Written by Helene Abrams Sunday, April 20 2008
There are many differences not only in the way that R12 handles your business, but also in the underlying structures of the Financials. Essentially, R12 was designed to accommodate global companies with different accounting requirements who need to allow their data to be shared among different entities. The most significant of these changes is that in R12, there is no concept of Sets of Books. Ledger and Ledger Sets together replace Sets of Books. The data of a Set of Books is contained in a ledger. The management of the set of books (open and closing, reporting, allocating, etc.) is now at the Ledger Set level A ledger and is defined by the 4 Cs: Calendar, Currency, Chart of Accounts (these should be familiar as the definition of a set of books), and Convention.
Convention refers to the Accounting Method (e.g. GAAP, IAS) used. From a single transaction ledger, you can generate rules that will populate different subledgers. For example, if you have different tax jurisdictions, you would have a ledger that would track the accounting and reporting necessary for each of the jurisdictions. You would only enter the transaction one time, and then populate that transaction to different ledgers depending on the rules that you create. Detailed transaction information is captured in the subledgers and periodically posted (in summary or detail form) to the ledger. Within the ledgers, you define accounting rules to comply with Sarbanes Oxley, providing an audit trail and easier reconciliation. You can balance at the subledger level.
Subledger Accounting allows you to define centralized rules and provides multiple accounting representations of a single transaction in multiple currencies. One of the main advantages is to be able to create a single payment transaction for different legal entities or different operating units and create a rule that allows that transaction to be credited and debited correctly without creating overrides and adjusting entries. A ledger owner might be a legal entity or a group of companies in a common legal environment, or a foreign branch. Ledgers are also used to consolidate financial transactions. Accounting entries can account for themselves in ledgers that are prepared under different conventions with different charts of accounts, and value transactions in different currencies. One of the ledgers is the primary ledger. A ledger set is a collection of ledgers that you wish to manage as though they were one ledger.
Many functions are available across ledgers:
- Open/Close Periods
- Create Journals
- Translate and Revalue Balances
- View Information
- Submit Standard Reports
- Submit Financial Statements
Another major change is the Multi-Org Access Control (MOAC). MOAC allows you to perform functions across operating units without changing responsibilities. A responsibility is no-longer tied to a single operating unit. Instead, from within HR, you can assign a list of operating units to a responsibility and assign security to that operating unit through a security profile. By setting the operating unit to null, you can import all transactions for all operating units through the open interface programs at the same time. You can also create and report on transactions that cross operating units or operate a shared services center with centralized processing.
In R12, the concept of legal entity has been enhanced. A legal entity exists in the outside world and may be regulated by different governing bodies (i.e. country, state, tax authority). A legal entity pays taxes, has bank accounts, and complies with different regulatory agencies. Transactions that occur between and across legal entities are intercompany transactions. Bank accounts are now associated with legal entities rather than with operating units, allowing for a single bank account to serve multiple operating units. Income statements and balance sheets are generated along with tax forms for every legal entity. In HR, there is the Government Reporting Legal Entity (GRLE) which represents the registered legal entity who is the employer in HR.
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January Puzzle
A traveler gets lost on a deserted island and finds himself surrounded by a group of n cannibals.
Each cannibal wants to eat the traveler but, as each knows, there is a risk. A cannibal that attacks and eats the traveler would become tired and defenseless. After he eats, he would become an easy target for another cannibal (who would also become tired and defenseless after eating).
The cannibals are all hungry, but they cannot trust each other to cooperate. The cannibals happen to be well versed in game theory, so they will think before making a move.
Does the nearest cannibal, or any cannibal in the group, devour the lost traveler?
Solution
The short answer is the traveler’s fate depends on the parity of the group. If there is an odd number of canibals, the traveler will be eaten, but if there is an even number, the traveler will survive.
To prove this, we will consider small groups and use mathematical induction to explain the solution for larger groups.
Case n = 1: this is an obvious case. If there is one cannibal, the traveler will be eaten. It doesn’t matter that the cannibal will get tired because there are no other cannibals around as a threat.
Case n = 2: this is a more interesting case. Each cannibal wishes to each the traveler, but each knows he cannot. If either cannibal eats the traveler, then he will become defenseless and the other one will eat him. So each cannibal uses backwards induction to realize that the only strategy is to not eat the traveler. The hapless traveler finds a bit of luck, therefore, and actually survives.
Case n = 3: this is where the problem gets interesting. The best strategy is for the closest cannibal to make a move and eat the traveler. The cannibal will be defenseless after eating, but ultimately he will be safe. Why is that? The reasoning is due to induction: once the cannibal eats the traveler, the resulting situation has 2 unfed cannibals and the 1 defenseless cannibal. But as we just showed above, when there are 2 unfed cannibals, neither will make a move for fear of being eaten by the other! Thus the first cannibal to make a move will be safe as the remaining 2 cannibals block each other.
We can prove the higher cases using mathematical induction. If the number n is odd, then the closest cannibal can safely eat the traveler because the remaining number of unfed cannibals is even (and by induction, with an even number of unfed cannibals no one makes a move). If the number n is even, then no cannibal will eat the traveler, for if he did, the remaining number of cannibals would be odd, meaning he will get eaten by the induction hypothesis.
Success Tips for Oracle Project Management
- Create a standard for documentation at the beginning of your project, and hold team members accountable for completing documentation requirements as well as keeping them at and above the standards required.
- Before promulgating user documentation or training, it’s also a good idea to choose a representative from the among the business users base to review materials first.
- If you are not sure about the resources and budget required, obtain several estimates from people that have experience with the same size and scope of your project.
- Be explicit, before beginning the project, what internal resources are required for execution. This includes people, infrastructure, hardware, and software.
- Help the project champion understand the impact your project will have on the organization and how its successful completion will make him or her an internal hero or heroine for supporting it.
- Break up your project into smaller projects (try for projects that can be completed in 4-6 months, especially early on) to get success and demonstrate momentum.
- Make sure that your testing includes reports, upstream and downstream interfaces, customizations, enhancements, and workflows.
- Ensure that comprehensive transition reports and meetings between departing and incoming personnel are completed.
- Instead of spending time and resources implementing third-party reporting, consider consolidating multiple instances, moving to a global chart of accounts (CoA), and/or standardizing on a consistent calendar.
- Include governance, risk, and compliance management as part of the project plan.
- Finally, celebrate the successes. Too many projects focus on defects, failures, or small cost over-runs without looking at the big picture and what was accomplished.
The Analyst Corner
John Van Decker, Research VP of Gartner, states:
"A single chart of accounts allows consistency in financial reporting across the enterprise by standardizing on common metrics and reporting structures, reduces dependencies on a separate financial consolidation system, and significantly reduces the costs incurred with ongoing, complex conversions and translations."
