cost accounting as you want it ─ ebs r12 cost accounting with sla douglas a. volz douglas volz...
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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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
• Oracle Discrete Costing SLA enhancements
• Case example: Discrete Costing-Product Line Accounting
• Oracle Process Costing MAC transitioning to SLA
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”
Oracle Discrete Costing SLA enhancements: Increased Flexibility
1. Create account derivation rules
2. Create journal line types
3. Create a journal lines definition(link the journal line type to the account derivation rule)
4. Create an application accounting definition(copy an existing definition and modify it)
5. Create a subledger accounting method(copy “standard accrual” and create a new one)
6. Assign it to a Ledger
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Subledger Accounting Method (SLAM) Setup Steps
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Key Concepts for SLA Transaction Types
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.
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Setup and Process
Transactions
Accounting Events
Cost Management SLA
AccountingConfigurations
SubledgerBalances
SubledgerJournal Entries
AccountingProgram
Journal Entry Setup
GLJournal Entriesand Balances
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Setup and Process
Case Example:
Discrete Costing-Product Line Accounting
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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”
Example: Purchase Price Variance product Line
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost/SLA Mapping Set Capability
• Product Line Setup Steps Using SLA mapping set
1. Enter your SLA account derivation rule for Purchase Price Variance accounts
2. Associate the new account derivation rule to your Journal Line Type
3. Associate the Application Accounting Definition with Subledger Accounting Method
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost SLA Mapping Set Capability: PPV by product Line
• Product Line Accounting – Descriptive flexfield
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost/SLA Mapping Set Capability
• Product Line Accounting – Item Descriptive FF
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost/SLA Mapping Set Capability
• Mapping set – Account Derivation Rule
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost/SLA Mapping Set Capability
• Mapping set – Account Derivation Rule
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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”
Cost/SLA Mapping Set Capability
• Assign product line code to the inventory item
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost/SLA Mapping Set Capability
• The material subledger from 11i still exists
Inventory
PPV
Inventory
Receiving
Matl Overhead Absorption
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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”
Cost/SLA Mapping Set Capability
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”
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
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
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”
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”
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.
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Product Line Category Accounting
• 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”
Discrete Inventory Period Close and Upgrade
Oracle Process Costing:MAC transitioning to SLA
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
• 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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost Setup Calculate Cost Store Costs MAC Oracle GL
GMI (OPM Inventory)
Purchasing GMD, GMEOrder Management
11i OPM
OPM MAC transitioning to SLA
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
Cost Setup Calculate Cost Store Costs SLA Oracle GL
Oracle Inventory
Purchasing GMD, GMEOrder Management
R12 OPM
OPM MAC transitioning to SLA
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
• 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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
• 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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
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
Douglas Volz Consulting, Inc. “Helping clients use Oracle Applications since 1990”
• 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.
OPM MAC transitioning to SLA
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 YOUTHANK 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”
Douglas Volz Consulting, Inc.
Helping clients use Oracle Applications since 1990
US Cell: +1 510 755-7050 [email protected]
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• 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:• 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”