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

1. Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA UKOUG 2009 Conference Series November 30, 2009 Douglas Volzdoug@volzconsulting.com Douglas Volz Consulting, Inc. OAUG Discrete MFG Cost Sub-Committee Lead

2. Agenda • Oracle Discrete Costing SLA enhancements • Oracle SLA Concepts • Case example: Product Line Accounting • If Time Allows: Oracle Process Costing MAC transitioning to SLA Slide – 2 Cost Accounting As You Want It ─ EBS R12 and SLA

3. 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 Slide – 3 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 3 Cost Accounting As You Want It ─ EBS R12 and SLA

4. 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 Slide – 4 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 4 Cost Accounting As You Want It ─ EBS R12 and SLA

5. Oracle SLA Concepts Slide – 5 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 5 Cost Accounting As You Want It ─ EBS R12 and SLA

6. Subledger Accounting Method (SLAM) Setup Steps • Determine sources of information for your account derivation rules (understand the underlying business logic and data) • Create account derivation rules (and optional mapping sets) • Create journal line types • Create a journal lines definition(link the journal line type to the account derivation rule) • Create an application accounting definition(copy an existing definition and modify it and then validate it) • Create a subledger accounting method (SLAM) (copy “standard accrual” and create a new one) • Assign the new SLAM to a Ledger Slide – 6 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 6 Cost Accounting As You Want It ─ EBS R12 and SLA

7. 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 Slide – 7 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 7 Cost Accounting As You Want It ─ EBS R12 and SLA

8. 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* Create Accounting* Create Accounting* Create Accounting* Transfer Journal Entries to GL Transfer Journal Entries to GL Transfer Journal Entries to GL 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. Slide – 8 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 8 Cost Accounting As You Want It ─ EBS R12 and SLA

9. GL Journal Entries and Balances Transactions Accounting Events Accounting Configurations Subledger Journal Entries Journal Entry Setup Subledger Balances SLA Cost Management Setup and Process Accounting Program Slide – 9 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 9 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

10. 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 Slide – 10 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 10 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

11. Case Example: Product Line Accounting for Discrete and Process Costing Slide – 11 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 11 Cost Accounting As You Want It ─ EBS R12 and SLA

12. 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) Slide – 12 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 12 Cost Accounting As You Want It ─ EBS R12 and SLA

13. Cost/SLA Mapping Set Capability(for Discrete and Process Costing) Slide – 13 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 13 Cost Accounting As You Want It ─ EBS R12 and SLA

14. 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 Slide – 14 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 14 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

15. Cost/SLA Mapping Set Capability • Product Line Accounting – Descriptive flexfield Slide – 15 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 15 Cost Accounting As You Want It ─ EBS R12 and SLA

16. Cost/SLA Mapping Set Capability • Product Line Accounting – Item Descriptive FF Slide – 16 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 16 Cost Accounting As You Want It ─ EBS R12 and SLA

17. TIP: you can use an existing product line category set to populate your item master DFF, you do not need to enter this one-by-one Cost/SLA Mapping Set Capability • Assign product line code to the inventory item Slide – 17 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 17 Cost Accounting As You Want It ─ EBS R12 and SLA

18. Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule Slide – 18 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 18 Cost Accounting As You Want It ─ EBS R12 and SLA

19. Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule Slide – 19 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 19 Cost Accounting As You Want It ─ EBS R12 and SLA

20. Cost/SLA Mapping Set Capability • SLA Journal Line / Derivation Rule Slide – 20 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 20 Cost Accounting As You Want It ─ EBS R12 and SLA

21. Cost/SLA Mapping Set Capability • Associate Journal Lines Definition to the Event Class Don’t forget to validate your new AADs Slide – 21 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 21 Cost Accounting As You Want It ─ EBS R12 and SLA

22. Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update Slide – 22 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 22 Cost Accounting As You Want It ─ EBS R12 and SLA

23. Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update Slide – 23 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 23 Cost Accounting As You Want It ─ EBS R12 and SLA

