Project Accounting

Implementation

Author:

sonam kumari

Email :

slashsonam@gmail.com

Contents:
1.
2.
3.
4.
5.

Introduction to Oracle Projects

Oracle Project Costing
About the company structure
Business requirement and its mapping to Oracle
Business process execution in Oracle for SAS

6. Setups required for Implementation

1. Introduction to Oracle Projects

Project is any short term or long term activity to which either investment or
generation of revenue can be associated. To mange it a system must be in place
wherein fragmentation of activity to various sublevels, association of budgets,
expenditure and resources can be done. Oracle Projects suite work together to
provide a complete enterprise project management solution. It provides a flexible

approach of defining and managing projects and the people, schedules,

deliverables, and finances associated with them.
At the aggregate level, enterprise project management involves the collection
and coordination of corporate resources (such as people, money, and hard
assets) to accomplish a predefined scope of work in a scheduled time frame and
budget. Some enterprises only have projects that are internal in nature, such as
projects that track time and costs related to marketing campaigns or
infrastructure build-out programs for capital development. Alternatively, many
enterprises are entirely project oriented: they derive their entire income stream
from projects that provide client services. Oracle Projects includes billing
functionality that enables these enterprises to generate project invoices of
varying complexity for their clients.
Mainly 3 different types of projects are involved namely (Capital, Indirect,
Contract projects).Capital projects are all those projects which are internal to an
organization and would serve as an asset to company and on the other hand
contract project are services which a company provides to another and on behalf
of service revenue is generated.
Oracle Projects consists of the following products:
Oracle Project Costing
Oracle Project Billing
Oracle Project Resource Management
Oracle Project Management
Oracle Project Collaboration
Oracle Intelligence for Projects
Oracle Project Portfolio Analysis

2. Oracle Project Costing

Oracle Project Costing provides an integrated cost management solution for all
projects and activities within an enterprise. With Project Costing you can manage
costs across currency and organizational boundaries. Project Costing also acts as
a central repository of project plans and transactions, processes project costs,
and creates corresponding accounting entries to satisfy corporate finance
requirements.
Main area of focus of this document would be Project Costing and its
implementation in a Book Publishing Company (SAS Publication)

3. About the company structure

SAS Publication is a book publishing company where every year thousands of
books are published. Every book serves as an asset to company. Costs are

involved in each activity of book publishing. Those activities can be like

(editorial, design, production, manufacturing, ed tech/media, translations,
permissions, tech/media (cdi), miscellaneous, restricted).Each of these activities
are further subdivided into several sub activities. A book may comes across
various phases like (Active, Cancelled, Published, Recovered etc.) in its journey of
production.
Each of these books are categorised based on some defined classification rules.
According to these rules company maps any of its produces book to any of the 3
collections* (Higher Education Courses, School Group Courses, Professional
Courses).Each collections have several Divisions, each divisions several
departments and further each department have several PU * (Publication
Units).Finally project are tagged to a PU. From top to bottom it is one to many
mapping and each and every relation is unique. This structure serves as a base
for accounting also.
(Collection->Division->Department->PU->Projects)
*Publication Units (PU) - It is a collection of Projects (Books)

4. Business requirement and its mapping to Oracle

Companys intent is to have a system in place which is capable of capturing
various activities of book publishing and associate all those activities to each of
the new book produced. Creation of new book must be routed through some user
inputs like (Book name, Book Number, Start date, End date, Division,
Department, and Publication Units etc.). System should provide a provision of
associating an estimate and at the same time actual for each activity of book
publishing. Estimate and Actual at the book level must be compared as per the
requirement and various reports must be generated for business analysis. Finally
it aims at distributing (amortizing) the total cost incurred for publishing any book
over a specified time frame. Monthly amortized cost should be calculated based
on the monthly production supplied for each asset assuming total production of
any book at the end of the time frame would be 10000 units.
The entire business requirement could be mapped in the
Oracle environment as follows:
Each book serves as a project/Asset
Activity and sub activity are different Tasks and Sub Tasks of projects
Phases are like different project status.
Book Creation Option implemented thorough quick entry fields
Estimate through budget window and Actual through Expenditure window
Project Status Inquire serve as the base for Reports
Amortization the cost is done through Fixed Asset after transferring the
book form Oracle Projects to Fixed asset through standard programs

