Overview of the New Financial Architecture in Oracle E-Business Suite Release 12 Mary Burns.
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<Insert Picture Here> Overview of the New Financial Architecture in Oracle E-Business Suite Release 12 Mary Burns 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. 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 <Insert Picture Here> What we set out to address Doing Business Globally is Complex Top Drivers of Complexity 1 National and International Laws & Regulations 2 Actions by Competitors 3 Changing Customer Requirements 4 Industry Standards and Regulations 5 Tax Codes 6 Changing Workforce Attitudes 7 International Reporting Standards 8 Language and Cultural Differences Direct impact on Finance Source: PWC, 9th Annual Global CEO Survey 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 Make it Simpler to do your job Control Costs by Managing Complexity Major Focus Standardizing operating practices and controls 69% 50% Standardizing policies and business rules 66% Standardizing and integrating finance systems 59% Adopting best practices 58% Optimizing the finance organization and its reporting structure 52% Senior executives say simplification is driving the Finance agenda Reducing reliance on spreadsheets 33% Source: PWC Management Barometer Make it Easier to do Your Job How Finance Spends its Time 26% 47% 27% Transactional Activities Control Activities Decision Support, Performance Mgmt % Yet To… 50% Improve processes or rationalize technologies 60% Standardize policies, rules, and processes across the entire enterprise 73% Implement a shared services model * 80% Adopt best practices or simplify processes across the entire enterprise The Agile CFO, IBM Business Consulting Services, 2005 * Deloitte Consulting, 2006 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 A$+$ Easy Reporting Transparent Audit, Reconciliation & Drilldown Comprehensive and compliant processing Financial Data for Management - and Compliant Analytics €+$ + € Controlled Transaction Entry Corp. Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar Joint Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar Parent Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar National Compliance Local Regulation National COA Local Calendar How Financials Release 12 Can Help The Global Business Release WORK GLOBALLY THINK GLOBALLY MANAGE GLOBALLY To Be More Competitive To Make the Right Decisions To Lower Cost & Increase Performance Financial Control & Reporting Performance Management Integration Credit-to-Cash Profitability Management Data Management Procure-to-Pay Business Intelligence Reporting Treasury & Tax Travel & Expense Asset Management Governance, Risk & Compliance Global: 1. 2. Of, relating to, or involving the entire earth; worldwide: global peace; global monetary policies, etc. Comprehensive; total: a... global, generalized sense of well-being <Insert Picture Here> Release Twelve The Global Business Release: A New Financial Architecture Global Financial Architecture 6 Major Initiatives 1. Ledger and Ledger Sets 2. Multi-Org Access Control 3. Subledger Accounting 4. Tax Engine 5. Intercompany 6. Bank Model General Ledger Sets Ledger & Ledger Dr Cr Subledger Accounting (SLA) Tax Engine Multi-Org Access Control Inter Company Inventory Work in Process Bank Model Receivables Purchasing Payables Projects <Insert Picture Here> Multi-Org Access Control Work Think Manage MOAC: Multi-Org Access Control Role based access to Operating Units Perform multiple tasks across operating units without changing responsibilities Belgium Holland Denmark Legal Entity Legal Entity Legal Entity Belgium Holland Denmark Operating Unit Operating Unit Operating Unit Responsibility SingleResponsibility Responsibility Responsibility Functional Tasks Order Management Dunning, Collections, Billing Requisition, Demand & Purchase Orders Receiving & Drop Ship Invoice Receipt, Disbursement Customer Data Management Accounting Setup Purpose Built Cross OU “Desks” Shared Services Shared Service Product Reference Order Management Order Management Dunning, Collections, Billing Receivables Requisition, Demand & Purchase Orders Procurement Receiving & Drop Ship Supply Chain Management Invoice Receipt, Disbursement Customer Data Management Accounting Setup Payables Trading Community Architecture Accounting Setup Manager Multiple Organization Access Control Summary 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 Multi-Org Access Control In practice Select Operating Units In daily use Select Classify Unit Operating Organization classification as operating unit Run Reports Across Operating Units <Insert Picture Here> Subledger Accounting Work Think Manage