Check List for Closing Accounting Period

You close a Payables period after you have completed accounting for transactions for the period and you have transferred the accounting entries to general ledger.

You cannot close a period in Payables if any of the following conditions exist:
1. Outstanding payment batches Confirm or cancel all incomplete payment batches.
2. Future dated payments for which the Maturity Date is within the period but that still have a status of Issued. Submit the Update Matured Future Payment Status Program.
3. Unaccounted transactions Submit the Payables Accounting Process to account for transactions, or submit the Unaccounted Transaction Sweep to move any remaining unaccounted transactions from one period to another.
4. Accounted transactions that have not been transferred to general ledger. Submit the Payables Transfer to General Ledger process to transfer accounting entries.

To complete the close process in Payables:
1. Validate all invoices.
2. Confirm or cancel all incomplete payment batches.
3. If you use future dated payments, submit the Update Matured Future Dated Payment Status Program. This will update the status of matured future dated payments to Negotiable so you can account for them.
4. Resolve all unaccounted transactions. Submit the Payables Accounting Process to account for all unaccounted transactions. Review the Unaccounted Transactions Report. Review any unaccounted transactions and correct data as necessary. Then resubmit the Payables Accounting Process to account for transactions you corrected. Or move any unresolved accounting transaction exceptions to another period(optional). Submit the Unaccounted Transactions Sweep Program.
5. Transfer invoices and payments to the General Ledger and resolve any problems you see on the output report: Payables Transfer to General Ledger Program.
6. In the Control Payables Periods window, close the period in Payables.
7. Reconcile Payables activity for the period. You will need the following reports:
    • Accounts Payable Trial Balance Report
    • Posted Invoice Register
    • Posted Payment Register
8. If you use Oracle Purchasing, accrue uninvoiced receipts.
9. If you use Oracle Assets, run the Mass Additions Create Program transfer capital invoice line distributions from Oracle Payables to Oracle Assets.
10. Post journal entries to the general ledger and reconcile the trial balance to the General Ledger.

Withhold Tax and Withholding Tax Invoices

Withhold Taxes in Payables

You may be required to withhold taxes from your employee expense reports and supplier invoices. Once you set up Payables to automatically withhold tax, you can withhold tax either during Invoice Validation or during payment processing. You can control all withholding tax options in the Withholding Tax region of the Payables Options window.

Companies that use withholding taxes calculate these taxes and deposit them to the corresponding fiscal authority. There can be various regimes applicable to a single transaction. These regimes have different rates that are predefined when the withholding tax is deducted. The time when the withholding taxes are deducted could be at invoice time, payment time, or both. Companies must apply the withholding taxes at the specified time and deposit the amount to the corresponding fiscal authority.

Oracle Payables allows you to calculate withholding taxes at invoice validation time, at payment time, or both invoice validation and payment time. In addition, you can create a withholding tax invoice at the following times:

• At invoice validation time if withholding taxes are calculated at invoice time.

• At payment time if withholding taxes are calculated at payment time.

• At withholding application time if withholding taxes are calculated at both invoice validation and payment time. This means that withholding invoices will be created at both invoice validation and payment time since the withholding taxes would be calculated at both these times.

For example, assume that withholding tax is calculated at Invoice Validation and the withholding tax rate is 20%. If you have a Prepayment Invoice for $250 with no withholding tax, an Invoice for $1555, and a Payment Amount of $1305. Then the calculated withholding tax is $311 (1555 * 20%). However, if the withholding tax is calculated at Payment Time, then the calculated withholding tax is $261 ($1305 * 20%).

To enable the requirement of applying withholding taxes at the time of invoice and payment, an option, At Invoice Validation and Payment Time, is included in the Apply Withholding Tax region of the Withholding Tax Tab of Payables window which when selected lets you apply the tax both at the time of Invoice and Payment. Another option, At Withholding Application, is added in the Create Withholding Invoice region. This option can be selected only when the Apply Withholding Tax option is selected At Invoice and Payment time.

Withholding tax invoice

Payables can automatically create withholding tax invoices, or you can perform this task manually. If you choose to automatically create withholding tax invoices, you must choose whether to do this during Invoice Validation or during payment processing. Indicate this choice in the Withholding Tax region of the Payables Options window.

Important: Payables does not give invoice detail on the Tax Authority Remittance Advice for manually created withholding amounts.

