This article will helps to understand about Subledger Accounting (SLA) and Financial Accounting Hub (FAH) and what is the basic difference between these two concepts. Nowadays companies are showing interest for Financial Accounting Hub and this article will helps to clarify certain doubts.

What is Subledger Accounting?

Subledger accounting is an interface between the subledger like (AP, AR, and FA) and the General Ledger. SLA is a set of services for R12 that enhances the accounting support. It is not a separate product on its own, but a rule-based accounting engine. It’s just like normal ledger, the difference is the ledger is the summarized version and SLA is detailed data. By providing the full link between the subledger and the ledger, it gives a powerful reconciliation and auditing capabilities to the users.

Key features of Subledger Accounting (SLA):

1. Application already registered in oracle Apps
2. Responsibilities are seeded
3. Event Model, Entities, Classes, Types and derivation Rules are seeded
4. Deals with the E-Business Suite subledger applications (AR, AP, etc.).
5. Have seeded event models (Provided by Oracle) which cannot be changed
6. Seeded accounting methods which can be customized (copied and modified) as required.
7. SLA is an Integral part of E-Business Suite Financials (R12 onwards).

What is Financials Accounting Hub?

The Financials Accounting Hub (FAH) is a tool designed for non-Oracle Subledgers (Third Party) to leverage Oracle's Subledger Accounting engine and ultimately transfer the Journals to an Oracle General Ledger. The Financials Accounting Hub uses accounting events to generate journals. Accounting Events have financial impact. Using this tool implementers determine how the events should be accounted. The Oracle Financial Accounting Hub (FAH) helps in creating a centralized, auditable accounting system for external and/or legacy systems. FAH has a configurable rules engine and configurable rules repository (user-defined) that keeps the definition and maintenance of accounting rules in one place. FAH acts as the accounting engine for any subledger (Oracle or non-Oracle), create adjusting journal entries, provide drill back from General Ledger (GL) to FAH, validate and transform source data, and fully leverage GL setups. FAH is a standalone (can work independently) application and nothing is seeded unlike SLA in EBS.

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                                   Diagram from Oracle showing FAH development History

Key features of Financials Accounting Hub

1. Deals with external (i.e. non-E-Business Suite) applications.
2. No seeded event models – event models need to be build from scratch.
3. No seeded accounting rules – accounting rules need to be build from scratch.
4. Requires purchasing a separate license
5. FAH is a concept of integrating 3rd party with Oracle through SLA

How to configure Financials Accounting Hub-major steps

1. First we need to register FAH application in Sys admin responsibility and provide a Basepath and description (like- this is FAH application) similar to AP or AR
2. Basepath is important to define because all set ups are stored in this Basepath once FAH is configured.
3. After registering application, create FAH Responsibility and this will have similar data group as of SLA.
4. Now assign this FAH responsibility to user.
5. Go ahead and do the FAH set ups
6. Now go to GL Responsibility and Define first journal source for FAH in GL to know GL from where data will be coming from when we will post the data
7. Now tie the application of FAH to journal source. This will tie custom application with journal source.
8. Now start with defining FAH event model from scratch as we do not have seeded event model like in SLA. This is a most important step in the entire FAH set ups. In this step we will have to identify all entity codes and then event classes. Here we cannot ask business users to as what are the event classes. Based on the business model we have to identify this along with Business Analyst.
9. Once event codes are identified then go to identify event classes. We have to define all event class and event codes

Difference between SLA and FAH

Technically both SLA and FAH are same, SLA offers seeded Event Models as stated above (including Event Class Options) and Application Accounting Definitions for E-Business Suite subledger applications. With the help of seeded SLA user can build customized Subledger Accounting Methods (including customized JLTs, ADRs, JLDs, and AADs) for E-Business Suite subledger applications. Oracle does not allow to make any changes to the seeded Event Models / Event Class Options in SLA. Custom Source functionality can be used when additional sources are needed.

FAH requires an additional license, and basically FAH is standalone SLA which can work of its own. FAH is an uptake of SLA.  With this licensing, users gets the SLA technology advantage but don’t get any seeded building blocks (Event Model, Entities, Classes, Types and derivation Rules), because FAH is intended to create accounting based on data which resides in external (non-E-Business Suite) applications. So with FAH we have option to create the Event Model(s) and AAD(s) for external applications entirely from scratch.

The accounting hub is intended to use the Subledger Accounting (SLA), which is a rules based accounting generation process to create the accounting for transactions from a custom application and then SLA will interface that to the GL Interface table. We are not required to build custom logic, we just need to define rules in the SLA UI for the accounting transformations.

FAH allows to use Oracle SLA and GL to perform the accounting for third party applications. Using AMB Tool, SLA standard application accounting definitions are copied and modified to map SLA application accounting definition with Source Application Accounting Events, Accounting events of source application is mapped and stored in the SLA tables. External/Source Application’s accounting event’s for, accounting attributes and transactions supporting references are kept in FAH transactions objects.  When user submits accounting program,

1. Accounting program fetches the applicable accounting events which are eligible for processing from SLA Tables.
2. Load FAH transactions objects and apply modified application accounting definitions on sources of FAH Transactions Objects.
3. SLA journal entries are created and stored in the SLA Tables
4. SLA journal entries are transferred to GL using standard Oracle Transfer to GL Program.

Using FAH, we can drill down from GL to FAH and FAH to External Source/Legacy Application like/similar to drill down from GL to Standard Oracle Subledger (AP, AR)  Using FAH, users can get the balances in GL by source/external application’s transactions. Therefore reconciliation becomes easy between the external application and Standard Oracle GL. FAH keeps the source transaction’s accounting attributes and key transactions references. Therefore it is used to keep the audit trial.

Why SLA and FAH are labelled as different concepts?

Technically there is zero difference between SLA and FAH as XLA is the technical label for the SLA and FAH solution. XLA is a common framework which handles all accounting feeds into the E-Business Suite General Ledger. In other words, XLA = SLA = FAH. The difference is within the way how the technology should be used. SLA/FAH (Financial Accounting Hub) is the new feature of R12, it is not a module is more a service or engine. From the functional architecture point of view is a previous step before the accounting transactions are transferred to GL. SLA/FAH is the middle step between the Subledgers and GL where we can add rules to modify the journals that gets transferred from AP to GL. SLA and FAH use same functionality, however SLA is used for standard eBS modules: AP, AR, FA and FAH is used for external sources, when we integrate external systems with GL.

SLA deals with the E-Business Suite subledger applications, while FAH deals with external applications.

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