It’s R12, How Do I Balance My Accrued Accounts Payable (AAP) Account?
Cost Management SIG
October 16, 2012
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
Agenda
2
Introduction
Purpose of AAP Process
Reconciliation Setup and Process
Reconciliation Write-Offs
Reconciliation Logic and Example
Accounting Setup
Lessons Learned
Q&A
Robert Smith currently is a Manager at KPMG, LLP with over 17 years of experience working with Oracle Applications as user and consultant.
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG’s Global Reach
3
Organizational Structure and Global Footprint KPMG International is a global network of professional firms providing audit, tax, and advisory services, drawing from the skills and experiences of 140,000 professionals across 150 countries. KPMG International provides services to 79 percent of the Global 1200, managing their large, complex projects using consistent sets of standards. Our global network of professionals operates under common core values, adheres to uniform quality control standards, uses globally consistent technologies, toolkits and methodologies with an persistent focus on delivering quality. Our worldwide presence and deep strength of talent allow us to leverage specific skill sets, industry knowledge, and global resources on an as-needed basis. KPMG LLP (KPMG), the US member firm of KPMG International, traces its origins back to 1897. As one of the world’s largest independent accounting firms, we are proud to provide many of the world’s largest entities with services, including 75 companies in the FORTUNE 100.
KPMG International ● Countries: 150 ● Professionals: 143,000+ ● Partners: 7,900 ● Revenue: $22.7 B
KPMG, LLP (US) ● Offices: 87 ● Professionals: 30,000+ ● Partners: 1,882 ● Revenue: $6 B
Provides independent audit services designed to enhance the reliability of information prepared by clients for use by investors, creditors and other stakeholders, including country-specific statutory requirements
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Helps clients to tackle growth, governance, and performance challenges, combining specialist skills around the world to provide objective advice and execution to help preserve and improve value
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Global Advisory Professionals:
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG’s Key Oracle Strengths
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Oracle Global Delivery Strength: 2,000+ resources in 35 countries/member firms World Class Business Process Transformation capabilities Deep Oracle expertise in Financial Management (Oracle & PeopleSoft),
HCM (PeopleSoft), EPM (Hyperion & Essbase), Business Intelligence (OBIEE & BI Analytics), and GRC
Long history of innovations and inaugural implementation successes in Oracle E-Business, PeopleSoft HCM, Oracle Business Intelligence, Hyperion Fusion Edition, and PeopleSoft Financials
Leading implementer of PeopleSoft 9.1, including the industry’s very first 9.1 implementation
Developing SCM capabilities, with strong expertise in OPM and Demantra Oracle Platinum Partner with an extensive set of Specializations
o Diamond Level Certification in process Oracle Fusion Early Adopter Partner Program, selected to lead Fusion
Financials and HCM go-to-market initiatives Oracle TITAN Award winning RapidSolutionsSM methodology KPMG LABSSM provide fully configured, industry-leading Oracle E-Business,
PeopleSoft HCM & Financials, Oracle Business Intelligence OBIEE and Analytics reference environments
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG Management Consulting’s Oracle Capabilities Snapshot
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Management Consulting
Key Facts • Oracle Platinum Partner • Specialized: Oracle E-Business,
PeopleSoft, Hyperion, Business Intelligence & Analytics
• Oracle Fusion Early Adopter Partner Program
• Diamond Level Certification Initiative in process
• Focus on Oracle-enabled Global Value Delivery Method
• Global Delivery Strength: 2,000+ resources in 35 countries
Oracle Capabilities
Across Industries
Business Effectiveness
COO / BU Leads
Supply Chain Management
BI Procurement & Spend Analytics
Financial Management
CFO
Financials
Financial Controls & Reporting
Enterprise Performance Management & Essbase
Budgeting, Planning, & Forecasting
BI Financial Analytics
Governance, Risk & Compliance
Transfer Pricing
International Financial Reporting Standards
People & Change
HR Executive
Human Capital Management
BI HR Analytics
Payroll
Benefits
Talent Management
Time & Labor
Compensation
Workforce Planning
IT Strategy & Performance
CIO
Information Management
Data Quality Management
Strategic Platform Alignment
Cloud Strategy and Deployment
ERP Performance Management & Implementation
Security and Risk Rationalization
Outsourcing Enablement
BI Project Analytics
KPMG’s World Class Business Process Transformation Capabilities
Value Chain Planning
Process & Discrete Manufacturing
Procurement
Order Fulfillment
Advanced Supply Chain Planning
Demand Management
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Oracle Product Experience
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Oracle has long recognized KPMG’s industry domain expertise and leadership position; viewing KPMG practitioners as trusted business advisors and industry thought leaders. We work closely with Oracle’s Sales teams, especially in the rollout of new releases, and have a long history working with Oracle’s Product Strategy & Development teams. The relationship our practitioners share with Oracle becomes a direct value to each of our clients when seeking rapid resolution to product issues.