5. Business process execution in Oracle for SAS

Project
Creation
from
Budget
Creation
Expenditure
Creation

Transferring
Assets to FA

Set Up Required:
Setup 6.2, 6.3, 6.4,
5.5, 6.6, 6.8, 5.9

Set Up Required:
Setup 6.7

Set Up Required:
Setup 6.10, 6.11

Depreciatio
n in FA
Reports
Generation

1. Project Creation: Project is created by copying it from a template defined

below as part of setup. While copying system prompts to enter the quick entry
fields like (Project Number, Name, Project Start date, project end date, BU,
Department, PU etc.) as defined in template setup. Project gets created on
entering quick entry fields. System automatically copies project start date and
end date in the transaction start date and finish date for the entire parent and
child task in work breakdown structure. Created project will have same work
break structure, project type, OU and other features as of template.
As each project is asset to company so it is created form the asset window by
providing details like asst name, asset description, Asset Key, Category,
Depreciation account, Location, Asset Book and assigned to project at project
level only.
2. Budgets: It is the approximation of amount which would be spared for
completion of project. In SAS two types of budget are created one is forecast cost
budget and other is approved cost budget. Budget is created at the child level
task. Total budget is aggregation of budgets at all child level tasks.
3. Expenditure: This is the actual cost created on the project. Expenditures are
created form the pre-approved expenditure batch screen supplying expenditure

batch name, expenditure class and expenditure ending date. In SAS all the
expenditures are entered under miscellaneous expenditure class as auto
accounting is set for this class. Now for entering expenditure first an expenditure
organization is selected from organization LOV. This LOV lists all the expenditure
owning organizations which are part of the expenditure hierarchy associated to
US OU as part of implementation option setup. Secondly project number, task,
expenditure type and quantity is selected and at the same time expenditure DFF
is also supplied with appropriate values of LE, BU, Department, and account for
accounting. Project number field will allow all projects except in cancelled, closed
and Recovered status to be entered. Task field will accept all chargeable child
level tasks associated to project. Expenditure type will list out all the expenditure
type associated to miscellaneous expenditure class. Quantity is entered based
on which raw cost would be calculated at the time of distributing cost. Raw cost
will product of quantity and rate. Rate is set for each expenditure type at the
time of expenditure type definition. If no rate is defined it is considered to be
one. After entering all the expenditure for a particular batch it s submitted and
released for processing.
To process an expenditure batch a series of standard programs are submitted.
PRC Distribute Usage and Miscellaneous Cost:
This process
computes the costs and determines the GL account to which to cost
must be posted.
PRC generate cost accounting events
Create accounting
PRC update Project summary amounts
4. Capitalization: It is the method of transferring asset from oracle projects to
fixed assets. Book becomes an asset to SAS when it gets published. For
publishing a book
Status of the project(book in SAS) is changed to published
Cost of asset is calculated based on expenditure created for all capitalized
task associated to project. Total cost of asset reflects in CIP field of the
capitalization screen after successful completion of PRC update project
summary amounts. This cost will be the cost of asset reflecting in FA.
Asset type is changed form Estimated to As-Built and Actual in service
date is also supplied. All mandatory asset information is filled if not filled
earlier at the time of asset creation.

Asset lines needs to be generated for each asset associated to project.

PRC generate asset line program generates the asset line. Generated line
will reflect asset name and cost in the asset lines window.
PRC Interface assets to oracle asset process transfer assets from Oracle
projects to fixed asset. Once asset is transferred cost moves form CIP to
interfaced CIP column in capitalization screen
5. Depreciation: It is the method of distributing cost of asset throughout its
life. In SAS predefined Units of Production methodology (UOP) is used for
calculating depreciation in FA. As per UOP monthly production against each asset

is entered in the production table. Ratio of monthly production to total production

(assumed to 10000) times the total cost calculates to depreciation amount for
that month.

