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Overview of the New Financial Architecture in Oracle E-Business Suite Release 12

Overview of the New Financial Architecture in Oracle E-Business Suite Release 12 . Mary Burns.

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Overview of the New Financial Architecture in Oracle E-Business Suite Release 12

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  1. Overview of the New Financial Architecture in Oracle E-Business Suite Release 12 Mary Burns

  2. 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.

  3. Agenda • What We Set Out To Address • Release Twelve: The Global Release • Global Architecture • MultiOrg Access Control • Subledger Accounting • Ledgers and Ledger Sets • Ledger Considerations • Global Business Functions • Legal Entities • Accounting Set Up Manager • E-Business Tax • Advanced Intercompany • Banking Model

  4. <Insert Picture Here> What we set out to address

  5. Doing Business Globally is ComplexTop Drivers of Complexity National and International Laws & Regulations Actions by Competitors Changing Customer Requirements Industry Standards and Regulations Tax Codes Changing Workforce Attitudes International Reporting Standards Language and Cultural Differences 1 2 Globalization is unstoppable. Regardless of geography, industry or income, companies are globalizing to gain new customers and access new markets. Is this a good thing? Nearly two-thirds of the CEOs we surveyed are positive about the impact that globalization will have on their organizations over the next three years. Source:9th Annual Global CEO Survey – Globalization and Complexity; PwC 2006 3 4 5 6 7 8 Direct impact on Finance Source: PWC, 9th Annual Global CEO Survey

  6. Make it Simpler to do your jobControl Costs by Managing Complexity 50% Senior executives say simplification is driving the Finance agenda Source: PWC Management Barometer

  7. Make it Easier to do Your Job % Yet To… 26% 47% 27% • The Agile CFO, IBM Business Consulting Services, 2005 • * Deloitte Consulting, 2006

  8. Corp. ComplianceUS GAAP / IAS-IFRS Corp COA Corp Calendar $ Joint ComplianceUS GAAP / IAS-IFRS Corp COA Corp Calendar A$+$ Parent ComplianceUS GAAP / IAS-IFRSCorp COA Corp Calendar €+$ + National Compliance Local Regulation National COA Local Calendar € Customers:Centralize, Simplify, Standardize Work Globally, to be more competitive Think Globally, to make the right decisions Manage Globally, to lower cost and increase performance Easy Reporting Transparent Audit, Reconciliation& Drilldown Analytics FinancialData forManagement - andCompliant Comprehensive and compliant processing ControlledTransactionEntry

  9. How Financials Release 12 Can HelpThe Global Business Release THINK GLOBALLY To Make the Right Decisions WORK GLOBALLY To Be More Competitive MANAGE GLOBALLY To Lower Cost & Increase Performance Financial Control & Reporting Performance Management Integration Profitability Management Data Management Credit-to-Cash Procure-to-Pay Business Intelligence Reporting Treasury & Tax Global: • Of, relating to, or involving the entire earth; worldwide: global peace; global monetary policies, etc. • Comprehensive; total: a... global, generalized sense of well-being Travel & Expense Asset Management Governance, Risk & Compliance

  10. <Insert Picture Here> Release Twelve The Global Business Release: A New Financial Architecture

  11. -% General Ledger General Ledger Ledger & Ledger Sets Ledger & Ledger Sets Subledger Accounting (SLA) BankModel Tax Engine InterCompany Multi-OrgAccessControl Inventory Dr Cr Receivables Projects Payables Purchasing Work in Process Global Financial Architecture • 6 Major Initiatives • Ledger and Ledger Sets • Multi-Org Access Control • Subledger Accounting • Tax Engine • Intercompany • Bank Model

  12. Work Think Manage <Insert Picture Here> Multi-Org Access Control

  13. Functional Tasks • Order Management • Dunning, Collections, Billing • Requisition, Demand & Purchase Orders • Receiving & Drop Ship • Invoice Receipt, Disbursement • Customer Data Management • Accounting Setup SingleResponsibility MOAC: Multi-Org Access ControlRole based access to Operating Units Perform multiple tasks across operating units without changing responsibilities Holland Legal Entity Belgium Legal Entity Denmark Legal Entity Denmark Operating Unit Belgium Operating Unit Holland Operating Unit Responsibility Responsibility Responsibility

