1. Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA Collaborate09 May 3 - 7, 2009 Diane Streubel diane.streubel@schreiberfoods.com Schreiber Foods Manager for Cost & Systems Development OAUG Process MFG Cost Sub-Committee Lead Douglas Volz davolz@comcast.net Douglas Volz Consulting, Inc. President / Managing Director OAUG Discrete MFG Cost Sub-Committee Lead

2. 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

3. 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

4. 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

5. Oracle Process Costing: MAC transitioning to SLA Slide – 5 Cost Accounting As You Want It ─ EBS R12 and SLA

6. 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

7. Cost SetupCalculate CostStore Costs MAC Oracle GL GMI (OPM Inventory) PurchasingGMD, GME Order Management 11i OPM OPM MAC transitioning to SLA Slide – 7 Cost Accounting As You Want It ─ EBS R12 and SLA

8. Cost SetupCalculate CostStore Costs SLA Oracle GL Oracle Inventory PurchasingGMD, GME Order Management R12 OPM OPM MAC transitioning to SLA Slide – 8 Cost Accounting As You Want It ─ EBS R12 and SLA

9. 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

10. SubledgerGL ExportJournal ImportJournal Posting InterfaceInterface General Ledger For G/L integration, discrete costing works the same as OPM costing 11i OPM OPM MAC transitioning to SLA Slide – 10 Cost Accounting As You Want It ─ EBS R12 and SLA

11. Payables Receivables Projects 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

12. OPM MAC Completed 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

13. OPM MACSLACOMMENTS Fiscal PolicyRetained with few modifications Event Fiscal PolicyRetained with few modifications SourceProcess Category EventEvent Entity Sub-EventEvent Class Account TitlesJournal Line Types (JLT) Accounting TemplateApplication Accounting Definitions (AAD) Users can define their own AADs or modify seeded information Account Mapping Attributes(SLA) SourcesSLA 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 MappingTest 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

14. OPM MACSLACOMMENTS Test and Actual Subledger Accounting Draft and Final Accounting Subledger ProgramAccounting 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 ReportIs 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

15. 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

16. 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

17. OPM MAC transitioning to SLA Slide – 17 Cost Accounting As You Want It ─ EBS R12 and SLA

18. 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

19. Oracle SLA Concepts Slide – 19 Cost Accounting As You Want It ─ EBS R12 and SLA

20. 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

21. 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 ENTITYMaterial 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

22. 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

23. Transactions Accounting Events Cost Management SLA Accounting Configurations Subledger Balances Subledger Journal Entries Accounting Program Journal Entry Setup GL Journal Entries and Balances Setup and Process Slide – 23 Cost Accounting As You Want It ─ EBS R12 and SLA

24. 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

25. Case Example: Product Line Accounting for Discrete and Process Costing Slide – 25 Cost Accounting As You Want It ─ EBS R12 and SLA

26. 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

27. Cost/SLA Mapping Set Capability (for Discrete and Process Costing) Slide – 27 Cost Accounting As You Want It ─ EBS R12 and SLA

28. 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

29. Product Line Accounting – Descriptive flexfield Cost/SLA Mapping Set Capability Slide – 29 Cost Accounting As You Want It ─ EBS R12 and SLA

30. Product Line Accounting – Item Descriptive FF Cost/SLA Mapping Set Capability Slide – 30 Cost Accounting As You Want It ─ EBS R12 and SLA

31. 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

32. Mapping set – Account Derivation Rule Cost/SLA Mapping Set Capability Slide – 32 Cost Accounting As You Want It ─ EBS R12 and SLA

33. Mapping set – Account Derivation Rule Cost/SLA Mapping Set Capability Slide – 33 Cost Accounting As You Want It ─ EBS R12 and SLA

34. SLA Journal Line / Derivation Rule Cost/SLA Mapping Set Capability Slide – 34 Cost Accounting As You Want It ─ EBS R12 and SLA

35. 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

36. 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

37. 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

38. 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

39. The material subledger from 11i still exists Cost/SLA Mapping Set Capability Inventory PPVReceiving Matl Overhead Absorption Slide – 39 Cost Accounting As You Want It ─ EBS R12 and SLA

40. 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

41. 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

42. Category Accounting – Discrete Cost Accounting migrated to SLA in R12.1 Slide – 42 Cost Accounting As You Want It ─ EBS R12 and SLA

43. 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

44. 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

45. 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

46. 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

47. Assign product line category accounts Product Line Category Accounting Slide – 47 Cost Accounting As You Want It ─ EBS R12 and SLA

48. 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

49. 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

50. 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

51. 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

52. 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

53. THANK YOU Slide – 53 Cost Accounting As You Want It ─ EBS R12 and SLA

54. Appendix Professional Background for Diane Streubel Professional Background for Douglas Volz Slide – 54 Cost Accounting As You Want It ─ EBS R12 and SLA

55. 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 Experience Within 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

56. 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 Experience Sample 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

57. End of Presentation Slide – 57 Cost Accounting As You Want It ─ EBS R12 and SLA