SLA Cost Management Overview [ID 471057.

1]

Modified 17-OCT-2010 Type BULLETIN Status PUBLISHED

In this Document
Purpose
Scope and Application
SLA Cost Management Overview

Applies to:
Oracle Cost Management - Version: 12.0.0 to 12.1 - Release: 12 to 12.1
Oracle Purchasing - Version: 12.0 to 12.1 [Release: 12 to 12]
Oracle Inventory Management - Version: 12.0.0 to 12.0.1 [Release: 12 to 12]
Information in this document applies to any platform.
Create Accounting - Cost Management
CSTGLTRN - Transfer Journal Entries to GL - Cost Management
Checked for relevance 17-OCT-2010

Purpose
An overview of SLA processing for Cost Management.
This includes Inventory, Purchasing and Work in Process transactions.

Scope and Application

General overview on the SLA setups and Create Accounting process for manufacturing products.

SLA Cost Management Overview

Subledger Accounting Cost Management –Details

Subledger accounting in R12 is an enhanced accounting process. The SLA process allows
customers to personalize the process for specific events. The user sets the rules to be followed.
Accounts are still defined the same way as prior application versions via the same forms.
Organizations are defined the same way. If there are no rules entered into the SLA engine, the
accounts defined the traditional way will be used to generate the journal entries posted to GL. All
setups to use preR12 functionality are automatic. The default base setup is US GAAP. This uses
the traditional account definitions. This is delivered and works out of the box.
SLA uses events for processing transactions. An event is the recording of a change of status in
the transaction life cycle, i.e., invoice approved, payment received, period close, etc. This allows
for a clear separation between transactions and accounting representation. Events are the bridge
between transactions and journal entries, so product teams are involved for coordinating actions
based on event models.

R12 Subledger Accounting Rules:

SLA uses a rules-based accounting engine that posts entries into GL. The rules used by the
engine are user defined. The rules are stored in a common repository for all subledger
applications. A subledger application would be a product area, such as Inventory, Payables,
Receivables, Purchasing, etc.

The R12 SLA process has created a common accounting process to be used across all
applications. This allows the customer to have a single method for defining accounting
behaviors.

The engine supports the use of multiple currencies. This also allows for various audit tools and
reports to be used when reviewing GL postings.

The SLA process allows for the display of the inventory valuation accounts to be seen for a user
defined date range. The engine also allows the accounting department to maintain control over
accounting and chart of accounts for the ledgers used.

When rules are created, the rules engine will override user entered accounts that might be
incorrect. This is important to control user errors that can occur within a period. The rules will
automatically redirect the costs to the correct account. The rules can be created for most item
attributes to allow for granularity of costs if so desired.

After the rules are established, the Cost Management – SLA responsibility allows for the
creation of the user-defined accounting data. The request group related to this process includes
all SLA processes as well as standard accounting processes.
For inventory transactions, a transaction would be received or costed. The transaction will
then be passed to GL via the Create Accounting – Cost Management program.
So for Misc receipt:
User creates misc receipt
Cost Manager processes transaction
Create Accounting - Cost Management Inventory Category process is run
This validates the accounts to be used as per any rules that have been defined.
If no rule defined for a transaction event then the default account value set for the
organization is used.
If the setting were final and post, the details would be transferred to GL. If no transfer to
GL was indicated and the setting was final and post, then the Transfer to GL process still needs
to be run via CSTGLTRN - Transfer Journal Entries to GL.
Transfer and Post to GL are recommended to be included in Create Accounting- Cost
Management when creating the accounting for the transactions. An exception would be Draft
mode.
Create Accounting – Receiving
This process is tied to the Purchasing responsibility.
Process Category is not a parameter for this request as only receiving transactions can be
processed from Purchasing. It will default with Process Category of Receiving.

Create Accounting – Cost Management

This process is tied to the Cost Management – SLA process and uses the following Process
Categories:
Inventory Receiving
Work in Process Third Party Merge
Manual

The process then completes or shows errors that need correction.

