Retroactive Price update of Orcle Purchasing documents

RETROACTIVE PRICING:-

  To use Retroactive Pricing feature set the following profile option to Yes.

PO: Allow Retroactive Pricing of POs

The profile can be set to the following options:
1. ALL RELEASES
2. NEVER
3. OPEN RELEASES

  To use this feature it should be set to ALL RELEASES. In 11.5.9, you only have the options as Never and Open Releases.

  The Retroactive Price Update on Purchasing Documents concurrent program (POXRPDP) is a Concurrent program run from the Purchasing responsibility which automatically updates purchase orders and blanket releases retroactively with price changes.
The parameters in this concurrent program can be the following:
1. Based on Supplier
2. Based on Blanket Agreement Number
3. Based on range of Items
4. Based on Date From ( Date starting from)

The accounting entries created are:-

For Inventory Destination type :
Debit      Retroactive Price Adjustment Account
    Credit         AP Accrual

For Expense Destination type :
Debit         Charge Account
    Credit            AP Accrual


For purchase orders with a destination type of Inventory/ Shopfloor, the adjustment account is posted to the Retroactive Price Adjustment account. This account is defined at the organization level in the Receiving Options window in Oracle Purchasing.

The following accounts and costs are not adjusted:-

1. Inventory and Work in Process valuation accounts
2. Costs are not recalculated in Average and LIFO/FIFO cost organizations.
3. Purchase price variance

For Inventory and Shop Floor destination types, Inventory and WIP valuation accounts are not adjusted. Instead, the balance is posted to Retroactive Price Adjustment Account.

Consider the following scenario:-

For an Item A
PO Created price = 10
Quantity = 10

Cost Price = 15.

Accounts hit:-

The accounts hit would be the following:-

Receiving:
Credit --  AP Accrual Account --  100
        Debit -- Receiving Account -- 100

Delivery:
Credit -- Receiving Account -- 100
       Debit -- Inventory Valuation Account -- 150
Credit -- Purchase price variance -- 50

This purchase price variance is because of the  difference in the PO price and the Item Cost.

Now the PO price is changed to 12.

The  accounts hit would be

Receiving:
Credit --  AP Accrual Account --  120
        Debit -- Receiving Account -- 120
       
Delivery:
Credit -- Receiving Account -- 100
       Debit -- Inventory Valuation Account -- 150
Credit -- Purchase price variance -- 50
Credit -- Receiving account -- 20
      Debit --  Retroactive price adjustment account --20

Technical Information:-

Important Table:-

RCV_ACCOUNTING_EVENTS
RCV_Accounting_Events stores accounting events for the Receiving Subledger.The corresponding accounting entries are stored in the RCV_Receving_Sub_Ledger table. Accounting entries may be generated when a receiving transaction is performed, when a retroactive price change is approved on a PO, and when Invoices are validated for period-end accruals in a Shared Services procurement scenario. You can only delete rows from this table using the Purge feature of Oracle Purchasing.

Forms Modified:-

RCVSTDRO.fmb à Purchasing à Setup à Organization à Receiving Options
CSTFDFCA.fmb à Cost à Periodic Costing à Setup à Periodic Cost Assignment

RELATED DOCUMENTS:-

Note 271655.1 - Price Changes Of A Contract Are Retroactive For Billed Periods

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Retroactive pricing allows buyers to adjust the price on blanket agreement lines and have the new pricing be updated on all release lines that have not been received against. Over the life of purchasing documents price changes, this functionality allows buyers to make sure that the
price on the blanket agreement is the agreed upon price.

‘The Retroactive Price Update on Purchasing Documents ‘ concurrent program automatically updates existing blanket releases and standard purchase orders retroactively with price changes from the parent blanket agreement or global purchase agreement. Other changes can
include updates to price breaks quantities, ship–to organization or location, new price breaks, and deletion of existing price breaks.

Take a note:

1. The Retroactive Price Update on Purchasing Documents concurrent program does not update the prices if purchase orders or releases have any accounting entries (receipt accruals, invoices, encumbrance) associated with them.
2. It does not process documents associated with blanket Agreement lines that are cumulatively priced.
3. It only considers price updates from lines of blanket agreements that are currently in the following statuses:
• Approved
• Closed
4. It updates the open Blanket Releases and Standard Purchase Orders against Global Agreements

‘The Retroactive Price Update on Purchasing Documents’ program uses Buyer entered parameter values to retrieve blanket agreement lines that have undergone price changes as well as the release shipments created against these lines. It then updates shipments with any new prices from the blanket agreement and update the timestamp information on release shipments with that of the blanket agreement line.

Purchasing documents that were in an approved status prior to the update can be automatically submitted for re–approval.

Profile option PO: Allow Retroactive Pricing of POs is need to be set, generally it has to be set to ‘Open Release Only’ to update only all open releases on that Blanket and that the PO Change Order Workflow has been configured to allow automatic re–approval of the updated releases and purchase orders. 

Please execute the following steps:-

1. Navigate to SetupàPurchasingàDocument Types.
2. Find in the Document Types the Standard Purchase Order type
3. Check the Archive on field : Is Archive set to 'Communicate' or set to 'Approve'
If the Archive is set to 'Communicate' you have to communicate the PO to the Supplier before you can use the Cancel Option. You can run the 'PO Output for Communicate' or 'Printed Purchase Order Report' (select 'Print Selection'-'All' and give the PO Number you want to communicate). This will create the Archive. Now you can cancel the PO.

If the Archive is set to 'Approve' you have to make the document authorization status ' Requires Reapproval' then REAPPROVE it before you can use the Cancel Option. You can update/enter the value in the field 'Note To Supplier'. (Navigation for the field is Lines block à Click on "More" tab.) This will change the revision number and status is set to 'REQUIRES REAPPROVAL'. Now APPROVE the Purchase Order. Archival process will takes place here.