Centralized Accounting Policies Greater Control, Transparency and Auditability • Internal control and compliance with multiple accounting policies through user-defined accounting rules General GeneralLedger Ledger 3rd Party Systems Dr Cr Centralized Accounting Model, Rules, Engine and Repository • Single source of truth for all subsystem accounting activity with a common data model and repository • Accounting, reconciliation and reporting facilitated by centralized data model Inventory Receivables Projects 3rd Party Systems Work in Process Purchasing Payables • Streamline closing process with common posting engine • Auditable and transparent entries accessible with full drilldown Subledger Accounting Centralized Rules, Common Repository: Global Control Ledger What it is French Rules Plan Comptable French Calendar EUR Dr Cr Subledger Accounting • Accounting Rules • SarBox & 8th Dir. • User Editable • Subledger Daybooks • • • • • Payables Invoice (Journals) Subledger Balancing Reports, inquiries, open items, et cetera Multiple Representations Common Posting to GL Ledgers Real time or Periodic Some Benefits • Faster, Easier • • • • • Reconciliation Corporate Rules = Accounting Standardization Local Rules = Improved Local Compliance Automate “Apples to Apples” Adjustments Improved Auditability Improved Internal Control Subledger Accounting Transaction 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 Event Class: Invoices Reconciliation Event: Invoice Approved Ledger: France (EUR) Platform GL Date: 20-Sep-2005 Description: Office supplies • “In accordance Type Account with the Asset purchase 01.9100010.100 Underlying Misc expense 01.9100020.100 Misc expense 01.9100020.200 Records” Misc expense 01.9100020.300 VAT 01.3100060.000 Accounts Payable 01.7000010.000 Description Debit Paris: furniture 10,000 Paris: supplies 400 Nantes: supplies 100 Nice: supplies 300 VAT@17% 1,836 ABC Supplies 12,636 Credit 12,636 12,636 Ticked & Tied SLA Controls that GL Balances and SLA Balances tie, and that both tie to the document (invoice, payment, etc.) sources Opening Balance Debit Credit Opening Balance GENERAL LEDGER Cash Receivables Inventory Assets Prepayments Payables Accruals Shares Previous Results Balance Sheet Sales COGS R&D S&M G&A-Fin G&A-IT G&A-HR Period Income Income Statement 100 1,000,000 500,000 100,000 1,000 (750,000) (250,000) (100,000) (501,100) - - Debit Credit 3,500,000 3,000,000 1,200,000 2,750,000 3,500,000 1,500,000 2,800,000 2,700,000 50,000 10,500,000 10,500,000 3,000,000 1,500,000 300,000 300,000 300,000 150,000 150,000 300,000 24,000,000 24,000,000 Closing Balance 750,100 500,000 200,000 100,000 1,000 (650,000) (300,000) (100,000) (501,100) (3,000,000) 1,500,000 300,000 300,000 300,000 150,000 150,000 300,000 - Closing Balance SUBLEDGER ACCOUNTING Receivables Customer Customer Customer Customer Customer Total One Two Three Four Five 250,000 350,000 100,000 100,000 200,000 1,000,000 150,000 250,000 1,500,000 800,000 300,000 3,000,000 400,000 450,000 1,400,000 750,000 500,000 3,500,000 150,000 200,000 150,000 500,000 1,000,000 75,000 725,000 1,000,000 2,800,000 900,000 50,000 775,000 975,000 2,700,000 (150,000) (75,000) (200,000) (225,000) (650,000) Payables Vendor Vendor Vendor Vendor Total I II III IX (250,000) (100,000) (150,000) (250,000) (750,000) General Ledger SLA Detail Multiple Accounting Representations Global Compliance – Statutory and Stock Market Ledger A Ledger B French Rules Plan Comptable French Calendar US GAAP US COA US Calendar EUR Multiple Ledgers EUR or Dr Cr Subledger Accounting Payables Invoice 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 SLA keeps the Subledgers & GL tied out Keep the auditors happy! Subledger Applications Accounting Events Accounting Configurations Accounting Program Journal Entry Setup Subledger Journal Entries Subledger Accounting Service Reconciled: Transactions (& adjustments) Docs, SLA, GL in synch General Ledger Subledger Balances GL Journal Entries and Balances <Insert Picture Here> Ledgers and Ledger Sets Work Think Manage Ledger One Repository of Financial Truth Ledger B US GAAP US COA US Calendar EUR Implements the 4 C’s: Accounting Method Chart of Accounts Calendar Currency The balance on Creditors (COA) is 4.2M Eur (Currency) on March 31, 2006 (Calendar) according to IAS/IFRS definitions (Accounting Method) Reporting Currency Ledger Sets Global Information At A Glance Ledger A Ledger B French Rules Plan Comptable French Calendar US GAAP US COA US Calendar EUR EUR Reporting Currency Ledger Sets Global Information At A Glance Share: Chart of Accounts Calendar Ledger Set Ledger C Ledger A Ledger B French Rules Plan Comptable French Calendar US GAAP US COA US Calendar EUR EUR 