  14. Purpose Built Cross OU “Desks”Shared Services

  15. Multiple Organization Access ControlSummary of Changes • Security Profiles for data security • MO: Security Profile • List of operating units for a responsibility • Defined in HR • OU field on UI • all transactions • setup data specific to OU, like transaction type • Enhanced Multi-Org Reporting and Processing • Ledger/Ledger Set parameter on accounting reports and processes • OU parameter on other standard reports and processes • For example: submit the Payables Open Interface Import w/OU param null to import all records across all OUs

  16. Multi-Org Access ControlIn practice SelectOperating Units In daily use Run ReportsAcrossOperating Units Select Operating Unit classification Classify Organization as operating unit

  17. Work Think Manage <Insert Picture Here> Subledger Accounting

  18. General Ledger General Ledger Centralized Accounting Model, Rules, Engine and Repository 3rd Party Systems Inventory Dr Cr Receivables Projects Centralized Accounting PoliciesGreater Control, Transparency and Auditability • Internal control and compliance with multiple accounting policies through user-defined accounting rules • Single source of truthfor all subsystem accounting activity with a common data model and repository • Accounting, reconciliation and reporting facilitated by centralized data model • Streamline closing process with common posting engine • Auditable and transparent entries accessible with full drilldown 3rd Party Systems Payables Purchasing Work in Process

  19. What it is Some Benefits Ledger French Rules Plan Comptable French Calendar EUR • Accounting Rules • SarBox & 8th Dir. • User Editable • Subledger Daybooks (Journals) • Subledger Balancing • Reports, inquiries, open items, et cetera • Multiple Representations • Common Posting to GL Ledgers • Real time or Periodic • Faster, Easier Reconciliation • Corporate Rules = Accounting Standardization • Local Rules = Improved Local Compliance • Automate “Apples to Apples” Adjustments • Improved Audit- ability • Improved Internal Control Dr Cr SubledgerAccounting Payables Invoice Subledger AccountingCentralized Rules, Common Repository: Global Control

  20. Event Class: Invoices Event: Invoice Approved Ledger: France (EUR) GL Date: 20-Sep-2005 Description: Office supplies Type Account Description Debit Credit Asset purchase 01.9100010.100 Paris: furniture 10,000 Misc expense 01.9100020.100 Paris: supplies 400 Misc expense 01.9100020.200 Nantes: supplies 100 Misc expense 01.9100020.300 Nice: supplies 300 VAT 01.3100060.000 VAT@17% 1,836 Accounts Payable 01.7000010.000 ABC Supplies 12,636 12,63612,636 Subledger AccountingTransaction Level Compliance • National Daily Journal Requirements • Internal Control: Central Definitions, Eliminate overrides • Policy Enforcement in Volume Processing • Transparent Accounting Rules • Debits & Credit at the point of the event • Automate Foreign Operation adjustments • ReconciliationPlatform • “In accordancewith theUnderlyingRecords”

  21. SLA Controls that GL Balances and SLA Balances tie,and that both tie to the document (invoice, payment, etc.)sources General Ledger SLA Detail Ticked & Tied

  22. Multiple Accounting RepresentationsGlobal Compliance – Statutory and Stock Market Ledger B Ledger A Multiple Ledgers French Rules Plan Comptable French Calendar EUR US GAAPUS COA US Calendar EUR or Dr Cr Subledger Accounting Single subledger transaction can create multiple accounting representations and in multiple currencies Chose to use an alternative Ledger - or just an Adjustment Ledger or segment Payables Invoice

  23. Transactions (& adjustments) Accounting Events Journal Entry Setup SLA keeps the Subledgers & GL tied outKeep the auditors happy! Subledger Applications Accounting Configurations General Ledger Subledger Journal Entries Accounting Program GL Journal Entries and Balances Subledger AccountingService Subledger Balances Reconciled:Docs, SLA, GL in synch

  24. Work Think Manage <Insert Picture Here> Ledgers and Ledger Sets

  25. Ledger B • Implements the 4 C’s: • Accounting Method • Chart of Accounts • Calendar • Currency US GAAPUS COA US Calendar EUR LedgerOne Repository of Financial Truth The balance on Creditors (COA) is 4.2M Eur (Currency) on March 31, 2006 (Calendar) according to IAS/IFRS definitions (Accounting Method) Reporting Currency