If you choose to create withholding tax invoices manually, create an invoice for each Withholding Tax type invoice distribution on an invoice. Create the invoice for the taxauthority supplier and site assigned to the Withholding Tax type tax code and for the amount of the Withholding Tax type invoice distribution.

If you specify that you want to create withholding tax invoices during Invoice Validation, Payables creates unvalidated withholding tax invoices for tax authority suppliers assigned to tax codes.

If you specify that you want to create withholding tax invoices during payment processing, Payables creates unvalidated withholding tax invoices (for those invoices where you have applied withholding tax) during the Confirm program of payment batch processing, or during processing of a Quick payment.

Important: Payables does not automatically withhold taxes if you pay with a manual payment or a refund.

R12: GL: Case Study on Creating a Ledger in Oracle General Ledger

Defining Accounting Flexfield
Defining Legal Entity
Defining Ledger
Completing mandatory Accounting Options
Assigning a Ledger to a Responsibility
Using the Ledger

http://realizeoracle.com/sitebuildercontent/sitebuilderfiles/r12_gl_config.pdf

Open/Close AP Period

Payables does not allow transaction processing in a period that is closed.
You can enter and account for transaction open accounting periods.

The periods statuses available in Payables are:
-Never Opened
-Future
-Open
-Closed
-Permanently Closed

After you change the status to Future or Open you can not change it back to Never Opened.

Chart of Accounts Set Up

Define a Chart of Accounts to set up the GL Accounts for your oraganization.
A Chart of Acccounts is the account structure you use to record accounting transactions and maintain accounting balances.

In Oracle General Ledger, the Chart of Accounts is a key Flexfield. For an Oracle Chart of Accounts, you can configure up to 30 segments in a Flexfield.

At mininum, you must define at lease two segments.

-Balancing Segment
-Natural Account Segment

Set Up:

 

Budgetary Control in Payables

If you use Oracle Public Sector General Ledger's Budgetary Control feature, you can check funds before you save a transaction and you can have Payables Approval automatically create encumbrances to reserve funds for your transactions. For example, when you enter an invoice, you can use the Funds Check program to check if you have available budgeted funds to pay for an invoice or invoice distribution.

If you select absolute budgetary control in General Ledger, Payables Approval places an Insufficient Funds hold on any invoice that fails funds checking. If you use advisory budgetary control, Payables will allow the invoice to pass Approval, even if it fails funds checking. During Approval, Payables creates encumbrances to reserve funds against the budgets you define in Oracle Public Sector General Ledger. When you create the accounting entries for the transactions, it relieves the encumbrances.

As the final step of budgetary control in Payables, if you enable Use PO Encumbrance in the Financials Options window, Oracle Public Sector Purchasing automatically creates encumbrance entries to reserve funds for invoice expenditures against the budgets you define in Oracle Public Sector General Ledger.
Funds checking and budgetary control include nonrecoverable tax as part of the item cost to fully recognize the commitment because nonrecoverable tax becomes part of the acquisition cost of the item.

Setup=>http://sbllc3.solutionbeacon.net/pls/a159vis2/fndgfm/fnd_help.get/US@PSA_US/gl/@p_bc_setup@PSA_US#p_bc_setup

Intercompany Vs Intracompany by David Haimes

InterCompany Transactions are between two or more related internal legal entities with common control, i.e. in the same enterprise (Inter = Latin for "BETWEEN")
IntraCompany Transactions are between two or more entities within the same legal entity (Intra = Latin for "WITHIN")
Well the real difference is that Intracompany processing is determined by company management, whereas Intercompany has to follow the law.
The amount the R&D department pays the manufacturing department of the same LE for some test chips(of the silicon kind) is to be sorted out between themselves. However when my manufacturing company in Ireland sell chips to their sister company in Germany you can imagine the tax authorities care about how much they charge because they get a % of it in taxes. This what transfer pricing is all about, it is important to get it right and you need to follow the rules and be prepared to open up your books to the tax people to demonstrate you followed the rules.
In R12 we have changed the way you set up the accounts formerly known as Intercompany accounts. You can enter Intercompany Accounts which are between pairs of Legal Entities, regardless of the ledger, chart of accounts, etc they are on. There is also the Intracompany Accounts screen where the accounts are defined from BSV to BSV with all the options that are available in 11i.

