1. Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA UKOUG 2009 Conference Series November 30, 2009 Douglas Volz doug@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. 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 SLA Concepts Slide – 5 Cost Accounting As You Want It ─ EBS R12 and SLA

6. 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 – 6 Cost Accounting As You Want It ─ EBS R12 and SLA

7. 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 accounting EVENT TYPE The most granular level of business event which has accounting impact Key Concepts for SLA Transaction Types Slide – 7 Cost Accounting As You Want It ─ EBS R12 and SLA

8. 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 – 8 Cost Accounting As You Want It ─ EBS R12 and SLA Create Accounting*Transfer Journal Entries to GL Cost Manager Create Accounting*Transfer Journal Entries to GL Enter Transaction(s) Cost Manager Create Accounting*Transfer Journal Entries to GL

9. 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 – 9 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

10. SLA Accounting Tables Enter Transaction(s) Basic Table Structure for SLA Slide – 10 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 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

12. 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) Example: Purchase Price Variance product Line 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

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

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

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

17. 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 – 17 Cost Accounting As You Want It ─ EBS R12 and SLA

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

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

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

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

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

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

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

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

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

27. For the Standard Cost Updates That Go to Your G/L Cost/SLA Mapping Set Capability 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

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

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

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

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

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

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

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

36. 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. Discrete Inventory Period Close and Upgrade Slide – 36 Cost Accounting As You Want It ─ EBS R12 and SLA

37. 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 Release 11i to 12 Upgrade Caveats Slide – 37 Cost Accounting As You Want It ─ EBS R12 and SLA

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

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

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

41. THANK YOU 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 Douglas Volz Consulting, Inc.

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

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

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

46. Cost SetupCalculate CostStore Costs SLA Oracle GL Oracle Inventory PurchasingGMD, GME Order Management R12 OPM OPM MAC transitioning to SLA Slide – 46 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

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

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

49. 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 – 49 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

50. 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 – 50 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

51. 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 – 51 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

52. 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 – 52 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

53. 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 – 53 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

54. 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 – 54 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

55. OPM MAC transitioning to SLA Slide – 55 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

56. 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 – 56 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

57. 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 over 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, Italy and Germany. Doug leads the Cost Sub-Committee, for the OAUG Discrete Manufacturing SIG. He also 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: Celgene (US & Switzerland) Beckman Coulter (US) Onninen AS (Norway) Matsushita (UK, Mexico) NTL (now Virgin Media) Idec Izumi (Japan) Logitech (US, Taiwan, P.R.C.) Slide – 57 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.

58. End of Presentation Slide – 58 Cost Accounting As You Want It ─ EBS R12 and SLA Douglas Volz Consulting, Inc.