  26. Ledger B US GAAPUS COA US Calendar EUR Ledger Sets Global Information At A Glance Ledger A French Rules Plan Comptable French Calendar EUR Reporting Currency

  27. Share: • Chart of Accounts • Calendar Ledger B US GAAPUS COA US Calendar EUR Ledger Sets Global Information At A Glance Ledger Set Ledger C US GAAP US COA US Calendar USD Ledger A French Rules Plan Comptable French Calendar EUR Ledger D US GAAP US COA US Calendar AUD • Key benefits to many Ledgers in one set • Decision-driving business information always available • Simpler processing and General Ledger management • Data and definitions that can be shared and secured Reporting Currency

  28. Currency in Release 12 • Transaction Currencies • Accounting Currency in Primary Ledger • Reporting Currency in Primary Ledger • More Accounting Currencies in Secondary Ledgers • For every transaction OR • For SLA Posting level / GL activity level • Balance level Translation or Remeasurement in Ledgers – within Ledger sets, run at one click • Balance & Activity level Translation or Remeasurement in Financial Consolidation Hub • Enhanced Revaluation • [Functional Currency term dropped: conflicts with IAS 21 / FAS 52]

  29. Data Access Sets Grant and tailor access to Ledgers and Balancing Segment Values (i.e. Companies, Stores, Branches, etc.) Privileges View Write GL Manager Accountant France Ledger Canada Ledger US Ledger Data Access, Definition Access • Definition Access Sets – separate from data security • Share, restrict definitions; privileges to view, modify, etc.

  30. <Insert Picture Here> Ledger Considerations

  31. ManagementLedger Set Corporate Ledger Set US Ledger Set Adjustment Ledger US Legal Ledger US2 Legal Ledger US3 Legal Ledger US1 adjustments eliminations UK Ledger Set Adjustment Ledger UK Legal Ledger UK1 Adj Ledger Corporate Legal Ledger UK2 • Automate GAAP / IAS adjustments in an adjusting ledger • Eliminate within a Set with GCS • Consolidate Formally in FCH • Map from a non-conforming COA with a GCS Ledger • Set of 26 Ledgers in one country • Euro Zone in One Ledger Set • My Corporate Set in US GAAP • Statutory Set for Country Y Subs • Division X Worldwide Ledger Set Ledger Sets – Work them your way

  32. When to use a Secondary Ledger, an Adjusting Segment or an Adjusting Ledger?

  33. Work Think Manage <Insert Picture Here> Global Business Functions

  34. PublicCompany(ultimate parent) SubsidiaryCompany(regional parent) SubsidiaryCompany(business parent) PublicCompany SubsidiaryCompany SubsidiaryCompany SubsidiaryCompany SubsidiaryCompany SubsidiaryCompany Legal Entity: Your Registered Companies Legal Authorities Countries, States, Local,Agencies, Taxation,Registrars, Regulators... Regulates Complies Legal Entities Registered Companies,Funds, Partnerships…Inc. LLC. Ltd. SA. GmBH. Etc. “exist in the outside world” Managed & analyzed by • Parent companies (LEs) “own or control” subsidiaries (LEs) • No outside ring - must pick an LE • LEs create commercial transactions Management Orgs Divisions, LOBS, Plants, Cost Centers, Whatever =“Decision Making Tags”

  35. LEs: Why and What? • Addresses, Officers, etc. • Enabled First Party stamp • Added Establishments:map Registrations to Authorities • GRE/LE not touched • Authorities as TCA parties • LE Configurator • LEs pay the taxes - need tax registrations • Trade between LEsneeds intercompany • LEs own the moneyand bank accounts • LEs file the accounts, take care of accounting • LEs comply with whatever needscompliance: “legal” in LE What we’ve done Why We Care

  36. Tabulate your Registered Companies and other forms of LE Setup and maintain: Legal Entities, Establishments, Jurisdictions, Legal Authorities, Legal Addresses

  37. Where LE fits in… Transaction Taxes -Complies &Files, Pays Actual RegisteredCompanies, etc. BusinessGroup Maintains its SubledgerDocuments in many OUsDefault LegalContext (DLC) GRE/LE Et Cetera, 11i LegalEntity Registrationswith Authorities Files OperatingUnits Accounts for itself in a Ledger or BSVs ExistsLocally Establishments Files Legal Entity: Vehicle for compliance Ledger Registrationswith Authorities

