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Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA
Collaborate09May 3 - 7, 2009
Diane Streubeldiane.streubel@schreiberfoods.com
Schreiber FoodsManager for Cost & Systems Development
OAUG Process MFG Cost Sub-Committee Lead
Douglas Volzdavolz@comcast.net
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
Slide – 3 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 4 Cost Accounting As You Want It ─ EBS R12 and SLA
Oracle Process Costing:MAC transitioning to SLA
Slide – 5 Cost Accounting As You Want It ─ EBS R12 and 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
Slide – 6 Cost Accounting As You Want It ─ EBS R12 and SLA
Cost Setup Calculate Cost Store Costs MAC Oracle GL
GMI (OPM Inventory)
Purchasing GMD, GMEOrder Management
11i OPM
OPM MAC transitioning to SLA
Slide – 7 Cost Accounting As You Want It ─ EBS R12 and SLA
Cost Setup Calculate Cost Store Costs SLA Oracle GL
Oracle Inventory
Purchasing GMD, GMEOrder Management
R12 OPM
OPM MAC transitioning to SLA
Slide – 8 Cost Accounting As You Want It ─ EBS R12 and 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.
OPM MAC transitioning to SLA
Slide – 9 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 10 Cost Accounting As You Want It ─ EBS R12 and 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 MAC transitioning to SLA
Slide – 11 Cost Accounting As You Want It ─ EBS R12 and SLA
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 transitioning to SLA
Slide – 12 Cost Accounting As You Want It ─ EBS R12 and SLA
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 transitioning to SLA
Slide – 13 Cost Accounting As You Want It ─ EBS R12 and 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
OPM MAC transitioning to SLA
Slide – 14 Cost Accounting As You Want It ─ EBS R12 and 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
OPM MAC transitioning to SLA
Slide – 15 Cost Accounting As You Want It ─ EBS R12 and SLA
• Historical OPM Subledger distribution data not migrated to SLA– Data refers to OPM Inventory
• Historical data available in query mode
OPM MAC transitioning to SLA
Slide – 16 Cost Accounting As You Want It ─ EBS R12 and SLA
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
OPM MAC transitioning to SLA
Slide – 17 Cost Accounting As You Want It ─ EBS R12 and 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.
OPM MAC transitioning to SLA
Slide – 18 Cost Accounting As You Want It ─ EBS R12 and SLA
Oracle SLA Concepts
Slide – 19 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 20 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 21 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 22 Cost Accounting As You Want It ─ EBS R12 and SLA
Transactions
Accounting Events
Cost Management SLA
AccountingConfigurations
SubledgerBalances
SubledgerJournal Entries
AccountingProgram
Journal Entry Setup
GLJournal Entriesand Balances
Setup and Process
Slide – 23 Cost Accounting As You Want It ─ EBS R12 and SLA
SLA Accounting Tables
Enter Transaction(s)
Basic Table Structure for SLA
Slide – 24 Cost Accounting As You Want It ─ EBS R12 and 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
Slide – 25 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 26 Cost Accounting As You Want It ─ EBS R12 and SLA
Cost/SLA Mapping Set Capability
(for Discrete and Process Costing)
Slide – 27 Cost Accounting As You Want It ─ EBS R12 and SLA
• 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
Slide – 28 Cost Accounting As You Want It ─ EBS R12 and SLA
• Product Line Accounting – Descriptive flexfield
Cost/SLA Mapping Set Capability
Slide – 29 Cost Accounting As You Want It ─ EBS R12 and SLA
• Product Line Accounting – Item Descriptive FF
Cost/SLA Mapping Set Capability
Slide – 30 Cost Accounting As You Want It ─ EBS R12 and SLA
• Assign product line code to the inventory item