24. Cost/SLA Mapping Set Capability • Associate SLA Definition to the SLA Method/Ledger Slide – 24 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 24 Cost Accounting As You Want It ─ EBS R12 and SLA

25. Inventory Inventory PPV Receiving Matl Overhead Absorption Cost/SLA Mapping Set Capability • The material subledger from 11i still exists Slide – 25 Cost Accounting As You Want It ─ EBS R12 and SLA

26. Cost/SLA Mapping Set Capability • SLA Entries That Go to Your G/L Slide – 26 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 26 Cost Accounting As You Want It ─ EBS R12 and SLA

27. Cost/SLA Mapping Set Capability • For the Standard Cost Updates That Go to Your G/L Slide – 27 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 27 Cost Accounting As You Want It ─ EBS R12 and SLA

28. Category Accounting – Discrete Cost Accounting migrated to SLA in R12.1 Slide – 28 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 28 Cost Accounting As You Want It ─ EBS R12 and SLA

29. Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” Slide – 29 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 29 Cost Accounting As You Want It ─ EBS R12 and SLA

30. Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes Slide – 30 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 30 Cost Accounting As You Want It ─ EBS R12 and SLA

31. Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes • Create category set Slide – 31 Cost Accounting As You Want It ─ EBS R12 and SLA

32. 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 Slide – 32 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 32 Cost Accounting As You Want It ─ EBS R12 and SLA

33. Product Line Category Accounting • Assign product line category accounts Slide – 33 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 33 Cost Accounting As You Want It ─ EBS R12 and SLA

34. Product Line Category Accounting • Find the correct source name to use Slide – 34 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 34 Cost Accounting As You Want It ─ EBS R12 and SLA

35. 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) Slide – 35 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 35 Cost Accounting As You Want It ─ EBS R12 and SLA

36. 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. Slide – 36 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 36 Cost Accounting As You Want It ─ EBS R12 and SLA

37. Release 11i to 12 Upgrade Caveats • Material and WIP Accounting Distribution Inquiries & Reports • These inquiries and reports don’t 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 Slide – 37 Cost Accounting As You Want It ─ EBS R12 and SLA

38. R12: New Journal Sources and Categories Release 11iInventory - MTL - WIPPurchasing - Receiving Release 12Cost Management - Inventory - Receiving - WIP Slide – 38 Cost Accounting As You Want It ─ EBS R12 and SLA

39. 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 Slide – 39 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 39 Cost Accounting As You Want It ─ EBS R12 and SLA

40. Additional information available from: • R12 Oracle Subledger Accounting – Implementation Guide • R12 Oracle Cost Management – User Guide • R12 Oracle Process Manufacturing Cost Management - User Guide Slide – 40 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 40 Cost Accounting As You Want It ─ EBS R12 and SLA

41. THANK YOU Slide – 41 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 41 Cost Accounting As You Want It ─ EBS R12 and SLA

42. Appendix • Oracle Process Costing: MAC transitioning to SLA • Professional Background for Douglas Volz Slide – 42 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 42 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

43. Oracle Process Costing: MAC transitioning to SLA Slide – 43 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 43 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

44. 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 Slide – 44 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 44 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

45. Cost Setup Calculate Cost Store Costs Oracle GL OPM MAC transitioning to SLA 11i OPM Order Management GMI (OPM Inventory) Purchasing GMD, GME MAC Slide – 45 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 45 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

46. Cost Setup Calculate Cost Store Costs Oracle GL OPM MAC transitioning to SLA R12 OPM Order Management Oracle Inventory Purchasing GMD, GME SLA Slide – 46 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 46 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

47. 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. Slide – 47 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 47 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

48. 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 Slide – 48 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 48 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

49. OPM Receivables Payables Projects OPM MAC transitioning to SLA R12 OPM Oracle SubledgerAccounting Oracle General Ledger For G/L integration, discrete costing works the same as OPM costing Slide – 49 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 49 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

50. OPM Costing Engine generates costs. OPM Costing Engine generates costs. 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 Slide – 50 Cost Accounting As You Want It ─ EBS R12 and SLA Slide – 50 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.