Oracle Corporation

Fusion Cost
Management
(DRAFT)
Subledger Accounting Setup Document for Cost and Receipt Accounting

Amit Kumar
14th August’2015

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Table of Contents

Introduction........................................................................................................................................................ 3

1. Key Features of Subledger Accounting:....................................................................................................... 4

2. Demonstration: Creating Subledger Account Rule for Cost Management events..........................................5

a. Brief Introduction....................................................................................................................................... 5

b. Understanding Distributions....................................................................................................................... 5

c. High level structural overview of Fusion SLA module...................................................................................7

d. Setting up Oracle Subledger Accounting...................................................................................................... 8

i. Create new Implementation Project for Cost Accounting or use an existing project...................................10

ii. Seeded Journal Line Rules: Cost Accounting.............................................................................................. 15

iii. Setup User defined Account Rules– Seeded Values, how to make use of it.................................................18

iv. User defined Journal Entry Rule Sets (JERS): to assign user defined Account Rules to JERS.........................23

v. Assign User-defined Journal Account Rule Set to Accounting Method “Standard Accrual”..........................26

vi. Activate Journal Entry Rule Set Assignments............................................................................................. 28

vii. Preview Accounting Results.................................................................................................................. 30

Appendix.......................................................................................................................................................... 32

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Introduction

This document can be referred as a helping document for implementing the SLA accounting rules for
Cost & Receipt Accounting applications. It contains Subledger Accounting key features, demonstration
on creating Subledger Account Rules for Receipt Accounting and Cost Management events with the
distribution entries, examples, screenshots, etc.

This document also includes an Appendix with links to:

1. Document describing accounting events (transactions for which accounting needs to be defined)
for Inventory and Manufacturing transactions. This document also lists the accounting
distributions created by Fusion Cost Accounting for these accounting events.
2. Document with steps on how to use Subledger Accounting Rules for Receipt Accounting.

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1. Key Features of Subledger Accounting:

a. Robust, centralized accounting engine and repository that facilitates true global accounting
b. Intermediate layer between the Subledger products (Accounts Payable, Accounts Receivable,
Supply Chain Management, Projects, FA etc) and Oracle General Ledger
c. Granular level of details in the Subledger Accounting module, with different summarization
options in General Ledger, allowing full auditability and reconciliations
d. Definition of multiple accounting rules (US GAAP, IFRS etc) for a single legal entity and apply
them in different ledgers
e. Flexible creation of accounting in draft or final mode.
f. Integration with third party applications and a gateway to bring the accounting into the FAH

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 2. Demonstration: Creating Subledger Account Rule for Cost
Management events

a. Brief Introduction
The Cost Accounting application processes inventory and manufacturing transactions and create the
necessary distribution entries. These distributions are in turn transferred to Oracle Subledger
Accounting where the code combination IDs (account codes) for the different accounting line types are
stamped and the journal entries are created. These journal entries are then subsequently transferred to
Oracle General Ledger.

b. Understanding Distributions

Distributions are created in Oracle Cost Accounting for the following transactions:

Inventory Transactions
 Miscellaneous Transactions
 Intra Organization Transfers
 Direct Organization Transfers
 Inter- Organization Transfers
 Transfer Orders: Sub-Inventory Transfers
 Transfer Orders: Direct Organization Transfers
 Transfer Order: Inter Organization Transfers
 Internal Drop Ship
Purchasing
 Receipts, Returns and Adjustments
 Global Procurement
Sales
Work in Process
Cost Adjustment
Consigned Material
 Purchasing
 Cycle Counts
 Direct Organization Transfer
 Inter Organization Transfer
 Transfer Order: Direct Organization Transfer
 Transfer Order: Inter Organization Transfer
 Global Procurement

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Inventory Transactions

Miscellaneous Transactions (Event Class)

Event Types under Miscellaneous Transactions Event Class, all follow the pattern shown in the following
table.

