R12.x Oracle Project Costing Fundamentals Instructor Guide

D60115GC10

Edition 1.0

February 2010

D65242

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Copyright © 2010, Oracle. All rights reserved. Disclaimer This document contains proprietary information and is protected by copyright and other intellectual property laws. You may copy and print this document solely for your own use in an Oracle training course. The document may not be modified or altered in any way. Except where your use constitutes "fair use" under copyright law, you may not use, share, download, upload, copy, print, display, perform, reproduce, publish, license, post, transmit, or distribute this document in whole or in part without the express authorization of Oracle. The information contained in this document is subject to change without notice. If you find any problems in the document, please report them in writing to: Oracle University, 500 Oracle Parkway, Redwood Shores, California 94065 USA. This document is not warranted to be error-free. Restricted Rights Notice If this documentation is delivered to the United States Government or anyone using the documentation on behalf of the United States Government, the following notice is applicable: U.S. GOVERNMENT RIGHTS The U.S. Government’s rights to use, modify, reproduce, release, perform, display, or disclose these training materials are restricted by the terms of the applicable Oracle license agreement and/or the applicable U.S. Government contract. Trademark Notice Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners.

Author

Debjit Nag

Technical Contributors and Reviewers

Ivy Farren, Mayank Khandelwal, Ruth Kukla, Erin Moss

This book was published using: Oracle Tutor

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R12.x Oracle Project Costing Fundamentals Table of Contents i

Table of Contents

Overview of Oracle Project Costing...............................................................................................................1-1 Overview of Oracle Project Costing..............................................................................................................1-3 Objectives ......................................................................................................................................................1-4 Agenda...........................................................................................................................................................1-5 Oracle Enterprise Project Management Solution...........................................................................................1-6 Oracle Project Costing and Integration..........................................................................................................1-7 Agenda...........................................................................................................................................................1-11 Oracle Project Costing and Project Classes ...................................................................................................1-12 Overview of Resources In Oracle Projects ....................................................................................................1-13 Costing Flow .................................................................................................................................................1-15 Collect and Manage All Costs .......................................................................................................................1-17 Manage Costs ................................................................................................................................................1-18 View Accounting: Transaction Details..........................................................................................................1-20 View Accounting: Final Subledger Accounting Entries................................................................................1-21 View Expenditure Item Details .....................................................................................................................1-22 Summary........................................................................................................................................................1-23 Quiz ...............................................................................................................................................................1-24

Defining Projects for Costing .........................................................................................................................2-1 Defining Projects for Costing ........................................................................................................................2-3 Objectives ......................................................................................................................................................2-4 Agenda...........................................................................................................................................................2-5 Overview of Projects and Tasks ....................................................................................................................2-6 Project Classes and Project Types .................................................................................................................2-7 Overview of Project Templates .....................................................................................................................2-8 Organizing a Project Structure.......................................................................................................................2-9 Basic Project Information ..............................................................................................................................2-10 Quiz ...............................................................................................................................................................2-12 Agenda...........................................................................................................................................................2-14 Burden Schedules for Costing .......................................................................................................................2-15 Organization Overrides..................................................................................................................................2-16 Project Currency............................................................................................................................................2-17 Currencies and Expenditures .........................................................................................................................2-18 Costing Currency Options .............................................................................................................................2-19 Quiz ...............................................................................................................................................................2-20 Agenda...........................................................................................................................................................2-21 Controlling Expenditures Overview ..............................................................................................................2-22 Project Statuses..............................................................................................................................................2-23 Task Chargeable Status .................................................................................................................................2-24 Transaction Dates ..........................................................................................................................................2-25 Transaction Controls......................................................................................................................................2-26 Exclusive and Inclusive Transaction Controls...............................................................................................2-28 Allowable Charges for Each Transaction Control .........................................................................................2-29 Determining if an Item is Chargeable............................................................................................................2-30 Quiz ...............................................................................................................................................................2-31 Summary........................................................................................................................................................2-32

Overview of Budgetary Controls, Budget Integration and Core Budgeting ..............................................3-1 Overview of Budgetary Controls, Budget Integration and Core Budgeting ..................................................3-3 Objectives ......................................................................................................................................................3-4 Agenda...........................................................................................................................................................3-5 Overview of Budgetary Controls...................................................................................................................3-6 Budgetary Control Settings: Time Intervals ..................................................................................................3-7

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R12.x Oracle Project Costing Fundamentals Table of Contents ii

Budgetary Control Settings: Control Levels..................................................................................................3-9 Example: Budgetary Control Rollup .............................................................................................................3-10 Entering Budget Amounts for Controlled Budgets........................................................................................3-11 Budget Definition Strategies..........................................................................................................................3-13 Transaction Processing with Controlled Budgets ..........................................................................................3-14 Overview of the Budgetary Control Process Flow ........................................................................................3-16 Viewing Budgetary Control Results ..............................................................................................................3-18 Maintaining Budgetary Control Balances......................................................................................................3-19 Budgetary Controls Cross Charge Restriction...............................................................................................3-20 Quiz ...............................................................................................................................................................3-21 Agenda...........................................................................................................................................................3-24 Overview of Budget Integration ....................................................................................................................3-25 Generating Accounting for Integrated Budgets .............................................................................................3-26 Accounting Event Model Overview ..............................................................................................................3-28 Budget Check Funds Processing Overview...................................................................................................3-31 Creating a Baseline for an Integrated Budget ................................................................................................3-33 Budget Integration Workflow........................................................................................................................3-35 Reviewing and Overriding Budget Account Details......................................................................................3-36 Viewing Encumbrance and Budget Subledger Accounting...........................................................................3-37 Quiz ...............................................................................................................................................................3-38 Agenda...........................................................................................................................................................3-39 Top-Down Budget Integration.......................................................................................................................3-40 Top-Down Budget Integration Procedures ....................................................................................................3-41 Encumbrance Accounting Example...............................................................................................................3-43 Creating Project Budgets for Top-Down Budget Integration ........................................................................3-46 Maintaining the Project Budget .....................................................................................................................3-47 Year-End Processing .....................................................................................................................................3-49 Agenda...........................................................................................................................................................3-50 Bottom-Up Budget Integration ......................................................................................................................3-51 Bottom-Up Budget Integration Procedures ...................................................................................................3-52 Agenda...........................................................................................................................................................3-54 Non-Integrated Budgets with Budgetary Controls Procedures......................................................................3-55 Agenda...........................................................................................................................................................3-56 Budgeting Implementation Steps...................................................................................................................3-57 Define Additional Core Budgeting Setup......................................................................................................3-58 Implementing Budgetary Controls ................................................................................................................3-59 Budgetary Controls: Enable Budgetary Controls and Encumbrance Accounting .........................................3-60 Budgetary Controls: Define Profile Options..................................................................................................3-61 Budgetary Controls: Define Control Levels and the Time Interval...............................................................3-62 Budgetary Controls: Create an Initial Budget................................................................................................3-64 Budgetary Controls: Adjust Default Control Levels .....................................................................................3-65 Implementing Budget Integration..................................................................................................................3-67 Budget Integration: Define the Project Budget Account Generation Workflow ...........................................3-68 Budget Integration: Define Profile Options...................................................................................................3-70 Budget Integration: Implement Top-Down Integration .................................................................................3-71 Budget Integration: Implement Bottom-Up Integration ................................................................................3-73 Quiz ...............................................................................................................................................................3-74 Summary........................................................................................................................................................3-75

Entering Expenditures ....................................................................................................................................4-1 Entering Expenditures ...................................................................................................................................4-3 Objectives ......................................................................................................................................................4-4 Agenda...........................................................................................................................................................4-5 Costing Flow: Enter Expenditures.................................................................................................................4-6 Expenditures Overview .................................................................................................................................4-7 Multiple Organization Access Control (MOAC)...........................................................................................4-8 Expenditures Overview .................................................................................................................................4-9

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R12.x Oracle Project Costing Fundamentals Table of Contents iii

Currency Fields for Expenditures ..................................................................................................................4-11 Pre-Approved Batch Expenditure Entry Flow Overview ..............................................................................4-12 Statuses for Pre-Approved Expenditure Batches...........................................................................................4-13 Enter Pre-Approved Batches .........................................................................................................................4-14 Submitting an Expenditure Batch ..................................................................................................................4-16 Reversing an Expenditure Batch ...................................................................................................................4-17 Correcting Expenditure Batches ....................................................................................................................4-18 Copying an Expenditure Batch......................................................................................................................4-20 Reviewing Project Expenditures....................................................................................................................4-21 Viewing Accounting Lines ............................................................................................................................4-24 Quiz ...............................................................................................................................................................4-25 Agenda...........................................................................................................................................................4-27 Automatically Reversing Expenditure Batches .............................................................................................4-28 Releasing the Batch .......................................................................................................................................4-29 GL Periods for the Expenditure Items ...........................................................................................................4-30 Agenda...........................................................................................................................................................4-31 Upload Expenditure Batches from Microsoft Excel ......................................................................................4-32 Upload Contingent Worker Timecards..........................................................................................................4-34 Quiz ...............................................................................................................................................................4-36 Agenda...........................................................................................................................................................4-37 Expenditure Batch Reports ............................................................................................................................4-38 Quiz ...............................................................................................................................................................4-39 Agenda...........................................................................................................................................................4-40 Costing Flow: Import Transactions ...............................................................................................................4-41 Overview of Transaction Sources..................................................................................................................4-42 Overview of Transaction Import ...................................................................................................................4-43 Resolving Import Exceptions ........................................................................................................................4-44 Quiz ...............................................................................................................................................................4-45 Correcting Rejected Transactions within Oracle Project Costing..................................................................4-46 Summary........................................................................................................................................................4-48

Implementing Expenditures ...........................................................................................................................5-1 Implementing Expenditures...........................................................................................................................5-3 Objectives ......................................................................................................................................................5-4 Expenditures Implementation Steps ..............................................................................................................5-5 Agenda...........................................................................................................................................................5-6 Expenditure Categories..................................................................................................................................5-7 Define Revenue Categories ...........................................................................................................................5-8 Define Units...................................................................................................................................................5-9 Expenditure Type Classes..............................................................................................................................5-10 Define Expenditure Types .............................................................................................................................5-12 Multiple Expenditure Type Classes Per Expenditure Type ...........................................................................5-14 Quiz ...............................................................................................................................................................5-15 Agenda...........................................................................................................................................................5-17 Transaction Control Extension ......................................................................................................................5-18 Quiz ...............................................................................................................................................................5-19 AutoApproval Extension ...............................................................................................................................5-20 Agenda...........................................................................................................................................................5-21 Define Transaction Sources...........................................................................................................................5-22 Example Predefined Transaction Sources .....................................................................................................5-23 Example Predefined Transaction Sources: Manufacturing and Inventory.....................................................5-24 Quiz ...............................................................................................................................................................5-26 Agenda...........................................................................................................................................................5-27 Listings ..........................................................................................................................................................5-28 Summary........................................................................................................................................................5-29

Performing Cost Processing............................................................................................................................6-1 Performing Cost Processing ..........................................................................................................................6-3

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R12.x Oracle Project Costing Fundamentals Table of Contents iv

Objectives ......................................................................................................................................................6-4 Agenda...........................................................................................................................................................6-5 Overview of Costing......................................................................................................................................6-6 Costing Concepts...........................................................................................................................................6-9 Overview of Encumbrance Accounting.........................................................................................................6-10 Quiz ...............................................................................................................................................................6-12 Agenda...........................................................................................................................................................6-13 Costing Flow: Distribute Costs......................................................................................................................6-14 Cost Distribution Processing Flow ................................................................................................................6-15 Determining Costs .........................................................................................................................................6-16 Quiz ...............................................................................................................................................................6-18 Burden Cost Calculations ..............................................................................................................................6-19 AutoAccounting: Distribution Programs .......................................................................................................6-20 Cost Distribution Concurrent Programs ........................................................................................................6-21 Agenda...........................................................................................................................................................6-23 Costing Flow: Create Accounting .................................................................................................................6-24 Integration with Oracle Subledger Accounting .............................................................................................6-25 Generating Cost Accounting Events..............................................................................................................6-26 AutoAccounting: Generate Accounting Events.............................................................................................6-27 Creating and Transferring Accounting ..........................................................................................................6-28 Oracle General Ledger Journal Import ..........................................................................................................6-29 Quiz ...............................................................................................................................................................6-30 Agenda...........................................................................................................................................................6-31 Streamline Processes .....................................................................................................................................6-32 Submitting Streamline Processes...................................................................................................................6-34 Agenda...........................................................................................................................................................6-35 Overview of Period Processing .....................................................................................................................6-36 Control of GL Period Statuses for Project Transactions................................................................................6-37 Transaction Accounting Methods..................................................................................................................6-38 Period End Date Accounting .........................................................................................................................6-39 Expenditure Item Date Accounting ...............................................................................................................6-41 Expenditure Item Date Accounting with Common Accounting Periods .......................................................6-43 Sweeping Transaction Accounting Events ....................................................................................................6-45 Quiz ...............................................................................................................................................................6-47 Summary........................................................................................................................................................6-48

Accounting for Costs .......................................................................................................................................7-1 Accounting for Costs .....................................................................................................................................7-3 Objectives ......................................................................................................................................................7-4 Agenda...........................................................................................................................................................7-5 Overview of Accounting for Costs ................................................................................................................7-6 AutoAccounting ............................................................................................................................................7-7 AutoAccounting Rules ..................................................................................................................................7-8 AutoAccounting Rule Mapping.....................................................................................................................7-9 Constant Value ..............................................................................................................................................7-10 Parameter Value ............................................................................................................................................7-11 SQL Select Statement Value .........................................................................................................................7-12 Lookup Sets ...................................................................................................................................................7-13 Selecting a Segment Value Source ................................................................................................................7-15 Assign Rules..................................................................................................................................................7-16 Quiz ...............................................................................................................................................................7-18 Agenda...........................................................................................................................................................7-19 AutoAccounting for Costs Implementation Steps .........................................................................................7-20 Accounting for Labor Costs...........................................................................................................................7-21 Accounting for Expense Report Costs...........................................................................................................7-22 Accounting for Usage Costs ..........................................................................................................................7-23 Accounting for Miscellaneous Costs .............................................................................................................7-24

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R12.x Oracle Project Costing Fundamentals Table of Contents v

Accounting for Burden Transactions.............................................................................................................7-25 Accounting for Total Burdened Cost.............................................................................................................7-26 Accounting for WIP and Inventory Costs......................................................................................................7-27 Accounting for Supplier Cost Adjustments ...................................................................................................7-29 Listings ..........................................................................................................................................................7-31 Quiz ...............................................................................................................................................................7-32 Agenda...........................................................................................................................................................7-33 Account Generator.........................................................................................................................................7-34 Account Generator Terminology...................................................................................................................7-36 Implementing Accounting for Project-Related Supplier Costs and Expense Reports ...................................7-37 Quiz ...............................................................................................................................................................7-39 Agenda...........................................................................................................................................................7-40 Encumbrance Accounting and Project Budgets.............................................................................................7-41 Project Budget Account Generation Workflow.............................................................................................7-42 Quiz ...............................................................................................................................................................7-43 Agenda...........................................................................................................................................................7-44 Overview of Oracle Subledger Accounting...................................................................................................7-45 Integration with Oracle Subledger Accounting .............................................................................................7-46 Accounting Event Model Overview ..............................................................................................................7-47 Quiz ...............................................................................................................................................................7-49 Agenda...........................................................................................................................................................7-50 Oracle Subledger Accounting for Costs Implementation Steps.....................................................................7-51 Oracle Subledger Accounting for Costs Implementation Steps (continued) .................................................7-52 Sources and Custom Sources.........................................................................................................................7-53 Journal Entry Methods and Definitions .........................................................................................................7-54 Associating Subledger Accounting Methods and Ledgers ............................................................................7-56 Post-Accounting Programs ............................................................................................................................7-57 Cross-Entity Balancing Rules........................................................................................................................7-59 Oracle Subledger Accounting Inquiries.........................................................................................................7-60 Audit Reports.................................................................................................................................................7-61 Summary........................................................................................................................................................7-62

Implementing Non-Labor Costing .................................................................................................................8-1 Implementing Non-Labor Costing.................................................................................................................8-3 Objectives ......................................................................................................................................................8-4 Agenda...........................................................................................................................................................8-5 Implementing Non-Labor Costing.................................................................................................................8-6 Non-Labor Costing Implementation Steps ....................................................................................................8-7 Defining Non-Labor Resources.....................................................................................................................8-8 Non-Labor Cost Rates ...................................................................................................................................8-9 Non-Labor Cost Rate Overrides ....................................................................................................................8-10 Agenda...........................................................................................................................................................8-11 Listings ..........................................................................................................................................................8-12 Quiz ...............................................................................................................................................................8-13 Summary........................................................................................................................................................8-15

Implementing Labor Costing..........................................................................................................................9-1 Implementing Labor Costing.........................................................................................................................9-3 Objectives ......................................................................................................................................................9-4 Agenda...........................................................................................................................................................9-5 Labor Costing Implementation Steps ............................................................................................................9-6 Define Labor Costing Multipliers..................................................................................................................9-7 Quiz ...............................................................................................................................................................9-8 Labor Costing Rules ......................................................................................................................................9-9 Quiz ...............................................................................................................................................................9-11 Rate Schedules...............................................................................................................................................9-12 Assign Costing Rules and Rate Schedules ....................................................................................................9-14 Labor Costing Overrides ...............................................................................................................................9-16

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R12.x Oracle Project Costing Fundamentals Table of Contents vi

Labor Costing Extension ...............................................................................................................................9-17 Labor Transaction Extension.........................................................................................................................9-18 Implement Overtime Processing....................................................................................................................9-20 Overtime Calculation Extension....................................................................................................................9-22 Quiz ...............................................................................................................................................................9-23 Agenda...........................................................................................................................................................9-24 Listings ..........................................................................................................................................................9-25 Summary........................................................................................................................................................9-26

Implementing Burden Costing .......................................................................................................................10-1 Implementing Burden Costing.......................................................................................................................10-3 Objectives ......................................................................................................................................................10-4 Agenda...........................................................................................................................................................10-5 Overview of Burdening .................................................................................................................................10-6 Burden Costing Terminology ........................................................................................................................10-7 Storing Burden Cost Calculations .................................................................................................................10-8 Accounting for Burden Costs ........................................................................................................................10-9 Project Types and Burdening.........................................................................................................................10-11 Quiz ...............................................................................................................................................................10-13 Agenda...........................................................................................................................................................10-14 Burden Costing Implementation Steps ..........................................................................................................10-15 Cost Bases and Cost Base Types ...................................................................................................................10-16 Burden Cost Codes ........................................................................................................................................10-17 Burden Structures ..........................................................................................................................................10-18 Burden Schedule Types and Burden Schedules.............................................................................................10-22 Assigning Burden Multipliers........................................................................................................................10-23 Defining Burden Schedules ...........................................................................................................................10-25 Assigning Burden Schedules .........................................................................................................................10-27 Burden Costing Extension .............................................................................................................................10-28 Reporting Separate Burden Transactions with Source Resources .................................................................10-29 Accounting for Cost Adjustments Resulting from Burden Schedule Revisions............................................10-31 Accounting for Cost Adjustments Example 1: Total Burdened Costs without Incremental Transactions ....10-32 Accounting for Cost Adjustments Example 2: Total Burdened Costs with Incremental Transactions .........10-34 Accounting for Cost Adjustments Example 3: Summarized Burden Cost Components without Incremental Transactions...................................................................................................................................................10-36 Accounting for Cost Adjustments Example 4: Summarized Burden Cost Components with Incremental Transactions...................................................................................................................................................10-38 Quiz ...............................................................................................................................................................10-40 Agenda...........................................................................................................................................................10-43 Burden Calculation in Costing Programs ......................................................................................................10-44 Concurrent Programs: Total Burdened Cost Accounting ..............................................................................10-47 Concurrent Programs: Account for Summarized Burden Cost Components.................................................10-48 Maintenance Concurrent Programs ...............................................................................................................10-49 Quiz ...............................................................................................................................................................10-50 Summary........................................................................................................................................................10-51

Performing Cost Adjustments ........................................................................................................................11-1 Performing Cost Adjustments........................................................................................................................11-3 Objectives ......................................................................................................................................................11-4 Agenda...........................................................................................................................................................11-5 Adjusting Expenditure Items .........................................................................................................................11-6 Adjustments to Imported Transactions ..........................................................................................................11-7 Project Status and Adjustments .....................................................................................................................11-9 Recalculate Burden Cost................................................................................................................................11-10 Recalculate Raw Cost ....................................................................................................................................11-11 Change Work Type........................................................................................................................................11-12 Change Comment ..........................................................................................................................................11-13 Split Item .......................................................................................................................................................11-14

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R12.x Oracle Project Costing Fundamentals Table of Contents vii

Transfer Item .................................................................................................................................................11-15 Change Currency Attributes ..........................................................................................................................11-16 Adjustments to Multi-Currency Transactions................................................................................................11-17 Adjustments to Supplier Costs.......................................................................................................................11-18 Mass Adjustments..........................................................................................................................................11-20 Correct Approved Expenditure Items ............................................................................................................11-22 Processing Adjustments.................................................................................................................................11-24 Results of Adjustment Processing .................................................................................................................11-26 Quiz ...............................................................................................................................................................11-28 Agenda...........................................................................................................................................................11-32 Audit Reporting for Expenditure Adjustments ..............................................................................................11-33 Summary........................................................................................................................................................11-35

Integration with Oracle Purchasing and Oracle Payables...........................................................................12-1 Integration with Oracle Purchasing and Oracle Payables..............................................................................12-3 Objectives ......................................................................................................................................................12-4 Agenda...........................................................................................................................................................12-5 Overview of Supplier Costs...........................................................................................................................12-6 Oracle Purchasing and Oracle Payables (Accrual) ........................................................................................12-7 Oracle Purchasing and Oracle Payables (Cash).............................................................................................12-9 Quiz ...............................................................................................................................................................12-11 Agenda...........................................................................................................................................................12-12 Entering Project-Related Information............................................................................................................12-13 Validating Project Information ......................................................................................................................12-15 Budgetary Control Activation........................................................................................................................12-16 Commitment Reporting .................................................................................................................................12-17 Accounting Transactions ...............................................................................................................................12-19 Quiz ...............................................................................................................................................................12-21 Agenda...........................................................................................................................................................12-22 Integration with Oracle Purchasing ...............................................................................................................12-23 Documents in Oracle Purchasing...................................................................................................................12-25 Agenda...........................................................................................................................................................12-26 Supplier Costs and Accounting Methods.......................................................................................................12-27 Integration with Oracle Payables (Accrual)...................................................................................................12-28 Integration with Oracle Payables (Cash) .......................................................................................................12-30 Invoices in Oracle Payables...........................................................................................................................12-31 Quiz ...............................................................................................................................................................12-32 Agenda...........................................................................................................................................................12-33 Interfacing Supplier Costs .............................................................................................................................12-34 Payment Control ............................................................................................................................................12-36 Predefined Transaction Sources ....................................................................................................................12-37 Predefined Transaction Sources (continued) .................................................................................................12-38 Supplier Cost Audit Report ...........................................................................................................................12-39 Expenditure Inquiry.......................................................................................................................................12-40 Viewing Project Adjustments from the Invoice Workbench .........................................................................12-41 Agenda...........................................................................................................................................................12-43 Managing Subcontractor Payments ...............................................................................................................12-44 Managing Financing and Advances...............................................................................................................12-46 Managing Retainage ......................................................................................................................................12-47 Quiz ...............................................................................................................................................................12-49 Agenda...........................................................................................................................................................12-50 Supplier Cost Adjustments Overview............................................................................................................12-51 Restrictions to Supplier Cost Adjustments in Oracle Project Costing...........................................................12-53 Adjusting Project-Related Documents in Oracle Purchasing ........................................................................12-55 Writing Off Receipt Accruals in Oracle Purchasing......................................................................................12-57 Adjusting Project-Related Documents in Oracle Payables............................................................................12-58 Adjusting Supplier Costs for Non-Capital Assets .........................................................................................12-60

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R12.x Oracle Project Costing Fundamentals Table of Contents viii

Manually Adjusting Unmatched Reversing Expenditure Items.....................................................................12-61 Processing Adjustments.................................................................................................................................12-62 Prioritizing Supplier Costs Adjustments........................................................................................................12-64 Accounting for Supplier Cost Adjustments ...................................................................................................12-69 Quiz ...............................................................................................................................................................12-74 Agenda...........................................................................................................................................................12-76 Oracle Purchasing and Oracle Payables Integration Implementation Steps ..................................................12-77 Implementing Oracle Purchasing and Oracle Payables Integration...............................................................12-79 Set Profile Options for Project-Related Documents ......................................................................................12-80 Define the Supplier Invoice Account Generator............................................................................................12-82 Defining a Project-Related Purchasing Transactions Account Generator .....................................................12-83 Specify a Default Supplier Cost Credit Account ...........................................................................................12-84 Define Project-Related Distribution Sets.......................................................................................................12-85 Define Oracle Payables Descriptive Flexfields and Related Profiles ............................................................12-86 Summary........................................................................................................................................................12-87

Integration with Oracle Internet Expenses ...................................................................................................13-1 Integration with Oracle Internet Expenses.....................................................................................................13-3 Objectives ......................................................................................................................................................13-4 Agenda...........................................................................................................................................................13-5 Oracle Internet Expenses ...............................................................................................................................13-6 Expense Report Flow.....................................................................................................................................13-7 Deriving Project Data from Expense Reports................................................................................................13-9 Disconnected Expense Reporting Process.....................................................................................................13-10 Adjusting Expense Reports............................................................................................................................13-11 Quiz ...............................................................................................................................................................13-13 Agenda...........................................................................................................................................................13-15 Integration with Oracle Internet Expenses Implementation Steps.................................................................13-16 Install and Implement Oracle Internet Expenses ...........................................................................................13-17 Set Profile Options for Project-Related Expense Report Entry .....................................................................13-18 Set Profile Options for Project-Related Expense Report Approval ...............................................................13-19 Define the Project Expense Report Account Generator.................................................................................13-21 Define a Project-Related Expense Report Template .....................................................................................13-22 Quiz ...............................................................................................................................................................13-23 Summary........................................................................................................................................................13-25

Integration with Oracle Time & Labor .........................................................................................................14-1 Integration with Oracle Time & Labor ..........................................................................................................14-3 Objectives ......................................................................................................................................................14-4 Agenda...........................................................................................................................................................14-5 Oracle Time & Labor Overview....................................................................................................................14-6 Disconnected Time Entry ..............................................................................................................................14-7 Collecting and Processing Project-Related Timecards ..................................................................................14-8 Editing Timecards in Oracle Time & Labor ..................................................................................................14-10 Contingent Worker Timecards with PO Integration......................................................................................14-11 Quiz ...............................................................................................................................................................14-13 Agenda...........................................................................................................................................................14-15 Integration with Oracle Time & Labor Implementation Steps ......................................................................14-16 Install and Implement Oracle Time & Labor.................................................................................................14-17 Set Profile Options for Project-Related Timecards .......................................................................................14-18 Implement Client Extensions to Route and Approve Timecards...................................................................14-19 Quiz ...............................................................................................................................................................14-20 Summary........................................................................................................................................................14-21

Allocations and AutoAllocations ....................................................................................................................15-1 Allocations and AutoAllocations...................................................................................................................15-3 Objectives ......................................................................................................................................................15-4 Agenda...........................................................................................................................................................15-5

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R12.x Oracle Project Costing Fundamentals Table of Contents ix

Overview of Allocations................................................................................................................................15-6 Allocation Terminology ................................................................................................................................15-7 Difference between Allocation and Burdening..............................................................................................15-9 Allocation Rules Implementation Steps ........................................................................................................15-10 Allocation Rules ............................................................................................................................................15-11 Basis Method .................................................................................................................................................15-12 Basis Method - Spread Evenly ......................................................................................................................15-13 Basis Method - Target Percent and Spread Evenly .......................................................................................15-14 Basis Method - Prorate ..................................................................................................................................15-15 Basis Method - Target Percentage and Prorate..............................................................................................15-16 Allocation Rule Definition ............................................................................................................................15-17 Source Definition...........................................................................................................................................15-19 Target Definition ...........................................................................................................................................15-21 Offset Definition............................................................................................................................................15-23 Prorated Basis Method Definition .................................................................................................................15-25 Copy Allocation Rules...................................................................................................................................15-26 Deleting or Modifying Allocation Rules .......................................................................................................15-27 Client Extensions for Allocations..................................................................................................................15-28 Quiz ...............................................................................................................................................................15-30 Agenda...........................................................................................................................................................15-34 Allocating Costs ............................................................................................................................................15-35 Creating Allocation Runs ..............................................................................................................................15-36 Allocation Run Statuses.................................................................................................................................15-37 Deleting Allocation Runs ..............................................................................................................................15-38 Releasing Allocation Runs ............................................................................................................................15-39 Reversing Allocation Runs............................................................................................................................15-40 Quiz ...............................................................................................................................................................15-41 Agenda...........................................................................................................................................................15-42 Overview of AutoAllocations........................................................................................................................15-43 AutoAllocation Rules Implementation Steps.................................................................................................15-46 AutoAllocation Set Definition.......................................................................................................................15-47 Implementing Workflow and Client Extensions for AutoAllocations...........................................................15-49 Quiz ...............................................................................................................................................................15-50 Agenda...........................................................................................................................................................15-51 Submitting an AutoAllocation Set.................................................................................................................15-52 Viewing the Status of AutoAllocation Sets ...................................................................................................15-53 Summary........................................................................................................................................................15-54

Asset Capitalization.........................................................................................................................................16-1 Asset Capitalization.......................................................................................................................................16-3 Objectives ......................................................................................................................................................16-4 Agenda...........................................................................................................................................................16-5 Overview of Asset Capitalization..................................................................................................................16-6 Project-Related Asset Processing Flow .........................................................................................................16-9 Accounting Example .....................................................................................................................................16-10 Quiz ...............................................................................................................................................................16-16 Agenda...........................................................................................................................................................16-18 Project Types for Asset Capitalization ..........................................................................................................16-19 Quiz ...............................................................................................................................................................16-21 Agenda...........................................................................................................................................................16-22 Asset Processing Flow...................................................................................................................................16-23 Specifying Costs ............................................................................................................................................16-25 Defining Assets for Capital Projects..............................................................................................................16-27 Streamlining Asset Creation ..........................................................................................................................16-29 Asset Grouping Levels ..................................................................................................................................16-30 Asset Cost Allocation Methods .....................................................................................................................16-31 Specifying an Actual Date in Service or a Retirement Date..........................................................................16-32

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R12.x Oracle Project Costing Fundamentals Table of Contents x

Capital Events................................................................................................................................................16-33 Generating Summary Asset Lines .................................................................................................................16-35 Assigning Asset Lines ...................................................................................................................................16-37 Sending Asset Lines to Oracle Assets ...........................................................................................................16-38 Quiz ...............................................................................................................................................................16-40 Agenda...........................................................................................................................................................16-41 Adjusting Capital Project Costs.....................................................................................................................16-42 Reversing Capitalization of Assets in Oracle Project Costing.......................................................................16-43 Abandoning a Capital Asset in Oracle Project Costing .................................................................................16-45 Agenda...........................................................................................................................................................16-46 Asset Capitalization Implementation Steps ...................................................................................................16-47 Implement Asset Extensions..........................................................................................................................16-48 Define Standard Unit Costs for Asset Cost Allocations ................................................................................16-50 Enable Retirement Cost Processing...............................................................................................................16-51 Define Proceeds of Sale Expenditure Types..................................................................................................16-52 Summary........................................................................................................................................................16-53

