sla and cost acctg

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

Collaborate09May 3 - 7, 2009

Diane [email protected]

Schreiber FoodsManager for Cost & Systems Development

OAUG Process MFG Cost Sub-Committee Lead

Douglas [email protected]

Douglas Volz Consulting, Inc.President / Managing Director

OAUG Discrete MFG Cost Sub-Committee Lead

Agenda

• Oracle Discrete Costing SLA enhancements

• Oracle Process Costing MAC transitioning to SLA

• Oracle SLA Concepts

• Case example: Product Line Accounting

Slide – 2 Cost Accounting As You Want It ─ EBS R12 and SLA

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

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

Oracle Discrete Costing SLA enhancements: Increased Flexibility


Oracle Process Costing: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

OPM MAC transitioning to SLA


Cost Setup Calculate Cost Store Costs MAC Oracle GL

GMI (OPM Inventory)

Purchasing GMD, GMEOrder Management

11i OPM



Cost Setup Calculate Cost Store Costs SLA Oracle GL

Oracle Inventory

Purchasing GMD, GMEOrder Management

R12 OPM



• 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.



Subledger GL Export Journal Import Journal Posting

Interface

General Ledger

For G/L integration, discrete costing works the same as OPM costing

11i OPMOPM MAC transitioning to SLA


PayablesPayables

ReceivablesReceivables

ProjectsProjects

Oracle Subledger Accounting Oracle General

Ledger

OPM

R12 OPM

For G/L integration, discrete costing works the same as OPM costing



OPM MACCompleted material

and/or resource transactions.

OPM Costing Engine generates costs.

OPM Subledger process processes

these transactions to create Journal entries

SLA

Cost Pre-processor will create

accounting Events

SLA accounting program processes the events to create the journal entries

Completed material and/or resource transactions.

OPM Costing Engine generates costs.



OPM MAC SLA COMMENTSFiscal 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



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



• 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



• Historical OPM Subledger distribution data not migrated to SLA– Data refers to OPM Inventory

• Historical data available in query mode



Update the Account Derivation Rule conditions. Ex: Add Item/Item Class/Organizations

Validate the Application Accounting Definition

Run OPM Accounting Pre-Processor

Run Create Accounting in Draft mode

Check Create Accounting report and Journal Entries report

Run Create Accounting in Final mode to create GL accounting entries

Run OPM Accounting Pre-Processor



• 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.



Oracle SLA Concepts


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

Subledger Accounting Method (SLAM) Setup Steps


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 kind of accounting

EVENT TYPE

The most granular level of business event which has accounting impact

Key Concepts for SLA Transaction Types


JOURNAL ENTRY SETUPS

Define/copy and modify journal line types

Define/copy and modify account derivation rules

Define/copy and modify descriptions

PROCESS

Enter Transaction(s)

Cost Manager

Create Accounting* Transfer Journal Entries to GL

*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.

Setup and Process


Transactions

Accounting Events

Cost Management SLA

AccountingConfigurations

SubledgerBalances

SubledgerJournal Entries

AccountingProgram

Journal Entry Setup

GLJournal Entriesand Balances

Setup and Process


SLA Accounting Tables

Enter Transaction(s)

Basic Table Structure for SLA


Transaction Accounting Tables

Cost Manager

XLA_AE_HEADERS

XLA_AE_LINES

XLA_DISTRIBUTION_LINKS

XLA_EVENTS

Same Cost Transaction Accounting

Tables

Create Accounting

GL_INTERFACE

G/L Tables

GL_LEDGERS

GL_JE_HEADERS

GL_JE_LINES

GL_JE_BATCHES

One Common Accounting Subledger

Table

Case Example:

Product Line Accounting for Discrete and Process Costing


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(works for Discrete and Process Costing)

– Category Accounting – R11i Cost Accounting migrated to SLA in R12.1 (only works with Discrete Costing)

