Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA Douglas A. Volz Douglas Volz Consulting, Inc. OAUG Discrete MFG Cost Sub-Committee Lead Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Agenda Oracle Discrete Costing SLA enhancements Case example: Discrete Costing-Product Line Accounting Oracle Process Costing MAC transitioning to SLA Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Subledger Accounting Method (SLAM) Setup Steps Create account derivation rules 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) Create a subledger accounting method (copy “standard accrual” and create a new one) Assign it to a Ledger Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 kind of accounting The most granular level of business event which has accounting impact EVENT TYPE Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Setup and Process PROCESS JOURNAL ENTRY SETUPS Enter Transaction(s) Define/copy and modify account derivation rules Cost Manager Define/copy and modify journal line types 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. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Setup and Process Accounting Configurations Transactions Accounting Events Cost Management SLA Accounting Configurations Subledger Balances Journal Entries GL Journal Entries and Balances Accounting Program Journal Entry Setup Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Case Example: Discrete Costing-Product Line Accounting Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 (works for Discrete and Process Costing) Category Accounting – R11i Cost Accounting migrated to SLA in R12.1 (only works with Discrete Costing) Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Product Line Setup Steps Using SLA mapping set Cost SLA Mapping Set Capability: PPV by product Line Product Line Setup Steps Using SLA mapping set 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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Product Line Accounting – Descriptive flexfield Cost/SLA Mapping Set Capability Product Line Accounting – Descriptive flexfield Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Product Line Accounting – Item Descriptive FF Cost/SLA Mapping Set Capability Product Line Accounting – Item Descriptive FF Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Mapping set – Account Derivation Rule Cost/SLA Mapping Set Capability Mapping set – Account Derivation Rule Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Mapping set – Account Derivation Rule Cost/SLA Mapping Set Capability Mapping set – Account Derivation Rule Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

SLA Journal Line / Derivation Rule Cost/SLA Mapping Set Capability SLA Journal Line / Derivation Rule Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability Associate Journal Lines Definition to the Event Class Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability Note the same ADR is usable for Standard Cost Update Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability Note the same ADR is usable for Standard Cost Update Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability Associate SLA Definition to the SLA Method/Ledger Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Assign product line code to the inventory item Cost/SLA Mapping Set Capability Assign product line code to the inventory item Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Matl Overhead Absorption Cost/SLA Mapping Set Capability The material subledger from 11i still exists Inventory Inventory Receiving Matl Overhead Absorption PPV Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

SLA Entries That Go to Your G/L Cost/SLA Mapping Set Capability SLA Entries That Go to Your G/L Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost/SLA Mapping Set Capability For the Standard Cost Updates That Go to Your G/L Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Category Accounting – Cost Accounting migrated to SLA in R12.1 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Create a new structure under the key flexfield “Item Category” Product Line Category Accounting Create a new structure under the key flexfield “Item Category” Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Create a new structure under the key flexfield “Item Category” Product Line Category Accounting Create a new structure under the key flexfield “Item Category” Create category codes Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Create a new structure under the key flexfield “Item Category” Product Line Category Accounting Create a new structure under the key flexfield “Item Category” Create category codes Create category set Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Assign product line category accounts Product Line Category Accounting Assign product line category accounts Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Product Line Category Accounting Account Derivation Rule would have used a source directly Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Summary Notes Product Line Category Accounting 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. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 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. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Oracle Process Costing: MAC transitioning to SLA Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA 11i OPM GMI (OPM Inventory) Order Management Purchasing GMD, GME Cost Setup Calculate Cost Store Costs Oracle GL MAC Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA R12 OPM Oracle Inventory Order Management Purchasing GMD, GME Cost Setup Calculate Cost Store Costs Oracle GL SLA Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA 11i OPM General Ledger I n t e r f a c e Subledger GL Export Journal Import Journal Posting For G/L integration, discrete costing works the same as OPM costing Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Oracle Subledger Accounting OPM MAC transitioning to SLA OPM R12 OPM Payables Receivables Oracle Subledger Accounting Oracle General Ledger Projects For G/L integration, discrete costing works the same as OPM costing Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Cost Pre-processor will create accounting Events OPM MAC transitioning to SLA OPM MAC SLA Completed material and/or resource transactions. Completed material and/or resource transactions. OPM Costing Engine generates costs. OPM Costing Engine generates costs. 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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA COMMENTS Fiscal Policy Retained with few modifications Event Fiscal Policy 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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to 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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

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 Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

OPM MAC transitioning to SLA NO LOSS of functionality by moving to SLA model A new sub-menu created under Cost Management for 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. Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Acknowledgements of assistance: Herve Yu – Oracle Cost Management Development Manager Diane Struebel – Schreiber Foods Cost Manager – OAUG Process MFG Cost Sub-Committee Lead Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Additional information available from: R12 Oracle Subledger Accounting – Implementation Guide R12 Oracle Cost Management – User Guide R12 Oracle Process Manufacturing Cost Management - User Guide Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

THANK YOU Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Appendix Professional Background for Douglas Volz Douglas Volz Consulting, Inc.  Helping clients use Oracle Applications since 1990 US Cell:  +1 510 755-7050 davolz@comcast.net www.volzconsulting.com Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

Professional Background 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 accumulated experience, including 5 years in Oracle Development (co-designing Oracle Cost Management) and 12 years in industry in Cost and Accounting Management positions. 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 companies. 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. 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: 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.) Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”

End of Presentation Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”