  38. Let’s put LEs to work • Isolate legal compliance from management needs • Track your registered companies • Make your compliance flow more easily Accounting Setup Manager Assign books, bookkeeping rules and currency management to your registered companies EBusiness Tax Have your registered companies calculate, file, and pay the transaction taxes they owe Intercompany Do business between and across your registered companies with full legal documentation Bank Model Have your registered companies use their money to pay their bills, et cetera Get the LE RightCompliance Falls Into Place Transaction Taxes -Complies &Files, Pays Actual RegisteredCompanies, etc. BusinessGroup Maintains its SubledgerDocuments in many OUsDefault LegalContext (DLC) GRE/LE Et Cetera, 11i LegalEntity Registrationswith Authorities Files OperatingUnits Accounts for itself in a Ledger or BSVs ExistsLocally Establishments Files Legal Entity: Vehicle for compliance Ledger Registrationswith Authorities

  39. Work Think Manage <Insert Picture Here> Accounting Setup Manager (ASM)

  40. Centralized Set-upAccounting Setup Manager Define Legal Entities& Associated Rules Ensure Complete & AccurateSetup via Online Checklist One Place to manage Your Global AccountingRules, Currencies,Ledgers, And Ledger Sets Define Multiple Ledgers for Rules & Currencies Set Accounting Rulesfor All EBS Apps

  41. Work Think Manage <Insert Picture Here> E-Business Tax

  42. Centralized Global TaxLess Complex Global Tax Compliance Business Needs Solution Automation • Tax content for certain countries • Vertex and Taxware integration for U.S. • Integrity checks during setup process Constant Changes in Tax Laws and Regulations • Date effective setup • Tax rules flow for change or creating rules • Tax simulator for setup, rules, and transactions Local Compliance • Tax registrations and tax reporting codes • Tax lines determine applicable taxes • Configurable tax reporting templates Information Visibility • Single set up for all Oracle applications • Use of E-Business Suite components such as trading partner geography, trading partner classification, legal entity, inventory item categorization, and accounting event.

  43. Parties  Compliance, Assurance  Efficiency, Global Visibility Places Purchasing Products Single Interface for Transactions Payables Processes Calculate TaxAmount Tax Status& Rate DetermineRegimes ApplicableTaxes Taxable Basis  Extensible  Service Oriented Architecture Sales Orders Transparent Integration with Tax Partner Services Receivables Tax Transactions Taxes, Rules Tax Reports - PDF, HTML, RTF- Security enabled Oracle E-Business TaxProcessing taxes for transactions and reporting Transactions …

  44. Work Think Manage <Insert Picture Here> Advanced Intercompany (AGIS)

  45. SubledgerInvoices &Documents Online Reconciliation Reporting XML Publisher Reports Dr Cr Subledger Accounting General Ledger Receivables Payables Advanced Global Intercompany SystemAddress the Top Barrier to a Fast Close Advanced GlobalIntercompanySystem Web UI Open Interfaces / API • Generate subledger invoices • Control transaction entry with Intercompany Calendar • Fully Configurable Approval Rules • Flexible Security Model • Centrally defined Intercompany Accounts Excel (Web ADI)

  46. SubledgerInvoices &Documents InterCompany General Ledger Entries AGIS at WorkRebilling a Corporate Cost from an USA HQ • GL Entries created for US subsidiaries • AP and AR Invoices created for France and Italy CaliforniaCompany IllinoisCompany New YorkCompany FranceCompany ItalyCompany

  47. Work Think Manage <Insert Picture Here> Banking Model

  48. Centralized BankingShared Services Disbursements • Bank account is now associated with LE entity rather than Operating Unit • Single bank account serves multiple Operating Units • Any and all Operating Units associated with a ledger can be permitted to use the bank account LE OU B OU A OU C Inventory Receivables Receivables Projects Projects Plus Work in Process Assets Payables Payables Purchasing • Centralized Credit Card Model • Credit Card Encryption • Supplier & Customer Banks in TCA

  49. OU A OU B Single Payment Instruction OU C Bank Payments Sub Ledger Accounting Invoices Bank Model: Example of What You Can DoPay invoices from different OUs with 1 instruction • New Payments Module • New Bank Model • New Bank & Credit Card Features

  50. Operating Units Legal Entity Banks

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