Leading implementer of Oracle BI solutions, including OBI EE and BI Analytic Applications.
One of the 1st to implement Project and HR Analytics 7.9.6
One of the 1st to successfully implement Oracle E-Business R12.
Leading implementer of v9.1 solutions.
The 1st to implement HCM v9.1, HCM 8.9 and Revenue Management v8.9.
Deep experience implementing Oracle EPM solutions, including Hyperion and Essbase.
The 1st to successfully implement HFM Fusion.
A leader in GRC Transformation services.
The 1st to successfully implement Oracle EGRCM 8.6.
A preferred Fusion HCM Partner, one of only 8 selected globally.
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Scope of KPMG’s Oracle Capabilities The following represents a full spectrum of resources we can bring to every initiative:
ORACLE EXPERTISE • Platinum Partner • Fusion Council Member • Member of the E-Business,
PeopleSoft, Fusion, Business Intelligence & Fusion Middleware Product Focus Groups
• OAUG Partner • Quest Partner
KPMG TOOLKITSM • Hosted Client Collaboration Suite • Process Analysis & Design Tools • Requirements Database • Customization Templates • Test Script Library • Project Administration Tools
TECHNICAL EXPERTISE • Planning & Architecture • Hardware/Software
Assessment & Configurations
• Custom Development • Database Administration
& Optimization • Interface Development • Data Conversion Automation • System Performance Tuning • Middleware / Integration
BUSINESS PROCESS FOCUS • Financial Management • IT Strategy & Performance • Business Effectiveness • People & Change
RAPIDSOLUTIONSSM
• TITAN Award Winning Methodology tailored for PeopleSoft 9.1
• Process-based Orientation • Stresses Knowledge Transfer • Incorporates Industry Best Practices
KPMG LABSSM
• Upgrade & Implementation Lab Environments
• Support Services • Demonstration &
Training Environments • Testing Facilities • PeopleSoft v9.1, EBS 12.1,
OBIEE 11g, BI Apps 7.9.6, Demantra 7.3, Hyperion Fusion
CHANGE & TRAINING FOCUS • EBS, PeopleSoft, BI, Change
Management & Training Expertise
• Process-based training methodology
• Job Impact and Change Strategies
Our Clients
SERVICE PROGRAMS • Implementation & Upgrade • Business Transformation &
Process Optimization • ERP Strategy & Roadmaps • Value Upgrade Assessment • HealthCheckSM Review • System Selection Assistance • Technical Infrastructure Planning • Enterprise Application Integration • Customized Training
INDUSTRY FOCUS • Consumer Goods • Communications & Media • Energy & Utilities • Financial Services • Government & Public Sector • Healthcare • Manufacturing • Professional Services • Retail • Transportation
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Purpose of AAP Process
To identify potential issues with receiving and purchasing transactions that could impact the accuracy of the AP accrual accounts recorded in the General Ledger
Quantities differ between receipts and invoices
Discrepancies in vendor billings
Invoices matched to incorrect purchase order
Receiving against wrong purchase order
Miscellaneous transactions that do not belong to the accrual accounts
Freight and tax payables entries that are incorrectly posted to the accrual accounts
The AAP reconciliation process has been “feared” or “strongly disliked”
Now with Release 12, users have access to a comprehensive reconciliation report and the ability to write off obsolete transactions
8
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
Reconciliation Setup/Process
Set Accrual Accounts
New Transaction Data
Accrual Load Program
Reconciliation Summary
Reconciliation Detail
Choose for Write-Off
Write-Off Summary
Write-Off Details
Choose for Reversal
Yes Yes
No
No
Yes
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
Identify accrual accounts to be reconciled
Reconciliation Setup/Process
Set Accrual Accounts
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
Enter transactions throughout the month as normal
Load program populates the following tables:
CST_AP_PO_RECONCILIATION
CST_MISC_RECONCILIATION
CST_RECONCILIATION_SUMMARY
Only transactions having a net balance will populate the tables
Reconciliation Setup/Process New Transaction Data
Accrual Load Program
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
Reconciliation Summary
Reconciliation Detail
Summary Accrual Reconciliation Report is used to determine the accrual accounts have balances
Reconciliation Setup/Process
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
The AP and PO Accrual Reconciliation Report is used to view the accrual accounts having a net balance not equal to zero
Reconciliation Setup/Process Reconciliation Summary
Reconciliation Detail
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Setup/Process
The Miscellaneous Accrual Reconciliation Report is used to view miscellaneous invoices not matched to PO or PO receipts
Reconciliation Setup/Process Reconciliation Summary
Reconciliation Detail
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Write-Offs
Review transactions and decide to write off. Ensure all transactions are completed and posted or reports reviewing may not be accurate.