 Account Alias Issue

 Account Issue
 Miscellaneous Issue
 Move Order Issue
 Cycle Count Adjustment – Negative Users don't enter accounts on cycle or phys adj
 Physical Inventory Adjustment – Negative transactions

Accounting Line Type Debit Credit Cost Used

Standard Actual Perp. Average
Offset X   Standard Cost Given cost in Given cost in transaction /
(Material) transaction / layer cost Current Average
Inventory Valuation / Expense   X
Outbound trsn From OH rules From OH rules
Expense X   Standard Cost
Material Overhead Absorption   X (Overhead)
Issue Cost minus Not Applicable Not Applicable
Offset X   Standard Cost
Miscellaneous Issue Variance   X (Material)

Offset X    Not Applicable Issue Cost minus Layer Issue Cost minus Current
Cost Average
Cost Variance   X

Event Types under Miscellaneous Transactions Event Class, all follow the pattern shown in the following
table.

 Account Alias Receipt

 Account Receipt
 Miscellaneous Receipt
 Cycle Count Adjustment - Positive Users don't enter accounts on cycle or phys adj
 Physical Inventory Adjustment – Positive transactions

Accounting Line Type Debit Credit Cost Used

Standard Actual Perp. Average
Inventory Valuation / Expense X   Standard Cost Given cost in Given cost in transaction /
(Material) transaction / layer cost Current Average
Offset   X
Inbound trsn Standard From OH rules From OH rules
Inventory Valuation / Expense X   Cost (Overhead)
Material Overhead Absorption   X
Actual Receipt Cost Not Applicable Not Applicable
Miscellaneous Receipt Variance X   minus Standard Cost
Offset   X (Material)

Note: For detailed understanding of Accounting Event Types / Transactions and distribution, please refer
to the annexed document on SLA Costing Event Model in the Appendix section under point no. 1.

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c. High level structural overview of Fusion SLA module

 All businesses have Ledgers to hold financial information.

 The majority of this financial information flows from Subledgers (like AP, AR etc) to Ledger.
 The financial information sent to General Ledger would be against account numbers. The
account numbers (Account Line Type) are derived in Subledger Accounting.
 Subledger Accounting Method is a setup task that details which account is used for which
transaction and for which Sub ledger application. It ties the event class /event type to Journal
Entry Rule Set.
 Journal Entry Rule Set is also a setup task. It has a group of rules and brings together the Event
class, Event type, Journal Line Rule and Accounting Rule. For this combination, it indicates
whether a debit or credit occurs.
 Journal line rule is also a setup task that indicates the Accounting Line Type to be used for a
particular Event class.
 Account Rule is another setup task that groups the Subledger Accounting (cost/receipt)
accounting line type and the way account code combination is derived.

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d. Setting up Oracle Subledger Accounting

1. Create new Implementation Project for Cost Accounting or use an existing project
2. Seeded Journal Line Rules
3. Set up User defined Account Rules – Seeded Values, how to make use of it
4. Set up User defined Journal Entry Rule Sets (JERS)
5. Assign User defined JERS to Accounting Method
6. Activate JERS Assignments
7. Preview Accounting results

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

1. Sign in to Oracle Fusion Applications.
2. Click the Navigator icon then Tools > Setup and Maintenance.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 3. Click Manage Implementation Projects.

i. Create new Implementation Project for Cost Accounting or use

an existing project

You can create a new functional setup manager project or use an existing project.
Find the existing project name, select row “cst” and click Create.

Enter a Project name at the beginning of the defaulted project name and then click Next.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Select the Supply Chain Managerial Accounting offerings.

Within the Supply Chain Managerial Accounting offering, select the Receipt Accounting and Cost
Accounting offerings. Click Save and Open Project.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Expand the Supply Chain Managerial Accounting and Define Supply Chain Managerial Accounting
Configuration. There are two folders there: Define Receipt Accounting and Define Cost Accounting.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

For Costing, open the following folders: Define Cost Accounting > Define Subledger Accounting Rules >
Define Subledger Accounting Methods.
For Receipt Accounting, open the following folders: Define Receipt Accounting > Define Subledger
Accounting Rules > Define Subledger Accounting Methods.

Click Go to Task icon to select the Scope against either of four tasks using Manage Accounting Methods,
Manage Subledger Journal Entry Rule Sets, Manage Journal Line Rules or Manage Account Rules. For
each, from the drop down list, choose Select and Add, then click Apply and then the Go to Task button.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Select Subledger Application as Cost Management and click Save.