Cross Charge....................................................................................................................................................17-1 Cross Charge .................................................................................................................................................17-3 Objectives ......................................................................................................................................................17-4 Agenda...........................................................................................................................................................17-5 Overview of Cross Charge.............................................................................................................................17-6 Cross Charge Terminology............................................................................................................................17-7 Cross Charge Types Example........................................................................................................................17-9 Processing Methods.......................................................................................................................................17-10 Quiz ...............................................................................................................................................................17-11 Agenda...........................................................................................................................................................17-12 Borrowed and Lent Processing......................................................................................................................17-13 Project and Task Setup ..................................................................................................................................17-14 Subledger Accounting Process Flow: Cross Charge .....................................................................................17-16 Borrowed and Lent Accounting.....................................................................................................................17-18 Cross Charge Adjustments ............................................................................................................................17-19 Processing Cross Charge Adjustments ..........................................................................................................17-21 Quiz ...............................................................................................................................................................17-23 Agenda...........................................................................................................................................................17-25 Borrowed and Lent Cross Charge Processing Implementation Steps............................................................17-26 Transfer Price Rules ......................................................................................................................................17-27 Transfer Price Schedule.................................................................................................................................17-29 Cross Charge Implementation Options..........................................................................................................17-31 Provider and Receiver Controls for Borrowed and Lent Accounting............................................................17-32 AutoAccounting Rules for Borrowed and Lent Transactions........................................................................17-33 Implement Cross Charge Extensions.............................................................................................................17-34 Quiz ...............................................................................................................................................................17-35 Summary........................................................................................................................................................17-36

Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking ..............18-1 Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking .....................18-3 Objectives ......................................................................................................................................................18-4 Agenda...........................................................................................................................................................18-5 Integration with Oracle Inventory..................................................................................................................18-6 Integration with Oracle Inventory Flow ........................................................................................................18-7 Miscellaneous Transactions...........................................................................................................................18-8 Launching Transaction Managers..................................................................................................................18-9 Transfer and Import .......................................................................................................................................18-10 Quiz ...............................................................................................................................................................18-11 Agenda...........................................................................................................................................................18-12 Oracle Inventory Integration Implementation Steps......................................................................................18-13 Install and Implement Oracle Inventory ........................................................................................................18-14

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R12.x Oracle Project Costing Fundamentals Table of Contents xi

Enable Project Cost Collection......................................................................................................................18-15 Create a Project-Enabled Transaction Type ..................................................................................................18-16 Create an Inventory Expenditure Type..........................................................................................................18-18 Set Expenditure Type Profile Option.............................................................................................................18-19 Quiz ...............................................................................................................................................................18-21 Agenda...........................................................................................................................................................18-22 Integration with Oracle Project Manufacturing .............................................................................................18-23 Importing Project Manufacturing Costs ........................................................................................................18-24 Transaction Sources.......................................................................................................................................18-25 Transaction Sources (continued) ...................................................................................................................18-26 Quiz ...............................................................................................................................................................18-27 Agenda...........................................................................................................................................................18-28 Integration with Oracle Asset Tracking.........................................................................................................18-29 How Purchase Order Receipts Flow into Project-Related Transactions........................................................18-31 Importing Oracle Asset Tracking Cost ..........................................................................................................18-33 Summary........................................................................................................................................................18-34

Appendix B: Budgetary Controls and Budget Integration ..........................................................................19-1 Appendix B: Budgetary Controls and Budget Integration.............................................................................19-3 Objectives ......................................................................................................................................................19-4 Agenda...........................................................................................................................................................19-5 Budgeting Implementation Steps...................................................................................................................19-6 Define Budget Change Reasons ....................................................................................................................19-7 Define Additional Budget Types ...................................................................................................................19-8 Define Additional Budget Entry Methods .....................................................................................................19-10 Budget Calculation Extensions......................................................................................................................19-12 Budget Verification Extension ......................................................................................................................19-14 Budget Workflow and Budget Workflow Extension.....................................................................................19-15 Quiz ...............................................................................................................................................................19-16 Agenda...........................................................................................................................................................19-18 Implementing Budgetary Controls ................................................................................................................19-19 Defining Profile Options for Budgetary Controls..........................................................................................19-20 Defining Control Levels and the Time Interval .............................................................................................19-21 Creating an Initial Budget..............................................................................................................................19-23 Adjusting Default Control Levels..................................................................................................................19-25 Quiz ...............................................................................................................................................................19-26 Agenda...........................................................................................................................................................19-27 Implementing Budget Integration..................................................................................................................19-28 Implementing Bottom–Up Integration...........................................................................................................19-29 Implementing Top-Down Integration............................................................................................................19-31 Summary........................................................................................................................................................19-33

Appendix C: Asset Capitalization: Capitalizing Interest .............................................................................20-1 Appendix C: Asset Capitalization: Capitalizing Interest ...............................................................................20-3 Objectives ......................................................................................................................................................20-4 Agenda...........................................................................................................................................................20-5 Overview of Capitalized Interest ...................................................................................................................20-6 Setting Up Capital Projects for Capitalized Interest ......................................................................................20-8 Generating Capitalized Interest Expenditure Batches ...................................................................................20-9 Reviewing Capitalized Interest Expenditure Batches....................................................................................20-10 Inactive Capital Projects Report ....................................................................................................................20-11 Quiz ...............................................................................................................................................................20-12 Agenda...........................................................................................................................................................20-14 Capitalized Interest Implementation Steps ....................................................................................................20-15 Defining Capitalized Interest Rate Names.....................................................................................................20-16 Defining Capitalized Interest Rate Schedules................................................................................................20-19 Specifying Capitalized Interest Rate Schedules for Project Types................................................................20-21 Setting Project Status Controls for Capitalized Interest.................................................................................20-22

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R12.x Oracle Project Costing Fundamentals Table of Contents xii

Implementing the Capitalized Interest Extension ..........................................................................................20-23 Quiz ...............................................................................................................................................................20-24 Summary........................................................................................................................................................20-26

Summary of R12.x Project Costing Fundamentals.......................................................................................21-1 Summary of R12.x Project Costing Fundamentals........................................................................................21-3 Objectives ......................................................................................................................................................21-4 Agenda...........................................................................................................................................................21-5 Defining Projects for Costing ........................................................................................................................21-6 Expenditures ..................................................................................................................................................21-7 Performing Cost Processing ..........................................................................................................................21-8 Accounting for Costs .....................................................................................................................................21-11 Burden Costing..............................................................................................................................................21-12 Integration with Oracle Purchasing and Oracle Payables..............................................................................21-13 Integration with Oracle Internet Expenses.....................................................................................................21-14 Integration with Oracle Time & Labor ..........................................................................................................21-15 Integration with Other Applications ..............................................................................................................21-16 Allocations and AutoAllocations...................................................................................................................21-17 Asset Capitalization.......................................................................................................................................21-18 Asset Capitalization: Capitalized Interest......................................................................................................21-19 Cross Charge .................................................................................................................................................21-20 Budgetary Controls and Budget Integration ..................................................................................................21-21 Agenda...........................................................................................................................................................21-22 Oracle Projects Fundamentals Learning Path ................................................................................................21-23 Summary........................................................................................................................................................21-24

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R12.x Oracle Project Costing Fundamentals Table of Contents xiii

Preface

Profile

Before You Begin This Course

• Working experience with project management and project accounting

Prerequisites

• R12.x Oracle E-Business Suite Essentials for Implementers

• R12.x Project Foundation Fundamentals

How This Course Is Organized

This is an instructor-led course featuring lecture and hands-on exercises. Online demonstrations and written practice sessions reinforce the concepts and skills introduced.

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R12.x Oracle Project Costing Fundamentals Table of Contents xiv

Related Publications

Oracle Publications Title Part Number

Oracle Project Costing User Guide E13438-03

Oracle Projects Implementation Guide E13582-03

Oracle Projects Fundamentals E13581-03

Additional Publications

• System release bulletins

• Installation and user’s guides

• Read-me files

• International Oracle User’s Group (IOUG) articles

• Oracle Magazine

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R12.x Oracle Project Costing Fundamentals Table of Contents xv

Typographic Conventions

Typographic Conventions in Text Convention Element Example Bold italic Glossary term (if

there is a glossary) The algorithm inserts the new key.

Caps and lowercase

Buttons, check boxes, triggers, windows

Click the Executable button. Select the Can’t Delete Card check box. Assign a When-Validate-Item trigger to the ORD block. Open the Master Schedule window.

Courier new, case sensitive (default is lowercase)

Code output, directory names, filenames, passwords, pathnames, URLs, user input, usernames

Code output: debug.set (‘I”, 300); Directory: bin (DOS), $FMHOME (UNIX) Filename: Locate the init.ora file. Password: User tiger as your password. Pathname: Open c:\my_docs\projects URL: Go to http://www.oracle.com User input: Enter 300 Username: Log on as scott

Initial cap Graphics labels (unless the term is a proper noun)

Customer address (but Oracle Payables)

Italic Emphasized words and phrases, titles of books and courses, variables

Do not save changes to the database. For further information, see Oracle7 Server SQL Language Reference Manual. Enter user_id@us.oracle.com, where user_id is the name of the user.

Quotation marks

Interface elements with long names that have only initial caps; lesson and chapter titles in cross-references

Select “Include a reusable module component” and click Finish. This subject is covered in Unit II, Lesson 3, “Working with Objects.”

Uppercase SQL column names, commands, functions, schemas, table names

Use the SELECT command to view information stored in the LAST_NAME column of the EMP table.

Arrow Menu paths Select File > Save. Brackets Key names Press [Enter]. Commas Key sequences Press and release keys one at a time:

[Alternate], [F], [D] Plus signs Key combinations Press and hold these keys simultaneously: [Ctrl]+[Alt]+[Del]

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R12.x Oracle Project Costing Fundamentals Table of Contents xvi

Typographic Conventions in Code Convention Element Example Caps and lowercase

Oracle Forms triggers

When-Validate-Item

Lowercase Column names, table names

SELECT last_name FROM s_emp;

Passwords DROP USER scott IDENTIFIED BY tiger;

PL/SQL objects OG_ACTIVATE_LAYER (OG_GET_LAYER (‘prod_pie_layer’))

Lowercase italic

Syntax variables CREATE ROLE role

Uppercase SQL commands and functions

SELECT userid FROM emp;

Typographic Conventions in Oracle Application Navigation Paths

This course uses simplified navigation paths, such as the following example, to direct you through Oracle Applications.

(N) Invoice > Entry > Invoice Batches Summary (M) Query > Find (B) Approve

This simplified path translates to the following:

1. (N) From the Navigator window, select Invoice then Entry then Invoice Batches Summary.

2. (M) From the menu, select Query then Find.

3. (B) Click the Approve button.

Notations:

(N) = Navigator

(M) = Menu

(T) = Tab

(B) = Button

(I) = Icon

(H) = Hyperlink

(ST) = Sub Tab

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R12.x Oracle Project Costing Fundamentals Table of Contents xvii

Typographical Conventions in Oracle Application Help System Paths

This course uses a “navigation path” convention to represent actions you perform to find pertinent information in the Oracle Applications Help System.

The following help navigation path, for example—

(Help) General Ledger > Journals > Enter Journals

—represents the following sequence of actions:

1. In the navigation frame of the help system window, expand the General Ledger entry.

2. Under the General Ledger entry, expand Journals.

3. Under Journals, select Enter Journals.

4. Review the Enter Journals topic that appears in the document frame of the help system window.

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R12.x Oracle Project Costing Fundamentals Table of Contents xviii

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 1

Integration with Oracle Purchasing and Oracle Payables Chapter 12

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 2

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 3

Integration with Oracle Purchasing and Oracle Payables

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 4

Objectives

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 5

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 6

Overview of Supplier Costs

Overview of Supplier Costs

Oracle Project Costing fully integrates with Oracle Purchasing and Oracle Payables and enables you to enter project-related documents using those products. You can use both Oracle Purchasing and Oracle Payables, or just Oracle Payables. In addition, you can use Oracle iProcurement to enter project-related requisitions. When you enter project-related transactions in Oracle Purchasing and Oracle Payables, you enter project information on your source document. Oracle Purchasing, Oracle Payables, and Oracle Project Costing carry the project information through the document flow: from the requisition to the purchase order in Oracle Purchasing, to the supplier invoice in Oracle Payables, and to the project expenditure in Oracle Project Costing. The accounting method for your ledger determines when you can interface supplier costs to Oracle Project Costing. Note: You can use Transaction Import in Oracle Project Costing to import accounted supplier invoices directly into Oracle Project Costing from 3rd party systems. Note: For information about project-related contingent worker timecards with purchase order integration see lessons titled "Entering Expenditures" and "Integration with Oracle Time and Labor."

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 7

Oracle Purchasing and Oracle Payables (Accrual)

Oracle Purchasing and Oracle Payables (Accrual)

When the primary accounting method is accrual basis accounting, you interface perpetual receipt accruals, invoice variances, invoice distributions, and payment discounts to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Purchasing In Oracle Purchasing, you can enter project information for requisition distribution lines to associate cost commitments with projects. You can also enter project information on requisitions in Oracle iProcurement. When you autocreate a purchase order, Oracle Purchasing copies the distribution lines from the requisition to the purchase order. You can also create a purchase order without first entering a requisition. In this case, you enter project information for the purchase order distribution lines to associate cost commitments with projects. For a blanket purchase order, you enter project information when you create a release. You can optionally enable the Accrue at Receipt check box when you enter a purchase order shipment to make it eligible for receipt accrual processing. After you enter a receiving transaction for an accrue-on-receipt purchase order shipment, you create subledger accounting

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 8

for the receiving transaction. Next, you interface the costs associated with the receipt to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Payables In Oracle Payables, you can match a supplier invoice to an existing purchase order or receiving transaction. Oracle Payables automatically copies the project information from the purchase order distribution lines when you perform the match. You can also create non-matched supplier invoices in Oracle Payables and enter invoice distributions to charge invoice costs to projects. After you validate the invoice and create accounting for it in final mode, you interface project-related invoice distributions to Oracle Project Costing as actual costs. In addition, this program sends any supplier invoice cost variances from receipt accruals to Oracle Project Costing. Project-Related Prepayment Invoices Oracle Project Costing summarizes prepayment invoices that are not matched to purchase orders as cost commitments, not as actual costs, and displays the commitments in the Project Status Inquiry window or the Project Performance page, depending on the summarization model you use. Oracle Project Costing tracks only prepayment invoices not matched to purchase orders as commitments because Oracle Project Costing tracks commitments for prepayment invoices matched to purchase orders as purchase order commitments. The unmatched prepayment invoice commitment amount is the outstanding unapplied amount of the prepayment invoice. Oracle Project Costing calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount. Project-Related Payment Discounts You can set up Oracle Payables to apply discounts to payments. After you enter a payment with discounts, you interface the discounts to Oracle Project Costing to adjust the previously interfaced supplier costs. When the program PRC: Interface Supplier Costs interfaces discount amounts to Oracle Project Costing, the interface program creates an expenditure item for each discount line. If you pay an invoice before you interface the invoice distribution lines to Oracle Project Costing, and you set the parameters for the program PRC: Interface Supplier Costs to interface both supplier invoices and discounts, then the interface program creates the invoice distribution expenditure items and invoice discount expenditure items at the same time. Interfacing Supplier Costs to Oracle Project Costing You run the program PRC: Interface Supplier Costs to interface actual costs to Oracle Project Costing from Oracle Purchasing and Oracle Payables. This program uses Transaction Import to move the costs into the expenditures table in Oracle Project Costing. Each distribution line becomes a separate expenditure item in Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 9

Oracle Purchasing and Oracle Payables (Cash)

Oracle Purchasing and Oracle Payables (Cash)

When the primary accounting method in Oracle Payables is cash basis accounting, you interface payments to Oracle Project Costing as actual costs. Managing Project-Related Supplier Costs in Oracle Purchasing In Oracle Purchasing, you can enter project information for requisition distribution lines to associate cost commitments with projects. Oracle Project Costing tracks project-related supplier costs in Oracle Purchasing as commitments. You can also enter project information on requisitions in Oracle iProcurement. When you autocreate a purchase order, Oracle Purchasing copies the distribution lines from the requisition to the purchase order. You can also create a purchase order without first entering a requisition. In this case, you enter project information on purchase order distribution lines to associate cost commitments with projects. For a blanket purchase order, you enter project information when you create a release. You enter receiving transactions for purchase order lines in Oracle Purchasing. With cash basis accounting, you do not flag purchase order lines to accrue at receipt and you cannot interface receipts to Oracle Project Costing as actual costs.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 10

Managing Project-Related Supplier Costs in Oracle Payables In Oracle Payables, you can match a supplier invoice to an existing purchase order or receiving transaction. Oracle Payables automatically copies the project information from the purchase order distribution lines when you perform the match. You can also create non-matched supplier invoices in Oracle Payables and enter invoice distributions to charge invoice costs to projects. You cannot interface costs from Oracle Payables to Oracle Project Costing as actual costs until you pay the invoice. After you enter payments for a supplier invoice, you interface payments to Oracle Project Costing as actual costs. Oracle Payables allocates payment amounts to invoice distributions. You can interface partially paid invoices to Oracle Project Costing. If you void a payment in Oracle Payables, then Oracle Payables automatically reverses the project-related costs when you interface the reversing items to Oracle Project Costing. Project-Related Prepayment Invoices Oracle Projects summarizes prepayment invoices that are not matched to purchase orders as cost commitments, not as actual costs, and displays the commitments in the Project Status Inquiry window or the Project Performance page, depending on the summarization model you use. Oracle Projects tracks only prepayment invoices not matched to purchase orders as commitments because Oracle Projects tracks commitments for prepayment invoices matched to purchase orders as purchase order commitments. The unmatched prepayment invoice commitment amount is the outstanding unapplied amount of the prepayment invoice. Oracle Projects calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount. In addition, you cannot interface discounts related to prepayments to Oracle Projects as actual costs. Project-Related Payment Discounts You can set up Oracle Payables to apply discounts to payments. If you set up Oracle Project Costing to interface discounts, then the interface program creates an expenditure item for the amount of the payment, minus the discount amount. If you set up Oracle Project Costing so that the interface program does not interface discounts, then interface program creates the two expenditure items. One expenditure item is for the payment amount minus the discount, and the other expenditure item is for the amount of the discount. Together, the two expenditure items total to the full amount of the cost. Interfacing Supplier Costs to Oracle Project Costing You run the program PRC: Interface Supplier Costs to interface supplier costs to Oracle Project Costing from Oracle Payables as actual costs. This program uses Transaction Import to move the costs into the expenditures table in Oracle Project Costing. Each distribution line becomes a separate expenditure item in Oracle Project Costing. Note: The parameter Interface AP Discounts does not apply to cash basis accounting.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 11

Quiz

Answer: a

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 12

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 13

Entering Project-Related Information

Entering Project-Related Information

When you enter requisitions, purchase orders, and supplier invoices, you specify the following project-related information:

• Project number - The project incurring the charge. • Task Number - The lowest level task incurring the charge • Expenditure Type - A classification of the cost. The expenditure type must have an

expenditure type class of Supplier Invoices or Expense Reports. • Expenditure Organization - The organization that is ordering or has ordered the goods or

services, which can be different from the project owning organization. The organization you specify in the profile option PA: Default Expenditure Organization in AP/PO is the default value for the expenditure organization.

• Expenditure Item Date - The date that you expect to incur the expense for the goods or services that you are requesting for a requisition or purchase order, or the date that you incur the charge for an invoice. This date is used during online validation using project transaction controls, and becomes the expenditure item date on the expenditure item in Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 14

Oracle Payables uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process to determine the default expenditure item date for supplier invoice distribution lines. Oracle Payables also uses the profile option to determine the default expenditure item date when you enter supplier invoice distribution lines for unmatched invoices. Oracle Project Costing uses this profile option when you run the program PRC: Interface Supplier Costs to determine the expenditure item date for Oracle Purchasing receipts, invoice payments, and discounts.

• Project Quantity - The quantity of goods or services for which you are charged. You can enter data in this field only in Oracle Payables, as this field is applicable for invoice lines and distributions only.

If the Rate Required option for the selected expenditure type is enabled in Oracle Project Costing, then you must enter a quantity. When you interface the invoice distribution to Oracle Project Costing, Oracle Project Costing copies the quantity and amount to the expenditure item and calculates the rate. If Rate Required option for the selected expenditure type is disabled, then the quantity of the expenditure item is set to the amount you enter in Oracle Payables.

You do not enter the Projects Quantity for documents in Oracle Purchasing because you do not know the quantity for which you will be invoiced. Oracle Payables automatically sets the Projects Quantity field to the quantity invoiced of the invoice distribution line when you match an invoice to a purchase order or receipt.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 15

Validating Project Information

Validating Project Information

When you enter project information and either save or move to the next distribution line, the information is validated against the project transaction control information in Oracle Project Costing. This validation ensures that you can charge the type of expenditure to the project and task on the expenditure item date that you specified. If the information that you entered does not pass, then you must enter valid chargeable project information based on the transaction controls in Oracle Project Costing before you can continue. If you cannot determine valid project information that is chargeable, you can delete the values and close the window. When you create a distribution set in Oracle Payables, the project information for a distribution set line is not validated against the project transaction control information in Oracle Project Costing, because you do not enter an expenditure item date which is required for transaction control validation. When you create the distribution set lines, Oracle Payables validates the project and task number. When you enable enhanced period processing in Oracle Project Costing, Oracle Payables gives you a warning message during data entry if a project-related supplier invoice distribution falls into a GL period with a status other than Open or Future in Oracle Project Costing. Oracle Payables notifies you if a project-related invoice has a distribution that fails validation.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 16

Budgetary Control Activation

Budgetary Control Activation

In Oracle Purchasing and Oracle Payables, you can activate budgetary control validation when you select the Check Funds option for a transaction, and also during the transaction approval process. You can enforce budgetary controls against a GL budget and a project cost budget. When you select the Check Funds option, a successful budgetary control result does not update budgetary control balances. You use the Check Funds option to verify available funds for a transaction before requesting approval for the transaction. During the transaction approval processes, a validation of budgetary controls is automatically performed. If the validation is successful, the transaction is approved and budgetary control balances are updated. You can enforce budgetary controls against a project budget. Budgetary controls enable you to monitor and control expense commitment transactions entered for a project, based on a project cost budget. Expense commitment transactions are transactions for non-inventory items. For additional information, see the lesson titled "Appendix B: Budgetary Controls and Budget Integration."

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 17

Commitment Reporting

Commitment Reporting

You can report the total cost of a project by reporting the committed cost along with the actual cost. You can report the flow of committed cost, including associated nonrecoverable tax amounts, through Oracle Purchasing and Oracle Payables. These committed costs can include:

• Open requisitions (unpurchased requisitions). • Open purchase orders (uninvoiced and non-delivered). • Prepayment invoices that are not matched to a purchase order, and not yet applied to a

supplier invoice. - Note: The unmatched prepayment invoice commitment amount is the outstanding

unapplied amount of the prepayment invoice. Oracle Project Costing calculates the amount by subtracting prepayment application amounts from the prepayment invoice amount.

• Unmatched pending invoices (supplier invoices not yet interfaced to Oracle Project Costing to be included in project costs).

Oracle Project Costing shows prepayment invoices that are not matched to purchase orders as invoice commitments. The matched prepayment invoice does not appear as a separate commitment.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 18

Both unapproved and approved open requisitions and purchase orders show as commitments after you run the concurrent program to update project summary amounts. When you drill-down to view commitment details, if the Approved check box is enabled, then the requisition or purchase order associated with the commitment has been approved. You can report summary committed cost amounts for your projects and tasks, and can also review detail requisitions and purchase orders that backup the summary amounts. Note to students: You will view committed and actual supplier costs on your project in upcoming practices.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 19

Accounting Transactions

Accounting Transactions

Oracle Purchasing and Oracle Payables use the Account Generator to determine the default accounting for each project-related distribution line based on the project information that you enter. Oracle Purchasing builds the account number for the charge, accrual, and variance distribution accounts based on the Account Generator assignments that you define during implementation. You can define your Account Generator processes so that project-related requisitions and purchase orders use project-related information in the Account Generator assignments and non-project-related documents use the Account Generator assignments predefined by Oracle Purchasing. If you use encumbrance accounting, you can also define assignments for the budget account based on project information. In Oracle Payables, the Account Generator builds the default expense account number for project-related invoices using assignments that you define during implementation. You must enter the account number for non-project-related invoices. The Account Generator determines the default liability account for all invoices based on the liability account defaults provided by Oracle Payables.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 20

When you create subledger accounting for the distributions lines, Oracle Subledger Accounting uses the predefined setup that Oracle Purchasing, Oracle Payables, and Oracle Project Costing provide so that the create accounting program accepts the default accounts without change. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites the default account.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 21

Quiz

Answer: a

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 22

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 23

Integration with Oracle Purchasing

Integration with Oracle Purchasing

When you enter project-related transactions in Oracle Purchasing and Oracle iProcurement, you only need to enter project information on the source document; either the requisition or the purchase order. Entering Requisitions You enter project-related purchase requisitions using the Requisitions window in Oracle Purchasing. A requisition can have a combination of project-related and non-project-related distribution lines. In addition, you can use the Buyer WorkCenter in Oracle Purchasing to review requisitions. You can also use Oracle iProcurement to enter project-related purchase requisitions. Using AutoCreate When you automatically create purchase orders from project-related requisitions in the AutoCreate Documents window, Oracle Purchasing copies the project information and the accounting information from the requisition to the purchase order. You do not need to enter any additional project-related information on your purchase order when you use this feature. You can change the project information on the purchase order that was copied from the requisition, though in this case, the project information on the requisition is not updated.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 24

Entering Purchase Orders If your company does not use online requisitions or the AutoCreate feature, you can enter project-related information directly on your standard purchase orders. The Account Generator automatically creates the account information, based on the project-related information you enter. You can also use the Buyer WorkCenter in Oracle Purchasing to enter project-related purchase orders. Entering Releases You enter project-related releases against blanket purchase agreements and planned purchase orders. If the release distribution line is project-related, then you can specify project information. Recording Receipts and Delivery When a purchase order shipment is flagged to accrue at receipt and the purchased goods are delivered to an expense destination, you enter a receiving transaction for the purchase order in Oracle Purchasing. Next, you interface receipt accruals to Oracle Project Costing as actual transactions. This feature enables you to recognize the cost to your project in the period in which it is incurred rather than in the period in which it is invoiced. Note: You must create subledger accounting for receiving transactions in final mode before you can:

• View accounting for receipt accrual expenditure items in Oracle Project Costing. • Create accounting for adjustments made in Oracle Project Costing to receipt accrual

expenditure items.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 25

Documents in Oracle Purchasing

Documents in Oracle Purchasing

You enter project information for distribution lines in Oracle Purchasing: • Requisitions have three levels: the requisition header, requisition lines, and requisition

distributions. • Releases have three levels: the release header, release lines, and release distributions. • Purchase orders have four levels: the purchase order header, purchase order lines,

purchase order shipments, and purchase order distributions. You can create project-oriented folders at the distribution line level to make it easier and faster to enter project-related information. For information about entering requisitions, releases, and purchase orders, see the Oracle Purchasing User's Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 26

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 27

Supplier Costs and Accounting Methods

Supplier Costs and Accounting Methods

When you define a ledger, you can enable an option for the ledger to use cash basis accounting. Otherwise, the ledger uses accrual basis accounting.

• Accrual basis accounting - Oracle Payables creates accounting entries for invoices and payments. If you use accrual basis accounting, then you can set up Oracle Purchasing to accrue expense items at receipt.

• Cash basis accounting - Oracle Payables accounts only for payments and does not record liability information for invoices.

When you define a primary ledger, you can optionally assign one or more secondary ledgers to it. The primary ledger acts as the main record-keeping ledger. The secondary ledger is an optional, additional ledger that is associated with the primary ledger. For example, one ledger can use accrual basis accounting and the other can use cash basis accounting. This approach is also known as combined basis accounting. Oracle Payables records invoice accounting entries in both ledgers. The accounting method of the primary ledger, cash basis or accrual basis, determines the flow of actual costs to Oracle Project Costing. When you make supplier cost adjustments in Oracle Project Costing, Oracle Project Costing does not create accounting entries for a secondary ledger if the accounting basis differs from the primary ledger.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 28

Integration with Oracle Payables (Accrual)

Integration with Oracle Payables (Accrual)

When the primary accounting method is accrual basis accounting, you interface perpetual receipt accruals, invoice variances, invoice distributions, and payment discounts to Oracle Project Costing as actual costs. Matching Invoices If you use Oracle Purchasing and have already associated project-related information to a purchase order, then you can match the invoice to a purchase order or receipt using the Invoices window. Oracle Payables automatically copies the project information to the invoice. You cannot change the project information that is copied from the purchase order to the invoice, with the exception of the expenditure item date. Oracle Payables uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process to determine the default expenditure item date for supplier invoice distribution lines. You can override the default expenditure item date for invoice distribution lines on the Invoice Workbench in Oracle Payables. Entering Invoices You can enter project-related invoices directly in Oracle Payables. You can enter project-related information at the invoice level, which populates the project-related information at the

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 29

invoice line level. You can override these default values at the invoice line level. The project-related information that you enter at the invoice line level populates the invoice distributions for the line. You can override this default information at the invoice distribution line level. An invoice can have both project-related and non-project-related distributions. Importing Invoices You can import projects-related invoices through the Payables Open Interface tables. For example, you can import expense report invoices from Oracle Internet Expenses. Tracking Commitments You can track project-related invoices as commitments in Oracle Project Costing before you interface them as actual costs. Posting Invoices If you use accrual basis accounting, then you must validate the invoice and create subledger accounting for it in final mode in Oracle Payables before you can interface the invoice to Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 30

Integration with Oracle Payables (Cash)

Integration with Oracle Payables (Cash)

When the primary accounting method in Oracle Payables is cash basis accounting, you interface payments to Oracle Project Costing as actual costs. You cannot interface costs from Oracle Payables to Oracle Project Costing as actual costs until you pay the invoice. You can interface partially paid invoices to Oracle Project Costing. Entering Invoices As with accrual basis accounting, you can match invoices to purchasing documents, manually enter a supplier invoice, and import supplier invoices from an external source. Tracking Commitments You can track project-related invoices as commitments in Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 31

Invoices in Oracle Payables

Invoices in Oracle Payables

Invoices in Oracle Payables have three levels: the invoice header, invoice lines, and invoice distributions. You can create project-oriented folders at all three levels to make it easier and faster to enter project-related information for your invoices. For information about entering invoices, invoice lines, and invoice distributions, see the Oracle Payables User's Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 32

Quiz

Answer: a

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 33

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 34

Interfacing Supplier Costs

Interfacing Supplier Costs

You run the program PRC: Interface Supplier Costs to bring project-related supplier costs into Oracle Project Costing from Oracle Purchasing and Oracle Payables. The interface process groups the items into expenditure batches by transaction source.

• For accrual basis accounting, this program interfaces receipt accruals from Oracle Purchasing and supplier invoice-related costs, receipt accrual price variances, and discounts from Oracle Payables to Oracle Project Costing as actual costs. You must validate invoices and create accounting for them before you can interface the costs to Oracle Project Costing.

• For cash basis accounting, this program interfaces payments and discounts from Oracle Payables to Oracle Project Costing as actual costs.

