Overview

This article provides a detailed explanation of the processes for unbilled/billed accounts receivable, invoicing, and recognizing revenue in Oracle Financials Cloud (OFC) for awards and contracts. It covers the accounting process after expenditures are incurred, contract events are processed in Project Portfolio Management (PPM), and how these events transition into General Ledger (GL) accounts.

Essential Information

UCSD Sponsored Awards, including Letter of Credit, Federal Sponsored Awards, Private and Local Grants, as well as certain State and Education-related funding, along with General Contracts, shall be administered in accordance with the guidelines specified below within the PPM framework.

• Revenue and Billing:
  • Revenue is recorded in PPM up to the contract funding amount through the Generate Revenue schedule process.
  • Billing entries are created based on the award type, either cost-reimbursable or fixed price/milestone awards.
• PPM Contract Setup in OFC:
  • Bill Plan Options: PPM creates invoices based on the funding type:
    • Cost Reimbursable: Invoices are created based on actual expenses.
    • Amount Based (Fixed Price/Milestone): Invoices are based on pre-set amounts or agreed milestones.
  • Revenue Plan Options: Revenue is recorded based on how it's earned:
    • As Billed: Revenue is recognized when the invoice is created.
    • As Incurred: Revenue is recognized as expenses are incurred.
    • Amount Based: Revenue is recognized as Billing Events are completed.
• Accounts:
  • Unbilled and Billed Accounts: Track the progression of transactions from revenue recognition to cash application.
  • Example: Sponsored Awards use a matrix of subledger accounting (SLA) rules that follow specific chartstrings.

 

This table displays various account levels, titles, and corresponding unbilled and billed amounts for Federal, State, Local, and Private contracts and grants. The accounts are categorized into revenue, bad debt, appropriations, contracts, grants, and more.

Accounting Overview

Accounting in OFC:

1. Revenue Recognition Key Points:
   1. Cost Reimbursable Awards: Revenue is recognized based on actual expenses incurred during billing. For example, costs like supplies or labor are recognized as revenue when invoiced.
   2. Amount Based (Fixed Price/Milestone) Awards: Revenue is recognized when an event is created, based on agreed milestones or payment schedules, regardless of actual expenses incurred.
   3. Revenue Recording: Revenue is recorded at the Project Owning Organization (Financial Unit (FinU)), Fund, and Project GL level for accurate financial reporting. Note that prior to November 2024, revenue was recorded at the Contract Owning Organization (Financial Unit)
   4. Multi-Project Contracts: OFC allows multiple projects under a single contract to be billed and recognized individually.
2. Accounts Receivable (AR) Key Points:
   1. Cost Reimbursable Awards: AR progresses from unbilled to billed as expenses are incurred and invoiced.
   2. Amount Based (Fixed Price/Milestone Awards): AR is directly linked to the invoice amount, moving from unbilled to billed when the invoice is generated.
   3. AR Recording: AR is recorded at the Contract Owning Organization (Financial Unit (FinU)), Fund.  AR is recorded to No project at the GL level

Accounting Entries Flowchart for Cost Reimbursable & Fixed Price/Milestone Awards: This flowchart depicts the accounting process for cost reimbursable and fixed price/milestone awards, showing the debit and credit entries for expense recognition and invoicing.

Case 1: Cost Reimbursable Invoice

Example Project Number: 2041914

Date	Action	Journal Entries
02/01/20XX	Lab supplies purchased	Debit: Lab Supplies Expense Credit: Accounts Payable
02/08/20XX	Revenue recognized in PPM at the Event level	Debit: A/R Federal Grants Unbilled Credit: Federal Grants Revenue
02/08/20XX	Invoice created (including lab supplies purchased)	Debit: A/R Federal Grants Billed Credit: A/R Federal Grants Unbilled
02/09/20XX	Cash received	Debit: Cash Credit: Undistributed Cash
03/01/20XX	Payment applied to the invoice	Debit: A/R Federal Grants Billed Credit: Undistributed Cash
	Revenue Flow to General Ledger	Revenue flows into the General Ledger from PPM. Verification can be performed by running the General Ledger Transaction Details Report in Oracle.

 

 

 

Revenue recognized in PPM:

 

Project Accounting Lines: Event 300002131487507, Ledger UCSD, Status Final, Date 11/12/2024, Journal Source Project Accounting. This screen displays two accounting line entries for external revenue with a debit and credit of $8,625.66 each. 

 

 

Invoice Created:

 

Accounting Lines: Invoice 242717, Ledger UCSD, Date 11/12/2024, Status Final. This screen displays two accounting line entries for an invoice with a credit of $26,838.86 each.

 

 

Cash Received:

 

Accounting Lines screen for Receipt ACH.VANDERBILT MC .00262469853, dated 12/11/2024 with a status of 'Final'. The table displays two transaction lines for 'Receipt Created' events: Line 1 indicates a Debit of $26,838.86, and Line 5 indicates a corresponding Credit of $26,838.86. 

