Cost Accounting As You Want It ─ EBS R12 Cost Accounting with

Cost Accounting As You Want It EBS R12 Cost Accounting with SLA Collaborate09 May 3 - 7, 2009 Diane Streubel [email protected] Schreiber Foods Manager for Cost & Systems Development OAUG Process MFG Cost Sub-Committee Lead Douglas Volz [email protected] 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

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 – 3 Cost Accounting As You Want It EBS R12 and 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 – 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

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

OPM MAC transitioning to SLA 11i OPM GMI (OPM Inventory) Cost Setup Purchasing Calculate Cost Order Management Store Costs Slide – 7 Cost Accounting As You Want It EBS R12 and SLA GMD, GME MAC Oracle GL

OPM MAC transitioning to SLA R12 OPM Oracle Inventory Cost Setup Purchasing Calculate Cost Order Management Store Costs Slide – 8 Cost Accounting As You Want It EBS R12 and SLA GMD, GME SLA Oracle GL

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 – 9 Cost Accounting As You Want It EBS R12 and SLA

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 – 10 Cost Accounting As You Want It EBS R12 and SLA

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 – 11 Cost Accounting As You Want It EBS R12 and SLA

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 – 12 Cost Accounting As You Want It EBS R12 and SLA SLA accounting program processes the events to create the journal entries

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 – 13 Cost Accounting As You Want It EBS R12 and SLA Use GL setups

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 – 14 Cost Accounting As You Want It EBS R12 and SLA COMMENTS Is retained and has been modified to use SLA repository

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 – 15 Cost Accounting As You Want It EBS R12 and SLA

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 – 16 Cost Accounting As You Want It EBS R12 and SLA

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

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 – 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

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 – 20 Cost Accounting As You Want It EBS R12 and 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 kind of accounting EVENT TYPE The most granular level of business event which has accounting impact Slide – 21 Cost Accounting As You Want It EBS R12 and 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 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 – 22 Cost Accounting As You Want It EBS R12 and 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 – 23 Cost Accounting As You Want It EBS R12 and SLA SLA

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 XLA AE LINES XLA DISTRIBUTION LINKS Slide – 24 Cost Accounting As You Want It EBS R12 and SLA GL INTERFACE GL JE BATCHES GL JE HEADERS GL JE LINES

Case Example: Product Line Accounting for Discrete and Process Costing Slide – 25 Cost Accounting As You Want It EBS R12 and 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 (works for Discrete and Process Costing) – Category Accounting – R11i Cost Accounting migrated to SLA in R12.1 (only works with Discrete Costing) 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

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 – 28 Cost Accounting As You Want It EBS R12 and SLA

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

Cost/SLA Mapping Set Capability Product Line Accounting – Item Descriptive FF Slide – 30 Cost Accounting As You Want It EBS R12 and 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 – 31 Cost Accounting As You Want It EBS R12 and SLA

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

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

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

Cost/SLA Mapping Set Capability Associate Journal Lines Definition to the Event Class Don’t forget to validate your new AADs Slide – 35 Cost Accounting As You Want It EBS R12 and SLA

Cost/SLA Mapping Set Capability Note the same ADR is usable for Standard Cost Update Slide – 36 Cost Accounting As You Want It EBS R12 and SLA

Cost/SLA Mapping Set Capability Note the same ADR is usable for Standard Cost Update Slide – 37 Cost Accounting As You Want It EBS R12 and SLA

Cost/SLA Mapping Set Capability Associate SLA Definition to the SLA Method/Ledger Slide – 38 Cost Accounting As You Want It EBS R12 and SLA

Cost/SLA Mapping Set Capability The material subledger from 11i still exists Inventory Inventory Receiving Matl Overhead Absorption Slide – 39 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 – 40 Cost Accounting As You Want It EBS R12 and SLA

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

Product Line Category Accounting Create a new structure under the key flexfield “Item Category” Slide – 43 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 Slide – 44 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 Slide – 45 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 – 46 Cost Accounting As You Want It EBS R12 and SLA

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

Product Line Category Accounting Account Derivation Rule would have used a source directly Slide – 48 Cost Accounting As You Want It EBS R12 and SLA

Product Line Category Accounting 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. Slide – 49 Cost Accounting As You Want It EBS R12 and 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 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 – 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 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 SubCommittee 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: Slide – 55 Cost Accounting As You Want It EBS R12 and SLA 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

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 Slide – 56 Cost Accounting As You Want It EBS R12 and SLA 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.)

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