Example: Purchase Price Variance product Line


Cost/SLA Mapping Set Capability

(for Discrete and Process Costing)


• Product Line Setup Steps Using SLA mapping set

1. Create the product line information in your item master

2. Enter your SLA account derivation rule for Purchase Price Variance accounts

3. Associate the new account derivation rule to your Journal Line Type

4. Associate the Application Accounting Definition with Subledger Accounting Method

Cost SLA Mapping Set Capability: PPV by product Line


• Product Line Accounting – Descriptive flexfield



• Product Line Accounting – Item Descriptive FF



• Assign product line code to the inventory item


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


• Mapping set – Account Derivation Rule



• SLA Journal Line / Derivation Rule



• Associate Journal Lines Definition to the Event Class


Don’t forget to validate your new AADs


• Note the same ADR is usable for Standard Cost Update



• Associate SLA Definition to the SLA Method/Ledger



• The material subledger from 11i still exists


Inventory

Inventory

PPV

Receiving

Matl Overhead Absorption


• SLA Entries That Go to Your G/L



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



Category Accounting –

Discrete Cost Accounting migrated to SLA in R12.1


• Create a new structure under the key flexfield “Item Category”

Product Line Category Accounting



• Create category codes





• Create category set





• Create category set

• Assign “Product Line Accounting” functional area category set



• Assign product line category accounts



• Account Derivation Rule would have used a source directly



• Summary Notes

– Product line accounting can be achieved in many ways without 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.

– One caveat: Pre-Release 12 subledger accounting reports are reading data from Costing distribution layer (such as the Material Account Distribution Summary or Detail Reports). Those reports will not show SLA journals. SLA provides a set of new accounting reports (such as Journal Entries Report, Accounting Analysis Report…) which can be modified as desired using BI Publisher.



• 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

• 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.

Discrete Inventory Period Close and Upgrade


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


Additional information available from:

• R12 Oracle Subledger Accounting – Implementation Guide

• R12 Oracle Cost Management – User Guide

• R12 Oracle Process Manufacturing Cost Management - User Guide


THANK YOUTHANK YOU


Appendix

• Professional Background for Diane Streubel

• Professional Background for Douglas Volz


Diane Streubel

Professional Background

Diane Streubel is the Cost & Systems Development Manager for Schreiber Foods. A process manufacturing company, Schreiber is the world’s largest supplier of private label dairy products and has been using Gemms/OPM for the past 13 years. Diane has been involved with OPM from it’s inception at Schreiber with Gemms 3.1. She has been involved in implementing additional products within Oracle at Schreiber and has played a key role in all of the upgrades within the company. Schreiber Foods is currently at 11.5.10.

Diane is also actively involved in the Process Manufacturing SIG. She has been the Costing Sub-Committee chairperson and the Membership chairperson for the Process SIG since 2001. As the Process SIG Enhancements chairperson, she has worked with the Process Manufacturing team at Oracle to develop and coordinate an Enhancements Voting process each year since 2001. She has been on the paper selection team for OAUG conferences for the past four years. Diane has also presented numerous papers at OpenWorld and OAUG conferences over the past several years on OPM Costing topics.

Core Expertise• Upgrades for Process Manufacturing• Project Management • Core manufacturing processes

OPM Cost Management OPM Inventory OPM Formulas

ExperienceWithin Schreiber Foods:• Responsible for OPM Costing and Inventory testing and

validations for all upgrades• Develop and improve processes within Company related

to Costing, Inventory and Formulas• Establish Cost Accounting methods, cost and production

formula structures, inventory and production transaction processes and system documentation.

• Train Finance employees at 17 plant facilities on OPM processes


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 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 and Germany.

Doug leads the Cost Sub-Committee, for the OAUG Discrete Manufacturing Special Interest Group.He also advises and participates on the Oracle Customer Advisory Board for Fusion Costing and for the Fusion SCM Strategy Council.

Core Expertise• 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

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


End of Presentation


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