 

 

Payment Applied to the Invoice:

 

Accounting Lines screen for Receipt ACH.VANDERBILT MC .00262469853, dated 12/11/2024 with a status of ‘Final’. The table displays Line 2 with a Debit of $26,838.86 and Line 8 with a Credit of $26,838.86 for the ‘Receipt Created’ event.

 

 

Revenue Flow to the General Ledger:

 

 General Ledger Transaction Details report prompts in Panorama. The highlighted fields show the selection of parameters: Accounting Period 'Nov-24', Fund '15029 - Housestaff and Resident', Financial Unit '3000080 - RAD Education', and Account '440000 - Other Sources Revenue'. 

 

 

General Ledger Detail Transactions report showing multiple entries for Accounting Period Nov‑24. Each row reflects a transaction dated 11/12/2024 for Fund 15029, Financial Unit 3000080, and Account 440000 (Other Sources Revenue), sourced from Project Accounting under the External Revenue journal category.

 

 

Revenue and debit transactions displayed for Contract 685314 and Project 2041914, showing several revenue entries and a highlighted total of $26,838.86 for both debit and credit amounts.

 

 

Case 2: Amount Based (Fixed Price/Milestone) Invoice

Example Project Number: 2025367

Date	Action	Journal Entries
07/02/20XX	Event created (per agreement payment schedule). Revenue recognized in PPM.	Debit: A/R Unbilled Private Credit: Private Contracts Revenue
07/02/20XX	Invoice created (per agreement payment schedule)	Debit: A/R Adv Billed Private Credit: A/R Unbilled Private
07/22/20XX	Cash received	Debit: Cash Credit: Undistributed Cash
08/01/20XX	Payment applied to the invoice	Debit: A/R Adv Billed Private Credit: Undistributed Cash
	Revenue Flow to General Ledger	Revenue flows into the General Ledger from PPM. Verification can be performed by running the General Ledger Transaction Details Report in Oracle.

 

 

 

Revenue Recognized in PPM:

Screenshot of Project Accounting Lines showing two External Revenue transactions, each for $46,000.00, one debit and one credit.

 

Invoice Created:

Accounting Lines for Invoice 246287 dated 11/27/2024 showing two entries for an ‘Invoice Created’ event. The first line records a receivable debit of $46,000, and the second line records the corresponding revenue credit. Ledger is UCSD and the status is Final. 

 

Cash Received:

Accounting Lines for Receipt ACH.THE WALLACE FN.00028125222 dated 12/13/2024, showing two ‘Receipt Created’ entries. The first line records a debit of $46,000.00, and the second line records the corresponding credit. Ledger is UCSD and the status is Final.

 

Payment Applied to the Invoice:

Accounting Lines for Receipt ACH.THE WALLACE FN.00028125222 dated 12/13/2024. The screen shows two ‘Receipt Created’ entries: one debit for $46,000.00 and one corresponding credit. Ledger is UCSD and the status is Final.

 

Revenue Flow to the General Ledger:

General Ledger Transaction Details prompt screen showing selected parameters for Accounting Periods Dec‑24 and Nov‑24, Fund 12304 (Misc Sales of Goods/Services Fund), FinUnit 1000157 (Education Studies), and Account 410990 (Service Agreement – Off Campus). This screen is used to filter and run the GL Transaction Details report, which allows users to view General Ledger and subledger activity in one place

 

General Ledger Detail Transactions report showing a single Nov‑24 entry dated 11/27/2024 for Fund 12304, FinUnit 1000157, and Account 410990 (Service Agreement – Off Campus). The transaction is sourced from Project Accounting under the External Revenue journal category.

 

Transaction detail for Contract 453126 and Project 2025367 showing a single revenue entry of $46,000 credited under the ORA_OTHER revenue category. The highlighted transaction number is 100027880041917, with a net amount of negative $46,000.

 

Case 3: Multi-Project Contract Invoice

Example Contract Number: 377130
Projects Included:

• Project A (Cost Reimbursable): Research Lab Equipment
• Project B (Fixed Price/Milestone): Prototype Development

Date	Action	Journal Entries
07/05/20XX	Revenue recognized in PPM at the Event level	Project A (Cost Reimbursable): Debit: A/R Federal Grants Unbilled Credit: Federal Grants Revenue Project B (Fixed Price/Milestone): Debit: A/R Unbilled Private Credit: Federal Grants Revenue
07/05/20XX	Invoice created for both projects	Project A (Cost Reimbursable): Debit: A/R Federal Grants Unbilled Credit: Federal Grants Revenue Debit: A/R Federal Grants Billed Credit: A/R Federal Grants Unbilled Project B (Fixed Price/Milestone): Debit: A/R Unbilled Private Credit: Federal Grants Revenue Debit: A/R Adv Billed Private Credit: A/R Unbilled Private
07/20/20XX	Cash received for both projects	Debit: Cash Credit: Undistributed Cash
07/25/20XX	Payment applied to the invoice	Project A (Cost Reimbursable): Debit: A/R Federal Grants Billed Credit: Undistributed Cash Project B (Fixed Price/Milestone): Debit: A/R Adv Billed Private Credit: Undistributed Cash
	Revenue Flow to General Ledger	Revenue from both Project A and Project B flows into the General Ledger via PPM. Verification can be performed by running the General Ledger Transaction Details Report in Oracle Financials Cloud (OFC).

