Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA UKOUG 2009 Conference Series...

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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

Transcript of Cost Accounting As You Want It ─ EBS R12 Cost Accounting with SLA UKOUG 2009 Conference Series...

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

UKOUG 2009 Conference Series November 30, 2009

Douglas [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

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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

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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

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Oracle SLA Concepts

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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

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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

Key Concepts for SLA Transaction Types

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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

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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

Transactions

Accounting Events

Cost Management SLA

AccountingConfigurations

SubledgerBalances

SubledgerJournal Entries

AccountingProgram

Journal Entry Setup

GLJournal Entriesand Balances

Setup and Process

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SLA Accounting Tables

Enter Transaction(s)

Basic Table Structure for SLA

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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

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Case Example:

Product Line Accounting for Discrete and Process Costing

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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

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Cost/SLA Mapping Set Capability

(for Discrete and Process Costing)

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• 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

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• Product Line Accounting – Descriptive flexfield

Cost/SLA Mapping Set Capability

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• Product Line Accounting – Item Descriptive FF

Cost/SLA Mapping Set Capability

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• 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

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• Mapping set – Account Derivation Rule

Cost/SLA Mapping Set Capability

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• Mapping set – Account Derivation Rule

Cost/SLA Mapping Set Capability

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• SLA Journal Line / Derivation Rule

Cost/SLA Mapping Set Capability

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• Associate Journal Lines Definition to the Event Class

Cost/SLA Mapping Set Capability

Don’t forget to validate your new AADs

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• Note the same ADR is usable for Standard Cost Update

Cost/SLA Mapping Set Capability

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• Note the same ADR is usable for Standard Cost Update

Cost/SLA Mapping Set Capability

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• Associate SLA Definition to the SLA Method/Ledger

Cost/SLA Mapping Set Capability

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• The material subledger from 11i still exists

Cost/SLA Mapping Set Capability

Inventory

Inventory

PPV

Receiving

Matl Overhead Absorption

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• SLA Entries That Go to Your G/L

Cost/SLA Mapping Set Capability

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• For the Standard Cost Updates That Go to Your G/L

Cost/SLA Mapping Set Capability

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Category Accounting –

Discrete Cost Accounting migrated to SLA in R12.1

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• Create a new structure under the key flexfield “Item Category”

Product Line Category Accounting

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• Create a new structure under the key flexfield “Item Category”

• Create category codes

Product Line Category Accounting

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• Create a new structure under the key flexfield “Item Category”

• Create category codes

• Create category set

Product Line Category Accounting

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• 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

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• Assign product line category accounts

Product Line Category Accounting

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• Find the correct source name to use

Product Line Category Accounting

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• 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

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• 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

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• 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

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R12: New Journal Sources and Categories

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Release 12

Cost Management

- Inventory- Receiving- WIP

Release 11i

Inventory- MTL- WIP

Purchasing- Receiving

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

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Additional information available from:

• R12 Oracle Subledger Accounting – Implementation Guide

• R12 Oracle Cost Management – User Guide

• R12 Oracle Process Manufacturing Cost Management - User Guide

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THANK YOUTHANK YOU

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Appendix

• Oracle Process Costing: MAC transitioning to SLA

• Professional Background for Douglas Volz

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Oracle Process Costing:MAC transitioning to SLA

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• 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

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Cost Setup Calculate Cost Store Costs MAC Oracle GL

GMI (OPM Inventory)

Purchasing GMD, GMEOrder Management

11i OPM

OPM MAC transitioning to SLA

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Cost Setup Calculate Cost Store Costs SLA Oracle GL

Oracle Inventory

Purchasing GMD, GMEOrder Management

R12 OPM

OPM MAC transitioning to SLA

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• 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

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Subledger GL Export Journal Import Journal Posting

Interface

General Ledger

For G/L integration, discrete costing works the same as OPM costing

11i OPMOPM MAC transitioning to SLA

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PayablesPayables

ReceivablesReceivables

ProjectsProjects

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

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OPM MACCompleted 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

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OPM MAC SLA COMMENTSFiscal 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

Use GL setups

OPM MAC transitioning to SLA

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OPM MAC 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

OPM MAC transitioning to SLA

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• 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

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• 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

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Update the Account Derivation Rule conditions. Ex: Add Item/Item Class/Organizations

Validate the Application Accounting Definition

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

Run OPM Accounting Pre-Processor

OPM MAC transitioning to SLA

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• 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

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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

ExperienceSample 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.)

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End of Presentation

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