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Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA UKOUG 2009 Conference Series November 30, 2009 Douglas Volz [email protected] Douglas Volz Consulting, Inc. OAUG Discrete MFG Cost Sub-Committee Lead 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 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 Slide Slide––33Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA 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 Slide Slide––44Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Oracle SLA Concepts Slide Slide––55Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Subledger Accounting Method (SLAM) Setup Steps 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 Slide Slide––66Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA 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 accounting EVENT TYPE The most granular level of business event which has accounting impact Slide Slide––77Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Setup and Process JOURNAL ENTRY SETUPS PROCESS Enter Transaction(s) Define/copy and modify account derivation rules Cost Manager Define/copy and modify journal line types Create CreateAccounting* Accounting* Define/copy and modify descriptions 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. Slide Slide––88Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Setup and Process Accounting Configurations Subledger Journal Entries Transactions GL Journal Entries and Balances Accounting Program Subledger Balances Accounting Events Journal Entry Setup Cost Management Slide Slide––99Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA SLA Douglas Volz Consulting, Inc. Basic Table Structure for SLA Enter Transaction(s) Same Cost Transaction Accounting Tables One Common Accounting Subledger Table Cost Manager Transaction Accounting Tables Create Accounting SLA Accounting Tables G/L Tables XLA_EVENTS GL_LEDGERS XLA_AE_HEADERS GL_ INTERFACE GL_JE_BATCHES XLA_AE_LINES GL_JE_HEADERS XLA_DISTRIBUTION _LINKS GL_JE_LINES Slide Slide––10 10Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. Case Example: Product Line Accounting for Discrete and Process Costing Slide Slide––11 11Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA 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 – using an Item Master DFF – Category Accounting – R11i Cost Accounting migrated to SLA in R12.1 (only works with Discrete Costing) Slide Slide––12 12Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability (for Discrete and Process Costing) Slide Slide––13 13Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost SLA Mapping Set Capability: PPV by product Line • 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 Slide Slide––14 14Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. Cost/SLA Mapping Set Capability • Product Line Accounting – Descriptive flexfield Slide Slide––15 15Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Product Line Accounting – Item Descriptive FF Slide Slide––16 16Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • 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 Slide Slide––17 17Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule Slide Slide––18 18Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Mapping set – Account Derivation Rule Slide Slide––19 19Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • SLA Journal Line / Derivation Rule Slide Slide––20 20Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Associate Journal Lines Definition to the Event Class Don’t forget to validate your new AADs Slide Slide––21 21Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update Slide Slide––22 22Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Note the same ADR is usable for Standard Cost Update Slide Slide––23 23Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • Associate SLA Definition to the SLA Method/Ledger Slide Slide––24 24Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • The material subledger from 11i still exists Inventory Inventory Receiving Matl Overhead Absorption Slide – 25 Cost Accounting As You Want It ─ EBS R12 and SLA PPV Cost/SLA Mapping Set Capability • SLA Entries That Go to Your G/L Slide Slide––26 26Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Cost/SLA Mapping Set Capability • For the Standard Cost Updates That Go to Your G/L Slide Slide––27 27Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Category Accounting – Discrete Cost Accounting migrated to SLA in R12.1 Slide Slide––28 28Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” Slide Slide––29 29Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes Slide Slide––30 30Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • Create a new structure under the key flexfield “Item Category” • Create category codes • Create category set Slide – 31 Cost Accounting As You Want It ─ EBS R12 and SLA 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 Slide Slide––32 32Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • Assign product line category accounts Slide Slide––33 33Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • Find the correct source name to use Slide Slide––34 34Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Product Line Category Accounting • 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) Slide Slide––35 35Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA 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 (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. Slide Slide––36 36Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Release 11i to 12 Upgrade Caveats • 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 Slide – 37 Cost Accounting As You Want It ─ EBS R12 and SLA R12: New Journal Sources and Categories Release 11i Release 12 Inventory - MTL - WIP Purchasing - Receiving Cost Management - Inventory - Receiving - WIP Slide – 38 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 • Diane Streubel – OAUG Process Cost SIG Lead Slide Slide––39 39Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA 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 Slide––40 40Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA THANK YOU Slide Slide––41 41Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Appendix • Oracle Process Costing: MAC transitioning to SLA • Professional Background for Douglas Volz Slide Slide––42 42Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. Oracle Process Costing: MAC transitioning to SLA Slide Slide––43 43Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. 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 Slide Slide––44 44Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA 11i OPM GMI Purchasing (OPM Inventory) Cost Setup Calculate Cost Order Management Store Costs Slide Slide––45 45Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA GMD, GME MAC Oracle GL Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA R12 OPM Oracle Inventory Cost Setup Purchasing Calculate Cost Order Management Store Costs Slide Slide––46 46Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA GMD, GME SLA Oracle GL Douglas Volz Consulting, Inc. 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. Slide Slide––47 47Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA 11i OPM Subledger GL Export I n t e r f a c e General Ledger Journal Import Journal Posting For G/L integration, discrete costing works the same as OPM costing Slide Slide––48 48Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA R12 OPM OPM Payables Oracle Subledger Accounting Oracle General Ledger Receivables Projects For G/L integration, discrete costing works the same as OPM costing Slide Slide––49 49Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. 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 Slide Slide––50 50Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA SLA accounting program processes the events to create the journal entries Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA OPM MAC SLA COMMENTS Fiscal 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 Slide Slide––51 51Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Use GL setups Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA OPM MAC SLA 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 Slide Slide––52 52Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA COMMENTS Is retained and has been modified to use SLA repository Douglas Volz Consulting, Inc. 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 Slide Slide––53 53Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA • Historical OPM Subledger distribution data not migrated to SLA – Data refers to OPM Inventory • Historical data available in query mode Slide Slide––54 54Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to SLA Update the Account Derivation Rule conditions. Ex: Add Item/Item Class/Organizations Validate the Application Accounting Definition Run OPM Accounting Pre-Processor 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 Slide Slide––55 55Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. OPM MAC transitioning to 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. Slide Slide––56 56Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc. 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 Slide Slide––57 57Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA 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.) Douglas Volz Consulting, Inc. End of Presentation Slide Slide––58 58Cost CostAccounting AccountingAs AsYou YouWant WantItIt──EBS EBSR12 R12and andSLA SLA Douglas Volz Consulting, Inc.