 

 

 

Revenue Recognized in PPM:

 

Project Accounting Lines for Event 100003403023280 dated 05/27/2022, showing two External Revenue entries. The first line records a debit of $1,890.00 and the second line records the matching credit. Ledger is UCSD and the status is Final.

 

Invoice Created:

 

Accounting Lines for Invoice 104124 dated 05/31/2022. The screen shows two ‘Invoice Created’ entries: a debit of $1,890.00 and a matching credit. Ledger is UCSD and the status is Final.

 

Cash Received:

 

Accounting Lines for Receipt Lockbox.070622.13143 dated 07/06/2022, showing two ‘Receipt Created’ entries. One line records a debit of $1,890.00 and the other records the corresponding credit. Ledger is UCSD and the status is Final.

 

Payment Applied to the Invoice:

 

Accounting Lines for Receipt Lockbox.070622.13143 dated 07/06/2022, showing two ‘Receipt Created’ entries. The first line displays a debit of $1,890.00 and the second line shows the matching credit. Ledger is UCSD and the status is Final.

 

Revenue Flow to the General Ledger:

 

General Ledger Transaction Details report prompt screen showing selected parameters for Accounting Period May‑22, Fund 13048 (Intellectual Property Fund), Financial Unit 8000005 (Office of Innovation and Commercialization), and Account 440005 (License/Permit Revenue). These criteria are used to filter the GL Transaction Details report before running it.

 

 

General Ledger Detail Transactions report showing a single May‑22 entry dated 05/02/2022 for Fund 13048 (Intellectual Property Fund), Financial Unit 8000005 (Office of Innovation and Commercialization), and Account 440005 (License/Permit Revenue). The transaction originates from Project Accounting under the External Revenue category and includes a credit of $1,890.00 with a corresponding net amount of negative $1,890.00.

 

Quick Recap & FAQ

Quick Reference Table

Step	System Action	Your Role
1. Expense Incurred	Costs recorded in PPM as expenses.	Ensure expenses are project-related and documented & in compliance with contract restrictions.
2. Invoice Created	Costs moved to AR and invoice sent to sponsor.	Monitor invoice status in OFC & review the AR Aging for open invoices.
3. Revenue Recorded	Revenue appears in GL.	No action needed; this is automatic.
4. Payment Received	Cash applied to invoice, reducing AR balance.	Review unapplied cash report & submit claim to apply the payment to open invoices. Confirm payment has been applied correctly.

 

FAQ:

1. What is PPM?
   Project Portfolio Management (PPM) is the system where project-related expenses and revenues are tracked. It's used to manage funding, expenses, and reporting for awards and grants.
2. What is Revenue Recognition?
   Revenue recognition ensures UCSD records income correctly based on rules like when costs are incurred or milestones are met. It follows specific accounting principles to ensure compliance and accurate reporting.
3. What are Unbilled and Billed Accounts Receivable?
   • Unbilled AR: Expenses incurred but not yet invoiced to the sponsor.
   • Billed AR: Amounts that have been invoiced to the sponsor but not yet paid.
   • Once an invoice is generated, the amount moves from "Unbilled AR" to "Billed AR."
4. How do I know if my project's revenue is recorded?
   Review the "Project Information Lookup Panorama" in the BAH for your project. Look for recognized revenue against incurred expenses or milestones.
5. What happens if expenses exceed the contract’s funded amount?
   The system will not allow billing or revenue recognition beyond the award funding. Review budgets and funding limits regularly.
6. How can I track performance at the project level?
   Use BAH reports to view expenditures, revenue, and billing for each project.
7. How does the system handle multi-project contracts?
   Each project is billed and recognized individually, but the system consolidates reporting under one overarching contract.
8. What if one project finishes before the others?
   OFC allows completed projects to close independently while leaving the contract and other projects open.
9. Can I reallocate funding between projects?
   Yes, adjustments can be made within the total contract funding limit, subject to sponsor approval through a cost transfer.

 

Change in Contract Billing Subledger Accounting Rules (SLAs)

Effective Date: November 26, 2024

• Oracle Financials Cloud will start posting revenue for Letter of Credit (LOC) and Special State Appropriations (SSA) contracts in project-specific chartstrings.
• This change aligns with UCOP’s requirements for project-based revenue and expense reporting.
• Key Benefits:
  • Supports posting revenue to multiple Project Owning Organizations (Financial Units) from a single contract.
  • Simplifies revenue allocation for complex projects.

Notes:

• Balance sheet accounts will continue to post to the contract-owning organization.
• There is no impact on receivables direct invoicing.
• Changes apply only to PPM Contract Billing.