Create Accounting – Cost Management Parameters:

Required; limits accounting events to the

chosen ledger If profile option SLA: Enable
Ledger Data Access Security in Subledgers = Yes, only
the ledgers included in the SL Access Sets
assigned to the responsibility is on the LOV
Optional; Restricts events selected to particular
process category. The program selects events
Process Category
with event types that are part of the event class
assigned to the process category.
Required; End date for the program to use. Will
End Date only process those events with event dates on or
before the end date.
Optional; Determines if entries created in Draft
or Final mode.Draft Mode –Transfer to GL,
Post in GL, and GL Batch Name fields are
Mode
disabled as the draft entries cannot be
transferred to GL; It is recommended to run in
draft first to check for errors
Required; Limits the creation of accounting to
those events that previously failed. If set to Yes
Errors
the program will process all events with the
status of error.
Optional; determines if the report showing the
Report results of the SLA program is in summary or
detail.
Required if mode = Final; Determines if the
Transfer to GL subledger journal entries are transferred to GL.
Journal Import is not launched if set to Yes
 Required if mode = Final or Create Accounting
Post in GL
is set to No
Optional; user entered batch name appears in
GL Batch Name transferred GL Subledger journal entries.
Transfer to GL must be set to Yes
Required; identifies the org each accounting
Included User Transaction Identifiers
entry belongs to

The Create Accounting - Cost Management request creates accrual journal entries, accrual
reversals, and multi-period journal entries.
To transfer the details to GL:
1- Set the parameter in the Create Accounting to Yes
2- If parameter is set to No, then the Transfer to GL process must be run manually as
this will only create accounting but no values are passed to GL.

There is an option to make the journal entry and post the journals automatically at the time of
submitting the Create Accounting program itself.

This option is used by setting the profile SLA: Disable Journal Import to "NO" .This will be the
most preferred setting for this profile option and this indicates that Journal Import will
ALWAYS accompany the transfer of data from Subledger. Another main implication of this
value is that, on failure of Journal Import, the data will be rolled back to SLA tables and hence
there will not be any data in GL_INTERFACE.

If you want to do the transfer to GL separately from creating accounting in the subledger
you can use the Create Accounting Program to create the accounting in the subledger only and
then run a different program CSTGLTRN - Transfer Journal Entries to GL to transfer the journal
and post to GL

CSTGLTRN - Transfer Journal Entries to GL - Cost Management

This is used to transfer final journal entries to GL that were processed by the Create Accounting
process but not transferred for some reason.
To View Accounting Events
Cost Management SLA Responsibility
SLA > Inquiry
Tools Menu Options
Then select Accounting Events, Journal Entries, or Journal Entry Lines to open.

You can also view the Account Journal Entries and Accounting Events from the View
Transaction Windows:
View Receiving Transactions
View Material Transactions
View Resource Transactions

The function Tools > Options is only available if SLA is being used for the transaction.
If there is no SLA being used, the distributions button will show the transaction details.
Basic Steps to Build Accounts:
These steps are needed for each different journal line type that is going to be used. For example,
Inventory valuation, Receiving valuation, WIP valuation, Cost of Goods Sold.

Step 1 Create Account Derivation Rule (ADR)

Step 2 Define conditions required for the ADR created

Step 3 Create Journal Line Definitions (JDL) for an event class

a- query the LOV of seeded event classes
b- copy the seeded event class using the Copy Definition button
c- replace existing ADR in the Journal Line type form with the new ADR
this is in the Line Assignments sections, using Line Type

Step 4 Create new Applications Accounting Definition (AAD)

a- query for the seeded AAD
b- copy from this to create a new AAD
c- associate the new JLD assignments created in Step 3
d- validate the definition. If successful continue to next step or continue creating the
JLDs required. If unsuccessful, check the setup for all steps above before moving to next steps

Step 5 Associate the new AAD with the Subledger Accounting Method (SLAM)
a- query SLAMs to view existing methods
b- for the existing AAD enter an end date to stop this from being used
c- attach the new AAD with the start date

Step 6 Assign the SLAM to the Ledger

Accounting Methods Builder

Ledger
|
Subledger Accounting Method (SLAM)
|
Application Accounting Definition (AAD)
|
Journal Line Definition (JLD)
|
-------------------------------
| |
Journal Line Types Account Derivation Rule
(JLT) (ADR)
|
Sources
 |
Transaction Objects

The process is built from the bottom up.

Ledgers replace Set of Books.

The 3C’s is now known as the 4C’s:
Chart of Accounts
Calendar
Currency
Accounting convention

This allows for accounting to be used at the local level (by country) and also by the line of
business (sales, consulting, etc). The Ledger and Ledger Sets (group of Ledgers) use the Multi-
Org Access control (MOAC) that is expanded in R12.