If you make adjustments to project-related supplier costs in Oracle Purchasing or Oracle Payables, then this program interfaces the adjusting distribution lines to Oracle Project Costing. The program selects transactions based on the parameter values that you enter. It first retrieves all eligible accounted, project-related supplier costs. The program then interfaces the amounts

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 35

to Oracle Project Costing. The program groups the items into expenditure batches by transaction source. Each time you run the program PRC: Interface Supplier Costs, Oracle Project Costing generates reports you can use to track the interfaced costs, as well as those invoice lines and receipt accruals that the process rejected during interface. Import and Expenditure Item Dates For receipt accruals, payments, and discounts, the program uses the profile option PA: Default Expenditure Item Date for Supplier Cost to determine the expenditure item date. The program validates expenditure item dates for supplier costs. If the expenditure item date for an expenditure item fails validation, then the program rejects the transaction and leaves it in the Oracle Project Costing interface table. You must either change the date setup in Oracle Project Costing or change the date for the expenditure item. You can use the Review Transactions window to change the date for a rejected expenditure item and validate the new date. If the new date passes validation, then Oracle Project Costing marks it as pending so that PRC: Interface Supplier Costs interfaces the transaction the next time you run the program. Note: To update the expenditure item date in the Review Transactions window, the Allow Interface Modifications option must be enabled for the transaction source.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 36

Payment Control

Payment Control

Payment Control enables project managers to manage supplier payment for their projects. It integrates with Oracle Purchasing and Oracle Payables to create supplier invoices with automatic payment hold in Oracle Payables for purchase orders with complex payment terms of Pay When Paid and a deliverables schedule. Further, on interface of these supplier invoices from Oracle Payables to Oracle Projects as expenditure items, draft customer invoices generated on these expenditure items are automatically linked to these supplier invoices. You can also manually link supplier invoices to draft invoices from the Supplier Workbench or when reviewing invoices. In addition, you can manually review hold conditions and release holds from the Supplier Workbench. Payment Control provides the Send AR Notification workflow to enable project managers track receipts applied to customer invoices in Oracle Receivables. You can customize the workflow to send notifications to recipients other than the default recipient of project manager. If you enabled AR Receipt Notification for your projects and the notification includes receipts applied to customer invoices that are linked to supplier invoices on payment hold, you can manually review these invoices and release holds on supplier invoices from the Supplier Workbench.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 37

Predefined Transaction Sources

Predefined Transaction Sources

Oracle Project Costing predefines transaction sources to import supplier costs from Oracle Purchasing and Oracle Payables and expense reports from Oracle Payables.

• You can define preprocessing and post-processing extensions to customize the predefined supplier cost transaction sources. See: Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.

• The program PRC: Interface Supplier Costs only rejects the expenditure items that fail validation. The program interfaces the remaining expenditure items to Oracle Projects. This functionality only applies to predefined transaction sources for supplier costs.

Important: Do not use these transaction sources to import transactions from non-Oracle sources. These transaction sources are intended only for use by the Oracle Project Costing processes that import supplier costs and expense report costs from Oracle Purchasing and Oracle Payables. Note: You run the program PRC: Interface Expense Reports from Payables to interface expense report costs to Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 38

Predefined Transaction Sources (continued)

Predefined Transaction Sources (continued)

You must enable the Allow Interface Modifications option for predefined supplier cost transaction sources to use the Review Transactions window to modify the expenditure item date for expenditure items that fail date validation during import. If you enable the Allow Adjustments option for a predefined transaction source for supplier costs, then you must complete at least one of the following setup steps to create accounting for supplier cost adjustments:

• Specify the default supplier cost credit account for supplier cost adjustments in Oracle Projects implementation options for each operating unit.

• Set up Oracle Subledger Accounting to determine the supplier cost credit account.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 39

Supplier Cost Audit Report

Supplier Cost Audit Report

Run the program AUD: Supplier Cost Audit in Oracle Project Costing to generate the Supplier Cost Audit Report. You can use this report to track supplier cost transactions in Oracle Project Costing. This report lists all supplier cost transactions in Oracle Project Costing for a selected operating unit.

• For accrual basis accounting, the report includes raw costs associated with unmatched invoices, PO-matched or receipt-matched invoices, accrued receipts, and payments associated with discounts.

• For cash basis accounting, the report includes payments and prepayment applications associated with invoices.

When you submit the report, you can enter values for parameters such as From Project Number, To Project Number, Supplier, Transaction Type, From GL Period, To GL Period, and Adjustment Type to restrict the supplier cost transactions that the program includes on the report. For a complete list of the parameters, see: Supplier Cost Audit Report, Oracle Projects Fundamentals.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 40

Expenditure Inquiry

Expenditure Inquiry

You can use the Find Project Expenditure Items window or the Find Expenditure Items window in Oracle Project Costing to query supplier cost expenditure items. You can select a combination of find criteria to limit the search. For example, you can enter find criteria specific to supplier costs on the Supplier tab to query the expenditure items for a specific supplier invoice, payment, or receipt. After you query the expenditure items, you use the Expenditure Items window or Project Expenditure Items window to review them. You can use folder tools to add additional columns that provide supplier cost-specific information. You can review the item details for supplier cost expenditure items. For supplier costs from supplier invoices, you can choose AP Invoice to drill down to the invoice overview in Oracle Payables. If the invoice is matched to a purchase order, then you can drill down to the purchase order from the Invoice Workbench. For expenditure items from receipt accrual transactions, you can choose PO Receipt to drill down to the receipt transaction summary in Oracle Purchasing. You can also drill down to the related purchase order from the Receipt Transaction Summary window. For expenditure items from purchase order-related contingent worker labor costs, you can choose Purchase Order Details to drill down to the purchase order details in Oracle Purchasing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 41

Viewing Project Adjustments from the Invoice Workbench

Viewing Project Adjustments from the Invoice Workbench

To view project adjustments from the Invoice Workbench:

1. Position your cursor at the invoice, invoice line, or invoice distribution level.

2. Select View Project Adjustments from the Tools menu. 3. Select the Find button on the Find Expenditure Items

window. You can access Expenditure Inquiry from the Invoice Workbench in Oracle Payables to view

adjustments to supplier costs in Oracle Project Costing. The adjustments are to supplier costs that you previously interfaced to Oracle Project Costing and then adjusted in Oracle Project Costing. You can use this option to help reconcile costs between Oracle Payables and Oracle Project Costing because you do not interface adjustments that users make in Oracle Project Costing back to Oracle Payables.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 42

On the Invoice Workbench in Oracle Payables, select the View Project Adjustments option from the Tools menu to open the Find Expenditure Items window. This option is context-sensitive; Oracle Payables automatically enters find criteria based on the position of your cursor. When your cursor is on the invoice header or an invoice line, you can optionally revise the find criteria before you search for the expenditure items.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 43

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 44

Managing Subcontractor Payments

Managing Subcontractor Payments

If Oracle Services Procurement has been licensed and implemented, then you can take advantage of additional features for procuring complex services. Complex services can include consulting, advertising, construction, research and development, and professional services, and they typically require negotiated contracts with complex terms and payment arrangements. Oracle's Complex Work feature streamlines all aspects of the acquisition process for complex services including:

• Negotiation of service contracts with emphasis on terms related to contract financing and progress payment arrangements.

• Tracking of work progress against an agreed schedule in the contract. • Processing of payment requests.

The role that Oracle Purchasing plays is primarily in the authoring and monitoring portion of the Complex Work flow. In addition, the purchase order styles that dictate which of the complex payment attributes are available are created in Oracle Purchasing. Complex payment attributes include:

• Progress Payments - For partial payments during performance of the contract. For example, progress payment pay items include:

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 45

- Milestone - Payments based on progress events. - Rate - Payment amount is pro-rated based on the percentage of work completed. - Lump Sum - Payment amount is a fixed amount based on the percentage of work

completed. • Advances - For advance payments (prepayments). • Retainage - To withhold a portion of the payment until all work under a contract is

accepted is to be allowed. Oracle's Complex Work feature provides a streamlined process for contractors to report progress and request payments using either a Work Confirmation Request or an Invoice, each of which can then be electronically routed for approval. You can optionally track the progress of project-related work against project deliverables that you define in Oracle Project Management. When the work is complete, multiple methods exist for submitting a Work Confirmation Request:

• The contractor can create and submit a Work Confirmation Request in Oracle iSupplier Portal.

• The project manager can create a Work Confirmation request on behalf of the contractor in iProcurement.

• The buyer can create and submit a Work Confirmation on behalf of the contractor. The buyer or contract administrator can then confirm the progress. For additional information about procuring complex services, see the Oracle Purchasing User's Guide and the course titled "R12.x Oracle Purchasing Fundamentals."

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 46

Managing Financing and Advances

Managing Financing and Advances

You assign financing terms that allow prepayments to a purchase order header in the Buyer WorkCenter in Oracle Purchasing. Oracle Payables imports prepayment invoices that Oracle Purchasing generates based on information from the purchase order financing terms. You cannot interface project-related prepayment invoices to Oracle Project Costing as actual costs. Prepayment invoices appear as commitments in Oracle Project Costing as follows:

• A project-related prepayment invoice that is not matched to a purchase order appears as separate commitment. Once you apply the prepayment invoice to a standard invoice, Oracle Project Costing relieves the cost commitment for the prepayment invoice.

• A project-related prepayment invoice that is matched to a purchase order appears as a purchase order commitment, not as an invoice commitment.

With accrual basis accounting, you interface the actual cost from the standard invoice, and not the prepayment, to Oracle Project Costing. With cash basis accounting, after you apply the prepayment invoice to a standard invoice, you interface the actual cost from the standard invoice to Oracle Project Costing. The actual cost amount that you interface to Oracle Project Costing is equal to the amount of the prepayment applied to the standard invoice.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 47

Managing Retainage

Managing Retainage

Retainage is an agreed upon amount, typically a percentage, that you withhold from a subcontractor until the subcontractor makes predetermined progress for a particular scope of work. Retainage is also known as retention or contractual withholds. With Oracle's Complex Work feature, contract administrator can negotiate retainage terms with the contractor and capture these as part of the contract. For example, the contract can specify that you will retain 20 percent from all payments until 25 percent of work is complete. Therefore, whenever the subcontractor sends you an invoice, you retain 20 percent of each payment until the overall progress reaches 25 percent. Oracle Payables automatically calculates the retainage amount for a supplier invoice based on the retainage rate and maximum retainage amount that you specify on the purchase order header in the Buyer WorkCenter in Oracle Purchasing. It stores the retainage amount as a separate distribution line with a distribution line type of Retainage. Oracle Payables has one retainage account it uses for each operating unit. Oracle Project Costing does not report on or interface project-related retainage distribution lines as commitments or actual costs. Instead, Oracle Project Costing captures the full amount of the expense as a commitment and, when applicable, for budgetary control. Later, the full

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 48

amount of the expense is interfaced to Oracle Project Costing as an actual cost. Retainage is related to the payment of the invoice and it ultimately does not impact the overall project cost. Retainage Release The contractor can submit a Retainage Release Invoice for release of retainage withheld. If the contractual clauses or other conditions governing the release of the retainage are met, then the buyer can release the applicable retainage. For additional information, see the Oracle Purchasing User's Guide and the Oracle Payables User's Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 49

Quiz

Answer: a

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 50

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 51

Supplier Cost Adjustments Overview

Supplier Cost Adjustments Overview

You can make adjustments to supplier costs in Oracle Project Costing, Oracle Purchasing, and Oracle Payables. In Oracle Project Costing, you can make the following adjustments to supplier cost and expense report cost expenditure items:

• Transfer an expenditure item to another project or task • Split an expenditure item • Reclassify the billable or capitalizable status • Place a billing hold or one-time hold • Release a billing hold • Recalculate burden costs • Recalculate raw costs • Recalculate revenue • Change comment • Change project functional currency attributes

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 52

• Reprocess cross charge transactions • Mark for no cross charge processing • Change transfer price currency attributes

In Oracle Purchasing and Oracle Payables, you can adjust the project-related information such as the invoice amount, supplier, project, task, expenditure type, expenditure organization and expenditure item date.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 53

Restrictions to Supplier Cost Adjustments in Oracle Project Costing

Restrictions to Supplier Cost Adjustments in Oracle Project Costing

Oracle Project Costing restricts the types of adjustments that you can make to supplier cost expenditure items in Oracle Project Costing. The restrictions apply to supplier costs interfaced to Oracle Project Costing from Oracle Purchasing and Oracle Payables, and to expense report costs interfaced from Oracle Payables. Allow Adjustments Option for Supplier Cost Transaction Sources If your implementation team does not enable the Allow Adjustments check box for predefined supplier cost transaction sources in the Transaction Sources window, then Oracle Project Costing restricts the types of adjustments that you can perform in Oracle Project Costing. The default value for this option is No. Automatic Offsets in Oracle Payables If you enter invoices in Oracle Payables for more than one balancing segment, then you can use the Automatic Offsets feature to keep your Oracle Payables transaction accounting entries balanced. When you use Automatic Offsets, Oracle Payables automatically creates balancing accounting entries for your transactions. When Automatic Offsets is enabled in Oracle

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 54

Payables, you can make adjustments to supplier cost expenditure items in Oracle Project Costing under the following conditions:

• When the Automatic Offset Method is Balancing, you can make an adjustment in Oracle Project Costing if the adjustment does not cause a change in the balancing segment value.

• When the Automatic Offset Method is Account, you can make an adjustment in Oracle Project Costing if the adjustment only affects the value of the natural account segment. If the adjustment affects the value of any other accounting segment, then you cannot make the adjustment.

Combined Basis Accounting With combined basis accounting, if you make supplier cost adjustments in Oracle Project Costing, then Oracle Project Costing does not create accounting entries for a secondary ledger if the accounting basis differs from the primary ledger. If you enter adjustments in Oracle Payables, then the adjustment activity updates both the primary ledger and the secondary ledger. You must make supplier cost adjustments in Oracle Payables if you want all adjustment activity to update both ledgers. Your implementation team can disable the Allow Adjustments check box for the predefined supplier cost transaction sources in the Transaction Sources window in Oracle Project Costing to prevent users from adjusting supplier cost expenditure items in Oracle Project Costing. Adjustments that Affect Tax Recoverability When you attempt to adjust a supplier cost expenditure item in Oracle Project Costing, if the adjustment has a potential impact on the tax recoverability, then Oracle Project Costing does not allow the adjustment. This restriction ensures the integrity of tax information stored in Oracle E-Business Tax. You must make the adjustment in the source application (Oracle Purchasing or Oracle Payables). Adjustments to Historical (Prior to Release 12) Prepayment Invoices You cannot adjust expenditure items for historical (prior to Release 12) prepayment invoices in Oracle Project Costing. You must make these adjustments in Oracle Payables. Adjustments to Canceled Supplier Invoices If you cancel a supplier invoice, then you cannot make further adjustments to expenditure items associated with the invoice in either Oracle Payables or Oracle Project Costing. Adjustments to Receipt Accruals and Exchange Rate Variance If you allow users to make adjustments in Oracle Project Costing to expenditure items that represent receipts, receipt nonrecoverable tax, or exchange rate variances, then Oracle Project Costing does not perform accounting for adjustments in the following ledgers:

• Reporting currency ledgers • Secondary ledgers if the secondary ledger currency differs from the primary ledger

currency During implementation, you set the profile option PA: Allow Adjustments to Receipt Accruals and Exchange Rate Variance to specify whether you can adjust receipt, receipt nonrecoverable tax, and exchange rate variance expenditure items in Oracle Project Costing when exchange rate variance exists and you convert journals to another currency.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 55

Adjusting Project-Related Documents in Oracle Purchasing

Adjusting Project-Related Documents in Oracle Purchasing

Requisition Adjustments You can update project information on a requisition only if it is not approved and before it is included on a purchase order. The Account Generator builds a new default account number value when you change the project information. The new project information is used in commitment reporting. If encumbrance accounting is enabled for the project, and the requisition is reserved, then you cannot change any of the project attributes. If you unreserve the requisition, then Oracle Purchasing reverses all encumbrance accounting entries and you can modify the project attributes. Purchase Order Adjustments You can update project information on a purchase order, even after it is approved and invoiced. However, you cannot update project information if there has been any accounting activity on the purchase order (for example, if it is encumbered, or if it is accrued on receipt and the distribution has been received or billed). If the purchase order is invoiced before you update the project information, the invoice is not updated with the new project information. If the

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 56

purchase order line is invoiced on a new invoice after you change the project information, then Oracle Payables copies the new project information to the new invoice. To update the project information on a purchase order, you must first return all goods that you have received for the purchase order. In addition, if you have previously interfaced receipts and returns for the purchase order to Oracle Project Costing, then you must interface all receipts and returns to Oracle Project Costing before you update project information. If you have not previously interfaced receipts or returns for the purchase order to Oracle Project Costing, then you do not have to interface receipts and returns before you update project information. The Account Generator builds a new default account number when you change the project information. The new project information is used in commitment reporting. If encumbrance accounting is enabled for the project, and the purchase order is reserved, then you cannot change any of the project attributes. If you unreserve the purchase order, then Oracle Purchasing reverses all encumbrance accounting entries and you can modify the project attributes.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 57

Writing Off Receipt Accruals in Oracle Purchasing

Writing Off Receipt Accruals in Oracle Purchasing

After you enter receipt transactions and match and approve your invoices, you can run the AP and PO Accrual Reconciliation Report in Oracle Purchasing to identify any differences between your Oracle Purchasing receipts and Oracle Payables invoices. After you identify the entries you want to write off, you create a manual journal entry to write off the transactions. When you write off a receipt accrual in Oracle Purchasing, you must manually adjust the cost in Oracle Project Costing. Because the receipt accrual write-off is recorded as a manual journal entry, Oracle Purchasing does not interface write-off adjustments to Oracle Project Costing. For additional information on receipt accruals and receipt accrual write-offs, see the discussion about receiving in the Oracle Purchasing User's Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 58

Adjusting Project-Related Documents in Oracle Payables

Adjusting Project-Related Documents in Oracle Payables

Matched Invoices If you match an invoice to a purchase order, then you cannot directly change any of the project information copied from the purchase order, with the exception of the expenditure item date. Oracle Project Costing uses the profile option PA: Default Expenditure Item Date for Supplier Cost during the invoice match process in Oracle Payables to determine the default expenditure item date for supplier invoice distribution lines. You can override the default expenditure item date for invoices on the Invoice Workbench in Oracle Payables. If you accidentally matched to the wrong purchase order document (purchase order, shipment, distribution, or receipt), you can reverse matched distributions and create new distributions by matching to new purchase order shipments or distributions of the same purchase order or of another purchase order. If you add or reverse invoice distributions, then you must also change the scheduled payment amounts to match the new invoice total, or Oracle Payables places holds on the invoice during validation. Note: If you use the Retroactive Pricing of Purchase Orders feature in Oracle Purchasing, and change project information on an invoice, you must update the same project information on any subsequent purchase order price adjustment or adjustment documents.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 59

Manually Entered, Unvalidated Invoices You can change the project information before an invoice is validated. The Account Generator derives a new default account number based on the new project information that you enter. Manually Entered, Validated Invoices You cannot directly change any project information on a validated invoice. You must reverse the distribution line and create a new distribution line with the new project information using the Distributions window in Oracle Payables.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 60

Adjusting Supplier Costs for Non-Capital Assets

Adjusting Supplier Costs for Non-Capital Assets

You can enter invoices for asset items in Oracle Payables and run the Mass Additions Create concurrent program in Oracle Payables to transfer the specified asset item distributions to the interface table in Oracle Assets. You then create assets from the distributions in Oracle Assets. If the invoice distributions are associated with a project, then you also interface the invoice distributions from Oracle Payables to Oracle Project Costing as supplier costs. When you adjust supplier cost expenditure items in Oracle Project Costing that affect non-capital assets, Oracle Project Costing provides the adjustment information to the Mass Additions Create concurrent program in Oracle Payables. This program transfers the adjustment information to Oracle Assets. Adjustment costs in Oracle Project Costing are eligible for interface to Oracle Assets when the following conditions are met:

• The final account type in Oracle Subledger Accounting for the charge account for the cost adjustment is Asset.

• You successfully generate accounting events for the adjustment and create the final accounting in Oracle Subledger Accounting.

Oracle Project Costing sends adjustments to the Mass Additions Create concurrent program in transaction, ledger, and reporting currencies.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 61

Manually Adjusting Unmatched Reversing Expenditure Items

Manually Adjusting Unmatched Reversing Expenditure Items

Typically, when Oracle Purchasing or Oracle Payables sends a reversing expenditure item to Oracle Project Costing, Oracle Project Costing accepts the reversal, associates it with the original expenditure item, and marks both expenditure items so that they are not eligible for further adjustments in Oracle Project Costing. Two scenarios exist in which Oracle Project Costing cannot automatically create the appropriate adjustment transactions, when you:

• Cancel a historical (prior to Release 12) supplier invoice. • Perform a partial return or partial correction of a receipt.

The program PRC: Interface Supplier Costs interfaces the unmatched reversing expenditure items from Oracle Payables or Oracle Purchasing to Oracle Project Costing. These items do not contain a reference to other expenditure items. You must manually adjust these unmatched reversing expenditure items in Oracle Project Costing. You must also separately adjust any related expenditure items, such as invoice price variance, exchange rate variance, and tax. You can run the Supplier Cost Audit Report to research the unmatched reversing expenditure items. You can also enable the Unmatched Reversing Items that Require Adjustment check box on the Supplier tab of the Find Expenditure Items or Find Project Expenditure Items window to query unmatched reversing expenditure items.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 62

Processing Adjustments

Processing Adjustments

To Process Adjustments to Supplier Costs or Expense Reports in Oracle Project Costing: 1. Perform the adjustment in Oracle Project Costing. 2. Process the adjustment by running either PRC: Distribute Supplier Cost Adjustments,

PRC: Distribute Supplier Cost Adjustments for a Range of Projects, or PRC: Distribute Expense Report Adjustments.

3. Run PRC: Generate Cost Accounting Events. Optionally, you can select Supplier Cost for the Process Category parameter to process only supplier cost and expense report adjustments.

4. Run PRC: Create Accounting to create the accounting for the accounting events in Oracle Subledger Accounting. Run the program in final mode to complete the processing. Optionally, you can select Supplier Cost for the Process Category parameter to process only supplier cost and expense report adjustments. When you run the program in final mode, you can also choose to transfer the final subledger accounting to Oracle General Ledger and to post the journal entries.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 63

Processing Adjustments

Processing Adjustments

To Process Adjustments to Supplier Costs or Expense Reports in Oracle Payables: 1. Perform the adjustment in Oracle Payables. 2. Validate the new invoice distribution lines. 3. Run Create Accounting in Oracle Payables to create the accounting for the invoice in

Oracle Payables. Run the program in final mode to complete the processing. When you run the program in final mode, you can also choose to transfer the final subledger accounting to Oracle General Ledger and to post the journal entries.

4. Interface the adjustment to Oracle Project Costing: - Run PRC: Interface Supplier Costs in Oracle Project Costing to interface the

adjustment to Oracle Project Costing. - Run PRC: Interface Expense Reports from Payables in Oracle Project Costing to

interface the adjustment to Oracle Project Costing. For information about other methods you can use to validate supplier invoices and create accounting in Oracle Payables, see the Oracle Payables User's Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 64

Prioritizing Supplier Costs Adjustments

Prioritizing Supplier Costs Adjustments

You can make adjustments to supplier costs in Oracle Project Costing or in the source system (Oracle Payables and Oracle Purchasing). Adjustments that you make in the source system take precedence over adjustments that you make in Oracle Project Costing. The following pages present an example of the accounting.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 65

Prioritizing Supplier Costs Adjustments

Prioritizing Supplier Costs Adjustments

First, you create a supplier invoice in Oracle Payables. You charge $10 USD to Project A, Task 1. In Oracle Payables, you validate the invoice and the create accounting in final mode in Oracle Subledger Accounting. In Oracle Project Costing, you run the program PRC: Interface Supplier Costs to interface the invoice to Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 66

Prioritizing Supplier Costs Adjustments

Prioritizing Supplier Costs Adjustments

You transfer the expenditure item in Oracle Project Costing from Project A, Task 1 to Project B, Task 1. When you make the adjustment, Oracle Project Costing, creates a reversing expenditure item for $10 USD for Project A, Task 1 and a new $10 USD expenditure item for Project B, Task 1. You generate cost accounting events for the transfer and create accounting in final mode in Oracle Subledger Accounting.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 67

Prioritizing Supplier Costs Adjustments

Prioritizing Supplier Costs Adjustments

Oracle Payables has no knowledge of the adjustments that you made and accounted for in Oracle Project Costing. Next, you make an adjustment to the original invoice distribution in Oracle Payables to move the cost to Project C, Task 1. You reverse the original distribution line for $10 USD for Project A, Task 1 and create a new distribution line for $10 USD for Project C, Task 1. In Oracle Payables, you revalidate the invoice and the create accounting for the adjustments in final mode in Oracle Subledger Accounting. The following table shows you the resulting distribution lines in Oracle Payables.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 68

Prioritizing Supplier Costs Adjustments

Prioritizing Supplier Costs Adjustments

You run the program PRC: Interface Supplier Costs to interface the adjustments to Oracle Project Costing. The program interfaces the reversing expenditure item for $10 for Project A, Task 1 and the new expenditure item for $10 USD for Project C, Task 1 to Oracle Project Costing. When the interface program receives reversals and adjustments from a source system after you have made adjustments in Oracle Project Costing, the program automatically reverses both the last entry recorded in Oracle Project Costing and the reversing entry recorded by the source system. In this example, the program reverses both the new expenditure item from the adjustment you made in Oracle Project Costing to transfer $10 USD to Project B, Task 1, and the expenditure item from reversing invoice distribution in Oracle Payables. This second reversal is necessary because Oracle Project Costing previously reversed the original expenditure item for Project A, Task 1 when you performed the transfer in Oracle Project Costing. You generate cost accounting events for the two reversing expenditure items that the interface program created and create accounting in final mode in Oracle Subledger Accounting.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 69

Accounting for Supplier Cost Adjustments

Accounting for Supplier Cost Adjustments

After you adjust supplier cost or expense report cost expenditure items in Oracle Project Costing, you must process the adjustment to create accounting entries in Oracle Subledger Accounting. The program PRC: Generate Cost Accounting Events sorts transactions to process reversals before the new transactions. For additional information about Oracle Subledger Accounting, see the lesson titled "Accounting for Costs" and the Oracle Subledger Accounting Implementation Guide. If multiple adjustments exist for the same transaction within the same processing batch, then Oracle Project Costing processes them in the order they were made. Oracle Project Costing generates accounting events for only the most recent adjustment if the GL date is the same for all adjustments. If the GL date is not the same for all adjustments, then Oracle Project Costing generates accounting events for all adjustments. If the program rejects one of the adjustments in the sequence, it also rejects all subsequent adjustments. Once you correct the original failure, Oracle Project Costing attempts to generate accounting events for the failed adjustment and all subsequent adjustments. The following pages present an example of the accounting. For additional information, see the Oracle Project Costing User Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 70

Accounting for Supplier Cost Adjustments

Accounting for Supplier Cost Adjustments

First, you create a supplier invoice in Oracle Payables. The Account Generator in Oracle Payables generates the default accounting for the supplier invoice. The default credit account comes from the account that is assigned to the invoice supplier site. After you validate the invoice and the create accounting in final mode, you interface the supplier costs to Oracle Project Costing. The interface program interfaces the default debit account, but not the default credit account. The following table shows the default accounting for the transaction.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 71

Accounting for Supplier Cost Adjustments

Accounting for Supplier Cost Adjustments

In this example, you have set up your own user-defined rules for Oracle Payables in Oracle Subledger Accounting. As a result, Oracle Subledger Accounting overwrites the default accounts from Oracle Payables when you create the subledger accounting in final mode. Fo

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 72

Accounting for Supplier Cost Adjustments

Accounting for Supplier Cost Adjustments

You adjust the supplier cost expenditure item in Oracle Project Costing and run the program PRC: Distribute Supplier Cost Adjustments. This program uses AutoAccounting in Oracle Project Costing to determine the default expense account for the new expenditure item. Next, you run the program PRC: Generate Cost Accounting Events to generate accounting events for the adjustments. This program uses the default supplier cost credit account from Oracle Projects implementation options for the operating unit to determine the default liability account for the reversal and the new expenditure item. Note: If your implementation team does not specify a default supplier cost credit account in Oracle Projects implementation options, then your implementation team must define a rule in Oracle Subledger Accounting to determine the account.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 73

Accounting for Supplier Cost Adjustments

Accounting for Supplier Cost Adjustments

Next, you run the program PRC: Create Accounting in final mode to create the subledger accounting for the accounting events. The program copies the expense account for the reversal from the original accounting entry in Oracle Subledger Accounting. No override is allowed for this account. In this example, you have set up your own user-defined rules in Oracle Subledger Accounting. As a result, Oracle Subledger Accounting overwrites the default accounts from Oracle Project Costing when it creates the final accounting for the reversal liability account, and the new transaction expense and liability accounts. For information about setting up rules in Oracle Subledger Accounting, see the Oracle Subledger Accounting Implementation Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 74

Quiz

Answer: a, b, c

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 75

Quiz

Answer: b

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 76

Agenda

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 77

Oracle Purchasing and Oracle Payables Integration Implementation Steps

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 78

Oracle Purchasing and Oracle Payables Integration Implementation Steps

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 79

Implementing Oracle Purchasing and Oracle Payables Integration

Implementing Oracle Purchasing and Oracle Payables Integration

Oracle Purchasing Install and implement Oracle Purchasing to use Oracle Purchasing to enter project-related requisitions, releases, and purchase orders, and then report outstanding committed costs of requisitions and purchase orders on your projects. You can also interface project-related receipt accruals from Oracle Purchasing to Oracle Project Costing as actual supplier costs. Oracle Payables Install and implement Oracle Payables to perform any of the following activities:

• Enter project-related expense reports in Oracle Payables in the Invoice Workbench. To enter project-related expense reports for an employee in the Invoice Workbench, you must first associate a supplier with the employee. Note that the entry of contingent worker expense reports in the Invoice Workbench is not supported.

• Enter project-related expense reports in Oracle Internet Expenses and import them into Oracle Payables.

• Use supplier and invoice information in Oracle Payables to create expenditure items for projects in Oracle Project Costing.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 80

Set Profile Options for Project-Related Documents

Set Profile Options for Project-Related Documents

Set the following profile options for project-related documents: • PA: Allow Adjustments to Receipt Accruals and Exchange Rate Variance - Specify

whether you can adjust receipt, receipt nonrecoverable tax, and exchange rate variance expenditure items in Oracle Project Costing when exchange rate variance exists and you convert journals to another currency.

• PA: Allow Override of PA Distributions in AP/PO - Specify whether Oracle Purchasing and Oracle Payables pass user-entered account segment values to the Account Generator workflow. To enable users to override generated accounts, you must set this profile option to Yes and also set the Replace Existing Value attribute in the Account Generator workflow to False. The default value for the Replace Existing Value is False.

• PA: AP Discounts interface start date (mm/dd/yyyy) - Specify when Oracle Project Costing retrieves and interfaces payment discounts from Oracle Payables. The system assigns a default start date of 01/01/2051. You can enter a different date to override the default system value. Oracle Project Costing allows you to enter either a historical date or future date. If you enter a historical date, then the system will retroactively retrieve discount amounts from the specified date forward the next time you run the PRC:

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 81

Interface Supplier Costs grogram. If you specify a future date, the program will begin interfacing discount amounts as of that date.