6. Setups required for Implementation

1. It is considered that (define chart of accounts, define calendar, define a
currency, define a sub ledger accounting method, and define a ledger) is
complete as part of GL setup.
2. Org Structure
SAS BG

MX OU
HE

MX_SAS

SP OU
SP_SAS

IT OU
IT_SAS

Prof.
SC
CTB
ELS
SAS

It is very important to understand organization structure of a company.

This structure defines the business group and all the organizations which
come under it. They must be classified as either project owning org or
expenditure/event owning org. Organization classified as Project owning
org. has the capability to hold projects and those classified as expenditure
owning can hold expenditures.
3. Organization Hierarchy: It defines the roll up structure between the
organizations.

Company has its business in 4 different geographies (Italy, Mexico, Spain, US)
so it have 4 different operating units.US OU have 5 different organizations (HE,
SG, Prof, CTB, ESL) which hold projects and an organization (SAS) to hold all
the events/expenditure associated to these organizations. Similarly for Italy,
Mexico, Spain, Colombia OU event/expenditure org are SAS_IT, SAS_MX,
SAS_SP, and SAS_CO respectively. For each Operating unit one organization
hierarchy is defined. It starts from corresponding OU and having all the
subordinate are at the same level in a particular hierarchy.
4. Implementation option: This form is used to relate operating unit to the
corresponding
ledger, business group, currency, calendar project and
expenditure related setup. In projects/expenditure tab a unique organization
hierarchy (as defined in step 3) is assigned to each operating unit.
Organizations in these hierarchies will be populated for project organizations
and expenditure LOV while creating project and expenditure respectively for a
particular operating unit.
5. Classificaion: This form help to define the characteristics used to
differentiate between the projects. They are department, Division, PU,
copyright year, Legal Entity, Attribute. These attribute are entered when new
projects are defined in the system.
6. Service Type: This category is used to segregate
type of task.
Permissible values are (Prepub, Can, WRO, OVS, LATE, Reorg, CIP, MGF)
7. Budget Entry Method: This defines the way how budget would be
entered for a particular project. Here only raw cost for lowest level task is
entered.
8. Project Types: Oracle broadly divides projects in 3 different types, namely
Capital, Contract, Indirect project. Capital project are those projects which an
organization develops for internal use and after completion it could be
considered as an asset eg. (Construction of building). Contract project are
those which an organization does for another company as service and in turn
would generate revenue (Any project which Wipro does for a particular org.).
Indirect project are used to aggregate the overhead cost. Oracle provides the
facility to create any number of project type belonging to any of the above
three classes. New project type will have features defined by the class to
which it belongs. While defining project types, information for Costing,
Budgeting, Capitalization, Classification, Workflow etc. are specified.
Here Capital project is taken into consideration as book is an asset
to SAS. Each OU (US, MX, IT, SP, CO) will hold one capital project under the
project type name as (Prepub) .SAS Company is not dealing in burden cost, so
the costing tab will not have any setup information. Entry method for raw cost
at lowest level task is assigned as budget entry method in budget option tab.
All the Classification (BU, PU, Department, Copyright year, Attribute) are made
compulsory for defining a particular project in classification tab. Capitalized
information is entered to have asset information associated to every project in

the capitalization information tab. A new project created must have Active
status is set in the project status/workflow tab.
9. Project Template: It is a repository of initial setup done for project
creation. It has everything defined in it (Organization, Type, Work break down
structure, Quick entry fields etc.).This is required so that user might not enter
all the information each time new project is created. Once project is created
from template necessary changes can be done.
In SAS one template is created for each and every
organization .As in US OU 5 different organization (HE, SC, Professional, CTB,
ESL) are present 5 templates are created. All 5 template mandates entry of
classification (Project name, Number, BU, Department, PU, Attribute, Copyright
year). Further 4 another template for other OUs (Italy, Mexico, Spain, and
Colombia).

