Lines)
Journal Import
GL_IMPORT_ GL_JE_LINES
REFERENCES (Journal Lines)
(Drilldown Link)

© Copyright 2000, by Oracle Corporation