Cost/SLA Mapping Set Capability
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
Slide – 31 Cost Accounting As You Want It ─ EBS R12 and SLA
• Mapping set – Account Derivation Rule
Cost/SLA Mapping Set Capability
Slide – 32 Cost Accounting As You Want It ─ EBS R12 and SLA
• Mapping set – Account Derivation Rule
Cost/SLA Mapping Set Capability
Slide – 33 Cost Accounting As You Want It ─ EBS R12 and SLA
• SLA Journal Line / Derivation Rule
Cost/SLA Mapping Set Capability
Slide – 34 Cost Accounting As You Want It ─ EBS R12 and SLA
• Associate Journal Lines Definition to the Event Class
Cost/SLA Mapping Set Capability
Don’t forget to validate your new AADs
Slide – 35 Cost Accounting As You Want It ─ EBS R12 and SLA
• Note the same ADR is usable for Standard Cost Update
Cost/SLA Mapping Set Capability
Slide – 36 Cost Accounting As You Want It ─ EBS R12 and SLA
• Note the same ADR is usable for Standard Cost Update
Cost/SLA Mapping Set Capability
Slide – 37 Cost Accounting As You Want It ─ EBS R12 and SLA
• Associate SLA Definition to the SLA Method/Ledger
Cost/SLA Mapping Set Capability
Slide – 38 Cost Accounting As You Want It ─ EBS R12 and SLA
• The material subledger from 11i still exists
Cost/SLA Mapping Set Capability
Inventory
Inventory
PPV
Receiving
Matl Overhead Absorption
Slide – 39 Cost Accounting As You Want It ─ EBS R12 and SLA
• SLA Entries That Go to Your G/L
Cost/SLA Mapping Set Capability
Slide – 40 Cost Accounting As You Want It ─ EBS R12 and SLA
• For the Standard Cost Updates That Go to Your G/L
Cost/SLA Mapping Set Capability
Slide – 41 Cost Accounting As You Want It ─ EBS R12 and SLA
Category Accounting –
Discrete Cost Accounting migrated to SLA in R12.1
Slide – 42 Cost Accounting As You Want It ─ EBS R12 and SLA
• Create a new structure under the key flexfield “Item Category”
Product Line Category Accounting
Slide – 43 Cost Accounting As You Want It ─ EBS R12 and SLA
• Create a new structure under the key flexfield “Item Category”
• Create category codes
Product Line Category Accounting
Slide – 44 Cost Accounting As You Want It ─ EBS R12 and SLA
• Create a new structure under the key flexfield “Item Category”
• Create category codes
• Create category set
Product Line Category Accounting
Slide – 45 Cost Accounting As You Want It ─ EBS R12 and SLA
• Create a new structure under the key flexfield “Item Category”
• Create category codes
• Create category set
• Assign “Product Line Accounting” functional area category set
Product Line Category Accounting
Slide – 46 Cost Accounting As You Want It ─ EBS R12 and SLA
• Assign product line category accounts
Product Line Category Accounting
Slide – 47 Cost Accounting As You Want It ─ EBS R12 and SLA
• Account Derivation Rule would have used a source directly
Product Line Category Accounting
Slide – 48 Cost Accounting As You Want It ─ EBS R12 and SLA
• 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.
Product Line Category Accounting
Slide – 49 Cost Accounting As You Want It ─ EBS R12 and SLA
• 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
Slide – 50 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 51 Cost Accounting As You Want It ─ EBS R12 and SLA
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 – 52 Cost Accounting As You Want It ─ EBS R12 and SLA
THANK YOUTHANK YOU
Slide – 53 Cost Accounting As You Want It ─ EBS R12 and SLA
Appendix
• Professional Background for Diane Streubel
• Professional Background for Douglas Volz
Slide – 54 Cost Accounting As You Want It ─ EBS R12 and SLA
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
Slide – 55 Cost Accounting As You Want It ─ EBS R12 and SLA
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.)
Slide – 56 Cost Accounting As You Want It ─ EBS R12 and SLA
End of Presentation
Slide – 57 Cost Accounting As You Want It ─ EBS R12 and SLA
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