R12 How Do I Balance My AP Accrual Account R12 (20130415)

It’s R12, How Do I Balance My Accrued Accounts Payable (AAP) Account?

Cost Management SIG

October 16, 2012

© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

Agenda

2

Introduction

Purpose of AAP Process

Reconciliation Setup and Process

Reconciliation Write-Offs

Reconciliation Logic and Example

Accounting Setup

Lessons Learned

Q&A

Robert Smith currently is a Manager at KPMG, LLP with over 17 years of experience working with Oracle Applications as user and consultant.

© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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Purpose of AAP Process

To identify potential issues with receiving and purchasing transactions that could impact the accuracy of the AP accrual accounts recorded in the General Ledger

Quantities differ between receipts and invoices

Discrepancies in vendor billings

Invoices matched to incorrect purchase order

Receiving against wrong purchase order

Miscellaneous transactions that do not belong to the accrual accounts

Freight and tax payables entries that are incorrectly posted to the accrual accounts

The AAP reconciliation process has been “feared” or “strongly disliked”

Now with Release 12, users have access to a comprehensive reconciliation report and the ability to write off obsolete transactions

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Reconciliation Setup/Process


Set Accrual Accounts

New Transaction Data

Accrual Load Program

Reconciliation Summary

Reconciliation Detail

Choose for Write-Off

Write-Off Summary

Write-Off Details

Choose for Reversal

Yes Yes

No

No

Yes



Identify accrual accounts to be reconciled


Set Accrual Accounts



Enter transactions throughout the month as normal

Load program populates the following tables:

CST_AP_PO_RECONCILIATION

CST_MISC_RECONCILIATION

CST_RECONCILIATION_SUMMARY

Only transactions having a net balance will populate the tables

Reconciliation Setup/Process New Transaction Data

Accrual Load Program



Reconciliation Summary


Summary Accrual Reconciliation Report is used to determine the accrual accounts have balances




The AP and PO Accrual Reconciliation Report is used to view the accrual accounts having a net balance not equal to zero

Reconciliation Setup/Process Reconciliation Summary




The Miscellaneous Accrual Reconciliation Report is used to view miscellaneous invoices not matched to PO or PO receipts

Reconciliation Setup/Process Reconciliation Summary




Review transactions and decide to write off. Ensure all transactions are completed and posted or reports reviewing may not be accurate.

Write-Off will automatically generate general ledger transactions.

Reconciliation Write-Offs Choose for Write-Off

Write-Off Summary

Write-Off Details

Yes




Write-Off Summary

Write-Off Details

Yes



After write-off and running accounting, transactions can be reviewed and see the accounting generated


Write-Off Summary

Write-Off Details

Yes


Reconciliation Logic/Example

Comparison of 11i and R12 AAP Accrual Process

Reconciliation Logic / Example

11i R12 Reconciliation Rebuild retrieved data falling within relevant date range, regardless of status of fully invoiced, partially invoiced, un-invoiced or written off

Concentrates on PO distributions rather than lines and aggregate totals

Reconciliation Reports are reported by PO lines

Load program uses to date parameter as a cut-off date to obtain PO distributions having a net balance which simplifies process and improves performance

Accrual Write-offs are removed from the reconciliation report, but the user has to manually

Reconciliation reports only show distributions with balances resulting only relevant data that directly impacts the current Net Accrual Balance

Reconciliation is based on age of PO Distributions not the transaction date of the whole transaction

Accrual write-offs are removed from the reconciliation reports and write off entries are systematically created

The reconciliation reports should only be used to reconcile current balances



Walk through of example. For simplicity assume only 1 item is involved and PO price is $10

Reconciliation Logic / Example Period 1 January 2012

PO#1 Ordered 10 01/01/2012

PO#2 Ordered 10 01/01/2012

PO#1 Received 5 01/01/2012

PO#2 Received 5 01/01/2012

PO#1 Invoiced 5 01/31/2012

PO#2 Invoiced 4 01/31/2012



After the Accrual Load Program is run for January the following will be populated in the CST_RECONCILIATION_SUMMARY and CST_AP_PO_RECONCILIATION respectively


Only PO2 because PO1 self cleared






User decides to write off transaction

Summary and detail shown respectively







User realizes the write-off was a mistake and reverses the write off

The summary and detail impact are shown to the right




After the reversal the transaction will reappear on the reconciliation report






Accounting Setup

Receiving Within standard Oracle the user can define the inventory accrual account to be used at

the organization level

Many times this is not enough so now in R12 users can utilize the Subledger Accounting (SLA) setups to map the accrual account based on various user decided attributes

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Accounting Setup

Payables Within standard Oracle the user can define the AP Accrual account to be used at the

Supplier and Supplier Site level

Many times this is does not offer enough flexibility so now in R12 users can utilize the SLA setups to map the Payables accrual account based on various user decided attributes

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Accounting Setup

Write-Offs Within standard Oracle the default offset account that is used when writing off an accrual

transaction is the charge account on the PO distribution if the destination type of the PO distribution is Expense

If the destination type of the PO distribution is inventory than the default account is the variance account on the PO distribution (Purchase Price Variance)

If this default account does not provided enough flexibility then the user can use the R12 SLA setups to map the Write-Off offset as they wish

The mapping for the write-off can be found in the Cost Management module

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Lessons Learned

Transactions must be accounted

Reconciliation should be done every month

The data on the Oracle reports is what is in the system

Transactions not final accounted do not appear on the reports

SLA rules not consistent on the purchasing and payables side can cause out of balances between report and genera ledger

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© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Thank you Robert Smith [email protected]

R12 How Do I Balance My AP Accrual Account R12 (20130415)

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reconciliation

accrual load

set accrual

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user decided

accrual accounts

financial

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