10. Expenditure: Expenditures are charged to a project to record actual

work performed or cost incurred commitments to future, committed costs
expect to incur. Expenditure is a group of expenditure items, or transactions,
incurred by an employee or an organization for an expenditure period.
All actual expenditure items and future commitments must be charged to a
project and task. Examples of actual expenditures are timecards, expense
reports, usage logs, and supplier invoices. Examples of commitments are
requisitions and purchase orders. Oracle Projects processes transactions by
associating each expenditure type with an expenditure type class. For every
expenditure items, expenditure type is identified such as professional, labour
or personal automobile use. Expenditure class associated to this expenditure
type is used to distribute the cost for that particular transaction.
Predefined expenditure types classes are (Straight time, Overtime, Expense
reports, Usages,
Supplier invoices, Miscellaneous transactions, Burden
transactions, Work in process, Inventory)
To setup the expenditure initially expenditure category must be setup.
Secondly all the expenditure type belonging to this category must be setup. At
the same time expenditure type must be associated to rate if required. Each
expenditure type must be associated with a pre defined expenditure type
class which helps for distributing the cost for a particular transaction.
In MHG Expenditure categories are (Conversion, Vendor supply charges,
Miscellaneous cost).
Name
Expenditure
Revenue
UOM
Category
Category
Conversion

Conversion

UNASSIGNED

Currenc
y

ABC Vendors

Vendor Supply UNASSIGNED

Charges

Currenc
y

Name

Expenditure
Category

Revenue
Category

UOM

Vendor Services

Vendor Supply UNASSIGNED

Charges

Currenc
y

MSS Vendors

Vendor Supply UNASSIGNED

Charges

Currenc
y

Miscellaneous
Costs

UNASSIGNED

Miscellaneous Costs

Currenc
y

UNASSIGNED

Project Worker

Miscellaneous
Costs

Currenc
y

Name

Descrip
tion

Effective
Date
From

Effectiv Expenditur Effective

e Date e
Type Date
To
Class
From

Conversio
n

01-Jan2000

Miscellaneou
s
Transaction

01-Jan2000

ABC
Vendors

01-Jan2000

Supplier
Invoice

01-Jan2000

Vendor
Services

01-Jan2000

Supplier
Invoice

01-Jan2000

Miscellane
ous Costs

01-Jan2000

Miscellaneou
s
Transaction

01-Jan2000

MSS
Vendors

01-Jan2000

Supplier
Invoice

01-Jan2000

Project
Worker

01-Jan2000

Miscellaneou
s
Transaction

01-Jan2000

Effect
ive
Date
To

11. Auto accounting: Any transaction that is created in oracle projects need to
be accounted. It aims at determining the correct account for each transaction.
Oracle project creates the accounting events and creates accounting for the
events for the Sub ledger Accounting .Oracle provides predefined rules for SLA
which accepts default account for auto accounting without change. These sub
ledger accounting rules can be modified as per the implementation
requirements.

Accounting transaction is identified by an auto accounting function. Each

accounting function is associated with some user defined rules. These rules are
used to find segment value for each accounting segment. Rules are so defined
that the values derived out of them are in line with COA defied in GL. Programs
which are submitted to generate the account code combination calls the
accounting function associated to the transactions. Some of the auto accounting
functions are like (Miscellaneous transaction cost account, Misc. transaction
clearing account etc.)
To implement auto accounting following steps must be followed:
Define lookup sets (optional): These are required if mapping exist from one
set of values to another set of values.
Define rules :Each rules have an sql statement associated which process
the value based on the input parameter and lookup sets .(As required in
implementation)
Assign rules to auto accounting function.