Select all the tasks under Define Subledger Accounting Methods (Subledger Application Setup) for Cost
Management.

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 ii. Seeded Journal Line Rules: Cost Accounting
In Journal Line Rules you can see the event classes and the accounting line types for each of event class
for Cost Accounting.
Click the Go to task icon of Mange Journal Line Rules. Set the Created by Application option to Yes,
select Event Class, then click Search. The list of seeded Accounting Line Types for the selected Event
Class is displayed.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 Event Classes
These are the accounting line
types for the event class
‘Miscellaneous Transaction’

You can customize Journal Line Rules as required.

Select the seeded Journal Line Rule that you want to duplicate, then select Actions > Duplicate.
For example you may want to customize the Oracle pre-seeded ‘Cost Variance’ journal line rule. To do
this you would highlight the seeded ‘Cost Variance’ template and duplicate it either by selecting Actions
> Duplicate.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

You can enter the Journal Line Rule name as ‘Cost Variance 1’, Short Name ‘COST_VARIANCE1’,
Description ‘Cost Variance 1’. Then click Save and Close.

Verify that customized Journal Lines Rules is created.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 iii. Setup User defined Account Rules– Seeded Values, how to make
use of it

After setting up the event classes, define Accounting Rules.

Select Go To Task icon for ‘Manage Account Rules’ under the respective application.

All the steps to implement SLA for Cost Accounting and Receipt Accounting are the same except for the
accessing the user interface. You select Define Cost Accounting or Define Receipt Accounting in the
implementation plan depending on the application.

a. If you search all Account Rules with Created by Application set to Yes, a list of Oracle seeded
Account Rule templates is displayed.

Many accounting rules were pre-seeded. You can identify which rules were pre-seeded by looking at
the Create by column. The seeded Account rule doesn’t work as is because it is not in the context of
your chart of accounts. It is provided as a template. You can copy the seeded template rules and create
a new custom rule that works for your chart of accounts.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 b. Select the seeded account rule which you want to duplicate, then select Actions > Duplicate.

For example, if you want to customize the Oracle pre-seeded ‘Cost of Goods Sold’ account rule, then
highlight the seeded Cost of Goods Sold template and duplicate it either by selecting Actions >
Duplicate.
You can enter the Account Rule Name as ‘Cost of Goods Sold 2’, Short Name ‘COGS_2’, Description
‘Cost of Goods Sold 2’ and Chart of Accounts ‘Operations Accounting Flex’, then select Save and Close.

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 ** Be cautious in selecting the chart of accounts when customizing the Account Rule. Once the chart of
accounts is assigned to Account Rule, it cannot be edited later.

c. The Edit Account Rule window is displayed.

You can specify the account selection criteria in the Rules region; however, do not change any
values in the Conditions region.

In the Rules region, the Value Type has four options. Source is only applicable to the Accrual Account
Rule in Receipt Accounting and the Offset Account Rule in Cost Accounting when the account is
retrieved from the Purchase Order in the case of the Accrual account and from the Miscellaneous
Transaction in the case of the Offset account.
If you select Value Type as Source, then the Value must be set as Code Combination Identifier.

You select the account from the chart of accounts for the Value Type of Constant.

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Additional Value Types are Accounting Rule and Mapping Set.
These values are for more advanced Subledger Account users and pull account values from the
Accounting Rule and Mapping set specified.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Click on Save and Close.
Once the Account Rules are setup, click Done to go back to the Implementation Project.

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 iv. User defined Journal Entry Rule Sets (JERS): to assign user
defined Account Rules to JERS

Next you set up the Journal Entry Rule Sets. You create copes of seeded Journal Entry Rule Sets to
associate the user-defined account rules you set up previously.
Select the Go to Task icon for Manage Subledger Journal Entry Rule Sets. This is where you will assign
the user-defined Account Rules to the Transaction and Event Types.

a. Set the Created by Application option to Yes and then click Search. The seeded Journal Entry
Rules Set templates are displayed.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

b. For user-defined Account Rules to assign to Journal Entry Rule Set/Transaction Type, create a
copy of the seeded Journal Entry Rule Set by highlighting the row and clicking the Copy icon or
selecting Action > Duplicate. Enter Name, Short Name, Description and Chart of Accounts.
Select Save and Close.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

c. For each Journal Line, update the Account Combination Rule with the names of user-defined
Account Rules created in steps 6.
User defined JERS

User defined Account Rule

created in earlier step.

d. Save and close after you have replaced all the Account Combination Rules within the Journal
Entry Rule Set. Your original search results are displayed. Repeat the previous steps until all
desired Journal Entry Rule Sets are updated.
e. Ensure that customized Journal Entry Rule Sets are in active status. Set them to active by
selecting Action > Activate, then Save and Close.

