Purchasing Setup: Encumbrance Accounting

Setting up encumbrance accounting actually has very few actions that need to be performed in Oracle Purchasing module. The primary level of effort required for encumbrance accounting setup is in the General Ledger module. There is one action that can be taken by PO and it deals with the AP form Financial Options
Here are some quick setup steps for encumbrance accounting. The setup details may differ depending on the business needs. the steps included here are for Release 11

1) Define the Encumbrance Account

    1.1. Navigation in GL: Setup -> Financials -> Flexfields -> Key -> Values
         Navigation in PO: Setup -> Financials -> Flexfields _> Key -> Values
    1.2. Perform a find by entering the following criteria:
         Application: Oracle General Ledger
         Title: Accounting Flexfield
         Structure: <name of a structure to be used>
         Segment: Account
    1.3. Click the Find button.
    1.4. Add a new segment value.
         Value: (enter your own)
         Description: Reserve For Encumbrance

Accounting entries during capitalizing eAM cost to Fixed Asset

The accounting reconcilliation between maintenance expenses from a work order and captalization of work order costs is largely a manual effort

However the same can be automated to some extent if the business process can accomodate a single asset clearing account for all capitalization works initiated from a single EAM org. To do this,

1. Create a separate accounting class which will referenced on capitalization work orders. This accounting class will have all its variance accounts set as the Asset Clearing account.

2. Set the eAM parameters to have the offset account as the Asset clearing account.

3. As a procedure, ensure that work orders are closed (i.e. status of work order is changed to 'Closed') before capitalization is initiated. This will ensure that value is transferred from valuation accounts to variance accounts

Now the accounting entries would be as follows :

Work Order transactions

Dr:     EAM Valuation accounts

Cr:     Mtl Valuation / Resource absorption

Work Order Close

Dr:     Variance account = Asset Clearing account

Cr:     EAM Valuation accounts

Post Mass additions

Dr:     Asset Cost account

Cr:     Asset Clearing account = Offset A/c = Variance account 

Basic shopping flow in iProcurement

Navigate to iProcurement Responsibility (N) Home Page > Shop. Search or select the item to procure and add to the shopping cart. once all the required items are selected to the shopping cart we can check out with any of the three available methods.

Checkout Methods: Comparison
From the user perspective the different checkout methods dictate the amount of information that requesters must enter to complete an order. From the implementation perspective the methods differ in how much help entering information you expect the requester to require. For example, power checkout provides the same access to requisition information as step-by-step, but does so in fewer pages.

Step-by-Step Checkout
Requesters are led step-by-step through entering the details needed to create an order. Requester needs less experience to complete the order process. Defaults details from requester's My Profile, which the requester can override Requires the Review/Submit step

This checkout method is ideal for the

Physical Inventory Counting Process

The Physical Inventory Count allows you to take a stock check on a specific
physical inventory. The system allows you to take a snapshot of the on-hand
figures at a point in time to allow the company to continue processing
transactions without those transaction affecting the results of the stock
take. Later when the stock take figures are entered the program compares the
count figures entered with these 'snapshot' values NOT the current on hand
figures. Adjustments are then entered, approved (if necessary) and posted

Transaction flow

1. Define Physical Inventory 

Allows a physical inventory to be defined and a snapshot of the qty on hand to be taken. The Approval Options
allows the following options:
a. Required for all adjustments - ALL adjustments entered need to be approved
(could be very time consuming!)
b. Not required for adjustments - adjustments do not need approval
c. Required for adjustments out of tolerance - adjustments out of the range of
the approval tolerances need to be approved (the norm!). The Approval
adjustments are also entered on this form and are in the form of quantity

Oracle Inventory Organization Structure (Release 11i )

Oracle Applications uses multiple types of organizations to build the business
execution structure. At the top of the structure is the accounting set of books
SOB), defined in the General Ledger. Next, different types of organizations are
used to further define the organization structure and relationships. All
organizations are defined and updated with the Define Organization form.

Set of Books: A General Ledger SOB, linked to the inventory organization,
controls the financial accounting of inventory transactions. A SOB is made up
of a chart of accounts, a financial calendar, and a currency. The general
ledger secures transactions (journal entries, balances) by SOB.

Legal Entity. A legal entity organization defines the tax and fiscal reporting
level. The legal entity represents the legal company.

Operating Unit: An operating unit organization defines the Purchasing, Order
Entry, Accounts Payable and Accounts Receivable level of operation. An operating
unit may span multiple manufacturing facilities, distribution points and sales
offices, or it may be limited to a single site.

Inventory Organization: Two flavors of inventory organizations are found in
Oracle Applications. They are defined the same, and both are assigned a set
of books, a legal entity organization, an operating unit organization, and a
location. An item master organization is used for item number maintenance and
validation. This master organization serves as a data repository storing items
and item attributes, master level categories and category sets, master level
cross references, and numerous data defaults. On-hand balances, inventory
movements, and other on-going inventory activities are not performed in an item
master organization. Generally, the master organization is used as the
validation organization for Purchasing and Order Entry. It is recommended
that a single item master organization be defined, even in multiple organization,
multiple sets of books environments.

In addition to the item master organization there are one or more non-master
inventory organizations. Like the item master inventory organization, the