• PA: Default Expenditure Item Date for Supplier Cost - Specify the source for the expenditure item date. Oracle Project Costing uses this profile option when you run the program PRC: Interface Supplier Costs to determine the expenditure item date for Oracle Purchasing receipts, invoice payments, and discounts. In addition, Oracle Payables uses this profile option during the invoice match process, and when you enter unmatched invoices, to determine the default expenditure item date for supplier invoice distribution lines.

• PA: Default Expenditure Organization in AP/PO - Specify the default expenditure organization for project-related information in Oracle Payables and Oracle Purchasing.

• PA: Expense Report Invoices Per Set - Specify the number of expense report invoices (entered in Oracle Internet Expenses or Oracle Payables) for the program PRC: Interface Expense Reports from Payables to process in each set.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 82

Define the Supplier Invoice Account Generator

Define the Supplier Invoice Account Generator

The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables use the Account Generator to determine the default account code combinations for supplier invoices and expense reports based on the project information entered. You define functions and processes to derive the Accounting Flexfield combinations. You can optionally customize the Account Generator for each set of defined ledgers. For details about each workflow, see the Oracle Projects Implementation Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 83

Defining a Project-Related Purchasing Transactions Account Generator

Defining a Project-Related Purchasing Transactions Account Generator

Oracle Purchasing uses item types to generate account numbers for all requisitions and purchase orders, whether they are project-related or not. Oracle Purchasing provides a set of default account generator processes for the accounts it needs to build. To derive the accounts based on project information, you must modify the default processes to use project information. The Account Generator workflows in Oracle Purchasing generate the following accounts:

• Purchase Order Charge Account • Purchase Order Budget Account • Purchase Order Variance Account • Purchase Order Accrual Account • Requisition Charge Account • Requisition Budget Account • Requisition Variance Account • Requisition Accrual Account

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 84

Specify a Default Supplier Cost Credit Account

Specify a Default Supplier Cost Credit Account

Specify a default supplier cost credit account in Oracle Projects implementation options. The program PRC: Generate Cost Accounting Events uses the specified account as the default account for supplier cost adjustments and expense report cost adjustments that you perform in Oracle Project Costing. If you allow adjustments to supplier cost expenditure items in Oracle Project Costing, then you must either specify a default supplier cost credit account in Oracle Project Costing or set up a rule to derive the account in Oracle Subledger Accounting.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 85

Define Project-Related Distribution Sets

Define Project-Related Distribution Sets

In the Distribution Sets window of Oracle Payables, you can define project-related distribution sets. When you assign a project-related distribution set to an invoice you are entering, Oracle Payables automatically creates project-related invoice distributions for the invoice. For more information, see: Distribution Sets, Oracle Payables Implementation Guide.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 86

Define Oracle Payables Descriptive Flexfields and Related Profiles

Define Oracle Payables Descriptive Flexfields and Related Profiles

• PA: Transfer DFF with AP - Specifies whether the program PRC: Interface Supplier Costs and the program PRC: Interface Expense Reports from Payables interface descriptive flexfield segments from Oracle Payables to Oracle Project Costing.

• PA: Transfer DFF with PO - Specifies whether the program PRC: Interface Supplier Costs interfaces descriptive flexfield segments from Oracle Purchasing to Oracle Project costing. This profile option only applies to receipt accruals.

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 87

Summary

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Integration with Oracle Purchasing and Oracle Payables Chapter 12 - Page 88

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Integration with Oracle Internet Expenses Chapter 13 - Page 1

Integration with Oracle Internet Expenses Chapter 13

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Integration with Oracle Internet Expenses Chapter 13 - Page 2

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Integration with Oracle Internet Expenses Chapter 13 - Page 3

Integration with Oracle Internet Expenses

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Integration with Oracle Internet Expenses Chapter 13 - Page 4

Objectives

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Integration with Oracle Internet Expenses Chapter 13 - Page 5

Agenda

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Integration with Oracle Internet Expenses Chapter 13 - Page 6

Oracle Internet Expenses

Oracle Internet Expenses

With Oracle Internet Expenses, employees and contingent workers can enter and submit expense reports using a standard Web browser or a Web-enabled mobile device. Oracle Workflow automatically routes expense reports for approval and enforces reimbursement policies. Oracle Internet Expenses integrates with Oracle Payables to provide quick processing of expense reports for payment. You can create project-related expense reports using Oracle Internet Expenses. You send expense reports entered in Oracle Internet Expenses to Oracle Payables and then to Oracle Project Costing. Note: You can enter expense reports containing project and task information in Oracle Internet Expenses or Oracle Payables. Additionally, you can import fully-accounted project-related expense reports into Oracle Project Costing from third-party systems using Transaction Import.

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Integration with Oracle Internet Expenses Chapter 13 - Page 7

Expense Report Flow

Expense Report Flow

Enter and Submit Project-Related Expense Reports You can enter and submit project-related expense reports in Oracle Internet Expenses. Approve and Audit Expense Reports You approve and audit expenses report in Oracle Internet Expenses to enforce policies. Run Expense Report Export After an expense report is approved and audited in Oracle Internet Expenses, you run the program Expense Report Export from an expense report audit responsibility to send this information to the Oracle Payables invoice tables. Oracle Payables identifies invoices created from Oracle Internet Expenses expense reports with a source of Oracle Internet Expenses. Validate and Process Invoices For accrual basis accounting, you must validate the expense report invoice and create subledger accounting in final mode before you can interface expense reports to Oracle Project Costing. For cash basis accounting, you must pay the invoice before you can interface expense reports to Oracle Project Costing. You can interface partially paid expense report invoices.

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Integration with Oracle Internet Expenses Chapter 13 - Page 8

Expense Report Flow

Expense Report Flow

Interface Expense Reports from Oracle Payables In Oracle Project Costing you run the program PRC: Interface Expense Reports from Payables to interface project-related expense report costs to Oracle Project Costing. This information initially goes to the interface tables. The program continues and automatically calls Transaction Import to import the transactions to the Expenditure Items table with a source of Oracle Payables Expense Reports. You run this program for expense reports that you create in Oracle Internet Expenses (and for expense reports that you enter directly into Oracle Payables). The program generates a report that lists the interfaced and rejected invoice distribution lines, as well as a summary of the total number and cost of the distribution lines. You can use either Oracle Project Costing or Oracle Payables to adjust expense reports that you entered in Oracle Internet Expenses or Oracle Payables. If you make adjustments in Oracle Project Costing, then you run programs in Oracle Project Costing to distribute the expense report adjustments, generate cost accounting events, and create accounting for the adjustments in Oracle Subledger Accounting. If you make adjustments in Oracle Payables, then you revalidate the invoices and create final subledger accounting in Oracle Payables, and run the program PRC: Interface Expense Reports from Payables in Oracle Project Costing.

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Integration with Oracle Internet Expenses Chapter 13 - Page 9

Deriving Project Data from Expense Reports

Deriving Project Data from Expense Reports

When you create expense reports in Oracle Internet Expenses, you directly enter some of the project-related information. This information includes the project and lowest task that is associated with each receipt line. Oracle Internet Expenses derives other project-related information from other data associated with the expense report. The derived information includes the expenditure type, expenditure organization, expenditure item date, and quantity. Note: The profile option PA: Default Expenditure Item Date for Supplier Cost does not apply to expense reports.

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Integration with Oracle Internet Expenses Chapter 13 - Page 10

Disconnected Expense Reporting Process

Disconnected Expense Reporting Process

Employees who are traveling or do not have access to the company’s intranet can create expense reports using the disconnected expense reporting process. The disconnected expense reporting process involves entering expenses in a Microsoft Excel spreadsheet on a personal computer or laptop and then importing this spreadsheet into Oracle Internet Expenses. Oracle Internet Expenses provides a Microsoft Excel expense spreadsheet template to create a disconnected expense report. You can configure this spreadsheet template to meet the needs of your enterprise. For additional information regarding the template, see the Oracle Internet Expenses Implementation and Administration Guide.

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Integration with Oracle Internet Expenses Chapter 13 - Page 11

Adjusting Expense Reports

Adjusting Expense Reports

Alternatively, you can make adjustments in Oracle Payables, create subledger accounting for the adjustments, and interface the adjustments to Oracle Project Costing. You can adjust expense reports that you enter in Oracle Internet Expenses in both Oracle Project Costing and Oracle Payables. When you make adjustments to expense report costs in Oracle Project Costing, you run the following processes to distribute the costs, create cost accounting events for the adjustments, and create accounting for the accounting events in Oracle Subledger Accounting:

• PRC: Distribute Expense Report Adjustments • PRC: Generate Cost Accounting Events • PRC: Create Accounting

When you make adjustments to expense report invoices in Oracle Payables, you revalidate the invoice and create accounting for it in Oracle Payables. You then run the process PRC: Interface Expense Reports from Payables in Oracle Projects to interface the adjustments to Oracle Project Costing.

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Integration with Oracle Internet Expenses Chapter 13 - Page 12

Adjustments to project-related expense reports follow the same logic as adjustments to project-related supplier costs. For a detailed discussion about supplier cost adjustments, see the lesson titled "Integration with Oracle Purchasing and Oracle Payables."

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Integration with Oracle Internet Expenses Chapter 13 - Page 13

Quiz

Answer: c

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Integration with Oracle Internet Expenses Chapter 13 - Page 14

Quiz

Answer: a

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Integration with Oracle Internet Expenses Chapter 13 - Page 15

Agenda

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Integration with Oracle Internet Expenses Chapter 13 - Page 16

Integration with Oracle Internet Expenses Implementation Steps

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Integration with Oracle Internet Expenses Chapter 13 - Page 17

Install and Implement Oracle Internet Expenses

Install and Implement Oracle Internet Expenses

To use integration with Oracle Internet Expenses, you must first implement Oracle Internet Expenses. For details, see the setup steps in the Oracle Internet Expenses Implementation and Administration Guide. Fo

r Ins

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Integration with Oracle Internet Expenses Chapter 13 - Page 18

Set Profile Options for Project-Related Expense Report Entry

Set Profile Options for Project-Related Expense Report Entry

• PA: Allow Project-Related Entry in Oracle Internet Expenses - Specify whether you can enter project-related information on expense reports. If you set this option to Yes, then you must set the OIE: Enable Projects profile option to Yes or Required.

• OIE: Enable Projects - Specify whether you can enter project-related information on expense reports in Oracle Internet Expenses. If you set this option to Yes or Required, then you must set PA: Allow Project-Related Entry in Oracle Internet Expenses profile option to Yes. Select one the following values:

- Yes - Enables the entry of project information. - No - Disables the entry of project information. - Required - Requires the entry of project information.

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Integration with Oracle Internet Expenses Chapter 13 - Page 19

Set Profile Options for Project-Related Expense Report Approval

Set Profile Options for Project-Related Expense Report Approval

• PA: AutoApprove Expense Reports - Specify whether to automatically approve project-related expense reports submitted in Oracle Internet Expenses. If you set the profile option PA: AutoApprove Expense Reports to Yes, then Oracle Internet Expenses does not use the approver specified on the expense report, even if you set the profile option OIE: Approver Required is set to Yes or Yes with Default. Instead, Oracle Internet Expenses approves the expense report without management involvement.

• OIE: Enable Approver - Specify whether to enable the Approver field in Oracle Internet Expenses. When you set this profile option to Yes, the Approver field is available for you to specify a different employee to approve your expense report. When this profile option is set to No, the Approver field is hidden.

• OIE: Approver Required - Specify whether you must designate an approver for your expense reports. Select one the following values:

- Yes - You must always designate an approver. - Yes with Default - You must always designate an approver and an employee's

supervisor, as defined in Oracle HRMS, is the default value in the Approver field. - No - You are not required to designate an approver.

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Integration with Oracle Internet Expenses Chapter 13 - Page 20

Note: If you set the OIE: Approver Required profile option to Yes or Yes with Default, do not set the OIE: Enable Approver profile option to No. If you do, the Approver field does not appear on the General Information page, but users receive a message that the field is required.

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Integration with Oracle Internet Expenses Chapter 13 - Page 21

Define the Project Expense Report Account Generator

Define the Project Expense Report Account Generator

The Project Expense Report Account Generator is an Oracle Project Costing workflow process that determines the default account for each project-related expense line created in Oracle Internet Expenses. When you submit a projects-related expense report, the Expense Report workflow process uses the Project Expense Report Account Generator to assign the proper accounting to each project-related expense line on the expense report. The default logic of this process returns the CCID (Code Combination ID) of the employee who incurred the project-related expenses. You can define the Project Expense Report Account Generator to meet your requirements. Note: When you adjust expense report expenditure items in Oracle Project Costing, Oracle Project Costing uses AutoAccounting (not the employee's default expense account) to determine the default expense report cost account. See the lesson titled "Accounting for Costs." For additional discussion regarding the account generator and Oracle Project Costing, see the Oracle Projects Implementation Guide.

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Integration with Oracle Internet Expenses Chapter 13 - Page 22

Define a Project-Related Expense Report Template

Define a Project-Related Expense Report Template

In the Expense Report Templates window in Oracle Payables, define project-related expense report templates. You must define at least one project-related template to submit project-related expense reports using Oracle Internet Expenses. To define an expense report template for project-related expense reports:

• Enable the template for Oracle Internet Expenses. • Assign an Oracle Project Costing expenditure type to each expense item.

- Note: If you want the expense types that appear in the Expense Type list of values in Oracle Internet Expenses to match the names of the expenditure types in Oracle Project Costing, then you can define an expense report template where you name each expense item with the same name as its associated expenditure type.

Instruct users who enter project-related expense reports in Oracle Internet Expenses to use this template. For additional information about defining expense report templates, see the Oracle Payables Implementation Guide.

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Integration with Oracle Internet Expenses Chapter 13 - Page 23

Quiz

Answer: b

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Integration with Oracle Internet Expenses Chapter 13 - Page 24

Quiz

Answer: a, c

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Integration with Oracle Internet Expenses Chapter 13 - Page 25

Summary

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Integration with Oracle Internet Expenses Chapter 13 - Page 26

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Integration with Oracle Time & Labor Chapter 14 - Page 1

Integration with Oracle Time & Labor Chapter 14

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Integration with Oracle Time & Labor Chapter 14 - Page 2

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Integration with Oracle Time & Labor Chapter 14 - Page 3

Integration with Oracle Time & Labor

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Integration with Oracle Time & Labor Chapter 14 - Page 4

Objectives

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Integration with Oracle Time & Labor Chapter 14 - Page 5

Agenda

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Integration with Oracle Time & Labor Chapter 14 - Page 6

Oracle Time & Labor Overview

Oracle Time & Labor Overview

Oracle Time & Labor integrates with Oracle Project Costing to enable employees and contingent workers to enter and submit project-related timecards. Employees and contingent workers enter their own time, which you can subject to an approval process according to your business rules. You can transfer approved timecards to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you import the timecards into Oracle Project Costing, you cost the timecards and derive the default accounting using AutoAccounting. During cost processing, the raw cost and any additional burden cost is calculated. Finally, you generate cost accounting events and create accounting for the timecards in Oracle Subledger Accounting. Oracle Time & Labor integration includes:

• Entry of project information on timecards • Validation of time against chargeable projects, tasks, and expenditure types and against

transaction controls that you may have implemented • Transfer of project-related timecards to both Oracle Project Costing and Oracle Payroll • Automatic population of timecards with projects and expenditure types from your

resource assignments when you use Oracle Project Resource Management

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Integration with Oracle Time & Labor Chapter 14 - Page 7

Disconnected Time Entry

Disconnected Time Entry

You can record your time when away from the office using a spreadsheet and then upload the spreadsheet to Oracle Time & Labor for review and submission. Once you save the template as a spreadsheet, you can enter your time for the week. You can add or update existing line items as desired. You can scroll down within the saved file to view the valid list of projects and tasks. This feature allows you to select and enter the correct project and task information on the timecard. When you have entered all the time data, save your work and upload to Oracle Time & Labor.

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Integration with Oracle Time & Labor Chapter 14 - Page 8

Collecting and Processing Project-Related Timecards

Collecting and Processing Project-Related Timecards

The following steps outline the procedure for collecting project-related timecards in Oracle Time & Labor and processing project-related timecards in Oracle Project Costing:

1. Enter and submit timecards - Employees and contingent workers enter and submit project-related timecards. People assigned to projects managed through Oracle Project Resource Management can use the Autopopulate template to automatically record their projects, tasks, and expenditure types.

2. Approve timecards - During implementation, you define approval and routing rules using Oracle Workflow. You can set up Oracle Time & Labor to automatically approve timecards, or require management review and approval.

3. Transfer time to Oracle Project Costing and import transactions - Oracle Human Resources, Oracle Payroll, and Oracle Project Costing can retrieve timecards from Oracle Time & Labor. In Oracle Time & Labor, you assign an application set and retrieval rule group to employees and contingent workers. The application set determines which applications can retrieve the timecards for an employee or contingent worker and the retrieval rule group determines the retrieval rules for each application. The retrieval rules specify which approval processes must be complete for a timecard before another

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Integration with Oracle Time & Labor Chapter 14 - Page 9

application can retrieve the data. For information about defining application sets, retrieval rule groups, and retrieval rules, see the Oracle Time & Labor Implementation and User Guide.

When the timecards are ready for retrieval, you run the program PRC: Transaction Import to transfer timecards from Oracle Time & Labor to Oracle Project Costing. This program transfers timecards that belong to employees and contingent workers with Oracle Project Costing in their application set and retrieval rule group, and that meet the retrieval rules for Oracle Project Costing. When you submit PRC: Transaction Import, select Oracle Time and Labor for the Transaction Source parameter and leave the Batch Name parameter blank.

4. Distribute labor costs - In Oracle Project Costing, run the program PRC: Distribute Labor Costs or the program PRC: Distribute Labor Costs for a Range of Projects. The program computes the labor costs for timecard hours and determines the default GL cost account.

5. Generate cost accounting events - Run the program PRC: Generate Cost Accounting Events for the Labor Costs process category to derive a default cost clearing account using AutoAccounting and to create accounting events in Oracle Subledger Accounting.

6. Create accounting and transfer to GL - Run the program PRC: Create Accounting for the Labor Costs process category to create accounting for the timecards in Oracle Subledger Accounting. When you run the process in final mode, you can choose to transfer the final journal entries to Oracle General Ledger and to post the journal entries in Oracle General Ledger.

For additional discussion regarding costing processes, see the lesson titled “Performing Cost Processing.”

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Integration with Oracle Time & Labor Chapter 14 - Page 10

Editing Timecards in Oracle Time & Labor

Editing Timecards in Oracle Time & Labor

A retro adjustment is a change made to a timecard in Oracle Time & Labor after you have transferred it to other applications. The preference Timecard Status Allowing Edits in Oracle Time & Labor controls whether you can edit existing timecards. The preference specifies whether you can only edit new, working, and rejected timecards, or can also edit submitted, approved, or even processed timecards in Oracle Time & Labor. The preference also specifies the age of the oldest timecard that you can edit, and how far in advance you can enter timecards. Note: If you made any changes to the original timecard data in Oracle Project Costing, then you cannot edit the timecard in Oracle Time & Labor. You receive an error when you try to submit the adjusted timecard.

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Integration with Oracle Time & Labor Chapter 14 - Page 11

Contingent Worker Timecards with PO Integration

Contingent Worker Timecards with PO Integration

Contingent workers can enter project-related timecards in Oracle Time & Labor with Oracle Purchasing integration:

• Each timecard line is related to a project and purchase order line. • The contingent worker must enter a timecard line for each type of work performed (for

example, regular and overtime). • An amount check is performed against the purchase order during timecard approval. • You interface approved timecards to Oracle Purchasing and Oracle Project Costing. • Oracle Project Costing uses the cost rates stored on the purchase order to calculate

contingent worker labor costs. • You interface additional cost, such as nonrecoverable tax or invoice price variances, to

Oracle Project Costing from the supplier invoice in Oracle Payables. • You can bill contingent worker costs as labor.

To use this integration, you must enable the Import Contingent Worker Timecards with Purchase Order Integration implementation option. You can optionally set up AutoAccounting

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Integration with Oracle Time & Labor Chapter 14 - Page 12

function transactions to determine default credit and debit accounts for contingent worker labor costs that are different from the default accounts for employee labor costs. Note: When contingent workers are allowed to enter timecards that are not related to a purchase order, you must ensure that the purchase order is not related to a project. Otherwise, the cost for the contingent work will be recorded in Oracle Project Costing twice, once as labor and once as supplier cost. Entering Contingent Worker Timecards with Oracle Purchasing Integration

1. Enter a project-related purchase order for the contingent worker labor in Oracle Purchasing. Associate the purchase order and purchase order line to the contingent worker assignment in Oracle HRMS.

2. Contingent worker enters project-related timecards in Oracle Time & Labor and assigns a purchase order and purchase order line to each timecard line.

3. Contingent worker submits timecard for approval. An amount check takes place against the purchase order during approval processing.

4. Manager approves timecard. 5. Process contingent worker timecards in Oracle Project Costing:

a. Run PRC: Transaction Import for the transaction source Oracle Time and Labor. b. Run PRC: Distribute Labor Costs. The program retrieves cost rates from purchase

order. c. Run PRC: Generate Cost Accounting Events (for the process category Labor Cost). d. Run PRC: Create Accounting (for the process category Labor Cost).

6. Process contingent worker timecards in Oracle Purchasing and Oracle Payables: a. Run the program Retrieve Time from OTL in Oracle Purchasing to automatically

generate purchase order receipts from approved timecards. b. Match supplier invoice to the receipt to reduce outstanding balances. c. Process and pay supplier invoice in Oracle Payables. d. Run PRC: Interface Supplier Costs in Oracle Project Costing to interface any

additional costs, such as nonrecoverable tax or invoice price variances. For information about uploading contingent worker timecards using Microsoft Excel, see the lesson titled "Entering Expenditures." Fo

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Integration with Oracle Time & Labor Chapter 14 - Page 13

Quiz

Answer: a

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Integration with Oracle Time & Labor Chapter 14 - Page 14

Quiz

Answer: a, c, d

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Integration with Oracle Time & Labor Chapter 14 - Page 15

Agenda

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Integration with Oracle Time & Labor Chapter 14 - Page 16

Integration with Oracle Time & Labor Implementation Steps

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Integration with Oracle Time & Labor Chapter 14 - Page 17

Install and Implement Oracle Time & Labor

Install and Implement Oracle Time & Labor

Some implementation considerations to review for project-related timecards: • Timecard layouts - Using the Timecard Layout preference, assign timecard layouts to

people who will submit timecards. The layout determines the fields that they can enter, how the fields are arranged on the page, and the instruction text that they see. Oracle Time & Labor provides a predefined layout for project-related timecards.

• Timecard templates - A template stores timecard data for reuse. Oracle Time & Labor predefines a dynamic template named Oracle Project Resource Management Assignments. This template generates time and labor entries from the project, type, and hours information held in Oracle Project Resource Management for the person’s assignments. Optionally, you can enable users to create their own private templates.

• Override approvers - The predefined Oracle Project Costing timecard layout has an Override Approver field. You can restrict the availability and use of this field. You can also define and apply a custom Override Approval Style segment and not use the predefined Oracle Project Costing Override Approver.

For details, see the Oracle Time & Labor Implementation and User Guide.

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Integration with Oracle Time & Labor Chapter 14 - Page 18

Set Profile Options for Project-Related Timecards

Set Profile Options for Project-Related Timecards

Set the following profile options related to project-related timecards in Oracle Time & Labor: • PA: Allow Time Entry of Negative Hours - Determines whether you can enter negative

hours on timecards in Oracle Time & Labor. • PA: AutoApprove Timesheets - Indicates whether to automatically approve timecards

submitted in Oracle Time & Labor. If you set this profile option to yes, then you do not need to route or review your timecards.

• PA: Enable Business Messages on Time Entry - Indicates whether Oracle Time & Labor displays a business message. If you set this profile option to Yes, then Oracle Time & Labor calls the Business Message Display client extension. For information about the Business Message Display client extension, see Oracle Time & Labor Implementation and User Guide.

• PA: Override Approver - Indicates whether you can enter an overriding approver for timecards in Oracle Time & Labor.

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Integration with Oracle Time & Labor Chapter 14 - Page 19

Implement Client Extensions to Route and Approve Timecards

Implement Client Extensions to Route and Approve Timecards

You can modify the AutoApproval client extensions to route and approve timecards according to your requirements and to enforce business rules. The AutoApproval Extensions contain procedures to define conditions under which timecards are approved automatically.

• AutoApproval Profile Options Extension - This procedure performs custom validation for all the expenditure items in an expenditure.

• Expenditure Summary AutoApproval Extension - This procedure contains default logic to read the values of the PA: AutoApprove Timesheets profile option.

• Timecard AutoApproval Extension - Use this procedure to incorporate additional approval logic for timecards.

• AutoApproval Routing Extension - Use this procedure to define rules for routing timecards for approval.

• Timecard Entry AutoApproval Extension - Use this procedure to define validations during entry and approval of timecards in Oracle Time & Labor.

For information, see: Oracle Projects APIs, Client Extensions, and Open Interfaces Reference and Oracle Time & Labor Implementation and User Guide.

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Integration with Oracle Time & Labor Chapter 14 - Page 20

Quiz

Answer: a

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Integration with Oracle Time & Labor Chapter 14 - Page 21

Summary

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Integration with Oracle Time & Labor Chapter 14 - Page 22

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Allocations and AutoAllocations Chapter 15 - Page 1

Allocations and AutoAllocations Chapter 15

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Allocations and AutoAllocations Chapter 15 - Page 2

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Allocations and AutoAllocations Chapter 15 - Page 3

Allocations and AutoAllocations

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Allocations and AutoAllocations Chapter 15 - Page 4

Objectives

Instructor Note

In Practice – Define an Allocation Rule, at Step 15, please update the project dates and status for the current period. Fo

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Allocations and AutoAllocations Chapter 15 - Page 5

Agenda

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Allocations and AutoAllocations Chapter 15 - Page 6

Overview of Allocations

Overview of Allocations

The allocations feature can distribute amounts between and within projects and tasks, or to projects in other organizational units. For example, you can distribute amounts such as salaries, administrative overhead, and equipment charges across several projects and tasks. Your allocations can be as simple or elaborate as you like. You identify the amounts to allocate (source) and then define the targets, the projects and tasks to which you want to allocate the source amounts. Optionally, you can offset the allocations with reversing transactions. Oracle Project Costing gathers source amounts into a source pool, and then allocates to the targets using the basis method that you specify in the allocation rule. When you allocate amounts, you create expenditure items whose amounts are derived from one or more sources:

• Existing summarized expenditure items in Oracle Project Costing • A fixed amount • Amounts in an Oracle General Ledger account balance

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Allocations and AutoAllocations Chapter 15 - Page 7

Allocation Terminology

Allocation Terminology

• Allocation - An allocation distributes existing amounts between and within projects and tasks.

• Allocation Rule - A set of attributes that describes how to allocate amounts in a source pool to specified target projects and tasks.

• Autoallocation Set - A group of allocation rules that you can run in a sequence that you specify (step-down allocations) or at the same time (parallel allocations).

• Basis Method - How you use an allocation rule to allocate the amounts from a source pool to target projects. The basis methods include options to spread the amounts evenly, allocate by percentage, or prorate amounts based on criteria you specify.

• Full Allocation - An allocation method that distributes the total amounts in the specified source pool. Use a full allocation to process an allocation rule only once in a run period.

• GL Allocation Batch - Allocation batches created in Oracle General Ledger. For example, GL allocation batches include Mass Allocation, Recurring Journals, and Mass Budget.

• Incremental Allocation - An allocation method that creates expenditure items based on the difference between the transactions processed from one allocation to the next. This

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Allocations and AutoAllocations Chapter 15 - Page 8

method is generally suitable if you want to use an allocation rule in allocation runs several times in a given run period.

• Offsets - Reversing transactions that you can use to balance allocation transactions with the source or other project.

• Source Pool - A combination of all allocation rule defined source amounts. These costs can be comprised of summarized projects costs, posted Oracle General Ledger balances, or fixed amounts.

• Target - The projects and tasks that receive allocation amounts. Allocation rules specify the targets.

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Allocations and AutoAllocations Chapter 15 - Page 9

Difference between Allocation and Burdening

Difference between Allocation and Burdening

Allocation uses existing amounts to generate expenditure items, which you can then assign to specified projects. Burdening uses a set percentage to increase the total cost amount of expenditure items. This set percentage is an estimate of the overhead. Whether your company uses allocations, burdening, or both in a particular situation depends on how your company works and how you have implemented Oracle Project Costing.

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Allocations and AutoAllocations Chapter 15 - Page 10

Allocation Rules Implementation Steps

Allocation Rules Implementation Steps

Steps to define an allocation rule: 1. Name the allocation rule and define the basic allocation rule information. 2. Define the sources. 3. Define the targets. 4. Define the offset. (optional) 5. If the basis method is Prorate, then specify how to prorate the amounts.

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Allocations and AutoAllocations Chapter 15 - Page 11

Allocation Rules

Allocation Rules

Allocation rules define how Oracle Project Costing generates allocation transactions: • The source of the amounts you are allocating. • The targets - the projects and tasks to which to allocate amounts. • How much of the source pool you want to allocate, and if you want to include a fixed

amount, GL balance, or client extension (or any combination of these). • The time period during which the rule is valid.

You can create as many rules as needed, and use them in as many allocation runs as needed. You can leave the original expenditure amounts in the source project, or offset the amounts with reversing transactions. In most cases, the reversing transactions decrease the project balance by the amount of the allocation. Each allocation rule belongs to an operating unit and cannot be shared with other operating units. Allocation rule source projects must be from the same operating unit. When cross-charge is enabled, depending on the Targets Selection, you can allocate to target projects that are in different operating units, legal entities, or business groups from the source project operating unit. Offset projects must always be in the same operating unit as source projects.

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Allocations and AutoAllocations Chapter 15 - Page 12

Basis Method

Basis Method

The basis method defines how the rule divides amounts in the source pool among the targets. • Spread Evenly - This method is the most simple and direct. The rule divides the source

pool amount equally among all the chargeable target tasks included in the rule. • Target % and Spread Evenly - Specify the percentage of the source pool to allocate to

each target line. The rule calculates the amount to allocate to the line, and then spreads the results evenly among the tasks.

• Prorate and Target % and Prorate - These two proration basis methods provide precise control over how the rule distributes the source pool. The rule uses the attributes set in the Basis window to derive the rate at which the source pool amount is apportioned among the target projects and tasks. For the Prorate basis method, the rule uses the basis attributes to apportion the source amount among all the tasks defined by the rule. For the Target % and Prorate method, the rule first uses the target percentage to calculate the amount to allocate to the line, and then goes on to apportion the results among all the tasks.

• Use Client Extension Basis - Another way to define percentages and a basis is to use the Allocation Basis extension. If you use this extension, then you cannot use the Basis window.

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Allocations and AutoAllocations Chapter 15 - Page 13

Basis Method - Spread Evenly

Basis Method - Spread Evenly

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the spread evenly basis method, the allocation program divides the total amount of the source pool evenly among all chargeable tasks. Fo

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Allocations and AutoAllocations Chapter 15 - Page 14

Basis Method - Target Percent and Spread Evenly

Basis Method - Target Percent and Spread Evenly

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the target percent and spread evenly basis method, the allocation program first multiplies the source pool amount by the target line percentage. Within each target line, the allocation program then divides the source pool amount evenly among the chargeable tasks.