Write-Off will automatically generate general ledger transactions.
Reconciliation Write-Offs Choose for Write-Off
Write-Off Summary
Write-Off Details
Yes
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Reconciliation Write-Offs
Reconciliation Write-Offs Choose for Write-Off
Write-Off Summary
Write-Off Details
Yes
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Write-Offs
After write-off and running accounting, transactions can be reviewed and see the accounting generated
Reconciliation Write-Offs Choose for Write-Off
Write-Off Summary
Write-Off Details
Yes
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Reconciliation Logic/Example
Comparison of 11i and R12 AAP Accrual Process
Reconciliation Logic / Example
11i R12 Reconciliation Rebuild retrieved data falling within relevant date range, regardless of status of fully invoiced, partially invoiced, un-invoiced or written off
Concentrates on PO distributions rather than lines and aggregate totals
Reconciliation Reports are reported by PO lines
Load program uses to date parameter as a cut-off date to obtain PO distributions having a net balance which simplifies process and improves performance
Accrual Write-offs are removed from the reconciliation report, but the user has to manually
Reconciliation reports only show distributions with balances resulting only relevant data that directly impacts the current Net Accrual Balance
Reconciliation is based on age of PO Distributions not the transaction date of the whole transaction
Accrual write-offs are removed from the reconciliation reports and write off entries are systematically created
The reconciliation reports should only be used to reconcile current balances
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
Walk through of example. For simplicity assume only 1 item is involved and PO price is $10
Reconciliation Logic / Example Period 1 January 2012
PO#1 Ordered 10 01/01/2012
PO#2 Ordered 10 01/01/2012
PO#1 Received 5 01/01/2012
PO#2 Received 5 01/01/2012
PO#1 Invoiced 5 01/31/2012
PO#2 Invoiced 4 01/31/2012
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
After the Accrual Load Program is run for January the following will be populated in the CST_RECONCILIATION_SUMMARY and CST_AP_PO_RECONCILIATION respectively
Reconciliation Logic / Example
Only PO2 because PO1 self cleared
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
Reconciliation Logic / Example
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
User decides to write off transaction
Summary and detail shown respectively
Reconciliation Logic / Example
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
Reconciliation Logic / Example
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
User realizes the write-off was a mistake and reverses the write off
The summary and detail impact are shown to the right
Reconciliation Logic / Example
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Reconciliation Logic/Example
After the reversal the transaction will reappear on the reconciliation report
Reconciliation Logic / Example
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Reconciliation Logic/Example
Reconciliation Logic / Example
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Accounting Setup
Receiving Within standard Oracle the user can define the inventory accrual account to be used at
the organization level
Many times this is not enough so now in R12 users can utilize the Subledger Accounting (SLA) setups to map the accrual account based on various user decided attributes
27
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Accounting Setup
Payables Within standard Oracle the user can define the AP Accrual account to be used at the
Supplier and Supplier Site level
Many times this is does not offer enough flexibility so now in R12 users can utilize the SLA setups to map the Payables accrual account based on various user decided attributes
28
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Accounting Setup
Write-Offs Within standard Oracle the default offset account that is used when writing off an accrual
transaction is the charge account on the PO distribution if the destination type of the PO distribution is Expense
If the destination type of the PO distribution is inventory than the default account is the variance account on the PO distribution (Purchase Price Variance)
If this default account does not provided enough flexibility then the user can use the R12 SLA setups to map the Write-Off offset as they wish
The mapping for the write-off can be found in the Cost Management module
29
© 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Lessons Learned
Transactions must be accounted
Reconciliation should be done every month
The data on the Oracle reports is what is in the system
Transactions not final accounted do not appear on the reports
SLA rules not consistent on the purchasing and payables side can cause out of balances between report and genera ledger
30
© 2012 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
Thank you Robert Smith [email protected]