Cost Accounting As You Want It - EBS R12 Cost Accounting with SLA

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Cost Accounting As You Want It - EBS R12 Cost
Accounting with SLA

• UKOUG 2009 Conference Series November 30, 2009

Douglas Volzdoug_at_volzconsulting.com Douglas Volz
Consulting, Inc. OAUG Discrete MFG Cost
Sub-Committee Lead
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Agenda

• Oracle Discrete Costing SLA enhancements
• Oracle SLA Concepts
• Case example Product Line Accounting
• If Time Allows Oracle Process Costing MAC
  transitioning to SLA

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Oracle Discrete Costing SLA enhancements
Increased Flexibility

• Release 11i account recognition pain points
  eliminated by Subledger Accounting (SLA)
• SLA removes limitations for recording COGS and
  Revenue (Cost Account Generator/workflow and A/R
  AutoAccounting are still in use)
• Gives you the ability to record inventory and WIP
  accounts with more flexibility

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Oracle Discrete Costing SLA enhancements
Increased Flexibility

• Flexible variance account recognition for
• Invoice price and purchase variances
• Average cost adjustment
• Standard cost adjustment
• Manufacturing variances
• Account aliases
• Freight charges
• Most other inventory, manufacturing and related
  account entries

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Oracle SLA Concepts
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Subledger Accounting Method (SLAM) Setup Steps

1. Determine sources of information for your account
   derivation rules (understand the underlying
   business logic and data)
2. Create account derivation rules (and optional
   mapping sets)
3. Create journal line types
4. Create a journal lines definition(link the
   journal line type to the account derivation rule)
5. Create an application accounting definition(copy
   an existing definition and modify it and then
   validate it)
6. Create a subledger accounting method (SLAM)
   (copy standard accrual and create a new one)
7. Assign the new SLAM to a Ledger

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Key Concepts for SLA Transaction Types

• Event Model definition of the subledger
  transaction types and
  lifecycle
• Entity Classification of source of transaction
• Event Class Classifies transaction types for
  accounting rule purposes
• Event Type for each transaction type, defines
  possible actions with accounting significance

ENTITY
Material Transaction, Receiving or WIP or Write
Off
EVENT CLASS
Logical grouping of events which have similar
accounting
The most granular level of business event which
has accounting impact
EVENT TYPE
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Setup and Process
PROCESS
JOURNAL ENTRY SETUPS
Enter Transaction(s)
Enter Transaction(s)
Define/copy and modify account derivation rules
Cost Manager
Cost Manager
Cost Manager
Define/copy and modify journal line types
Create Accounting
Transfer Journal Entries to GL
Create Accounting
Transfer Journal Entries to GL
Create Accounting
Transfer Journal Entries to GL
Create Accounting
Transfer Journal Entries to GL
Define/copy and modify descriptions
Run Create Accounting Cost Management
concurrent request for accounting all
transactions from the Cost Management SLA
responsibility. Receiving Accounting can be
generated in the Purchasing responsibilities
using the Create Accounting Receiving
concurrent request. These requests have an
option to transfer the entries created to General
Ledger. A separate process is also available.
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Setup and Process
Accounting Program
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Basic Table Structure for SLA
Enter Transaction(s)
One Common Accounting Subledger Table
Same Cost Transaction Accounting Tables
Cost Manager
SLA Accounting Tables
G/L Tables
Transaction Accounting Tables
GL_LEDGERS
XLA_EVENTS
Create Accounting
GL_JE_BATCHES
XLA_AE_HEADERS
GL_INTERFACE
GL_JE_HEADERS
XLA_AE_LINES
GL_JE_LINES
XLA_DISTRIBUTION_LINKS
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Case Example Product Line Accounting for
Discrete and Process Costing
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Example Purchase Price Variance product Line

• Say there are two brands of cell phones, Samsung
  and Nokia
• We want to track variances by cell phone brands
• We are going to use 2 different ways to address
  this same requirement
• Cost/SLA mapping set capability using an Item
  Master DFF
• Category Accounting R11i Cost Accounting
  migrated to SLA in R12.1 (only works with
  Discrete Costing)

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Cost/SLA Mapping Set Capability(for Discrete
and Process Costing)
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Cost SLA Mapping Set Capability PPV by product
Line

• Product Line Setup Steps Using SLA mapping set
• Create the product line information in your item
  master
• Enter your SLA account derivation rule for
  Purchase Price Variance accounts
• Associate the new account derivation rule to your
  Journal Line Type
• Associate the Application Accounting Definition
  with Subledger Accounting Method

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Cost/SLA Mapping Set Capability

• Product Line Accounting Descriptive flexfield

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Cost/SLA Mapping Set Capability