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Allocations and AutoAllocations Chapter 15 - Page 15

Basis Method - Prorate

Basis Method - Prorate

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the prorate basis method, the allocation program prorates the costs based on the total labor hours for each chargeable target task. For example, because project 1, task A has 10% of the labor hours (40 hours out of 400 hours), it receives 10% of the source pool allocation ($100 out of $1000). Note that while this example uses labor hours, you can use other options for the proration basis.

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Allocations and AutoAllocations Chapter 15 - Page 16

Basis Method - Target Percentage and Prorate

Basis Method - Target Percentage and Prorate

In the example, project P1 has three chargeable tasks (A, B, and C) and project 2 has two chargeable tasks (Y and Z). Using the target percentage and prorate basis method, the allocation program first multiplies the source pool amount by the target line percentage that you assign to each project. Within each target line, the allocation program then prorates the source pool amount among the chargeable tasks based on the total labor hours for each chargeable target task. Note that while this example uses labor hours, you can use other options for the proration basis.

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Allocations and AutoAllocations Chapter 15 - Page 17

Allocation Rule Definition

Allocation Rule Definition

1. Select the operating unit that owns the allocation rule. 2. Enter a unique rule name and optional description, and specify the effective dates. 3. Select a basis method. 4. For Allocation Method, select Full or Incremental:

- To use the rule only once within the same GL or PA run period, select Full. - Full allocations distribute all the amounts in the specified projects in the

specified amount class. - If you generate allocation transactions using a full allocation rule more than

once in a run period, then you will create duplicate transactions in your target projects. If this happens, then you can reverse the duplicates.

- To use the rule several times within the same GL or PA run period, select Incremental.

- Incremental allocations create expenditure items based on the difference between the transactions processed in the previous and current run.

5. For Allocation Period Type, select GL or PA.

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Allocations and AutoAllocations Chapter 15 - Page 18

- This field specifies if you want to identify amounts based on the Oracle General Ledger (GL) fiscal calendar or the Oracle Projects (PA) calendar.

6. Specify the attributes that you want to associate with this rule: - Target Selection

- Select Operating Unit, Legal Entity, Business Group, or All. The last three options require cross-charge setup.

- The option you select determines the available project when you select targets on the Targets window.

- Auto Release - Enable this option to release the allocation transactions automatically. If this

option is not enabled, then you must release the transactions in a separate step. - Allow Duplicate Targets (Available only if the rule uses the full allocation method.)

- Enable this option to be able to allocate an amount to a chargeable task two or more times.

- If you do not allow duplicates, then the rule creates one transaction per target project and task, even if an allocation run returns a particular target project and task several times.

7. Select the Allocation Transaction Attributes - Expenditure Organization - Expenditure Type Class - Expenditure Type

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Allocations and AutoAllocations Chapter 15 - Page 19

Source Definition

Source Definition

The rule accumulates the amounts for the source pool during a specific period of time. The end date of that time period is based on the amount class. The amount class is the period or periods during which the amounts are accumulated. The allocation period type and the amount class determine the start date. You must define at least one source. All source projects and tasks must be open and from the same operating unit. The exception report for the allocation run lists any duplicate projects. If you are using projects as sources, then the results can change each time you run the allocation if project statuses change. To define sources:

1. In the Allocation Pool % field, enter a percentage to specify how much of the source pool to allocate. The default value is 100%.

2. (Optional) In the Fixed Source Amount field, enter an amount to include in the source pool.

3. For Amount Class, select from the list of values. Depending on the allocation period type you selected in the Allocation Rule window, PA or GL precedes the field name.

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Allocations and AutoAllocations Chapter 15 - Page 20

4. To use projects as sources, go to Step 5. To use only GL accounts as sources, skip to Step 7.

5. For Amount Type, select from the list of values. 6. Specify the projects whose amounts you want to include in the allocation pool.

- Client extension - To use projects designated in the Allocation Source client extension, enable the

use Client Extension Sources check box. - Designate one or more projects

- For Line Num, enter a number greater than 0. You can enter project information in the following fields: Project Org, Project Type, Class Category, Class Code, Project, and Task. To exclude a line, select the Exclude check box on the appropriate line. If you do not enter a task, then the rule uses the amounts for all the tasks on the source line. You can add columns (Project Name, Service Type, Task Name, and Task Org) to the Sources window.

- Limit the resources that are part of the designated projects (optional) - If you do not limit the resources, the rule uses all the resource types in the

specified project in the source pool amount. Select the Resources button. In the Resources window, enter a name for the resource list. In the Resource field, you can enter the resource or resource group and the percent you want to include. To exclude a specific resource, select Exclude on the appropriate line.

- If you exclude a resource, then Oracle Project Costing excludes the entire amount for that resource regardless of the specified percentage.

7. (Optional) One or more GL accounts whose amounts you want to include in the allocation pool in the GL Sources region:

- For Line Num, enter an integer greater than 0. Then select from the list of values for Account and Description.

- You cannot select or enter GL summary accounts (also known as accounts that contain a parent segment value).

- In the % field, enter the percentage of the account balance that you want to include. - To subtract the amount in the GL summary account from the source amount, select

Subtract.

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Allocations and AutoAllocations Chapter 15 - Page 21

Target Definition

Target Definition

Targets are the projects and tasks to which the allocation distributes amounts. You specify the projects and tasks either in the Target window or with the Allocation Target client extension. You must define at least one target. Target projects must be open and target tasks must be chargeable. How the Target Interacts with the Basis The rule charges allocation transactions to the target projects and tasks according to the basis method. The rule first allocates the specified percentage of the source pool to each target line, and then uses the information in the Basis window to prorate the allocated amount across the tasks on each line. Duplicate Target Projects You can include the same project on multiple lines in the Target window. For example, you can enter Project Y in the Project field on one line, and then specify a project organization that includes Project Y on a different line. If you include the same project on multiple lines, then the Allow Duplicate Targets option in the Allocation Rule window affects the way the rule behaves:

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Allocations and AutoAllocations Chapter 15 - Page 22

• If you allow duplicate targets, then the rule allocates amounts to the project as many times as it appears in the transactions the PRC: Generate Allocations Transactions program generates.

• If you do not allow duplicate targets, then the rule allocates amounts only to the project with the lowest line number.

To define targets: To use projects designated in the Allocation Target client extension, enable the Use Client Extension Targets option. Specify one or more open projects to which to distribute the amounts in the allocation pool:

• Enter a number in the Line Num field, and then select from the list of values to enter project information in the Project Org, Project Type, Class Category, Class Code, Project, and Task fields.

• If you do not enter a task, then the rule distributes the allocation to all the chargeable tasks in the proportion specified by the basis method.

• You can add columns (Billable/Capitalizable, Service Type, Task Name, and Task Org) to the Targets window.

• (Optional) If you selected one of the target percentage basis methods in the Allocation Rule window (Target % and Spread Evenly or Target % and Prorate), then enter a value in the % field. The value is the percentage of the source pool to allocate to the line. The total percentage for included targets must equal 100.

• To exclude a project from the target definition, select Exclude on the appropriate line. To exclude a specific task within a project, enter the project on two lines: on one line, leave the Task field blank; on the other line, enter the task that you want to exclude and select Exclude.

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Allocations and AutoAllocations Chapter 15 - Page 23

Offset Definition

Offset Definition

Offsets are reversing transactions that you can use to balance the allocation transactions with the source or other project. All projects and tasks to which you apply offsets must be open and chargeable. Do not specify an offset to the source project if you do not want to change the total amount in the source project. All offset projects and tasks must be open and chargeable, and in the same operating unit as the source projects. The rule creates the offset transactions for the offset project and task when you run PRC: Generate Allocations Transactions.

To define the offset: 1. Select an offset method. If the source is an Oracle General Ledger account and you want to create offsetting

transactions, then select the offset method Use Client Extension for Project and Task or Specific Project and Task.

- None - The rule does not create any offset transactions. - Source Project and Task - The rule creates reversing transactions for the source

projects and tasks.

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Allocations and AutoAllocations Chapter 15 - Page 24

- Source Project, Use Client Extension for Task - The rule creates reversing transactions in specific tasks in the source project. Specify the tasks in the Allocation Offset Tasks client extension.

- Use Client Extension for Project and Task - The rule creates reversing transactions in projects and tasks as specified in the Allocation Offset Projects and Tasks client extension.

- Specific Project and Task - The rule creates reversing transactions in one project and one of its tasks, as specified in the Project and Task fields.

2. For the fields in the Offset Transaction Attributes region, select from the list of values: - Expenditure Organization - Expenditure Type Class - Expenditure Type

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Allocations and AutoAllocations Chapter 15 - Page 25

Prorated Basis Method Definition

Prorated Basis Method Definition

1. In the Allocation Rule window, select the Basis button. 2. Enter the Basis information:

- Basis Category - Select Budget (to use the estimated amounts from the project budget) or Actual (to use the actual amounts in the project).

- Relative Period - Enter a number to denote the current (0) or earlier (less than 0) period. For example, to use the period preceding the current one, enter -1.

- Budget Type (Available only if the basis category is Budget) - Select from the list of budget types. The list of values displays only cost (non-revenue) budget types. The allocation program uses the latest budget baseline to compute the basis.

3. For Resource List, choose from the list of values those resources to include in the basis computation.

4. In the Resources area, choose resources and resource groups from the list of values. To exclude a specific resource or resource group, select Exclude on the appropriate line.

- If you include a resource group, then you cannot also include a resource that is a member of that group. However, you can exclude the resource.

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Allocations and AutoAllocations Chapter 15 - Page 26

Copy Allocation Rules

Copy Allocation Rules

Copy a rule to use an existing rule as a template. You can copy rules only within the same operating unit. For example, the definition of a set of rent allocation rules can be basically the same; with only a few differences from rule to rule (such as identifying a different set of target projects). Create the first rule and then copy it to create other similar rules. To copy an allocation rule:

1. In the Allocation Rule window, find an existing rule that you want to use as a template. 2. Select the Copy To button. 3. Enter a new name and optional description, and then choose OK.

- You see the new rule in the Allocation Rule window. 4. Change the attributes of the rule as needed.

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Allocations and AutoAllocations Chapter 15 - Page 27

Deleting or Modifying Allocation Rules

Deleting or Modifying Allocation Rules

If an allocation run exists for a rule, you cannot: • Delete the rule. • Modify the allocation method. • Modify the basis method, allocation period type, source amount class, source amount type,

or offset method for an incremental rule. • Delete or modify source lines.

Error messages notify you of other restrictions as you work with an allocation rule. Fo

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Allocations and AutoAllocations Chapter 15 - Page 28

Client Extensions for Allocations

Client Extensions for Allocations

• Allocation Source Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Sources check box in the Source window. Use the Allocation Source extension to include or exclude projects or tasks temporarily when creating a source pool.

• Allocation Target Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Targets check box in the Targets window. Use the Allocation Targets extension to include or exclude projects or tasks temporarily when allocating amounts to target projects and tasks.

• Allocation Offset Tasks Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension for Task check box in the Offsets window. Use the Allocation Offset Tasks extension to offset some source tasks but not others.

• Allocation Offset Projects and Tasks Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension for Project and Task check box in the Offsets window. Use this extension to specify more or different projects and tasks than are defined in the Sources window.

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Allocations and AutoAllocations Chapter 15 - Page 29

• Allocation Basis Extension - Oracle Project Costing calls this extension when you enable the Use Client Extension Basis check box in the Allocation Rule window. During the allocation run, the program calls the procedure to get the basis amount for each target project and task. Use the Allocation Basis extension to use amounts other than target costs to calculate the basis rate for target projects and tasks.

• Allocation Descriptive Flexfields Extension - Use this extension to define descriptive flexfields to use when you when define allocation rules. The allocation program can use the descriptive flexfields when it creates allocation and offset transactions.

• Allocation Dependencies Extension - Use this extension to verify compliance with the business rules of your choice. For example, you can verify that certain projects or tasks are never included in a source pool, or that the previous allocation run used a particular rule.

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Allocations and AutoAllocations Chapter 15 - Page 30

Quiz

Answer: a

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Allocations and AutoAllocations Chapter 15 - Page 31

Quiz

Answer: b

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Allocations and AutoAllocations Chapter 15 - Page 32

Quiz

Answer: d

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Allocations and AutoAllocations Chapter 15 - Page 33

Quiz

Answer: a

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Allocations and AutoAllocations Chapter 15 - Page 34

Agenda

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Allocations and AutoAllocations Chapter 15 - Page 35

Allocating Costs

Allocating Costs

After you define a rule for allocating costs, you can use the rule in an allocation run. Processing the rule generates allocation transactions and (if specified) offset transactions in a draft. The draft is a trial allocation run that you can review and evaluate. If the draft allocation fails or does not produce the results you expect, then you can delete the draft, change the rule parameters, and then create another draft. You can create, review, and delete draft runs until you are satisfied with the results. However, you cannot create a draft if another draft exists for the same rule. When you are satisfied with the draft run and its status is Draft Success, you can release the allocation run. Although you can run the program to generate allocations at any time, it is a good practice to interface supplier costs and expense reports, run all costing programs, and run summarization programs to prepare for the allocation to ensure that the allocation run includes all relevant amounts.

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Allocations and AutoAllocations Chapter 15 - Page 36

Creating Allocation Runs

Creating Allocation Runs

When you submit the concurrent program PRC: Generate Allocation Transactions, specify the following parameters:

• Rule Name - Enter the name of the allocation rule to use in this allocation run. • Period Name - Select the period from which the program will accumulate the source

amount. • Expenditure Item Date - Enter the expenditure item date for the generated allocation

transactions. The default value is the system date. Fo

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Allocations and AutoAllocations Chapter 15 - Page 37

Allocation Run Statuses

Allocation Run Statuses

• In Process - The program is not yet complete. • Draft Success - The program created draft transactions that are ready for release. Oracle

Project Costing does not create the transactions for the target and (if specified) offset projects and tasks until you release the draft.

• Draft Failure - The program encountered issues and could not create draft transactions. • Release Success - Oracle Project Costing created the transactions for the target and offset

projects and tasks. • Release Failure - Oracle Project Costing did not create the transactions, perhaps because

projects or tasks included in the draft run were deleted or closed after the program created the draft. Delete the run, fix the problem, and then run the generate program again.

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Allocations and AutoAllocations Chapter 15 - Page 38

Deleting Allocation Runs

Deleting Allocation Runs

During review, if you determine that the allocation is not correct, then you can delete the draft allocation run for the allocation rule that you specify. To delete an allocation run:

1. Navigate to the Allocations Runs window. 2. Select the allocation run to delete. The status of the run must be Draft Success, Draft

Failure, or Release Failure. 3. Select the Delete button.

- Initiates the program PRC: Delete Allocations Transactions. Fo

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Allocations and AutoAllocations Chapter 15 - Page 39

Releasing Allocation Runs

Releasing Allocation Runs

To allocate the transactions to the targets, you release the run. You can release a draft run after the effective dates of the rule. To release an allocation run:

1. Navigate to the Allocations Runs window. 2. Select the allocation run to release. The status of the run must be Draft Success. 3. Select the Release button.

- Initiates the program PRC: Release Allocations Transactions. - After you release the run, the status changes to Release Success or Release Failure. - You can also use the Submit Request window to submit PRC: Release Allocations

Transactions to release the run.

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Allocations and AutoAllocations Chapter 15 - Page 40

Reversing Allocation Runs

Reversing Allocation Runs

You can reverse any successful allocation run (the status is Release Success). The reversal creates reversing expenditure items. If you transferred or split expenditure items before reversal, then Oracle Project Costing reverses the transferred or split items. Oracle Project Costing creates reversal entries in the allocation history, so that generate allocations program considers the reversed amounts for the next incremental allocation. Reversing the allocation run reverses all of the transactions and you cannot reverse individual transactions. You cannot reverse an allocation run if any of the target projects in the run cannot accept new transactions. To reverse an allocation run:

1. Navigate to the Review Allocation Runs window. 2. Select an allocation run that has a status of Release Success. 3. Select the Reverse button. 4. In the Reverse an Allocation Run window, enter the parameters. 5. Select the OK button.

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Allocations and AutoAllocations Chapter 15 - Page 41

Quiz

Answer: a, b, d

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Allocations and AutoAllocations Chapter 15 - Page 42

Agenda

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Allocations and AutoAllocations Chapter 15 - Page 43

Overview of AutoAllocations

Overview of AutoAllocations

AutoAllocations provide the ability to generate allocations more efficiently. You can group processes and run them in a specified sequence or at the same time. AutoAllocations is an Oracle General Ledger and Oracle Project Costing feature. In Oracle General Ledger, the allocation definition is called a batch. In Oracle Project Costing, the allocation definition is called a rule. From an Oracle Project Costing responsibility, you can create AutoAllocation sets that contain project allocation rules. If Oracle Project Costing is integrated with Oracle General Ledger, then you can also include GL allocation batches. You can also view AutoAllocation sets that you create using an Oracle Project Costing responsibility. From an Oracle General Ledger responsibility, you can create AutoAllocation sets that contain only Oracle General Ledger batches. You can also view AutoAllocation sets that you create using an Oracle General Ledger responsibility.

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Allocations and AutoAllocations Chapter 15 - Page 44

Overview of AutoAllocations

Overview of AutoAllocations

Each rule or batch has a different effect when you run the autoallocation set, depending on the set type:

• Step-down allocations - Use the results of each step in subsequent steps of the AutoAllocation set. Oracle Workflow controls the flow of the AutoAllocations set.

• Parallel allocations - Carry out the specified rules all at once.

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Allocations and AutoAllocations Chapter 15 - Page 45

Overview of AutoAllocations

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Allocations and AutoAllocations Chapter 15 - Page 46

AutoAllocation Rules Implementation Steps

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Allocations and AutoAllocations Chapter 15 - Page 47

AutoAllocation Set Definition

AutoAllocation Set Definition

1. Using an Oracle Project Costing responsibility, navigate to the AutoAllocation Workbench window.

2. For Allocation Set, enter a unique name for the set. 3. Select the operating unit that owns the set. 4. (Optional) For Description, enter a set description. 5. For Allocation Set Type, select Step-Down or Parallel.

- After you save the allocation set, you cannot change the allocation set type. - If you create a step-down allocation that contains an Oracle Project Costing allocation

rule, then you cannot roll back any allocations transactions that you generate. You can, however, choose View Status to see which steps are complete and which failed.

6. Complete the remaining fields: - Default Contact (Available only for step-down AutoAllocations) - Select the user ID

for the person that you want to approve or notified about the status of the process. - Step - Enter a step number. The program carries out the steps in numerical order,

although you can enter the steps in any order.

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Allocations and AutoAllocations Chapter 15 - Page 48

- Type - Select the type of allocation to include in the set. - Batch/Rule - Select a GL allocation batch (if Oracle General Ledger is installed and

integrated) or a project allocation rule from the list of values. Items available in the list of values depend on the selection in the Type field.

- Contact (Available only for step–down AutoAllocations) - Select the user ID (or accept the default) for the person to notified about the status of the process for this rule.

- Allocation Method (For GL batches) - Select Incremental or Full. - Allocation Method (Displayed only for project allocation rules) - The system

displays the allocation method of the selected rule. 7. You can view information about the set or the steps within the set:

- The status of a submitted AutoAllocation set. - Choose the View Status button.

- Information about the allocations rule or batch for a step. - Select a step, and then choose the button in the lower-left corner of the

AutoAllocations Workbench window. The window that you see depends on the type of batch or rule that you select. If you select a project allocation rule, then you see the Allocations Rules window. If you select a batch, then you see the appropriate Oracle General Ledger window.

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Allocations and AutoAllocations Chapter 15 - Page 49

Implementing Workflow and Client Extensions for AutoAllocations

Implementing Workflow and Client Extensions for AutoAllocations

You can implement Workflow and client extensions to expand the capabilities of AutoAllocations. Implementing Workflow for AutoAllocations The PA Step Down Allocations workflow (item type) automates the execution of step-down autoallocation sets. For more information, see the Oracle Projects Implementation Guide. Implementing the Allocation Extension You can use the allocation extension to expand the capabilities of the AutoAllocations feature. For more information, see the Oracle Projects APIs, Client Extensions, and Open Interfaces Reference.

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Allocations and AutoAllocations Chapter 15 - Page 50

Quiz

Answer: a

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Allocations and AutoAllocations Chapter 15 - Page 51

Agenda

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Allocations and AutoAllocations Chapter 15 - Page 52

Submitting an AutoAllocation Set

Submitting an AutoAllocation Set

1. Using an Oracle Project Costing responsibility, navigate to the AutoAllocation Workbench.

2. In the Allocation Set field, find the set to submit. 3. Choose Submit or Schedule. 4. Enter information for this AutoAllocation set. The fields displayed vary depending on

whether the allocation set contains GL batches, project allocation rules, or both. - GL batches: Name, Period, and Budget (if your allocation uses budget amounts)

Note: If your set contains Oracle General Ledger batches and your Oracle General Ledger uses an average balance ledger, then enter a Journal Effective Date, Calculation Effective Date, and Usage (Standard Balances or Average Balances).

- Project allocation rules: GL Period or PA Period and Expenditure Item Date 5. Select the Submit button or the Schedule button.

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Allocations and AutoAllocations Chapter 15 - Page 53

Viewing the Status of AutoAllocation Sets

Viewing the Status of AutoAllocation Sets

1. Using an Oracle Project Costing responsibility, navigate to the View AutoAllocation Statuses window.

2. Select the set to view and then choose a Find or Query command from the View menu. - To see the Allocation Workbench for this set, select the Allocation Workbench

button. - You can see more information about a step by selecting the step, and then selecting an

option: - To see more information about a step, select the Step Detail button. - To see more information about the workflow process for the step, select the

Monitor Workflow button.

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Allocations and AutoAllocations Chapter 15 - Page 54

Summary

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Asset Capitalization Chapter 16 - Page 1

Asset Capitalization Chapter 16

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Asset Capitalization Chapter 16 - Page 2

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Asset Capitalization Chapter 16 - Page 3

Asset Capitalization

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Asset Capitalization Chapter 16 - Page 4

Objectives

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Asset Capitalization Chapter 16 - Page 5

Agenda

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Asset Capitalization Chapter 16 - Page 6

Overview of Asset Capitalization

Overview of Asset Capitalization

Using capital projects, you can define capital assets and capture construction-in-process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets you are building, installing, or acquiring. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work-in-process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.

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Asset Capitalization Chapter 16 - Page 7

Overview of Asset Capitalization

Overview of Asset Capitalization

Using Capital Projects to Create Capital Assets You define and build capital assets in capital projects using information specified in the project work breakdown structure (WBS). You define asset grouping levels and assign assets to the grouping levels to summarize the CIP costs for capitalization. You can review and adjust capital project costs before and after capitalization. For example, you can allocate costs collected under common tasks to multiple CIP assets before you place them in service. You can also account for additional costs incurred after capitalization, because Oracle Project Costing allows you to place assets in service before completion of a project. When you are ready to place a CIP asset in service, you send the capital project amounts to Oracle Assets as asset lines. Oracle Assets places the asset lines in a holding area where your fixed assets department can post the capital costs in Oracle Assets as fixed assets. You can review detail transactions associated with the asset lines in Oracle Project Costing and Oracle Assets. Using Capital Projects to Process Retirement Costs You capture retirement costs in a capital project by recording cost of removal and proceeds of sale amounts to a task that is designated as a retirement cost task

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Asset Capitalization Chapter 16 - Page 8

To distinguish cost of removal and proceeds of sale amounts, you must enter proceeds of sale amounts using expenditure types that you define to specifically classify these amounts. Oracle Project Costing automatically classifies amounts for all other expenditure types as cost of removal. To associate retirement costs with a group asset in Oracle Assets, you create a retirement adjustment asset in the capital project and identify it with a specific group asset. As with capital assets, you define asset grouping levels and assign retirement adjustment assets to the grouping levels to summarize the retirement cost amounts for posting to Oracle Assets. When retirement activities are complete, you generate asset lines for the retirement cost amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group assets. To communicate notice of an asset retirement to Oracle Assets, you can optionally initiate retirement requests in Oracle Project Costing that are automatically passed to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 9

Project-Related Asset Processing Flow

Project-Related Asset Processing Flow

You charge expenditures to capital projects in Oracle Project Costing. You collect supplier costs in Oracle Purchasing and Oracle Payables and run the program PRC: Interface Supplier Costs in Oracle Project Costing to interface project-related receipt accrual cost from Oracle Purchasing and supplier costs from Oracle Payables to Oracle Project Costing. Oracle Project Costing, Oracle Purchasing, and Oracle Payables create accounting entries for CIP, RWIP, and expensed cost in Oracle Subledger Accounting. In addition, Oracle Project Costing creates accounting in Oracle Subledger Accounting for supplier cost adjustments in Oracle Project Costing. Oracle Subledger Accounting transfers accounting entries to Oracle General Ledger. Oracle Payables uses the Mass Additions Create program to send non-CIP assets to Oracle Assets. If the non-CIP asset is associated with a capital project, then Oracle Project Costing interfaces the asset and associated costs from Oracle Payables. In this case, Oracle Project Costing interfaces the non-CIP asset and asset cost to Oracle Assets. When you place a CIP asset in service, you interface the asset and associated CIP asset lines to Oracle Assets. When you retire an asset, you interface the retirement adjustment asset and associated RWIP asset lines to Oracle Assets. Oracle Assets creates accounting in Oracle Subledger Accounting to clear the CIP and RWIP accounts and to post asset costs to the appropriate asset or group depreciation reserve account.

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Asset Capitalization Chapter 16 - Page 10

Accounting Example

Accounting Example

In this example, you create a capital project to capture the costs of building a new clean room and installing air quality monitors. As part of this project, you are removing several air quality monitors from an existing clean room that is being designated for other uses and retiring them. Fo

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Asset Capitalization Chapter 16 - Page 11

Accounting Example

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Asset Capitalization Chapter 16 - Page 12

Accounting Example

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Asset Capitalization Chapter 16 - Page 13

Accounting Example

Accounting Example

In this example, after you transfer the final accounting for the adjustment to Oracle General Ledger, the total amount in Oracle General Ledger for the CIP-Clean Room account is 9,205.00. Fo

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Asset Capitalization Chapter 16 - Page 14

Accounting Example

Accounting Example

Each asset line created by the program to generate asset lines has an associated general ledger account. After you post the asset lines in Oracle Assets, you can create accounting in Oracle Subledger Accounting to relieve the CIP or RWIP account, and transfer the amount to the appropriate asset cost or group depreciation reserve account. Oracle Subledger Accounting transfers the final accounting entries to Oracle General Ledger.

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Asset Capitalization Chapter 16 - Page 15

Accounting Example

Accounting Example

As the final step in the process of accounting for the asset transactions illustrated in this example, you initiate an asset retirement transaction in Oracle Assets for the air quality monitors that you removed from the clean room that you are taking out of service. You then create journal entries to account for the retirement of the group asset cost associated with these monitors. For more information on processing retirement transactions, see: Asset Retirements, Oracle Assets User Guide.

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Asset Capitalization Chapter 16 - Page 16

Quiz

Answer: a

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Asset Capitalization Chapter 16 - Page 17

Quiz

Answer: c

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Asset Capitalization Chapter 16 - Page 18

Agenda

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Asset Capitalization Chapter 16 - Page 19

Project Types for Asset Capitalization

Project Types for Asset Capitalization

When you create a capital project, you must copy a project template or existing project that is associated with capital class project type. You cannot change the class (capital, contract, or indirect) of a project. Capitalization Information specified for a project type:

• Cost Type - Specifies whether to capitalize costs at their burdened or raw cost amount. • Require Complete Asset Definition - Specifies whether you must complete an asset

definition in Oracle Project Costing before you can interface costs to Oracle Assets. If you select this option, then you do not need to enter information for the imported asset line in the Prepare Mass Additions window in Oracle Assets. The interface program places asset lines with complete definitions directly into the Post queue.

• Override Asset Assignment - This field interacts with the assignment status of the asset to either call or disregard the Asset Assignment client extension.

• Asset Cost Allocation Method - You can select one of several predefined allocation methods to automatically distribute indirect and common costs across multiple assets. Options include Actual Units, Current Cost, Client Extension, Estimated Costs, None, Standard Cost, and Spread Evenly.

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Asset Capitalization Chapter 16 - Page 20

• Event Processing Method - You can specify a capital event processing method to control how assets and costs are grouped over time. You can choose to use either periodic or manual events.

• Grouping Method Specify how to summarize asset lines. You can choose from the following options:

- All (highest level of summarization) - CIP Grouped by Client Extension - Expenditure Category - Expenditure Category, Nonlabor Resource - Expenditure Type - Expenditure Type, Nonlabor Resource

• Group Supplier Invoices - Select to consolidate the expenditure items on a supplier invoice into one asset line according to the method specified in the Grouping Method field. Deselect to interface the lines to Oracle Assets as separate mass addition lines.

• Interface Supplier Invoices - If you choose not to group supplier invoices, then you select a grouping option:

- As New Mass Additions - Interfaces each expenditure item on a supplier invoice line to Oracle Assets as a separate Mass Addition line. Each line has the status NEW.

- As Merged Mass Additions - Interfaces each supplier invoice line to Oracle Assets as a separate Mass Addition line with the status MERGED.

• Capitalized Interest Default Schedule - Use this field to specify a default interest rate schedule for capitalized interest.

• Capitalized Interest Allow Override - Select this check box to allow override of the default capitalized interest rate schedule at the project level.

For additional information regarding Capitalized Interest, see the lesson titled “Capital Projects: Capitalized Interest.” For additional information regarding implementing project types, see the course titled “R12.x Project Foundation Fundamentals.”

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Asset Capitalization Chapter 16 - Page 21

Quiz

Answer: a

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Asset Capitalization Chapter 16 - Page 22

Agenda

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Asset Capitalization Chapter 16 - Page 23

Asset Processing Flow

Asset Processing Flow

Creating and processing capital projects consists of a series of steps: 1. Create a new capital project and Work Breakdown Structure using a project template

whose project type is set up for a capital project. Update project and task details if necessary. You can also create assets when you copy an existing capital project. Assets associated with the existing project or project template are copied to the new project.

2. Update the transaction controls to determine which transactions to capitalize. 3. Collect CIP, RWIP, and expensed costs for your capital project and make adjustments if

necessary. 4. Define CIP and retirement adjustment assets as needed. You can define assets manually

or using project asset APIs. 5. Specify asset grouping levels and grouping level types within the Work Breakdown

Structure. You can then associate assets with the various grouping levels. 6. Specify the date in service for completed CIP assets or the date retired for retirement

adjustment assets

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Asset Capitalization Chapter 16 - Page 24

7. Optionally, define capital events to control how assets and costs are grouped, and placed in service or retired.

8. Generate asset lines. 9. Review asset cost lines and make any necessary adjustments. 10. Run the program to interface assts to Oracle Assets. 11. Run the program to tieback asset lines from Oracle Assets.

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Asset Capitalization Chapter 16 - Page 25

Specifying Costs

Specifying Costs

Specifying Capital Asset Transactions to Capitalize For capital assets, you must specify whether to capitalize or expense each transaction charged to a capital project. You can use project-level and task-level transaction controls to indicate which kinds of expenditures are allowable for capitalization. You can disable the Capitalizable check box for a lowest level task on a capital project to indicate that all transactions charged to the task will be classified as non-capitalizable. Retirement Cost You can select Retirement Cost check box for a task on a capital project to indicate that the task is for retirement cost processing. When you enable this option, all expenditure items charged to a task are designated as cost of removal or proceeds of sale amounts that pertain to retirement adjustment assets. A task identified for processing retirement cost cannot also be capitalizable. You cannot make an election on how to account for retirement costs you record to a retirement adjustment asset. Oracle Project Costing automatically classifies retirement costs as cost of removal or proceeds of sale amounts based on the expenditure type. You define expenditure types for the PROCEEDS_OF_SALE_EXP_TYPES lookup type. Oracle Project Costing

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Asset Capitalization Chapter 16 - Page 26

classifies all amounts you enter for the expenditure types defined in this lookup as proceeds of sale amounts. Conversely, when you enter amounts for a retirement cost task and specify an expenditure type that is not defined in the PROCEEDS_OF_SALE_EXP_TYPES lookup type, Oracle Project Costing automatically classifies the amounts as cost of removal.

