The following is intended to outline our general product direction The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

E-Business Suite R12 Cost Accounting Integrated with SLA Diane Streubel – Schreiber Foods Cost Manager Douglas Volz – OAUG Discrete Cost SIG Sub-Committee Herve Yu – Oracle Costing Development

Costing Accounting Integrated with SLA Agenda Oracle Process Costing MAC transitioning to SLA Oracle Discrete Costing SLA enhancements Case example: Discrete Costing-Product Line Accounting

<Insert Picture Here> Schreiber Foods Diane Streubel Manager - Cost & System Development Oracle Process Costing MAC transitioning to SLA

Costing Accounting Integrated with 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

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA 11i OPM GMI (OPM Inventory) Order Management Purchasing GMD, GME Cost Setup Calculate Cost Store Costs Oracle GL MAC

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA R12 OPM Oracle Inventory Order Management Purchasing GMD, GME Cost Setup Calculate Cost Store Costs Oracle GL SLA

Costing Accounting Integrated with SLA 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.

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA 11i OPM General Ledger I n t e r f a c e Subledger GL Export Journal Import Journal Posting For G/L integration, discrete costing works the same as OPM costing

Oracle Subledger Accounting Costing Accounting Integrated with SLA OPM MAC transitioning to SLA OPM R12 OPM Payables Receivables Oracle Subledger Accounting Oracle General Ledger Projects For G/L integration, discrete costing works the same as OPM costing

Cost Pre-processor will create accounting Events Costing Accounting Integrated with 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 SLA accounting program processes the events to create the journal entries

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA – Setup Forms COMMENTS Fiscal Policy Retained with few modifications Event Fiscal Policy 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

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA - Reports 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

Costing Accounting Integrated with SLA 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

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA - Process

Costing Accounting Integrated with SLA OPM MAC transitioning to SLA - Summary 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.

<Insert Picture Here> OAUG Discrete Cost SIG Sub-Committee Douglas Volz Douglas Volz Consulting, Inc. Oracle Discrete Costing SLA Enhancements

Costing Accounting Integrated with SLA Increased Flexibility: Oracle Discrete Costing SLA Release 11i account recognition “pain points” eliminated by SLA: SLA removes limitations for recording COGS and Revenue (still uses Cost Account Generator/workflow and A/R AutoAccounting) Recording inventory and WIP accounts with more flexibility Flexible variance account recognition for: Invoice price variance Purchase price variance Average cost adjustment Standard cost adjustment Manufacturing variances Account aliases Freight charges And most other inventory, manufacturing and related account entries

Sub Ledger Accounting(SLA) Key Concepts 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 The most granular level of business event which has accounting impact EVENT TYPE

Sub Ledger Accounting(SLA) Setup and Process JOURNAL ENTRY SETUPS Enter Transaction(s) Define/copy and modify journal line types Cost Manager Define/copy and modify account derivation rules Create Accounting* Transfer Journal Entries to GL Define/copy and modify descriptions *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.

Sub Ledger Accounting(SLA) Setup and Process Transactions Accounting Events Cost Management SLA Accounting Configurations Subledger Balances Journal Entries GL Journal Entries and Balances Accounting Program Journal Entry Setup

<Insert Picture Here> Oracle Corporation - Discrete Costing Development Herve Yu Senior Principal Engineer Case Example: Discrete Costing-Product Line Accounting

Costing Accounting Integrated with SLA Case Example: Purchase Price Variance product Line Example: Record Purchase Price Variance by Product Line We have 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 Category Accounting – Cost/Global Accounting migrated to SLA in R12.1 A word for Inventory period close and Cost/SLA upgrade

Cost/SLA mapping set capability

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Product Line Setup Steps Set up your product line using SLA mapping set Enter your SLA account derivation rule for Purchase Price Variance accounts Associate the new account derivation rule to your Journal Line Type Associate the Application Accounting Definition with Subledger Accounting Method

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Product Line Accounting – Descriptive flexfield

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Product Line Accounting – Descriptive flexfield

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Mapping set – Account Derivation Rule

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Mapping set – Account Derivation Rule

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line SLA Journal Line / Derivation Rule

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Associate Journal Lines Definition to the Event Class

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Note the same ADR is usable for Standard Cost Update

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Note the same ADR is usable for Standard Cost Update

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Associate SLA Definition to the SLA Method/Ledger

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line Assign product line code to the inventory item

Matl Overhead Absorption Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line The material subledger from 11i still exists Inventory Inventory Receiving Matl Overhead Absorption PPV

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line SLA Entries That Go to Your G/L

Costing Accounting Integrated with SLA Cost/SLA mapping set capability:PPV by product Line For the Standard Cost Update That Go to Your G/L

Category Accounting – Cost/Global Accounting migrated to SLA in R12.1

Costing Accounting Integrated with SLA Product Line Category Accounting:Global Accounting Create a new structure under the key flexfield “Item Category”

Costing Accounting Integrated with SLA Product Line Category Accounting:Global Accounting Create a new structure under the key flexfield “Item Category” Create category codes

Costing Accounting Integrated with SLA Product Line Category Accounting:Global Accounting Create a new structure under the key flexfield “Item Category” Create category codes Create category set

Costing Accounting Integrated with SLA Product Line Category Accounting:Global 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

Costing Accounting Integrated with SLA Product Line Category Accounting:Global Accounting

Costing Accounting Integrated with SLA Product Line Category Accounting:Global Accounting Account Derivation Rule would have used a source directly

Costing Accounting Integrated with SLA Case Example - Conclusion Summary Notes Product line accounting can be achieved in many ways without using 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 desire using BI Publisher.

Costing Accounting Integrated with SLA 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.

Costing Accounting Integrated with SLA Additional information are available: R12 Oracle Subledger Accounting – Implementation Guide R12 Oracle Cost Management – User Guide R12 Oracle Process Manufacturing Cost Management - User Guide

THANK YOU