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v. Assign User-defined Journal Account Rule Set to Accounting
Method “Standard Accrual”

a. Once you set up the user-defined Journal Entry Rule Sets, you must assign each to the
Accounting Method.
b. When setting up a custom SubLedger Accounting Method, Oracle pre-seeded Sub Ledger
Accounting Method “Standard Accrual” must be copied (duplicated). You add the previously
created customized Journal Entry Rule Sets to the duplicated Sub Ledger Accounting Method
Standard Accrual for the Costing & Receipt Accounting Subledgers.
Select Manage Accounting Methods Go to Task icon.

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c. Set Created by Application to Yes and click Search. The pre-seeded accounting method Standard
Accrual assigned to the Primary and Secondary Ledgers is displayed. Duplicate SubLedger
Accounting Method Standard Accrual.

d. Edit the Accounting Method. Add the previously customized Journal Entry Rule Sets by adding a
new row and entering the Event Class and Event Type. Then enter the Journal Entry Rule Set in
the Rule Set field.
When you add the customized Journal Entry Rule Sets to customized SubLedger Accounting
Method, delete the existing Rule Set under that SubLedger Accounting Method. Enter the
Effective Start Date and save the row.

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 For example, if you want to add the Journal Entry Rule Set “COGS Recognition 1” to the
customized SubLedger Accounting Method (duplicated for Standard Accrual) Standard
Accrual_Testing, then you must delete the existing rule set COGS Recognition under the
customized SubLedger Accounting Method. If this is not done, then the new Journal Account
Rule Set cannot be activated unless you specify the effective end date for the existing account
rule COGS Recognition.

New User defined JERS as created in earlier step

e. Continue until all the Event Types and Journal Entry Rule Sets are assigned to the Accounting
Method.

vi. Activate Journal Entry Rule Set Assignments

You can activate the Accounting Method on the Edit Accounting Method window or as a separate
process from the implementation project.
On the Edit Accounting Method window, click Activate, then Yes to continue. Be sure to click Save
after the Accounting Method is activated.

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To run the Accounting Method activation as a separate process from the Implementation Project, go
back to the Implementation Project and Go to Task Define Subledger Accounting Methods > Activate
Subledger Journal Entry Rule Set Assignments.

Run this process for the Accounting Method, Subledger Application and Incomplete Status Only set
to No.

Note: This is a more fool-proof way to activate an Accounting Method especially if many changes
have been done to the Journal Entry Rule Sets.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 The Subledger Accounting setup is now done for CMR and CST. You should now be able to create
entries for Cost Accounting or create entries for Receipt Accounting to Draft or Final Account Costed
transactions.

vii. Preview Accounting Results

Run the Review Cost Accounting Distributions and Review Receipt Accounting Distributions in Draft
mode.

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

 The Cost accounting transactions enquiry will
show the accounting entries that have been
created once SLA rules are defined and Cost
Accounting has created the entries (the entries
are posted through SLA to GL).

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9

Appendix

1. Document covering accounting events (transactions for which accounting needs to be defined)
for Inventory and Manufacturing transactions. This document also lists down the accounting
distributions created by the Fusion Cost Accounting solution for these Accounting Events.

2. Document covering the detailed steps on how to use Subledger Accounting for Receipt
Accounting (Though we have given detailed steps above for setting-up SLA for Cost
Management and same can be used as handy for Receipt Accounting also, attached is the
document available on SLA setup steps for Receipt Accounting, in case user wants to refer this
directly for Receipt Accounting SLA setup)

Fusion Costing: Subledger Accounting Setup Documentation Release 1.0.9