• Product Line Accounting Item Descriptive FF

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Cost/SLA Mapping Set Capability

• Assign product line code to the inventory item

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Cost/SLA Mapping Set Capability

• Mapping set Account Derivation Rule

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Cost/SLA Mapping Set Capability

• Mapping set Account Derivation Rule

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Cost/SLA Mapping Set Capability

• SLA Journal Line / Derivation Rule

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Cost/SLA Mapping Set Capability

• Associate Journal Lines Definition to the Event
  Class

Dont forget to validate your new AADs
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Cost/SLA Mapping Set Capability

• Note the same ADR is usable for Standard Cost
  Update

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Cost/SLA Mapping Set Capability

• Note the same ADR is usable for Standard Cost
  Update

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Cost/SLA Mapping Set Capability

• Associate SLA Definition to the SLA Method/Ledger

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Cost/SLA Mapping Set Capability

• The material subledger from 11i still exists

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Cost/SLA Mapping Set Capability

• SLA Entries That Go to Your G/L

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Cost/SLA Mapping Set Capability

• For the Standard Cost Updates That Go to Your G/L

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Category Accounting Discrete Cost Accounting
migrated to SLA in R12.1
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Product Line Category Accounting

• Create a new structure under the key flexfield
  Item Category

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Product Line Category Accounting

• Create a new structure under the key flexfield
  Item Category
• Create category codes

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Product Line Category Accounting

• Create a new structure under the key flexfield
  Item Category
• Create category codes
• Create category set

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Product Line Category Accounting

• Create a new structure under the key flexfield
  Item Category
• Create category codes
• Create category set
• Assign Product Line Accounting functional area
  category set

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Product Line Category Accounting

• Assign product line category accounts

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Product Line Category Accounting

• Find the correct source name to use

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Product Line Category Accounting

• Summary Notes
• Product line accounting can be achieved in many
  ways without using custom programming or using
  the Costing Hook.
• In R12 SLA is the Oracle R12 accounting platform
  and Costing supplies application sources from
  INV, WIP, RCV to build the accounting journals.
• You could also create a custom SLA source for the
  Item Master Cost of Sales Account
  (mtl_system_items_b.cost_of_sales)

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Discrete Inventory Period Close and Upgrade

• Inventory Period Close Process
• Inventory interim G/L transfer has been replaced
  by SLA
• The Inventory Accounting Period close works just
  like it did before, however, SLA now sends
  accounting information to the general ledger
  (Create Accounting)
• Discrete Upgrade Process
• Customers have option of migrating the whole
  historical data to SLA or choose which periods
  data to be migrated.
• Customers get option to either upgrade in
  downtime when upgrading or anytime after the
  upgrade process.
• Default for Cost management is to migrate the
  present calendar year data to SLA.

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Release 11i to 12 Upgrade Caveats

• Material and WIP Accounting Distribution
  Inquiries Reports
• These inquiries and reports dont show the
  Subledger journals
• You still see the same information as in Release
  11i
• This can be confusing
• SLA has new accounting reports (such as Journal
  Entries Report, Accounting Analysis Report)
  which can be modified as desired using BI
  Publisher.
• The Standard Costing profile CST Account
  Summarization profile no longer exists

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R12 New Journal Sources and Categories
Release 12Cost Management - Inventory -
Receiving - WIP
Release 11iInventory - MTL -
WIPPurchasing - Receiving
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• Acknowledgements of assistance
• Herve Yu Oracle Cost Management Development
  Manager
• Audrea Auld Oracle University Senior
  Financials Instructor
• Russell Bayles Oracle Principal Product
  Strategy Manager
• Michel Basinet Oracle Director Fusion Costing
  Product Strategy
• Diane Streubel OAUG Process Cost SIG Lead

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• Additional information available from
• R12 Oracle Subledger Accounting Implementation
  Guide
• R12 Oracle Cost Management User Guide
• R12 Oracle Process Manufacturing Cost Management
  - User Guide

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THANK YOU
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Appendix

• Oracle Process Costing MAC transitioning to SLA
• Professional Background for Douglas Volz

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Oracle Process Costing MAC transitioning to SLA
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OPM MAC transitioning to SLA

• Converged inventory model
• Inventory Organizations that are Process will use
  Process Costing
• Process users are denied access to Discrete
  Costing forms
• Process Enabled organizations can not setup costs
  in the Discrete Costing application
• Sub Ledger Architecture (SLA) replaces MAC

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OPM MAC transitioning to SLA
11i OPM
Order Management
GMI (OPM Inventory)
Purchasing
GMD, GME
MAC
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OPM MAC transitioning to SLA
R12 OPM
Order Management
Oracle Inventory
Purchasing
GMD, GME
SLA
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OPM MAC transitioning to SLA

• Subledger accounting is an intermediate step
  between subledger products and the Oracle General
  Ledger
• Each transaction that requires accounting is
  represented by a complete and balanced subledger
  journal entry, stored in a common data model.