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Asset Capitalization Chapter 16 - Page 27

Defining Assets for Capital Projects

Defining Assets for Capital Projects

After you create a capital project, you can create capital assets for assets you want to place in service as fixed assets. You can also create retirement adjustment assets to collect retirement costs for assets you want to retire that are associated with a group asset in Oracle Assets. You can define capital assets and retirement adjustment assets separately in different projects or together in the same project. You can create multiple assets for one project. However, assets cannot be created for multiple projects. Creating a Capital (CIP) Asset

• You create capital assets and accumulate costs for fixed assets you are building, installing, or acquiring. You define an asset in Oracle Project Costing for each capital asset you want to place in service. To interface a capital asset to Oracle Assets, you must specify an actual date in service for the asset in Oracle Project Costing.

Creating a Retirement Adjustment Asset • You create retirement adjustment assets to collect cost of removal and proceeds of sale

amounts for assets associated with a group asset in Oracle Assets you are retiring, removing, abandoning, or otherwise disposing that are associated with a group asset in Oracle Assets.

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Asset Capitalization Chapter 16 - Page 28

• When you define a retirement adjustment asset in Oracle Project Costing, you must specify a valid Oracle Assets group asset identifier as the target asset. You can create retirement adjustment assets and interface retirement costs to Oracle Assets only for fixed assets that are associated with group assets in Oracle Assets. To interface a retirement adjustment asset to Oracle Assets, you must specify a retirement date for the asset in Oracle Project Costing.

• You can initiate a retirement request in Oracle Project Costing to identify one or more assets that you are retiring from service. Retirement requests serve as an advice that you can use to notify your fixed asset department about assets that need to be retired in Oracle Assets.

For descriptions of the asset attributes, see the Oracle Project Costing User Guide.

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Asset Capitalization Chapter 16 - Page 29

Streamlining Asset Creation

Streamlining Asset Creation

Create and Assign Assets Using API’s The project asset API’s enable you to create, update, and delete project assets and project asset assignments. This feature enables you to integrate with external asset management systems. Copying Assets To streamline the definition of multiple project assets that have similar attributes, you can use the Copy Asset option on the Assets and Asset Details windows to copy assets within a project.

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Asset Capitalization Chapter 16 - Page 30

Asset Grouping Levels

Asset Grouping Levels

You can group by project, top task, lowest level task or mixed task levels. When grouping at mixed task levels, you can group assets at either the top task or at the lowest task levels, but not at both levels on the same top-task branch. For example, if you group at the project level, Oracle Project Costing summarizes all capitalizable costs at all task levels into asset lines at the project level. If you group at a top task level, Oracle Project Costing summarizes all tasks below that top task into asset lines for that top task. Grouping level types determine whether you can associate assets with the grouping level:

• Specific Assets - Select this option to associate assets with the project or task. • Common Costs - Select this option to group projects or tasks that capture costs you want

to allocate to multiple assets. You cannot associate assets with this grouping level type. You can change the grouping level type at any time. If you change a grouping level type from Specific Assets to Common Costs, then Oracle Project Costing deletes existing asset assignments from the grouping level. Changing the grouping level after you interface assets does not affect the asset lines that you previously sent to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 31

Asset Cost Allocation Methods

Asset Cost Allocation Methods

You can specify an asset allocation method to enable Oracle Project Costing to automatically allocate unassigned asset lines and common costs across multiple assets. Unassigned asset lines typically occur when more than one asset is assigned to an asset grouping level. To specify an asset allocation method for a project, select an allocation method in the Capital Information window for the project. Optionally, you can override the asset cost allocation method when defining capital events. You can select one of the following asset allocation methods based on:

• Actual Units - The number of actual units specified for each asset in the Assets window. • Client Extension - The Asset Allocation Basis extension. • Current Cost - The grouped CIP cost of each asset. • Estimated Cost - The estimated cost in the Assets window. • Standard Unit Cost - A standard unit cost defined for the asset book and category in the

Project Assets Standard Unit Cost window. • Spread Evenly - The number of assets being capitalized for the project or the event.

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Asset Capitalization Chapter 16 - Page 32

Specifying an Actual Date in Service or a Retirement Date

Specifying an Actual Date in Service or a Retirement Date

Placing a Capital Asset in Service When a capital asset is complete, you place it in service. If your project has more than one capital asset, then you can place each asset in service as it is completed. You do not have to complete the entire project to place an asset in service. You place an asset in service by entering the actual date in service for the asset. The actual date in service can be a past, current, or future date. After you enter the date, generate asset lines and interface the asset lines to Oracle Assets. When you enter a past actual date in service, Oracle Assets will calculate and record how much depreciation should have been taken for the asset, if any. Specifying a Retirement Date for Retirement Adjustment Assets When the activities associated with retiring, removing, abandoning, or disposing of an asset are complete, you can specify a retirement date for the retirement adjustment asset to signify the retirement of the asset. Specifying a retirement date enables you to generate asset lines for the retirement costs captured in Oracle Project Costing. You can then interface the retirement asset lines to Oracle Assets for posting to the accumulated depreciation accounts for the associated group asset. If your project has more than one retirement adjustment asset, then you can retire each asset as retirement activities are completed.

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Asset Capitalization Chapter 16 - Page 33

Capital Events

Capital Events

You can create periodic and manual capital events to control how Oracle Project Costing interfaces capital project assets and costs to Oracle Assets over time. You use capital events to group assets and costs before you generate asset lines for capitalization and retirement cost processing. You can specify a default event processing method for a capital project type and override it at the project level. Oracle Project Costing supports the following event processing methods:

• None - Defined groupings are valid for the life of the project • Periodic Event Creation - Cost and assets are grouped periodically by grouping level • Manual Event Creation - Cost and assets are grouped manually by the user

When you submit the program PRC: Generate Asset Lines for a Single Project or PRC: Generate Asset Lines for a Range of Projects for a capital project that uses capital events, Oracle Project Costing automatically generates asset lines for all defined, unprocessed capital events.

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Asset Capitalization Chapter 16 - Page 34

Periodic Events When you use periodic event processing, you submit the concurrent program PRC: Create Periodic Capital Events to select unprocessed assets and cost amounts for a project based on the actual date in service and expenditure item date you specify in the process parameters. The program PRC: Create Periodic Capital Events enables you to create periodic capital events to group project assets and costs for capitalization and retirement cost processing. You enable periodic capital event processing for a project by setting the event processing option in the Capital Information window to Periodic. When you submit this program, Oracle Project Costing selects unprocessed assets and costs for capital projects based on the actual date in service, expenditure item date, and project values you specify in the process parameters. The process then associates the assets and costs with the event period you specify in the process parameters. You can then submit the program to generate asset lines for the selected assets and costs. Manual Events When you use manual event processing, you can specify the assets and costs that you want to include in the event, as well as the actual date in service and expenditure item date. You create capital events from the Capital Projects window:

1. Navigate to the Capital Projects window. 2. Find the capital project for which you want to define a capital event in the Find Capital

Projects window. 3. Choose the capital project you want and choose the Capital Events button. 4. In the Capital Events window, select either the Capital Project Assets Workbench or the

Retirement Adjustment Assets Workbench. 5. Insert a new row to derive the (next) sequential event number, an event name, and

optionally select a different asset allocation method. 6. Save your work. 7. To select assets for the event, choose the Assets button to open the Event Assets window

and choose Attach New Assets. 8. In the Attach New Asset window, enter selection criteria to find one or more assets to

attach to the event and choose OK to return to the Event Assets window. 9. Save your work and close the Event Assets window to return to the Capital Events

window. 10. To select costs for the event, choose the Costs button to open the Event Costs window

and choose Attach New Costs. 11. In the Attach New Costs window, enter selection criteria to find costs to attach to the

event and choose OK to return to the Event Costs window. 12. Save your work and close the Event Costs window to return to the Capital Events

window. 13. To generate asset lines for the event, choose Generate. You can view the status of the

request in the Events window. Note: You can optionally reverse all assets for the event by choosing the Reverse button.

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Asset Capitalization Chapter 16 - Page 35

Generating Summary Asset Lines

Generating Summary Asset Lines

Run PRC: Generate Asset Lines for a Single Project or PRC: Generate Asset Lines for a Range of Projects to generate summary asset lines. Prerequisites Before you generate asset lines, perform the following steps:

1. Cost the transactions by running the following programs: - PRC: Distribute Labor Costs or PRC: Distribute Labor Costs for a Range of Projects - PRC: Distribute Usage and Miscellaneous Costs - PRC: Interface Supplier Costs - PRC: Interface Expense Reports from Payables - PRC: Distribute Supplier Cost Adjustments - PRC: Distribute Expense Report Adjustments - PRC: Distribute Total Burdened Costs (required if you are capitalizing burdened

costs and you capture burden cost on the same expenditure item) - PRC: Create and Distribute Burden Transactions (required if you are capitalizing

burdened costs and you capture burden as a separate expenditure item)

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Asset Capitalization Chapter 16 - Page 36

- PRC: Generate Cost Accounting Events Note: You must run this program for each process category for which you have costs. Alternatively, you can leave the Process Category parameter blank to generate accounting events for all costs.

- PRC: Create Accounting Note: You must run this program for each process category for which you have costs. Alternatively, you can leave the Process Category parameter blank to create accounting events for all costs. Important: You must run the program PRC: Create Accounting in final mode for the expenditure items before you generate asset lines. The generate asset lines program does not create asset lines for the costs if the corresponding expenditure items are not successfully accounted in final mode.

2. Run the program to update project summary amounts so you can see the total expense and CIP/RWIP amounts in the Capital Projects Summary window.

3. If you use periodic or manual capital events to group project assets and costs, then process the events.

Determining CIP or RWIP Accounting You must create the final accounting for costs in Oracle Subledger Accounting before you can generate asset lines for the costs. The program that generates asset lines uses the final accounting from Oracle Subledger Accounting to determine the CIP or RWIP accounts for asset lines. This approach ensures that Oracle Project Costing interfaces the final CIP or RWIP accounts to Oracle Assets. The program uses the predefined post-accounting programs that Oracle Project Costing provides in Oracle Subledger Accounting to obtain final CIP or RWIP accounts from Oracle Subledger Accounting. If you define journal line types for Oracle Subledger Accounting that use different accounting classes, then you must add these accounting classes to the post-accounting program assignments. Note: The generate asset lines process obtains the CIP or RWIP accounts from the cost distribution lines in Oracle Project Costing, and not from Oracle Subledger Accounting, in the following two situations:

• The Interface Costs to GL option for the type of cost is set to No in Oracle Project Costing implementation options.

• You import costs from an external non-Oracle system into Oracle Project Costing as accounted costs. As a result, Oracle Project Costing does not generate accounting events or create accounting for these costs.

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Asset Capitalization Chapter 16 - Page 37

Assigning Asset Lines

Assigning Asset Lines

• Assigning an Asset to Unassigned Asset Lines - When the program that generates asset lines creates asset lines without an asset assignment, you need to manually assign an asset to the line before you can send it to Oracle Assets. If unassigned asset lines are associated with an event, then you can only assign the lines to an asset that is included in the event.

• Changing the Asset Assigned to an Asset Line - You can change the asset or description for an asset line in the Asset Lines window. However, you cannot change asset lines you already sent to Oracle Assets.

• Splitting an Asset Line - You can split an asset line and assign the split costs to multiple assets by using percentages or amounts. You can split lines with and without asset assignments.

• Note: The Asset Category field displays the asset category related to payables invoice items. The field does not display the asset category for assets defined in Oracle Project Costing.

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Asset Capitalization Chapter 16 - Page 38

Sending Asset Lines to Oracle Assets

Sending Asset Lines to Oracle Assets

Run PRC: Interface Assets to Oracle Assets to send valid capital asset and retirement adjustment asset lines to Oracle Assets. Then, in Oracle Assets, you can review the mass addition lines created from the project asset lines in the Prepare Mass Additions window. For Oracle Project Costing to send asset lines to Oracle Assets, the asset line must meet these specific conditions:

• The actual date in service or retirement date must fall in the current or a prior Oracle Assets accounting period.

• A capital asset or retirement adjustment asset must be associated with the asset line. The program creates one mass addition line in Oracle Assets for each asset line in Oracle Project Costing, assigning the asset information you entered for the asset in Oracle Project Costing to the mass addition line in Oracle Assets. You use the Mass Additions process in Oracle Assets to prepare and post these mass additions. If you did not enter all required asset information in Oracle Project Costing, then you must enter it for the line in the Prepare Mass Additions window before you can post it. The program PRC: Interface Assets to Oracle Assets interfaces both ledger currency amounts and reporting currency amounts for the asset lines to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 39

In Oracle Assets you can query and review assets posted to Oracle Assets by project number and task number in the Financial Inquiry window. Prerequisite: If you are sending cost adjustments for an asset from Oracle Project Costing to Oracle Assets, ensure that the original mass addition was posted to Oracle Assets. If the mass addition has not become an asset, the Interface process will reject the adjustment line. Tieback Asset Lines from Oracle Assets After you interface assets to Oracle Assets, run the program PRC: Tieback Asset Lines from Oracle Assets. This program identifies and updates Oracle Project Costing assets and asset lines that you interfaced to Oracle Assets. For assets, the program updates the asset details to reflect the asset number assigned in Oracle Assets and the period in which the asset was posted. For asset lines, the program updates each line to reflect the Oracle Assets period in which the asset line was posted.

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Asset Capitalization Chapter 16 - Page 40

Quiz

Answer: b

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Asset Capitalization Chapter 16 - Page 41

Agenda

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Asset Capitalization Chapter 16 - Page 42

Adjusting Capital Project Costs

Adjusting Capital Project Costs

You can adjust expenditure items whose cost you sent to Oracle Assets, and send the summarized asset lines to Oracle Assets. You process these cost adjustments in Oracle Project Costing and send them to Oracle Assets as adjusting asset lines. You can also collect new expenditure items for an asset in Oracle Project Costing after you capitalize or retire an asset. Your cost adjustments can be either positive or negative. For example, you receive a credit memo from a supplier for a capitalized asset you sent and posted to Oracle Assets. When you send this credit memo to Oracle Project Costing, you create new negative asset lines, which you can send to Oracle Assets as a negative cost adjustment to the original asset. Oracle Project Costing includes the information you enter for the asset on the adjusting asset line you send to Oracle Assets. If you specify to amortize depreciation adjustments for a capital asset in Oracle Project Costing, then Oracle Assets amortizes any catch-up depreciation amount for the adjustment over the remaining life of the asset. Otherwise, it expenses the catch-up depreciation for the adjustment in the current period. You cannot send cost adjustments to Oracle Assets until you have posted the original mass addition line (imported asset line) to Oracle Assets using the Post Mass Additions process.

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Asset Capitalization Chapter 16 - Page 43

Reversing Capitalization of Assets in Oracle Project Costing

Reversing Capitalization of Assets in Oracle Project Costing

If you placed an asset in service in error or sent inappropriate asset costs to Oracle Assets, you can reverse capitalization of the asset in Oracle Project Costing, and send the reversing line to Oracle Assets as an adjustment. After the capitalization is reversed, you interface the negative distributions to Oracle Assets. Those distribution lines are merged with the existing asset reducing the cost to 0. After you adjust the asset cost to 0, you can retire the asset in Oracle Assets. If depreciation had been taken on the asset, then there will be a credit to depreciation expense in the reversal period. Never retire an asset prior to adjusting the cost to 0 or Oracle Assets calculates gains and losses associated with the retirement. When reversing capitalization, note that:

• If you reverse capitalize an asset in Oracle Assets that was created from Oracle Project Costing, then this transaction is recorded in Oracle Assets only, and not in Oracle Project Costing. If this happens, you cannot manually update the corresponding asset in Oracle Project Costing.

• You cannot send a reversing line to Oracle Assets until you have posted the original asset using the Post Mass Additions process. You cannot make a negative cost adjustment (reversal) to a mass addition not yet posted to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 44

• When you choose the action to reverse capitalize an asset, Oracle Project Costing checks Oracle Assets to determine if the asset was retired previously. If yes, then Oracle Project Costing issues a warning message and you can either continue processing or cancel the reversal action.

Reversing Capitalization of a Capital Asset After Depreciation Oracle Assets processes reversal transactions from Oracle Project Costing as negative cost adjustments to the original asset. If you have begun depreciating this asset, then Oracle Assets must reverse the depreciation expense in the period you reverse capitalize the asset. Before you reverse an asset, ensure that the Amortize Adjustment check box is unchecked for the asset. If you reverse capitalize an asset for which you specify to amortize adjustments, then the monthly depreciation on the original cost will not equal the monthly depreciation generated to account for the asset cost reversal in Oracle Assets. Oracle Assets amortizes the catch-up depreciation on the negative cost adjustment over the remaining life of the asset. Recapitalization of Reverse Capitalized Assets To recapitalize an asset, enter the new Date Placed in Service in Oracle Project Costing so you can generate new asset lines. You must also manually change the Date Placed in Service for the asset in the Asset Workbench in Oracle Assets, as the Date Placed in Service cannot be updated through the Mass Additions process.

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Asset Capitalization Chapter 16 - Page 45

Abandoning a Capital Asset in Oracle Project Costing

Abandoning a Capital Asset in Oracle Project Costing

You can abandon a capital asset at any time. Before Interfacing to Oracle Assets You can abandon a capital project prior to interfacing to Oracle Assets by changing all expenditure items from capitalizable to non-capitalizable. The journal entries for the adjusted costs transfer these costs from a CIP or RWIP account to an Expense account. After Interfacing to Oracle Assets If you already interfaced the asset that you want to abandon, then you must reverse capitalize the asset in the Assets window in Oracle Project Costing. You also need to send the reversing lines to Oracle Assets to account for the abandoned CIP asset. The program to generate asset lines creates reversal lines, which you can then interface to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 46

Agenda

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Asset Capitalization Chapter 16 - Page 47

Asset Capitalization Implementation Steps

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Asset Capitalization Chapter 16 - Page 48

Implement Asset Extensions

Implement Asset Extensions

• Asset Assignment Extension - Implement your company’s rules for assigning an asset to a task during asset line generation. Oracle Project Costing calls the Asset Assignment extension:

• For all unassigned assets. You can modify the extension to designate the assets for specific tasks (asset lines) and thus avoid the UNASSIGNED designation, or you can assign an asset to the line manually.

• If the Override Asset Assignment check box is selected on the Project Types window (Capitalization tab). You can modify the extension to override the asset assigned to specified tasks.

• Asset Cost Allocation Basis Extension - Define your own allocation bases for allocating unassigned and common costs across multiple project assets. Oracle Project Costing calls this extension to allocate costs for projects that specify an asset cost allocation method of Client Extension in the Capital Information window.

• Asset Lines Processing Extension - The program PRC: Generate Asset Lines program (for a Single Project or a Range of Projects) calls this extension for each project for which it generates asset lines. Use this extension to automatically create project assets (capital assets

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Asset Capitalization Chapter 16 - Page 49

and retirement adjustment assets) and asset assignments prior to the creation of asset lines, based on transaction data (such as inventory issues or supplier invoices) entered for the project.

• Capital Event Processing Extension - The program PRC: Create Periodic Capital Event calls this extension for each project for which it creates a capital event. Use this extension to automatically create project assets (capital assets and retirement adjustment assets) and asset assignments prior to the creation of capital events, based on transaction data (such as inventory issues or supplier invoices) entered for the project.

• CIP Account Override Extension - Override the CIP account associated with an asset line to specify a different account for posting CIP clearing amounts. This capability enables you to utilize accounts for clearing CIP amounts that are different from the accounts you use to account for CIP expenditures. This extension allows you to preserve the original CIP cost account details.

• CIP Grouping Extension - Define a unique method that your company uses to specify how expenditure lines are grouped to form asset lines. Oracle Project Costing predefines five CIP Grouping Methods. If these methods do not meet your company’s business needs, then use this client extension to create your own CIP Grouping Method. After you define the extension, select the Group by Client Extension grouping method. Oracle Project Costing calls the CIP Grouping extension when it generates asset lines.

• Depreciation Account Override Extension - Define your own logic for deriving the depreciation expense account when you define an asset or interface asset lines to Oracle Assets. Oracle Project Costing calls this extension during update of the Assets and Asset Details windows and during validation of asset information when you interface asset lines to Oracle Assets.

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Asset Capitalization Chapter 16 - Page 50

Define Standard Unit Costs for Asset Cost Allocations

Define Standard Unit Costs for Asset Cost Allocations

You can select an asset cost allocation method for the project to set up a capital project to automatically allocate unassigned and common costs to multiple assets. To allocate costs using the Standard Unit Cost method, you must define a standard unit cost for each asset book and asset category combination for which you want to allocate costs. When you choose this method of cost allocation, Oracle Project Costing multiplies the standard unit cost times the units installed for each asset to determine the proration basis for allocating costs.

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Asset Capitalization Chapter 16 - Page 51

Enable Retirement Cost Processing

Enable Retirement Cost Processing

To enable retirement cost processing features, you must set the value of the site-level profile option PA: Retirement Cost Processing Enabled to Yes. This site-level profile option determines whether retirement cost processing windows and features are enabled in Oracle Project Costing. If you enable retirement cost processing and you also use Oracle Assets group asset processing features, then you can access all retirement cost processing features in Oracle Project Costing. However, if you do not use Oracle Assets group asset processing features, you can only use the retirement requests processing feature.

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Asset Capitalization Chapter 16 - Page 52

Define Proceeds of Sale Expenditure Types

Define Proceeds of Sale Expenditure Types

To enter and record proceeds of sale amounts for retirement cost processing in Oracle Project Costing, you must define unique expenditure types to classify and account for the amounts. To define and update expenditure types for proceeds of sale, navigate to the Retirement Cost Classification Lookups window. You can also define and update expenditure types for proceeds of sale by navigating to the Oracle Project Costing Lookups window and querying the lookup type: PROCEEDS_OF_SALE_EXP_TYPES. When you define lookup values, you can use the Tag field to define the sort order in which Oracle Project Costing displays lookup values in a list of values. If you do not specify tag values, then Oracle Project Costing sorts the list based on the value displayed in the lookup Code field. Do not use the PROCEEDS_OF_SALE_EXP_TYPES lookup type to define expenditure types that you want to account for as cost of removal. Oracle Project Costing classifies all amounts you enter for the expenditure types defined in this lookup as proceeds of sale amounts. Conversely, when you enter amounts for a retirement cost task and specify an expenditure type that is not defined in the PROCEEDS_OF_SALE_EXP_TYPES lookup type, Oracle Project Costing automatically classifies the amounts as cost of removal.

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Asset Capitalization Chapter 16 - Page 53

Summary

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Asset Capitalization Chapter 16 - Page 54

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Cross Charge Chapter 17 - Page 1

Cross Charge Chapter 17

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Cross Charge Chapter 17 - Page 2

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Cross Charge Chapter 17 - Page 3

Cross Charge

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Cross Charge Chapter 17 - Page 4

Objectives

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Cross Charge Chapter 17 - Page 5

Agenda

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Cross Charge Chapter 17 - Page 6

Overview of Cross Charge

Overview of Cross Charge

When projects share resources within an enterprise, it is common to see those resources shared across organization and country boundaries. Further, project managers can also divide the work into multiple projects for easier execution and management. The legal, statutory, or managerial accounting requirements of such projects often present complex operational control, billing, and accounting challenges. Cross charge enables project managers to easily view the current total costs of the project, regardless of who performs the work or where it is performed.

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Cross Charge Chapter 17 - Page 7

Cross Charge Terminology

Cross Charge Terminology

• Borrowed and Lent - A method of processing cross charge transactions that generates accounting entries to pass cost or share revenue between the provider and receiver organizations within a legal entity.

• Cross Charge - The act of charging costs directly to a project outside your own organization, operating unit, ledger, legal entity, or business group. A cross charge is the act of entering a transaction where the expenditure organization and the task owning organization are different. End users see no change; the cross charge is just another project in their List of Values.

• Cross Charge Transaction - An expenditure item whose provider operating unit is different from the receiver operating unit, the provider organization is different from the receiver organization, or both.

• Cross Charge Type - One of the three types of cross charge transactions: intercompany, inter–operating unit, and intra-operating unit.

• Intercompany Billing - A method of internally billing work performed by a provider operating unit and charged to a project owned by a receiver operating unit. The provider

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Cross Charge Chapter 17 - Page 8

operating unit creates an Oracle Receivables invoice, which is interfaced as an Oracle Payables invoice to the receiver operating unit.

• Provider Operating Unit - The operating unit whose resources provide services to another project or organization. For cross charge transactions, the provider operating unit is the expenditure operating unit; the project operating unit owns the intercompany billing project.

• Provider Organization - For cross charge transactions, the organization that provides resources to another organization. The default is the expenditure organization or the non-labor resource organization, which can be overridden using the Provider and Receiver Organization Override client extension.

• Receiver Operating Unit - An operating unit whose projects receive services from another project or organization.

• Receiver Organization - The operating unit whose projects receive services from another project or organization.

• Transfer Price - The price agreed upon by the provider and receiver organizations in a cross charged transaction.

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Cross Charge Chapter 17 - Page 9

Cross Charge Types Example

Cross Charge Types Example

A transaction’s cross charge type depends on whether the provider operating unit, organization, and legal entity are different from those of the receiver. You cannot change the provider or receiver operating unit, but you can use the Provider and Receiver Organizations Override client extension to override the default provider organization and receiver organization. Oracle Project Costing provides three types of cross charge transactions:

• Intercompany - Operating units and legal entities are different. • Inter-Operating Unit - Operating units are different, but legal entities are the same. • Intra-Operating Unit - Operating units and legal entities are the same, but the

organizations are different.

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Cross Charge Chapter 17 - Page 10

Processing Methods

Processing Methods

You can choose one of the following processing methods for cross charge transactions: • Borrowed and Lent Accounting - Oracle Project Costing creates accounting entries to

pass costs and revenue across organizations without generating internal invoices. Oracle Project Costing determines the appropriate cost or revenue amounts based on the transfer price rules of the provider and receiver organizations. Borrowed and lent accounting entries provide a financial view of an organization’s performance.

• Intercompany Billing Accounting - Companies choose the intercompany billing method largely due to legal and statutory requirements. Oracle Project Costing generates physical invoices and corresponding accounting entries at legal transfer prices between the internal seller (provider) and buyer (receiver) organizations when they cross a legal entity boundary or operating units. For additional discussion of Intercompany Billing, see the Advanced Topic lesson titled “R12 Projects Advanced - Intercompany Billing.”

• No Cross Charge Process - Companies generally process cross charges in Oracle Project Costing using the borrowed and lent or intercompany billing method. However, companies may not need to process cross charge transactions, if, for example, you have performed intercompany billing manually in Oracle General Ledger.

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Cross Charge Chapter 17 - Page 11

Quiz

Answer: b

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Cross Charge Chapter 17 - Page 12

Agenda

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Cross Charge Chapter 17 - Page 13

Borrowed and Lent Processing

Borrowed and Lent Processing

The borrowed and lent processing method creates accounting entries ONLY to pass costs or share revenue between the provider and receiver organizations within a legal entity. Borrowed and lent processing is a general ledger reclassification of funds and costs. No additional Oracle Project Costing transactions exist and Oracle Project Costing does not generate any legal documents. The borrowed and lent processing method creates accounting entries to pass costs or share revenue (the transfer price amount determines the cost or revenue amounts) between the provider and receiver organizations. If you choose to pass costs from the provider to the receiver, then this processing method:

• Debits the cost from the receiver (or lent) organization. • Credits the cost account of the provider (or borrowed) organization.

Similarly, if you choose to share revenue, then this processing method: • Debits the revenue from the receiver organization. • Credits the revenue to the provider organization.

Oracle Project Costing provides AutoAccounting functions for borrowed and lent processing.

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Cross Charge Chapter 17 - Page 14

Project and Task Setup

Project and Task Setup

To specify cross charge information for a project or a task, select the Cross Charge project or task option. When you select the Cross Charge option at the project level, the Project Multinational Setup window opens. When you select the Cross Charge option at the task level, the Task Multinational Setup window opens. You can enter the following information in the Project Multinational Setup and Task Multinational Setup windows:

• Allow Charges from Other Operating Units - Enable this check box to accept cross-charged transactions from other operating units. At the project-level, this entry is the default value for each new top-task that you create. At the task-level, this entry is the default value for each new subtask that you create.

• Process Cross Charges - Optionally enable the Labor, Non-Labor, or both check boxes to have Oracle Project Costing process labor and non-labor cross-charged transactions. If you do not enable a check box, then Oracle Project Costing does not process cross-charged transactions for that type of cost. If you enable a check box, then you must specify a transfer price schedule for that selection. You can optionally specify a fixed date to use to calculate the transfer price amount. Oracle Project Costing uses this date only if the transfer price rule uses a calculation method based on a bill rate or burden schedule. If you do not enter a date, then Oracle Project Costing uses the expenditure item date.

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Cross Charge Chapter 17 - Page 15

- At the project-level, this entry is the default value for each new top-task that you create.

- At the task-level, this entry is the default value for each new subtask that you create. If you assign a transfer price schedule to a lowest-level task, then Oracle Project Costing uses that transfer price schedule to process labor or non-labor cross-charged transactions. If you do not assign a transfer price schedule at the lowest task level, then Oracle Project Costing uses the transfer price schedule that you assign at the project-level.

Note: Intercompany Tax Receiving Task (project-level only) is for intercompany billing. You can specify the task to use to collect nonrecoverable intercompany tax amounts as project costs.

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Cross Charge Chapter 17 - Page 16

Subledger Accounting Process Flow: Cross Charge

Subledger Accounting Process Flow: Cross Charge

The provider operating unit performs the following tasks: 1. Enter or import cross charge transactions - The provider operating unit enters or

imports cross charge transactions. 2. Distribute costs of cross charges - The provider operating unit distributes the costs of the

cross charges. In addition to determining the raw and burden cost amounts and the accounting information for project transactions, the cost distribution processes also determine the following information for cross charge transactions:

• Provider and receiver operating units and organizations • Cross-charge type, which indicates whether a transaction is an intra-operating unit,

inter-operating unit, or intercompany cross charged transaction or not a cross charged transaction

• Cross-charge processing method, which indicates whether a transaction is subject to cross charge processing and which processing method to use

3. PRC: Distribute Borrowed and Lent Amounts - Calculates the borrowed and lent cross charge amounts. The program also uses AutoAccounting to determine the default debit account for each expenditure item.

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Cross Charge Chapter 17 - Page 17

4. PRC: Generate Cross Charge Accounting Events - Uses AutoAccounting to determine the default credit account and then to generate accounting events. You can select Borrowed and Lent for the Process Category parameter to run the program only for borrowed and lent transactions.

5. PRC: Create Accounting - Creates subledger journal entries for eligible accounting events. You can select Borrowed and Lent for the Process Category parameter to run the program only for borrowed and lent accounting events. You can run the program in either draft or final mode. Optionally, the program can post journal entries in Oracle General Ledger to send journal entries to Oracle General Ledger.