Examples of Subledger Methods (SLAMs)

US GAAP
FRENCH GAAP
Cash Basis Accounting
Accrual Basis Accounting

The following SLAMS are seeded in Oracle:

Standard Accrual
Standard Cash
Encumbrance and US Federal

Product teams are responsible for the following:

Identify transaction entities with accounting impacts
Define event types that correspond to different status in the lifecycle
Create events for transactions when passing from status to another …this is transparent to the
customer although the creation is triggered by the user action.
Define transaction objects that provide data that SLA uses to create journal entries
Population of transaction objects is the responsibility of product teams

SLA Team is responsible for the following:

Defining data model for events
Develop/Maintain programs and APIs that create and maintain events and related objects
Processing events as part of the Create Accounting programs

Events

Event Entities have Event Classes. Each Event Class has Event Types.
There are four Main Entities for Cost Management:

Inventory:
 Material Accounting Events
Event Classes:
PO Delivery in Inventory
Sales Order Issue
Internal Order to Expense
WIP Material
Consigned Inventory Ownership Transfer
Miscellaneous
IntraOrg transfer
Direct Interorg Shipment
Direct Interorg Receipts
Intransit Interorg Shipment – FOB Shipment
Intransit Interorg Receipt – FOB Receipt
All other intransit interorg transactions
Material cost update
Retroactive price adjustment
Logical Intercompany
WIP Material Lot

Purchasing/Receiving
Write Off Accounting Events
Receiving Accounting Events

Work in Process:
WIP Accounting Events
Event Class:
WIP Absorption
Event Type:
Resource Absorption
Resource Overhead Absorption
Scrap Absorption
Outside Processing
Event Type:
OSP Transaction
ShopFloor Delivery for Direct Items
IPV transfer to Work Order
WIP Variance
Event Type:
Period Close Variance
Job close Variance
Final Completion Variance
WIP Lot
Event Type:
WIP Lot Split
WIP Lot Merge
WIP Lot Update Quantity
 WIP Lot Bonus
WIP Cost Update
Event Type:
WIP Cost Update

The Work in Process list above shows the Main Event Entity is WIP Accounting.
The Event Classes are then listed with each Event Type that is part of the Event Class.

Definitions:

Accounting Methods Builder

This is the process that created a SLAM and assigns it to the Ledger.

Ledger
The ledger determines the rules that are applied when accounting is generated. Ledgers replace
Set of Books. Each Operating Unit is associated with a Primary Ledger. Multiple Legal Entities
can be tied to a Ledger through the accounting set up flow. Multiple SLAMs can be assigned to a
Ledger. There can be a primary and Secondary ledger setup that can use different accounting
methods in each ledger.

Subledger Accounting Method (SLAM)

This is the subledger accounting method that is built and assigned to a Ledger. This will be
created via the Accounting Methods Builder and includes all the details needed to created the
appropriate journal entries.

Application Accounting Definitions (AAD)

The application accounting definitions is made up of the Journal Line Definition, Journal line
types, and Accounting Derivation Rules. These are developed using the event classes and types.
A new AAD can be created or a seeded AAD can be used. The details are assigned and validated
to be certain the setup at this level is correct.

Journal Line Definitions (JLD)

JLT, ADR and JED are combined to create the JDL for an event. These can be shared across
AADs and can be used to create sets of line assignments for event classes and types.

For Cost Management, The Journal Entry Description is not seeded by default in Costing
application accounting definition. This has been submitted as an enhancement request.

Journal Line Types (JLT)

The types are defined for each particular class to be used. These must be assigned to the Journal
Line Definition (JDL) to be used. These determine the journal entry line options to be used.
These options include identifying the natural side used (debit, credit, gain/loss), accounting class,
summarization, and other conditions that will cause the rule to create a journal entry.

Account Derivation Rule (ADR)

This is used to determine the accounting combinations that will be used for the journal entries.
Various rules can be defined. These can be defined by segment, accounting combination, or
value set. The simplest way to derive an account is to establish the account as a constant value-
use the account combination that is defined in the accounting chart of accounts.

Mapping Sets
These sets are optional and user defined. If the user determines that the seeded details are
insufficient, then mapping sets can be setup to allow for more specialization in the accounts. This
is not supported by development as this would require customization. Seeded details are
supported as they are provided by Oracle code.

Transaction Objects/Sources
Transaction objects and sources carry transaction information into the rules defined for the
accounting chart of accounts.

Event:
An event is the recording of a change of status in the transaction life cycle, i.e., invoice
approved, payment received, period close, etc. These are defined for each
SLAM used. Event classes and event types are used to create the events to be used

Event Class
This classifies the types of transactions that are to be accounted for. An example of an event
class is WIP Variance.

Event Type
This defines actions that are possible for an event class that has potential accounting
significance. Examples for the WIP Variance Event CLASS would have event TYPES defined
for Period Close Variance, Job Close Variance, and Final Completion Variance.

References:
Note 429105.1
Note 466522.1