Example on Intercompany Vs Intracompany:
In order to take advantage of the automatic Intercompany balancing during GL posting and SLA Accounting you first need to define the accounts you want us to use.
Intercompany and Intracompany Accounts in R12 are defined in two different Set Up Pages, the Intracompany Balancing Rules are what we had in 11i for Intercompany Accounts (confusing I know) – this is where you will find the rules you had in 11i of you are upgrading from 11i. If you don't want to take advantage of the Legal Entity Configurator product and define Legal Entities and map them to your accounting structure, you can still go ahead and use the intracompany rules. If you start to map your Legal Entities to Ledgers and/or Balancing Segment Values (BSV) then you will want to be sure you complete the job, so there is no ambiguity in your setup. Consider the example below for BSV 10, 20, 30, 40, 80 and 90 :

The France Ledger is mapped to the FR LE, so all BSV in that ledger are assumed to be owned by LE France. However the UK Ledger has BSV 10 and 20 mapped to the UK LE, but 80 and 90 are not mapped to anything we have no way to know what LE they are assigned to.
You will be able to set up Intracompany balancing rules

• Between 10 and 20
• Between 80 and 90
• between 30 and 40

You can set up Intercompany Accounts between

• 10 and 30 or 40
• 20 and 30 or 40
• LE France and LE UK

All the above are unambiguous, we know what we are dealing with. The 80 and 90 BSV are in the same ledger with no LE at Ledger or BSV level so we just assume that any transactions between 80 and 90 are intracompany.
We would not allow you to create Intracompany rules between

• 80 and 10 or 20
• 90 and 10 or 20

This is because we don't know if 80 and 90 are in the UK LE or not, if they are then assign those BSV to LE UK too and you're good to go.
If 80 and 90 aren't in the UK LE then what LE do they belong to? Once you map them to the to the appropriate LE then you will need to define Intercompany accounts for them.
Set up:

In R12 the Intercompany Accounts setup is broken out from GL and included in the Advanced Global Intercompany System (AGIS) product (Don't worry you don't need any additional license for this product). There is a separate set up screen for Intercompany and Intracompany Accounts. The same set up pages are available through the Accounting Set Up Manager as well as AGIS so you can pick your navigation path.
The Intracompany accounts are defined for pairs of Balancing Segment Values (BSV) within the same ledger; this set up is similar to the 11i approach and we upgrade 11i Intercompany accounts to Intracompany accounts here. You don't need to uptake the Legal Entity Configurator product(new in R12) to define these.
In order to enter Intercompany Accounts you need use Legal Entity Configurator to define your Legal Entities and map them to ledgers and/or BSV. You then define accounts to use when certain pairs of Legal Entities trade.
In R12 you can now define a separate payable and receivable account for each Inter/Intracompany trading relationship. In 11i you would just define the due to/due from account and that account was used for both the payables and receivables I had with the specified trading partner.
These will be used for any AGIS transactions you create and also by the automatic intercompany balancing in GL and SLA. Doing the Intercompany balancing at the transaction level in SLA is a big enhancement for R12

More info =>http://davidhaimes.wordpress.com/2007/11/26/intercompany-vs-intracompany/

Tax Variances in Payables

A tax variance occurs when there is a difference between the tax on the invoice and the tax on the PO matched to the invoice. When you match a PO to an invoice, there are three tax-related variances that can occur:

Tax Exchange Rate Variance (TERV) – when there is a difference between the invoice and PO distributions due to exchange rate variance.

Tax Invoice Price Tax Rate Variance (TIPV) – when there is a difference between the invoice and PO distributions due to price variance.

Tax Rate Variance (TRV) – when there is a difference between invoice and PO distributions due to difference in tax applicability.
In addition, Tax Quantity Variance (TQV) is calculated, but is shown as a non-variance distribution.

Variances are calculated for all taxes that are enabled in E-Business Tax.

The following example illustrates how variances are determined.

Note that the exchange rate and tax amounts differ between the PO and the Invoice. The distributions for the invoice show a Tax Exchange Rate Variance of 0.3 and a Tax Rate Variance of $20.00.

To illustrate an Invoice Price Tax Rate Variance, assume that the invoice is the same as above, but the Unit Price changes from $100.00, as shown on the Purchase Order, to $200.00. The Tax Amount also changes as a result of the change in Unit Price.