6. PRC: Transfer Journal Entries to GL - When you run the program PRC: Create Accounting, if you select No for the parameter Transfer to GL, then you run this program to transfer final subledger accounting entries to Oracle General Ledger.

7. Journal Import (in Oracle General Ledger) - Imports the final accounting entries into Oracle General Ledger. Either PRC: Create Accounting or PRC: Transfer Journal Entries to GL initiates this program when you transfer final subledger accounting journal entries to Oracle General Ledger. Optionally, you can set these programs to post journal entries in Oracle General Ledger.

You can require the receiver operating unit to run additional customized processes to create additional accounting entries in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. For example, your implementation team can develop customized processes to handle organizational profit elimination to satisfy your company's accounting practices. In addition, the provider operating unit can adjust cross charge transactions or perform steps resulting in the reprocessing of borrowed and lent transactions.

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Cross Charge Chapter 17 - Page 18

Borrowed and Lent Accounting

Borrowed and Lent Accounting

In this example, the cost center associated with the provider organization (490) received the initial charge for the labor, while the receiver organization received the benefits of the resources. The borrowed and lent accounting, using transfer prices, relieved the cost for the provider operating unit and debited the cost center associated with the receiver operating unit (422).

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Cross Charge Chapter 17 - Page 19

Cross Charge Adjustments

Cross Charge Adjustments

In the Expenditure Items window or Project Expenditure Items window: • Marking for cross charge reprocessing - You can mark one or more expenditure items for

cross charge reprocessing in the Expenditure Items window or the Project Expenditure Items window. To do this, choose the Reprocess Cross Charge option from the Tools menu. The next time you run the programs to process cross charges, the programs process these transactions as new cross charged transactions. Marking a transaction for cross charge reprocessing:

• Resets the cross charge type to Null. • Resets the cross charge processing method to Pending. • Resets the cross charge processing status to Never Processed. • Resets the transfer price amount in all currencies to Null. • Re-determines the cross charge type and processing method.

• Marking transactions to skip cross charge processing - You can mark one or more expenditure items so that the cross charge programs skip them. To do this, choose Mark For No Cross Charge Processing from the Tools menu. Marking a transaction as not requiring

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Cross Charge Chapter 17 - Page 20

cross charge processing resets the cross charge processing method to No Cross Charge Processing and the cross charge processing status to Never Processed.

• Changing transfer price conversion attributes - You can reconvert transfer price amounts from the transaction currency if you change the transfer price exchange rate date type and exchange rate type, which govern how Oracle Project Costing converts the transfer price amount from the transaction currency to the functional currency. To do this, you choose the Change Transfer Price Functional Currency Attributes option from the Reports menu.

• Changing transfer price base amounts - If you recalculate raw or burdened cost, then the amount of the transfer price basis (and the final transfer price amount) of a cross charged transaction can also change. The respective cost distribution processes determines whether such recalculations affect the transfer price amount of any cross charged transactions and automatically mark the transactions for cross charge reprocessing. The cost distribution programs automatically reset the cross charge processing status to Never Processed and blanks out the transaction’s transfer price amount.

• Performing transfers and split - Transferring or splitting a cross charged transaction does not affect the cross charge processing method of the existing transactions. The reversing and new transactions undergo the cross charge processing as usual.

In addition, if you change and recompile a burden schedule that Oracle Project Costing used to determine the transfer price of some items, then the recompile program marks these items for cross charge reprocessing. The program resets the cross charge type to Null, the cross charge processing method to Pending, and the cross charge processing status to Never Processed.

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Cross Charge Chapter 17 - Page 21

Processing Cross Charge Adjustments

Processing Cross Charge Adjustments

Oracle Project Costing processes adjustments similarly to the original transactions. PRC: Distribute Borrowed and Lent Amounts performs the following steps:

• Recalculates the transfer price if no transfer price amount exists in transaction currency. • Reconverts the transfer price amount from the transaction currency to functional currency

if an amount exists in transaction currency but not the functional currency. After it completes the common processing steps for cross charge adjustments, the program:

• Regenerates accounting entries - If any accounts for which you already generated cross charge accounting events changed, then the program reverses the original cross charge distributions and creates new ones. The program also determines the PA dates for the reversing and new distributions. If you did not generate cross charge accounting events for the original accounting entries, and the accounts or amounts changed, then the program replaces them with new entries.

• Reverse existing distributions if processing method has changed - If the cross charge processing method for the transaction changes from borrowed and lent to intercompany billing or no cross charge processing, then the program reverses existing entries for which you already generated cross charge accounting events.

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Cross Charge Chapter 17 - Page 22

Note: If the adjustment has an impact on the accounting, then you must run the programs PRC: Generate Cross Charge Accounting Events and PRC: Create Accounting to process the adjustment accounting. You can select the process category Borrowed and Lent for both programs to restrict the processing to only borrowed and lent accounting events.

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Cross Charge Chapter 17 - Page 23

Quiz

Answer: a

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Cross Charge Chapter 17 - Page 24

Quiz

Answer: b

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Cross Charge Chapter 17 - Page 25

Agenda

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Cross Charge Chapter 17 - Page 26

Borrowed and Lent Cross Charge Processing Implementation Steps

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Cross Charge Chapter 17 - Page 27

Transfer Price Rules

Transfer Price Rules

In Oracle Project Costing, transfer price refers to the price that two organizations agree upon for cross charge purposes. Define transfer price rules to determine how Oracle Project Costing calculates the transfer price for cross charged transactions. You can base the calculations based on:

• Transfer price basis - Base your transfer price on a cross charged transaction’s raw cost, burdened cost, or revenue.

• Cross-charge calculation method - You can optionally perform an additional calculation and apply a markup or discount to the amount from the transfer price basis.

Oracle Project Costing automatically converts transfer price amounts to the functional currency of the provider operating unit using the transfer price currency conversion attributes defined in that operating unit. You can use the Transfer Price Currency Conversion Override Extension to adjust these conversion attributes. You can process transfer price based on revenue amounts for cross-charged transactions independent of revenue generation. Oracle Project Costing calculates the revenue of the receiver project as part of transfer price calculation even if the revenue is not generated in the receiver operating unit. The cost transaction does not have to be billable. You can use the

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Cross Charge Chapter 17 - Page 28

potential revenue amount as a basis and apply a transfer price markup percentage even when the cost transaction is not billable from the receiver project's perspective. To define a transfer price rule:

1. Enter a unique name for the rule. 2. Select a type (Labor or Non–Labor). 3. Specify a description and the effective dates. 4. For Basis, select Raw Cost, Burdened Cost, or Revenue. 5. Select one of the calculation methods to determine the transfer price:

- Basis - Use the transfer price with no further adjustments. - Burden Schedule - Specify the name of an existing burden schedule to apply to the

basis. - Bill Rate Schedule - For Operating Unit, specify the name of the operating that owns

the bill rate schedule that you want to use. For Schedule, specify a bill rate schedule to apply to the basis.

6. In the Apply field, enter a percentage (zero or any positive number). - The percentage is the amount of a markup or discount to the transfer price amount

calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup.

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Cross Charge Chapter 17 - Page 29

Transfer Price Schedule

Transfer Price Schedule

A transfer price schedule is a list of transfer price rules. In the simplest transfer price schedule, an enterprise has a single transfer price rule that every provider and receiver organization pair follows. Oracle Project Costing supports more complex schedules so different pairs of provider and receiver organizations can negotiate their own transfer price rules. You can also define a schedule with one rule that applies to cross charges to a particular organization and another rule for cross charges to all other organizations. You can define one transfer price schedule consisting of different rules for different organization pairs or multiple schedules consisting of different rules for the same pair of organizations. When defining transfer price schedule lines, you can use the amount type classification to assign different rules for revenue sharing and cost reimbursement agreements. As Oracle Project Costing processes cross charge transaction, it uses the work type attribute to classify each transaction as cost or revenue, and therefore, to determine the schedule line to use when it calculates the transfer price. Oracle Project Costing uses the labor or non-labor transfer price schedule that you specified for the lowest-level task to which you charged the transaction. If you do not assign a transfer price schedule at the lowest task level, then Oracle Project Costing uses the transfer price schedule that you assign at the project-level.

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Cross Charge Chapter 17 - Page 30

To define a transfer price schedule: 1. Enter a unique name for the schedule 2. Select a type (Labor or Non-Labor). 3. Specify a description and the effective dates. 4. Enter the schedule lines:

- Line Num - Enter a number greater than zero to specify the display order for the lines.

- Provider - Choose any organization, parent organization, operating unit, legal entity, or business group.

- Receiver (Optional) - Choose any organization, parent organization, operating unit, legal entity, or business group. If you leave this field blank, then this transfer price schedule applies to any receiver organization receiving transactions from the specified provider organization.

- Labor Rule and Non Labor Rule - For Labor Rule, choose a valid transfer type rule with a type of Labor for this provider and receiver organization pair. For Non Labor Rule, choose a rule with a type of Non Labor. You must specify at least one transfer price rule (labor, non-labor, or both) for each schedule line.

- Apply % - One Apply % field applies to labor rules, the other to non-labor rules. Enter a percentage (zero or any positive number). The percentage is a markup or discount to the transfer price amount calculated by the rule. Numbers less than 100 indicate a discount, and numbers greater than 100 indicate a markup.

- Transfer Price Amount Type - Select one of the following: - Cost and Revenue - The schedule line applies to all cross charge transactions. - Cost Transfer - The schedule line is applied to transactions when the assigned

work type has an amount type of Cost. - Revenue Transfer - The schedule line is applied to transactions when the

assigned work type has an amount type of Revenue. - Effective Dates - Enter effective dates for this schedule line. - Default - Choose one schedule line to be a default for this schedule. Oracle Project

Costing uses the rule associated with this line to derive the transfer price if none of the other lines match your transaction. Oracle Project Costing does not require that a transfer price schedule line be identified as the default line, however, it does issue an error message if it cannot determine a rule to apply to a transaction.

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Cross Charge Chapter 17 - Page 31

Cross Charge Implementation Options

Cross Charge Implementation Options

1. Enter the exchange rate date type and the exchange rate type that Oracle Project Costing uses to convert the transfer price amount to the functional currency of the provider operating unit.

2. Select a method for processing cross charges within an operating unit: - None - Borrowed and Lent

3. To allow cross charges to all operating units within a legal entity, enable the check box, and then choose a default processing method for this type of transaction:

- None - Borrowed and Lent

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Cross Charge Chapter 17 - Page 32

Provider and Receiver Controls for Borrowed and Lent Accounting

Provider and Receiver Controls for Borrowed and Lent Accounting

1. Select the operating unit that owns the controls. 2. Enter the operating unit that can receive cross charges from the current operating unit. 3. Enable Allow Cross Charge check box to allow cross charges to this operating unit.

- This value overrides the Allow Cross Charges To All Operating Units Within Legal Entity option. Changes to the check box affect future cross charges to this receiver operating unit.

4. For Processing Method, select the cross charge processing method to use for transactions charged to this receiver operating unit. You can choose:

- Borrowed and Lent only if the receiver operating unit and provider operating unit are in the same legal entity.

- Intercompany Billing only if you have identified the operating unit as a receiver for internal billing.

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Cross Charge Chapter 17 - Page 33

AutoAccounting Rules for Borrowed and Lent Transactions

AutoAccounting Rules for Borrowed and Lent Transactions

Define AutoAccounting rules for borrowed and lent cross charges in each provider operating unit. Use the Borrowed Account and Lent Account AutoAccounting functions to select the appropriate intercompany borrowed and lent accounts. You can optionally set up Oracle Subledger Accounting to overwrite the default borrowed and lent accounts, or individual segments of the accounts, that Oracle Project Costing derives using AutoAccounting rules. For additional discussion, see the lesson titled “Accounting for Costs.”

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Cross Charge Chapter 17 - Page 34

Implement Cross Charge Extensions

Implement Cross Charge Extensions

• Provider and Receiver Organizations Override Extension - Use this extension to enforce cross-charge rules at a higher level in the organization hierarchy than the level at which you assign resources and projects. This extension provides a single place for you to enforce and maintain your business rules in all organizations in your enterprise.

• Cross Charge Processing Method Override Extension - Use this extension to have custom business rules that help you identify how to process cross-charged transactions. For example you can exclude certain cross-charged transactions from cross-charge processing or you can change the cross-charge method.

• Transfer Price Determination Extension - Use this extension to specify a transfer price for transactions. If this extension returns a valid value for the transfer price, then Oracle Project Costing uses that value as the transfer price instead of computing the transfer price.

• Transfer Price Override Extension - Use this extension to override the transfer price for a transaction.

• Transfer Price Currency Conversion Override Extension - Use this extension to override the default attributes that Oracle Project Costing uses to convert the transfer price from the transaction currency to the functional currency.

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Cross Charge Chapter 17 - Page 35

Quiz

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Cross Charge Chapter 17 - Page 36

Summary

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 1

Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 2

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 3

Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 4

Objectives

Instructor Note

In Guided Demonstration – Process Miscellaneous Transactions, at Step 15, please note that workflow takes about an hour to process/move the data to the project interface table. Fo

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 5

Agenda

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 6

Integration with Oracle Inventory

Integration with Oracle Inventory

Oracle Project Costing fully integrates with Oracle Inventory to enable you to enter inventory transactions in Oracle Inventory and transfer them to Oracle Project Costing. You can order and receive items into inventory before assigning them to a project. You can then assign the items to a project as they are taken out of or received into Oracle Inventory. When you enter project-related transactions in Oracle Inventory, you enter the project information on the source transaction. Oracle Inventory and Oracle Project Costing carry the project information through from the Issue To or Receipt From transaction in Oracle Inventory to the project expenditure in Oracle Project Costing. If you integrate with Oracle Inventory, you can use function security to prevent users from manually entering preapproved batch items in Oracle Project Costing with an expenditure type class of Inventory.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 7

Integration with Oracle Inventory Flow

Integration with Oracle Inventory Flow

In a non-manufacturing environment, you enter issues and receipts into Oracle Inventory. After you process costs, these transactions become costed transactions. Next, run the Cost Collector. You can initiate the Cost Collector from the Project Cost Transfers window in Oracle Inventory to collect and then transfer costs to Oracle Projects. Next, in Oracle Projects, run the program PRC: Transaction Import for the transaction source Inventory Misc to create expenditures in Oracle Projects. If the import program rejects any transactions, then you can review and correct them using the Review Transactions window. After you correct the transactions, resubmit the PRC: Transaction Import program. The program imports the transactions into Oracle Project Costing as accounted and costed. You cannot perform adjustments on expenditure items from Oracle Inventory in Oracle Project Costing that impact the raw cost accounting for the expenditure item. The Allow Adjustments transaction source option is disabled for the transaction source Inventory Misc.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 8

Miscellaneous Transactions

Miscellaneous Transactions

To enter a miscellaneous transaction in Oracle Inventory: 1. Enter the date and time (or accept default values).

- The transaction date becomes the expenditure item date. 2. Select a project-enabled transaction type in the Type field. 3. Enter the following required information:

- Item - Subinventory - Unit of Measure - Quantity - Account - Source Project - Source Task Expenditure Type - Expenditure Organization

4. Save

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 9

Launching Transaction Managers

Launching Transaction Managers

After you enter project-related inventory transactions in Oracle Inventory, the next step is to cost the transactions. You start the material cost transaction manager to cost material transactions. This manager processes costs for all material transactions. For details, see the Oracle Inventory User's Guide.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 10

Transfer and Import

Transfer and Import

The next step in moving the transactions to Oracle Project Costing is to run the Project Cost Collector in Oracle Inventory. The Project Cost Collector collects the organization's project-related costs and passes these costs by project, task, and expenditure type to the Transaction Import Interface table in Oracle Project Costing. You can then import these transactions into Oracle Projects. The total Inventory Cost becomes the Raw Cost in Oracle Projects. Use the Project Cost Transfers window to submit the Project Cost Collector program and then run the program PRC: Transaction Import for the transaction source Inventory Misc in Oracle Project Costing to import the transactions from the interface table. In Oracle Project Costing, you can optionally run the request set PRC: Interface Miscellaneous Inventory Costs from Oracle Inventory to both collect costs and import transactions. This request set runs the following programs:

• Projects Cost Collection Manager - In the parameters, enter the Organization ID and the Number of Days to Leave Costs Uncollected. The program transfers the amount and quantities of the inventory transactions to the Transaction Import interface table.

• PRC: Transaction Import - The program imports the transactions as costed and accounted.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 11

Quiz

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 12

Agenda

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 13

Oracle Inventory Integration Implementation Steps

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 14

Install and Implement Oracle Inventory

Install and Implement Oracle Inventory

For details regarding how to install and setup Oracle Inventory, see the Oracle Inventory User’s Guide. Fo

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 15

Enable Project Cost Collection

Enable Project Cost Collection

To collect project-related costs in Oracle Inventory, you need to enable project cost collection for each organization: In Oracle Inventory: (N) Setup > Organizations > Parameters

• Select the Costing Information Tab • Enable the Project Cost Collect. Enabled check box.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 16

Create a Project-Enabled Transaction Type

Create a Project-Enabled Transaction Type

Terminology associated with transaction types: • Transaction Source Type - A type of entity against which Oracle Inventory charges a

transaction. Along with a transaction action, it uniquely identifies the type of transaction you perform. Select a transaction source type of either Inventory or Move Order from the list of values.

• Transaction Action - A generic type of material movement or cost update with no specificity regarding the source of the transaction. Along with a transaction source type, a transaction action identifies a transaction type. When defining project-enabled transaction types with a transaction source type of Inventory, you can select either Receipt into stores or Issue from stores as the transaction action. You can set up a separate transaction type for each action. For project-enabled transaction types with a transaction source type of Move Order, select Issue from stores as the transaction action.

• Transaction Type – The combination of a transaction source type and a transaction action. It is used to classify a particular transaction for reporting and querying purposes. Use the Transaction Types window to define additional transaction types to customize transaction entry. A user-defined transaction type is a combination of a user-defined

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 17

transaction source type and a predefined transaction action. Oracle Inventory provides transaction reporting and querying capabilities by transaction type.

Only user-defined transaction types can be project-enabled. To create a user-defined transaction type: In Oracle Inventory: (N) Setup > Transaction > Types

1. Select the User Defined tabbed region. 2. Enter a unique name for the transaction type. 3. Enter a transaction source type. 4. Select a transaction action. 5. Enable the Project check box. 6. Save your work.

To make a user-defined transaction type inactive: Enter the date on which the transaction type becomes inactive. As of this date, you can no longer use the transaction type in a transaction. To enable Shortage Alerts and Shortage Notifications: You can choose to receive an online shortage alert, a workflow-based notification, or both for user-defined transaction types. For project-enabled transaction types, you can enable the alerts and notifications for transaction types that have a transaction action of Receipt into stores. Enable the check boxes to select which transaction action types will generate material shortage alerts and notifications.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 18

Create an Inventory Expenditure Type

Create an Inventory Expenditure Type

In Oracle Project Costing, create at least one expenditure type with the expenditure type class Inventory. For additional discussion about how to define expenditure types, see the lesson titled “Implementing Expenditures.” Fo

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 19

Set Expenditure Type Profile Option

Set Expenditure Type Profile Option

The profile option INV: Project Miscellaneous Transaction Expenditure Type governs the entry of expenditure types for project-related miscellaneous transactions. You can update the profile option at the site and responsibility levels. Values for this profile option are:

• User Entered - You must enter expenditure types for project-related miscellaneous transactions.

• System Derived from Cost Element - You cannot enter expenditure types for project-related miscellaneous transactions. The Cost Collector uses the expenditure types linked to the cost elements of the current weighted average unit cost of the item to post to Oracle Project Costing. If you select this option, then you need to associate expenditure types with cost elements using an Oracle Cost Management responsibility.

Associating Expenditure Types with Cost Elements Select an Oracle Cost Management responsibility and navigate to the Expenditure Types for Cost Elements window:

• (N) Setup > Expenditure Types for Cost Elements • Select a Transfers In and a Transfers Out expenditure type each of the following cost

elements:

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 20

- Material - An account to accumulate material costs. - Material Overhead - An account to accumulate material overhead or burden costs. - Resource - An account to accumulate resource costs. - Outside Processing - An account to accumulate outside processing costs. - Overhead - An account to accumulate resource overhead or department overhead

costs. • In expenditure types are used to cost the value of transfers into a project. Out expenditure

types are used to cost the value of transfers out of a project. • You can choose only Expenditure Types that are not defined as Rate Required in Oracle

Projects

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 21

Quiz

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 22

Agenda

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 23

Integration with Oracle Project Manufacturing

Integration with Oracle Project Manufacturing

Oracle Project Manufacturing is a solution for companies that manufacture products using projects or contracts. Oracle Project Manufacturing combines three major applications:

• Oracle Projects Suite • Oracle Manufacturing Suite • Third-party project planning and scheduling systems (project management systems)

When used as a part of the Oracle Project Manufacturing functionality, Oracle Project Costing acts as a cost repository for manufacturing-related activities from other products in the Oracle Project Manufacturing suite. This integration enables you to:

• Set up the WBS for a manufacturing project. You can then track all manufacturing costs by project and task and import the cost into Oracle Project Costing.

• Track projects and tasks throughout various manufacturing applications. • Charge project costs from inventory and work in process to a project and task. • Include project costs from manufacturing and distribution in your budget.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 24

Importing Project Manufacturing Costs

Importing Project Manufacturing Costs

When you incur project-related costs in Oracle Project Manufacturing, the Cost Collector process in Oracle Cost Management passes those costs to Oracle Project Costing. The Cost Collector finds all costed manufacturing transactions that have a project reference and passes the costs to the correct project, task, and expenditure type in Oracle Project Costing. Run PRC: Transaction Import in Oracle Project Costing to import the costs. See the following pages for additional information about the transactions sources that you use to import transactions into Oracle Project Costing. If you use Oracle Project Manufacturing, then use function security to prevent users from entering pre-approved batch items with an expenditure type class of Inventory or Work in Process.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 25

Transaction Sources

Transaction Sources

Oracle Project Costing predefines transaction sources to import transactions manufacturing-related costs. Do not use these transaction sources to import transactions from non-Oracle sources. Fo

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 26

Transaction Sources (continued)

Transaction Sources (continued)

For the transaction sources for Inventory, WIP, and WIP Straight Time transactions, the GL Posting Option in the Project Manufacturing Parameters window determines whether Oracle Project Manufacturing or Oracle Project Costing generates accounting events and creates accounting for the transactions in Oracle Subledger Accounting as follows:

• If the posting option is Manufacturing, then Oracle Project Manufacturing creates accounting for the transactions in Oracle Subledger Accounting.

• If the posting option is Projects, then Oracle Project Costing creates accounting for the transactions in Oracle Subledger Accounting. The value that you select for the Account Option determines the source of the default accounting as follows:

- If the option is set to Use AutoAccounting, then Oracle Project Costing uses the transaction sources with No Accounts to import the transactions with no accounts. Oracle Project Costing then uses AutoAccounting to derive the default accounts.

- If the option is set to Send Accounts to PA, then Oracle Project Costing uses the transaction sources with Accounts to import the transactions and the default accounting from Oracle Project Manufacturing.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 27

Quiz

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 28

Agenda

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 29

Integration with Oracle Asset Tracking

Integration with Oracle Asset Tracking

Oracle Asset Tracking is a fully integrated solution in the Oracle E-Business suite designed to deploy and track internal products and assets at internal or customer sites, while providing the ability to automatically capture financial transactions. Oracle Asset Tracking enables you to provide users with access to tracking information, without allowing them access to sensitive processes related to assets and purchasing. You can also track inventory items after you have installed them and link financial transactions to the physical movement of equipment. Oracle Asset Tracking enables you to create assets upon receipt in Oracle Purchasing. After you create the asset, Oracle Asset Tracking performs the changes in the background for any further physical movement. For example, if you move the asset from one location to the other, then Oracle Asset Tracking performs the asset cost, distribution, and unit changes without manual intervention. Oracle Asset Tracking integrates with Oracle Inventory, Oracle Purchasing, Oracle Project Costing, Oracle Assets, Oracle Order Management, and Oracle Payables, and stores information collected from them. Oracle Asset Tracking integration includes:

• Creating project-related purchase orders linked to Oracle Asset Tracking

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 30

• Entering receipts for project-related purchase orders in Oracle Purchasing and validating the receipts against the Oracle Asset Tracking repository

• Importing tracked items and cost into Oracle Project Costing • Monitoring costs in Oracle Project Costing • Generating asset lines for non-depreciable tracked items

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 31

How Purchase Order Receipts Flow into Project-Related Transactions

How Purchase Order Receipts Flow into Project-Related Transactions

The flow of purchase order receipts starts with the creation of a purchase order. Items against the purchase order are then received into the project. Oracle Asset Tracking validates the receipt data against the Oracle Installed Base repository and creates or updates the repository instance depending upon the physical attributes of the instance.

• For serialized items, Oracle Installed Base always creates a new instance. • For non-serialized items, physical attributes are combinations of values for Inventory Item

ID, Project ID, Task ID, and Instance Status. If any values of these attributes are different, then the application creates a new instance in Oracle Installed Base. If these attributes match, then the application adds the new receipt to the same instance.

During the process of creating purchase orders for expense items, that is, receipt into project, you must check the Accrue on Receipt flag in the purchase order shipment. You can capture project information in the distribution record only when the destination type is Expense. Accrual at period end is not supported. Run PRC: Transaction Import to create project expenditures after receipt is complete. Use the Expenditure Inquiry window in Oracle Projects to view the expenditures.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 32

For a depreciable item, an asset is created upon receipt. Therefore, the cost is transferred from Oracle Assets to Oracle Subledger Accounting and then to Oracle General Ledger and not from Oracle Project Costing. To create mass additions in Oracle Assets, you must run the Create Assets: Interface Inventory Transactions to Oracle Assets concurrent program in Oracle Asset Tracking.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 33

Importing Oracle Asset Tracking Cost

Importing Oracle Asset Tracking Cost

You run the program PRC: Transaction Import in Oracle Project Costing to import cost. When you run the program, you must select a transaction source:

• CSE_INV_ISSUE - Imports transactions of the type Issue for non-depreciable items. • CSE_INV_ISSUE_DEPR - Imports transactions of the type Issue for depreciable items. • CSE_IPV_ADJUSTMENT - Imports supplier cost adjustments for non-depreciable

items. • CSE_IPV_ADJUSTMENT_DEPR - Imports supplier cost adjustments for depreciable

items. • CSE_PO_RECEIPT - Imports transactions of the type Receipt for non-depreciable items. • CSE_PO_RECEIPT_DEPR - Imports transactions of the type Receipt for depreciable

items. • Inventory Misc - Imports miscellaneous transactions such as Miscellaneous Issue and

Miscellaneous Receipt. For additional information, see the Oracle Asset Tracking Implementation Guide and the Oracle Asset Tracking User Guide.

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Appendix A: Integration with Oracle Inventory, Project Manufacturing, and Asset Tracking Chapter 18 - Page 34

Summary

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 1

Appendix B: Budgetary Controls and Budget Integration Chapter 19

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 2

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 3

Appendix B: Budgetary Controls and Budget Integration

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 4

Objectives

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 5

Agenda

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 6

Budgeting Implementation Steps

Budgeting Implementation Steps

Prerequisite Setup Before you set up budgetary controls and budget integration you must define resource lists in Oracle Project Foundation. For detailed discussion regarding defining resource lists, see the course titled “12.1 Project Foundation Fundamentals." If you want to create budgets that use budgetary controls and budget integration features, then complete the following steps: 1. Define budget types. 2. Define budget entry methods. 3. Define budget change reasons. 4. Define resource lists.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 7

Define Budget Change Reasons

Define Budget Change Reasons

You can select a budget change reason for budget versions and for individual budget lines. To define a budget change reason:

1. Navigate to the Budget Change Reason Lookups window. 2. Enter the following information for the budget change reason:

• Code • Meaning • Description • Tag value (optional – tag value is not used by Oracle Projects) • Effective dates

3. Check the Enabled check box. 4. Save your work.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 8

Define Additional Budget Types

Define Additional Budget Types

Budget types define the different types of budgets that you plan for when you want to create budgets that use budgetary controls and budget integration features. You designate each budget type as either a cost budget type or a revenue budget type.

• For a cost budget type, you can enter quantities, raw cost amounts, and burdened cost amounts.

• For a revenue budget type, you can enter quantities and revenue amounts. You can use any budget type for project status tracking. Oracle Projects predefines four budget types:

• Approved Cost Budget • Approved Revenue Budget • Forecast Cost Budget • Forecast Revenue Budget

You can define additional budget types during implementation. For example, your company may want to create a separate budget type from the Approved Cost Budget to track what if scenarios for future project alternatives.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 9

To define a budget type: 1. Navigate to the Budget Types window. 2. Enter a name and description for the budget type. 3. Enter effective dates for the budget type. 4. Select Cost Budget or Revenue Budget as the Amount Type. 5. Optionally, enable Workflow for the budget type.

• If you want to enable Workflow for the budget type, then check the Use Workflow for Budget Status Changes check box.

6. Save your work.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 10

Define Additional Budget Entry Methods

Define Additional Budget Entry Methods

Budget entry methods are used when you create budgets that use budgetary controls and budget integration features. Budget entry methods specify and control the following options:

• The level of the work breakdown structure at which you enter a budget. • The time phase that you use to enter budget amounts, if any. • Whether you enter amounts that are categorized by resources. • The amounts that you can enter.

Budget entry methods simplify budget entry by leading you through the budget entry windows to enter the data that you need. Budget entry methods also provide a way to enforce consistent budget entry across similar projects, which facilitates cross–project reporting. You select a budget entry method when you create a draft budget for a project. You also specify a default budget entry method for a project type. Oracle Projects predefines three budget entry methods:

• By lowest tasks and date range, Categorized by Resources • By lowest tasks and GL period, Categorized by Resources

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 11

• By lowest tasks and PA period, Categorized by Resources You can define additional budget entry methods during implementation. To define a budget entry method: 1. Navigate to the Budget Entry Methods window. 2. Enter a name and description for the budget entry method. 3. Select an entry level.

• The entry level can be Project, Top Tasks, Lowest Tasks, or Top and Lowest Tasks. 4. Select Categorized by Resources if you want to categorize amounts by resources. 5. Select a time phased type.

• The choices are Date Range, GL Period, PA Period, or None. 6. Select the enterable fields for cost and revenue using the displayed check boxes. 7. Save your work.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 12

Budget Calculation Extensions

Budget Calculation Extensions

Budget calculation extensions allow you to control how Oracle Projects processes budgets. You can make the following types of changes:

• Facilitate budget entry by defining your own rules for calculating budget amounts, based on the quantities and raw cost amounts that you enter.

• Use function security to control whether users can override the calculated amount, based user responsibility.

Types of Calculations Using budget calculation extensions, you can calculate the following budget amounts:

• Raw Cost - Oracle Projects calls the budget calculation extension for raw cost after you enter a

Quantity in a Cost Budget’s budget line. If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Raw Cost amount field.

- Some examples of rules that you can define are: · Calculate Raw Cost for an employee based on the number of Hours entered.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 13

· Calculate Raw Cost for vehicle usage based on the number of Days entered. • Burdened Cost

- Oracle Projects calls the budget calculation extension for burdened cost either after you enter a Quantity for a budget line of a Cost Budget, or after you enter the Raw Cost, deriving the burdened cost from the raw cost.

- If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Burdened Cost amount field.