11.1 Implementation of auto accounting in SAS:

11.1.1 Lookups: In SAS six segment account structure is followed of the format
(LE.DIVISION.DEPARTMENT.ACCOUNT.INTERCOMPANY.FUTURE1.FUTURE2).
From
top to bottom one-many unique relationship exists.
Three lookups are defined to find the values for LE, BU, and Account. Values
for LE, BU are derived based on department and value for account based on
service type of task (Each task is associated with predefined service type).
1. Department
to
LE:
Used
to
derive
LE
value
based
on
department(eg.:1007230101)
2. Department
to
BU:
Used
to
derive
BU
value
based
on
department(eg.:1007231042)
3. Service type to Account: Each task is associated with a service type and
each service type is linked to an account. Linkage between service type
and account is defined.(eg.:Prepub15121101)
11.1.2 Rules: Rules are defined to evaluate the segment values for each
account segment. Each segment value is determined in two steps. In first step
intermediate value is determined and in the second step segment value. To
determine intermediate value SQL statement is defined which evaluates this

value based on some input parameter. Various input parameter can serve as the
feed to SQL statement (Class codes, Expenditure ID, Expenditure Type, Project
Type, Project ID etc.) .Intermediate value can be a constant also. Once
intermediate value is known, it may be either mapped to auto accounting lookup
defined or can itself be the segment value.
Various rules defined are like
Rule Name
0-LE from Exp Item DFF
Description
Intermediate Value
Sour SQL Statement
ce
Valu
e

select
ATTRIBUTE1
from
Expenditure_item_ID = :1

Segment Value
Source

PA_EXPENDITURE_ITEMS_ALL

where

Intermediate Value

Lookup Set
Rule Parameters
Sequenc Parameter
e
1

Expenditure
Item ID

Description
Internal ID of Expenditure
Item

2.
Rule Name

1-BU from Exp Item DFF

Description
Intermediate Value
Sour SQL Statement
ce
Valu
e

select
ATTRIBUTE2
from
Expenditure_item_ID = :1

Segment Value
Source

PA_EXPENDITURE_ITEMS_ALL

Intermediate Value

where

Lookup Set
Rule Parameters
Sequenc Parameter
e
1

Expenditure
Item ID

Description
Internal ID of Expenditure
Item

As six segment accounting is followed 6 different rules must be defined to

generate one account code combination.SAS deals with only miscellaneous cost
class so twelve different rules as above are defined. Six rules for the credit line
and six rules for debit line.
11.1.3 Assign rule to auto accounting function:
Oracle provides
functionality to account different type of project in different manner by
associating different set of rules for the same function based on project types. In
SAS all projects are accounted based on the same rules. Six rules are assigned to
function Miscellaneous Transaction cost account and Six to Miscellaneous
transaction clearing account.
Name
Misc Trans Cost Account
Operating
Unit

SAS_US_USD_CORP_OU

Description

Determines cost account for Miscellaneous Transaction Items

Function Transactions1.
Name

Description

Enable
d

Capital,
All

All Miscellaneous Transaction items on capital projects

Checked

Segment Rule Pairings

Number

Segment Name

Rule Name

Legal Entity

0-LE from Class-LE or Department

Division

1-BU from Class-BU or Department

Department

2-Dept from Department

Account

3-Acct from Task Service Type

Intercompany

4-Intercompany 0000

Future Use 1

5-Future1

Future Use 2

6-Future2

Function 2
Name

Misc Trans Clearing Account

Operating
Unit

SAS_US_USD_CORP_OU

Description

Determines clearing account for Miscellaneous Transaction

Items

Function Transactions.
Name

Description

Enabl
ed

All
Misc
Transactions

Clearing
account
Transaction Costs

for

all

Miscellaneous

Segment Rule Pairings

Number

Segment Name

Rule Name

Legal Entity

0-LE from Exp Item DFF

Division

1-BU from Exp Item DFF

Department

2-Dept from Exp Item DFF

Account

3-Acct from Exp Item DFF

Intercompany

4-Intercompany from Exp Item DFF

Future Use 1

5-Future1

Future Use 2

6-Future2

Checke
d