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OPM MAC transitioning to SLA
11i OPM
General Ledger
Interface
Subledger
GL Export
Journal Import
Journal Posting
For G/L integration, discrete costing works the
same as OPM costing
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OPM MAC transitioning to SLA
R12 OPM
Oracle Subledger Accounting
Oracle General Ledger
For G/L integration, discrete costing works the
same as OPM costing
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OPM MAC transitioning to SLA
SLA
OPM MAC
Completed material and/or resource transactions.
Completed material and/or resource transactions.
Cost Pre-processor will create accounting Events
OPM Subledger process processes these
transactions to create Journal entries
SLA accounting program processes the events to
create the journal entries
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OPM MAC transitioning to SLA
OPM MAC SLA COMMENTS
Fiscal Policy Retained with few modifications
Event Fiscal Policy Retained with few modifications
Source Process Category
Event Event Entity
Sub-Event Event Class
Account Titles Journal Line Types (JLT)
Accounting Template Application Accounting Definitions (AAD) Users can define their own AADs or modify seeded information
Account Mapping Attributes (SLA) Sources SLA sources are used in ADRs
Priorities and Account Mapping Account Derivation Rules (ADR) More flexible. Mapping can be done at Accounting flexfield level as well as segment level
Test Mapping Test Accounting Builder (TAB)
OPM Currency, OPM Ledger, OPM Exchange Rates Use GL setups
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OPM MAC transitioning to SLA
OPM MAC SLA COMMENTS
Test and Actual Subledger Accounting Draft and Final Accounting
Subledger Program Accounting Pre-Processor
Run Subledger for multiple valuation/cost methods for a ledger Supports multiple valuation methods In OPM there can only be one representation at a time. SLA supports multiple representations at the same time
Run Subledger process for a functional area Run Pre-Processor by Process Category Flexible. User can have any number of categories. Assigned to one or more event classes
Detailed Subledger Report Is retained and has been modified to use SLA repository
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OPM MAC transitioning to SLA

• Most of the steps are automated using migration
  scripts
• All the Account Definitions would be migrated as
  ADRs
• Manual Steps to be completed are
• Assign Account Derivation Rules to Journal Line
  Definitions
• Validate Application Accounting Definition
• Assign User Subledger Accounting Method to Ledger

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OPM MAC transitioning to SLA

• Historical OPM Subledger distribution data not
  migrated to SLA
• Data refers to OPM Inventory
• Historical data available in query mode

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OPM MAC transitioning to SLA
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OPM MAC transitioning to SLA

• NO LOSS of functionality by moving to SLA model
• New menus created under OPM Financials for new
  SLA forms
• Fiscal Policy and Event Fiscal Policy screens
  retained with minor modifications. Most of the
  fields will be read-only.
• OPM Event model mapped to SLA event model.

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Douglas Volz
Professional Background

Doug Volz is a Senior Architect and Advisor for
Oracle Application projects, with a particular
interest in Project and Cost Management. He has
over 30 years experience, including 5 years in
Oracle Development (co-designing Oracle Cost
Management), 12 years in industry for
manufacturing and distribution companies, and 14
years consulting. His Manufacturing and Cost
systems experience covers project management,
software design/development, delivery and
consulting services, for both Oracle Corporation,
and multiple international consulting firms.
Prior to his systems career, Mr. Volz also held
numerous management accounting positions for
telecommunications, defense, and electronics
firms. In his consulting roles, Doug has served
over 100 clients. Many of these were multi-org,
multi-currency with global footprints. Countries
include US, Mexico, UK, Netherlands, Belgium,
Taiwan, P.R.O.C., Norway, Japan, Italy and
Germany. Doug leads the Cost Sub-Committee, for
the OAUG Discrete Manufacturing SIG. He also
participates on the Oracle Customer Advisory
Board for Fusion Costing and for the Fusion SCM
Strategy Council.
Core Expertise
Experience

• Multi-organization, Multi-currency ERP
  Implementations
• Project Management and Senior Project Advisor
• Core manufacturing processes
• Cost Management
• Inventory
• Bills of Material
• WIP
• Systems Integration and Data Conversions

• Sample of clients served
• Celgene (US Switzerland)
• Beckman Coulter (US)
• Onninen AS (Norway)
• Matsushita (UK, Mexico)
• NTL (now Virgin Media)
• Idec Izumi (Japan)
• Logitech (US, Taiwan, P.R.C.)

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End of Presentation
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