- Some examples of rules that you can define are: · Calculate Raw Cost and Burdened Cost for an employee based on the number of

Hours entered. · Calculate Burdened Cost for computer usage charges based on the Raw Cost

entered. • Revenue

- Oracle Projects calls the budget calculation extension for revenue after you enter a Quantity for a Revenue Budget’s budget line. If you define rules in the budget calculation extension that return a value, Oracle Projects displays the amount in the Revenue field.

- Some examples of rules that you can define are: · Calculate Revenue for an employee using a standard bill rate assigned to the

task. · Calculate Revenue for the Job entered using the number of Hours entered.

• All Budget Amounts - Oracle Projects also calls the budget extension to calculate budget amounts when

you enter the Resource, Dates, and Quantity, and when you change the resource or dates for existing amounts.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 14

Budget Verification Extension

Budget Verification Extension

The budget verification extension allows you to define rules for validating a budget before its status is changed. You should determine your requirements for submitting a budget and for creating a baseline budget. By default, the budget verification extension does not include any budget submission requirements. You can customize the extension to match your company’s rules for budget submission. If you are using Workflow for budget status changes, Workflow calls this extension twice: once before it initiates the budget approval process, and again before it changes the budget status. This ensures that the verification rules for the status change are met, even if changes have been made to the budget during the approval process.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 15

Budget Workflow and Budget Workflow Extension

Budget Workflow and Budget Workflow Extension

Budget Workflow Budget Workflow is used to initiate an approval process when budgets are submitted. When Oracle Projects budgeting is integrated with Workflow, Workflow is initiated for budget approval when you submit the budget draft. The budget is routed via Workflow if you defined the budget type to use Workflow. You can further define rules in the budget workflow extension. Oracle Projects provides a default budget workflow process, called PA Budget Workflow. You may customize the process or create a new one, using the Oracle Workflow Builder. For additional information regarding the Default Budget Workflow, see the "Oracle Projects Implementation Guide." Budget Workflow Extension Budget workflow extension is used to customize the budget workflow processes. Oracle Projects calls the budget workflow process to determine whether to call Oracle Workflow and which workflow process to call. The default budget workflow process calls the budget workflow extension to determine the budget approver. The default procedure returns the ID of the supervisor of the person who requested the budget status change.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 16

Quiz

Answer: b

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 17

Quiz

Answer: a

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 18

Agenda

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 19

Implementing Budgetary Controls

Implementing Budgetary Controls

Budgetary controls enable you to monitor and control expense commitment transactions entered for a project. Fo

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 20

Defining Profile Options for Budgetary Controls

Defining Profile Options for Budgetary Controls

PA: Enable Budget Integration and Budgetary Control Feature • This profile option controls whether the budgetary controls windows and processes are

displayed and run. • This profile option can be set at either the site or application level. • The default value is N (no). You must set this value to Y (yes) to enable Oracle Projects

budgetary controls and budget integration features. PA: Days to Maintain BC Packets

• This profile option specifies the number of days transaction funds check results are maintained.

• This profile option is specified at the site level. • The default value is 3. Increasing this value may slow the performance of the funds check

process.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 21

Defining Control Levels and the Time Interval

Defining Control Levels and the Time Interval

You can define budgetary controls for project types, project templates, and projects. Values that you define for a project type are the default values for project templates. Values that you define for project templates are the default values for projects. When you define a project type, you indicate whether or not the default values for budgetary controls can be changed at the project level. The default control level values defined for a project can be changed for the project, and for individual tasks, resource groups, and resources after a project budget baseline is created. For example, you have a project with an overall budget of $1000. In your project budget, you have budgeted $100 for Task 1, $200 for Task 2, and $700 for Task 3. The default control level setting is Absolute for the project level and Advisory for the task level. If you want to make sure that no more than $100 is ever spent on Task 1, but want to remain flexible on Tasks 2 and 3, you could override the default control setting for Task 1, making it Absolute, while leaving Tasks 2 and 3 at an Advisory control level. Specifying Budgetary Controls for Project Types, Project Templates, and Projects

• To specify budgetary controls for a project type, navigate to the Budgetary Control tab for a project type.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 22

• To specify budgetary controls for a project or project template, select the Budgetary Control option from the Projects, Templates window.

Defining Control Level Defaults for Resource Groups and Resources If you want to impose different levels of control on different project resources, then you can define default budgetary control values for your resource lists. The control level you define for the resource group is the default value for all resources assigned to the group. You can change the value for individual resources. Defining the Time Intervals Time interval settings identify the beginning period and the ending period included in the available funds calculation. The time interval settings are:

• Amount Type (beginning budget period) • Boundary Code (ending budget period)

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 23

Creating an Initial Budget

Creating an Initial Budget

When budgetary controls are enabled for a project, you must create a cost budget baseline before you enter commitment transactions. If a cost budget baseline does not exist when commitment transactions are entered, the system does not enforce budgetary controls when the commitment transactions are approved. Burdened Cost Amounts For a project that uses budgetary controls, use a budget entry method that allows the entry of burdened cost amounts. Oracle Projects uses burdened cost amounts to enforce budgetary controls. Therefore, when you use budgetary controls in a project, you must specify a budget entry method for the project cost budget that allows the entry of burdened cost amounts. If you enter only raw cost amounts for a project budget with a budget entry method that allows the entry of burdened cost amounts, then the system automatically copies the raw cost amounts to the burdened cost fields. Deferred Workflow for Creating Baselines When budgetary controls are enabled for a budget type, the baseline process uses a deferred workflow. The functions performed by the deferred workflow vary depending on whether or not you use workflow to control budget status changes.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 24

If you do not use workflow to control budget status changes, then the deferred workflow process performs the following actions: 1. Changes the budget version status to In Progress 2. Creates/maintains budgetary control balances 3. Creates a baseline budget version 4. Sends a workflow notification to the user when the baseline process is complete If you use workflow to control budget status changes, the deferred workflow process performs the following actions: 1. Changes the budget version status to In Progress 2. Creates/maintains budgetary control balances 3. Initiates the budget status change workflow process

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 25

Adjusting Default Control Levels

Adjusting Default Control Levels

When create a budget baseline, default budgetary control level settings are created for each budget level based on the values you entered in the Budgetary Controls option. You can override the default control level values for the baseline budget version. Fo

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 26

Quiz

Answer: c

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 27

Agenda

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 28

Implementing Budget Integration

Implementing Budget Integration

1. Define the Project Budget Account workflow process. • When a project budget is integrated with a non–project budget, an account must be

generated for each defined project budget line. You must customize the Project Budget Account workflow process to generate accounts according to your needs.

2. Define the PA: Allow Override of Budget Accounts profile option. • This profile option enables you to control whether users can manually override

accounts generated by the Project Budget Account workflow process. 3. Define the PA: Enable Budget Integration and Budgetary Control Feature profile option.

• To define budget integration for your projects, you must enable budget integration by setting the PA: Enable Budget Integration and Budgetary Control Feature profile option to Y (Yes).

4. Define the PA: Days to Maintain BC Packets profile option. • Top–Down Budget Integration Only

5. Define integration details for project types, project templates, and projects.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 29

Implementing Bottom–Up Integration

Implementing Bottom–Up Integration

To define bottom–up budget integration for a project type: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level

• Check this check box if you want to allow users to modify the default budget integration settings at the project level.

3. Budget Type • Select a project budget type to be integrated. You can select any active budget type.

4. Balance Type • Select Budget. (For bottom–up integration, the Balance Type must be Budget.)

5. Non–Project Budget • Select an Oracle General Ledger budget from the list of values. • For Bottom–Up Budgeting, all other budgetary control fields must be blank.

To define bottom–up budget integration for a project template or project: 1. Navigate to the Budgetary Control option of the Projects, Template window.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 30

2. Budget Type • Select a project budget type to be integrated. You can select any active budget type.

3. Balance Type • Select Budget. For bottom–up integration, the Balance Type must be Budget.

4. Non–Project Budget • Select an Oracle General Ledger budget from the list of values. • Oracle Projects supports bottom–up integration with Oracle General Ledger only. • Only defined budgets with a status of Open or Current appear in the list of values.

For Bottom–Up Budgeting, all other budgetary control fields must be blank. Note: If entry is not allowed, verify that the project type budgetary control settings allow override at the project level.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 31

Implementing Top-Down Integration

Implementing Top-Down Integration

To define top–down budget integration for a project type: 1. Navigate to the Budgetary Control tab for a project type. 2. Allow Override at Project Level

• Enable this check box if you want to allow users to modify the default budget integration settings at the project level.

3. Budget Type • Select a project cost budget type to be integrated. You can enable top–down integration

for cost budget types only. 4. Control Flag

• Enable the Control Flag check box. Budgetary controls must be enabled for top–down integration.

5. Balance Type • Select Encumbrance. (For top–down integration, the Balance Type must be

Encumbrance.) 6. Non–Project Budget

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 32

• Select the Oracle General Ledger Funding Budget. 7. Encumbrance Type

• Select a General Ledger encumbrance type from the list of values. 8. Levels

• Select a default control level for each budget level. • For top–down budget integration, the system imposes absolute control at the project level

for all encumbered accounts. 9. Time Phase

• Select an Amount Type and Boundary Code to be used when the system calculates available funds.

• The project budget controls you set must be compatible with the funding budget controls. The project budget controls must not allow a transaction to pass funds check if the transaction will fail a funds check against the funding budget. In general, the project budget controls must be equal to or more restrictive than the funding budget controls.

To define top–down budget integration for a project template or project: 1. Navigate to the Budgetary Control option of the Projects, Template window. 2. Budget Type

• Select a project cost budget type to be integrated. 3. Balance Type

• Select Encumbrance. 4. Non–Project Budget

• Select the Oracle General Ledger Funding Budget. 5. Encumbrance Type

• Select a General Ledger encumbrance type from the list of values. 6. Levels

• Select a default control level for each budget level. • For top–down budget integration, the system imposes absolute control at the project level

for all encumbered accounts. 7. Time Phase

• Select an Amount Type and Boundary Code to be used when the system calculates available funds.

• If entry is not allowed, verify that the project type budgetary control settings allow override at the project level.

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 33

Summary

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Appendix B: Budgetary Controls and Budget Integration Chapter 19 - Page 34

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 1

Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 2

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 3

Appendix C: Asset Capitalization: Capitalizing Interest

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 4

Objectives

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 5

Agenda

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 6

Overview of Capitalized Interest

Overview of Capitalized Interest

Capitalized interest (also referred to as Allowance for Funds Used During Construction) is an estimate of the interest cost that enterprises incur when they invest in long-term capital projects. Subject to accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total cost of acquiring and constructing assets that require an extended amount of time to prepare for their intended use. To accommodate this business requirement, Oracle Project Costing enables you to calculate and record capitalized interest for capital projects. To meet the requirements of regulated businesses such as those in the utilities industry that can recognize multiple types of capital interest, you can set up Oracle Project Costing to separately calculate capitalized interest for multiple interest types such as debt and equity. Oracle Project Costing calculates capitalized interest on open CIP amounts. You can spread the cost for one expenditure item across multiple assets. If you have previously capitalized any of the assets to which the cost is allocated, then Oracle Project Costing excludes the total item cost from the interest calculation. You define capitalized interest rate names to represent the interest types to capitalize. After you define rate names, you can create and maintain capitalized interest rate schedules to assign

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 7

rates to each organization. For additional discussion regarding defining rate names and rate schedules, see the section of this lesson titled “Implementing Capitalized Interest.” The process for generating and recording capitalized interest transactions includes the following tasks:

• Setting up capital projects for capitalized interest - To calculate capitalized interest for all eligible capital projects, define the capital information options for each project. You must also assign each project a status that allows capitalized interest.

• Generating capitalized interest expenditure batches - To generate interest expenditures, you periodically submit the concurrent program PRC: Generate Capitalized Interest Transactions.

• Reviewing capitalized interest expenditure batches - After you generate capitalized interest expenditure batches, review the transactions for accuracy. If necessary, you can delete or reverse a batch to allow regeneration.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 8

Setting Up Capital Projects for Capitalized Interest

Setting Up Capital Projects for Capitalized Interest

To calculate capitalized interest for all eligible capital projects, you must define the capital information options for each project and assign each project a status that allows capitalized interest. You can define values for the following fields in the Capital Information window:

• Allow Capital Interest - Defines whether a project is eligible for capitalized interest. By default, Oracle Project Costing enables this option for all capital projects. You can deselect or select this option at any time.

• Capital Interest Schedule - Displays the default capitalized interest rate schedule for the project type, if any. If the Allow Schedule Override option is enabled for the project type, then you can override the default interest rate schedule value at the project level.

• Capital Interest Stop Date - You can optionally specify a date beyond which a project is not eligible for capitalized interest. To calculate interest, this field must either be blank or contain a date that is later than the end date of the GL period for which you want to calculate interest.

The Allow Capital Interest and Capital Interest Stop Date fields are also available at the task level. You can use these fields to control the calculation of capitalized interest for individual tasks.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 9

Generating Capitalized Interest Expenditure Batches

Generating Capitalized Interest Expenditure Batches

To generate and record capitalized interest expenditures, submit PRC: Generate Capitalized Interest Transactions. This program calculates capitalized interest and generates transactions for eligible projects and tasks. When you submit the program, you can specify whether the program automatically releases expenditure batches. If you choose not to automatically release the batches, then you must release them manually in the Review Capitalized Interest Runs window. The program charges interest expenditures to the same tasks as the expenditure items on which it calculates interest. The program derives the expenditure organization and expenditure type values for the interest transactions from the expenditure organization source and expenditure type attributes that you define for the interest rate name.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 10

Reviewing Capitalized Interest Expenditure Batches

Reviewing Capitalized Interest Expenditure Batches

After you submit PRC: Generate Capitalized Interest Transactions, check the status of each run and review the results in the Review Capitalized Interest Runs window. You can generate, review, and delete draft expenditure batches until you are satisfied with the results. To record the transactions in an expenditure batch, you must release the batch. You can reverse an expenditure batch after it is released successfully. If exceptions exist for one or more projects, then you can release the batch to release the successfully generated transactions. After you resolve the exceptions, you can create a new run to process the exception projects. You cannot generate a draft expenditure batch if a draft already exists for the same project and GL period. The rules for releasing, reversing, and deleting capitalized interest expenditure batches are:

• Releasing expenditure batches - You can release batches with the status Draft Success or Release Failure.

• Reversing expenditure batches - You can reverse expenditure batches with the status Release Success.

• Deleting expenditure batches - You can delete expenditure batches with the status Draft Success, Draft Failure, and Release Failure. You cannot delete batches with the status In Process. You cannot delete batches after they are reversed or released successfully.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 11

Inactive Capital Projects Report

Inactive Capital Projects Report

Depending on your business rules, if a capital project has no activity over a period of time, then you may need to suspend the generation of capitalized interest for the project. For example, if the inactive period exceeds six months, then you can enter a Capital Interest Stop Date on the Capital Information window for the project to suspend capitalized interest calculation. You can run the MGT: Inactive Capital Projects Report to find capital projects with no activity for a specific period of time. When you submit the report, you must enter a value for the parameter Number of Inactive Periods. Enter the minimum number of periods (months) that a capital project must be inactive to appear on the report.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 12

Quiz

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 13

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 14

Agenda

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 15

Capitalized Interest Implementation Steps

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 16

Defining Capitalized Interest Rate Names

Defining Capitalized Interest Rate Names

You can define a unique name in the Capitalized Interest Rate Information window for each type of interest that you want to capitalize. For example, you can define a rate name to maintain interest rates for debt and another to maintain interest rates for equity. For each rate name, you can define thresholds that determine when projects become eligible for interest calculation. You can select interest calculation basis attributes that determine how Oracle Project Costing calculates interest amounts. For example, you can select an interest method to specify whether Oracle Project Costing calculates interest on a simple or compound basis. You can specify a period rate convention to determine whether Oracle Project Costing spreads interest amounts evenly across accounting periods or derives the interest amounts based on the number of days in each accounting period. You can specify the current period convention and expenditure type exclusions to determine the CIP balance on which Oracle Project Costing calculates interest. The current period convention controls how much of the current period CIP costs Oracle Project Costing includes in the balance on which it calculates interest. Expenditure type exclusions prevent interest calculation on specific types of costs.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 17

Defining Capitalized Interest Rate Names

Defining Capitalized Interest Rate Names

The process for defining a capitalized interest rate name includes the following tasks: • Defining rate names - Define a unique name for each interest rate type. • Defining additional information - Specify an expenditure organization source,

optionally define thresholds, and select attributes for the interest calculation basis. • Define expenditure type exclusions - Optionally, select expenditure types to exclude

from the cost basis used to calculate capitalized interest. To define a rate name:

1. Navigate to the Capitalized Interest Rate Information window. 2. Enter a unique rate name and optionally a description. 3. Select the expenditure type for generated interest transactions.

- The expenditure type list displays only expenditure types with the expenditure type class Miscellaneous Transaction.

4. Enter an effective start date for the rate and optionally an end date. - After you use a rate name for creating interest transactions, the following restrictions

apply to updating the effective dates:

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 18

- You cannot change the effective start date to a date later than the earliest period start date associated with existing capitalized interest calculation runs.

- You cannot change the effective end date to a date prior to the latest period end date associated with existing capitalized interest calculation runs.

To define additional information: 1. In the Capitalized Interest Rate Information window, select the rate name to update, and

select the Additional Information button. 2. Select an expenditure organization source to define the expenditure organization for

generated interest transactions. 3. Optionally, select a threshold amount type to use when determining whether a project is

eligible for capitalized interest. - You can specify any combination of threshold settings. All entered thresholds must

be met before Oracle Project Costing calculates interest. 4. If you select the threshold amount type Budget, then select the budget type or plan type

you use to define cost budget amounts. If you use budget types for some projects and plan types for other projects, then select a value for both.

5. Optionally, enter a project threshold amount. - If you use the threshold amount type Budget and a budget is not defined for a

project, then the project is ineligible for interest calculation. 6. Optionally, enter a number of days from the project start date at which the project is

eligible for capitalized interest calculation. 7. Optionally, enter a task threshold amount.

- If you use the threshold amount type Budget and a budget is not defined for a task, then the task is ineligible for interest calculation.

8. Optionally, enter a number of days from the task start date at which the task is eligible for capitalized interest calculation.

9. Select a current period convention to specify the portion of the current period CIP amount to include in the interest calculation.

10. Select a period rate convention to specify how Oracle Project Costing spreads interest amounts across accounting periods.

11. Select an interest method to specify whether to use a simple or compound interest calculation.

To define expenditure type exclusions: 1. In the Capitalized Interest Rate Information window, select the rate name to update, and

select the Expenditure Type Exclusion button. 2. Select the operating unit for the exclusion and select the Find button. 3. Select one or more expenditure types that you want to exclude from the CIP basis on

which interest is calculated.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 19

Defining Capitalized Interest Rate Schedules

Defining Capitalized Interest Rate Schedules

You define interest rate schedules to create and maintain rates for interest calculation. You maintain rates by organization and rate name. You can specify an interest rate schedule for each project type. The rate schedule you define for a project type is the default rate schedule for all projects you create for the project type. You can optionally allow override of the default rate schedule at the project level. Define capitalized interest rate schedules in the Capitalized Interest Rate Schedule window. Interest rate schedules enable you to maintain interest rates at the organization level. If you do not define a rate for an organization, then the capitalized interest calculation program uses the rate for the next higher level organization in the organization hierarchy. You can assign an interest rate schedule to a project type and optionally allow override of the assigned schedule at the project level. To define an interest rate schedule:

1. Navigate to the Capitalized Interest Rate Schedule window. 2. Enter a rate schedule name and optionally a description. 3. Enter an effective from date and optionally enter an end date.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 20

4. Select an organization hierarchy to specify the source of assignment organizations. 5. Enter a hierarchy version number. The hierarchy version is the default version of the

organization hierarchy to be applied to the schedule. 6. Select a start organization within the organization hierarchy. 7. In the Versions region, enter a version name to define a unique set of rates. 8. Enter a start date for the version and optionally enter an end date.

- Enable the Hold check box to hold this schedule from compiling. - Choose the Details button to review the details of a revision.

9. In the Multipliers region, select an organization name to which to assign an interest rate. 10. Select a rate name to which to assign an interest rate. 11. Enter an interest rate in the Multiplier field. Enter an annual rate to use for this rate name

and organization. - Enter a decimal and not a percentage value. For example, for 10% you enter 0.10. - Optionally, choose the Copy button to copy multipliers from one schedule revision

to a new revision. 12. Save your work. 13. After you have completed entry of all multipliers, choose Compile to compile new

multipliers. When you compile a schedule, Oracle Project Costing automatically submits PRC: Compile Rate Schedule.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 21

Specifying Capitalized Interest Rate Schedules for Project Types

Specifying Capitalized Interest Rate Schedules for Project Types

You can specify a default capitalized interest rate schedule for a capital project type. The rate schedule that you specify for a project type is the default rate schedule for all projects that you create for the project type. In addition, you can specify whether you can override the default schedule at the project level. To specify a default capitalized interest rate schedule for a capital project type and set the override control, navigate to the Capitalization Information tab on the Project Types window.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 22

Setting Project Status Controls for Capitalized Interest

Setting Project Status Controls for Capitalized Interest

You use project status controls to determine whether Oracle Project Costing calculates capitalized interest throughout the various stages of a project. By default, all project statuses to which you assign a system status of Approved allow calculation of capitalized interest. You must determine the project statuses for which to allow the calculation of capitalized interest and update project status controls accordingly. To update project status controls for capitalized interest, navigate to the Project Statuses window and select a project status. For each status, either select or deselect the Allow check box for the Capitalized Interest status controls action.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 23

Implementing the Capitalized Interest Extension

Implementing the Capitalized Interest Extension

The Capitalized Interest Extension has the following procedures: • Target Task Override Procedure - Enables you to redirect capitalized interest

transactions to specific tasks. • Expenditure Organization Procedure - Enables you to specify organizations other than

the source project owning organization or source task owning organization as the expenditure organization for generated transactions.

• Interest Rate Multiplier Override Procedure - Enables you to define multiple interest rate multipliers based on the rate name and task owning organization.

• Interest Override Procedure - Enables you to define your own calculations for capitalized interest.

• Interest Threshold Procedure - Enables you to define duration and amount thresholds at levels lower than the operating unit.

• Grouping Method Procedure - Enables you to specify grouping criteria. • Get Transaction Attributes Procedure - Enables you to control how Oracle Project

Costing populates the transaction attribute columns.

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 24

Quiz

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 25

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Appendix C: Asset Capitalization: Capitalizing Interest Chapter 20 - Page 26

Summary

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 1

Summary of R12.x Project Costing Fundamentals Chapter 21

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 2

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 3

Summary of R12.x Project Costing Fundamentals

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 4

Objectives

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 5

Agenda

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 6

Defining Projects for Costing

Defining Projects for Costing

You can use Oracle Project Costing to collect costs associated with all of your project activities. A project financial structure is a task tree showing the organization of project activities. It can be as simple or detailed as you want it to be. There are no limits in width or levels.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 7

Expenditures

Expenditures

An expenditure is a group of expenditure items, or transactions, that an employee or an organization incurs or an expenditure period. You charge expenditures to a project to record actual work performed or cost incurred. Oracle Project Costing uses these terms for expenditures:

• Expenditure batch - A user-defined name used to track a batch of expenditures, such as timecards and miscellaneous transactions.

• Expenditure - A group of expenditure items incurred by an employee or organization for an expenditure period.

• Expenditure item - The individual transactions charged to a specific project and task combination.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 8

Performing Cost Processing

Performing Cost Processing

Oracle Project Costing is an integrated cost management solution for all projects and activities within an enterprise. Costing includes the following major steps:

1. Enter and approve expenditures through the Oracle Project Costing user interface, or import unaccounted transactions.

2. Distribute costs and derive default accounting. 3. Generate cost accounting events.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 9

Performing Cost Processing

Performing Cost Processing

4. Create accounting in Oracle Subledger Accounting and transfer the accounting entries to Oracle General Ledger. Fo

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 10

Performing Cost Processing

Performing Cost Processing

5. Import final subledger journal entries in Oracle General Ledger. 6. Post journal entries in Oracle General Ledger. Fo

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 11

Accounting for Costs

Accounting for Costs

Oracle Project Costing creates many different accounting transactions throughout its business cycle. You can use AutoAccounting to specify how to determine the correct account for each transaction. Oracle Project Costing generates accounting events and creates accounting in Oracle Subledger Accounting. If you define your own detailed accounting rules in Oracle Subledger Accounting, then Oracle Subledger Accounting overwrites default accounts, or individual segments of accounts, that Oracle Project Costing derives using AutoAccounting. The Account Generator uses Oracle Workflow to derive default account code combinations. Oracle Payables and Oracle Purchasing use the Account Generator to determine the default account code combinations for purchasing requisitions, purchase orders, supplier invoices, and expense reports based on the project information entered.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 12

Burden Costing

Burden Costing

Burdening, also known as cost plus processing, is a method of applying one or more burden cost components to the raw cost amount of each individual transaction to calculate burden costs. Fo

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 13

Integration with Oracle Purchasing and Oracle Payables

Integration with Oracle Purchasing and Oracle Payables

Oracle Project Costing fully integrates with Oracle Purchasing and Oracle Payables and enables you to enter project-related documents using those products. You can use both Oracle Purchasing and Oracle Payables, or just Oracle Payables. In addition, you can use Oracle iProcurement to enter project-related requisitions. When you enter project-related transactions in Oracle Purchasing and Oracle Payables, you enter project information on your source document. Oracle Purchasing, Oracle Payables, and Oracle Project Costing carry the project information through the document flow: from the requisition to the purchase order in Oracle Purchasing, to the supplier invoice in Oracle Payables, and to the project expenditure in Oracle Project Costing. The accounting method for your ledger determines when you can interface supplier costs to Oracle Project Costing. Note: You can use Transaction Import in Oracle Project Costing to import accounted supplier invoices directly into Oracle Project Costing from 3rd party systems.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 14

Integration with Oracle Internet Expenses

Integration with Oracle Internet Expenses

With Oracle Internet Expenses, employees and contingent workers can enter and submit expense reports using a standard Web browser or a Web-enabled mobile device. Oracle Workflow automatically routes expense reports for approval and enforces reimbursement policies. Oracle Internet Expenses integrates with Oracle Payables to provide quick processing of expense reports for payment. You can create project-related expense reports using Oracle Internet Expenses. You send expense reports entered in Oracle Internet Expenses to Oracle Payables and then to Oracle Project Costing. Note: You can enter expense reports containing project and task information in Oracle Internet Expenses or Oracle Payables. Additionally, you can import fully-accounted project-related expense reports into Oracle Project Costing from third-party systems using Transaction Import.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 15

Integration with Oracle Time & Labor

Integration with Oracle Time & Labor

Oracle Time & Labor integrates with Oracle Project Costing to enable employees and contingent workers to enter and submit project-related timecards. Employees and contingent workers enter their own time, which you can subject to an approval process according to your business rules. You can transfer approved timecards to Oracle Project Costing, Oracle Payroll, and Oracle Human Resources. After you import the timecards into Oracle Project Costing, you cost the timecards and derive the default accounting using AutoAccounting. During cost processing, the raw cost and any additional burden cost is calculated. Finally, you generate cost accounting events and create accounting for the timecards in Oracle Subledger Accounting.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 16

Integration with Other Applications

Integration with Other Applications

Integration with Oracle Inventory When you enter project-related transactions in Oracle Inventory, you enter the project information on the source transaction. Oracle Inventory and Oracle Project Costing carry the project information through from the Issue To or Receipt From transaction in Oracle Inventory to the project expenditure in Oracle Project Costing. Integration with Oracle Project Manufacturing When used as a part of the Oracle Project Manufacturing functionality, Oracle Project Costing acts as a cost repository for manufacturing-related activities. Integration with Oracle Asset Tracking

Oracle Asset Tracking is a fully integrated solution in the Oracle E-Business suite designed to deploy and track internal products and assets at internal or customer sites, while providing the ability to automatically capture financial transactions. You can create project-related purchase orders linked to Oracle Asset Tracking and import tracked items and cost into Oracle Project Costing. You can also generate asset lines for non-depreciable tracked items and interface the asset lines to Oracle Assets to create assets.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 17

Allocations and AutoAllocations

Allocations and AutoAllocations

The allocations feature can distribute amounts between and within projects and tasks, or to projects in other organizational units. For example, you can distribute amounts such as salaries, administrative overhead, and equipment charges across several projects and tasks. Your allocations can be as simple or elaborate as you like. AutoAllocations provide the ability to generate allocations more efficiently. You can group processes and run them in a specified sequence or at the same time. AutoAllocations is an Oracle General Ledger and Oracle Project Costing feature. In Oracle General Ledger, the allocation definition is called a batch. In Oracle Project Costing, the allocation definition is called a rule.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 18

Asset Capitalization

Asset Capitalization

Using capital projects, you can define capital assets and capture construction-in-process (CIP) and expense costs for assets you are creating. When you are ready to place assets in service, you can generate asset lines from the CIP costs and send the lines to Oracle Assets for posting as fixed assets. You use capital projects to capture the costs of capital assets you are building, installing, or acquiring. You can also define retirement adjustment assets and capture cost of removal and proceeds of sale amounts (collectively referred to as retirement costs, retirement work-in-process, or RWIP) for assets you are retiring that are part of a group asset in Oracle Assets. When your retirement activities are complete, you can generate asset lines for the RWIP amounts and send the lines to Oracle Assets for posting as adjustments to the accumulated depreciation accounts for the group asset that corresponds to each asset.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 19

Asset Capitalization: Capitalized Interest

Asset Capitalization: Capitalized Interest

Capitalized interest (also referred to as Allowance for Funds Used During Construction) is an estimate of the interest cost that enterprises incur when they invest in long-term capital projects. Subject to accounting rules and regulatory guidelines, enterprises can capitalize interest as part of the total cost of acquiring and constructing assets that require an extended amount of time to prepare for their intended use. To accommodate this business requirement, Oracle Project Costing enables you to calculate and record capitalized interest for capital projects. To meet the requirements of regulated businesses such as those in the utilities industry that can recognize multiple types of capital interest, you can set up Oracle Project Costing to separately calculate capitalized interest for multiple interest types such as debt and equity.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 20

Cross Charge

Cross Charge

When projects share resources within an enterprise, it is common to see those resources shared across organization and country boundaries. Further, project managers can also divide the work into multiple projects for easier execution and management. The legal, statutory, or managerial accounting requirements of such projects often present complex operational control, billing, and accounting challenges. Cross charge enables project managers to easily view the current total costs of the project, regardless of who performs the work or where it is performed. You can choose one of the following processing methods for cross charge transactions:

• Borrowed and Lent Accounting • Intercompany Billing Accounting • No Cross Charge Process

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 21

Budgetary Controls and Budget Integration

Budgetary Controls and Budget Integration

Budgetary Controls You can enforce budgetary controls against a GL budget and a project cost budget. Budgetary controls enable you to monitor and control expense commitment transactions. Expense commitment transactions are transactions for non-inventory items. Oracle Project Costing enforces budgetary controls for:

• Project-related purchase requisitions and purchase orders entered in Oracle Purchasing • Contingent worker purchase orders entered in Oracle Purchasing • Supplier invoices entered in Oracle Payables • Project-related prepayments not matched to a purchase order and the application of

unmatched prepayments to supplier invoices Budget Integration Oracle Project Costing budget integration features enable you to integrate project budgets with non-project budgets in Oracle General Ledger. Integration is defined in order to perform bottom-up or top-down budgeting.

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 22

Agenda

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 23

Oracle Projects Fundamentals Learning Path

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Summary of R12.x Project Costing Fundamentals Chapter 21 - Page 24

Summary

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