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 US GAAP US COA US Calendar USD Ledger D US GAAP US COA US Calendar AUD Reporting Currency 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] Data Access, Definition Access • Data Access Sets • Grant and tailor access to Ledgers and Balancing Segment Values (i.e. Companies, Stores, Branches, etc.) Privileges View GL Manager Write Accountant France Ledger Canada Ledger US Ledger • Definition Access Sets – separate from data security • Share, restrict definitions; privileges to view, modify, etc. <Insert Picture Here> Ledger Considerations Ledger Sets – Work them your way Management Ledger Set US Ledger Set Legal Ledger US1 Legal Ledger US2 Legal Ledger US3 Adjustment Ledger US Corporate Ledger Set adjustments eliminations UK Ledger Set Legal Ledger UK1 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 Adjustment Ledger UK Adj Ledger Corporate • 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 When to use a Secondary Ledger, an Adjusting Segment or an Adjusting Ledger? Adjusting Segment Adjusting Ledger Secondary Ledger Corp. wants GL balances per Parent GAAP Corp. wants “Just the adjustments, thank you” Corp. wants a complete Parent GAAP & Currency edition of the Sub’s books Subsidiary books are pretty similar to parents Mapping gets us most of the way to Parent Subsidiary books are quite alien to parents No inventory Inventory is the big difference Inventory is one of the big differences National chart of accounts is clearly related to IAS IFRS or GAAP balances Manageable series of reclassifications National chart of accounts is radically different from corporate National Controllership - Corp GAAP known Regional Controllership - Corp GAAP administered Parent Controllership Mexico plant, US parent Balances are enough (Full drill down available) See they’ve been properly adjusted to our rules Every petty cash slip <Insert Picture Here> Global Business Functions Work Think Manage Legal Entity: Your Registered Companies Public Company (ultimate parent) 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 Management Orgs Divisions, LOBS, Plants, Cost Centers, Whatever = “Decision Making Tags” Subsidiary Public Company Company (regional parent) Subsidiary Company Subsidiary Company (business parent) Subsidiary Company Subsidiary Company Subsidiary Company Subsidiary Company • Parent companies (LEs) “own or control” subsidiaries (LEs) • No outside ring - must pick an LE • LEs create commercial transactions LEs: Why and What? Why We Care • LEs pay the taxes - need tax registrations • Trade between LEs needs intercompany What we’ve done • Addresses, Officers, etc. • Enabled First Party stamp • LEs own the money and bank accounts • Added Establishments: map Registrations to Authorities • LEs file the accounts, take care of accounting • GRE/LE not touched • LEs comply with whatever needs compliance: “legal” in LE • Authorities as TCA parties • LE Configurator Tabulate your Registered Companies and other forms of LE Setup and maintain: Legal Entities, Establishments, Jurisdictions, Legal Authorities, Legal Addresses Where LE fits in… Transaction Taxes Complies & Files, Pays Registrations Files with Authorities Exists Locally Establishments Actual Registered Companies, etc. GRE/LE Legal Entity Accounts for itself in a Ledger or BSVs Files Registrations with Authorities Business Group Ledger Maintains its Subledger Documents in many OUs Default Legal Context (DLC) Et Cetera, 11i Operating Units Legal Entity: Vehicle for compliance Get the LE Right Compliance Falls Into Place Transaction Actual Registered Let’s put LEs to work Business Taxes Companies, etc. • Isolate legal compliance from management needs Group Complies• & Track your registered companies GRE/LE Files, Pays • Make your compliance flow more easily Maintains Et Cetera, 11i its Subledger Accounting Setup Manager Registrations Operating Filesbooks, bookkeeping rules and Documents Assign currency management with Authorities in many OUs Units to your registered companies Default Legal Exists EBusiness Tax Context (DLC) Locally Have your registered companies calculate, file, and pay the Accounts transaction taxesfor theyitself owe Legal Entity Intercompany in a Ledger Establishments Do business between and across your registered companies or BSVs with full legal documentation Files Bank Model Legal Entity: Ledger companies use their money to pay Registrations Have your registered Vehicle for compliance with Authorities their bills, et cetera <Insert Picture Here> Accounting Setup Manager (ASM) Work Think Manage Centralized Set-up Accounting Setup Manager Define Legal Entities & Associated Rules Ensure Complete & Accurate Setup via Online Checklist Define Multiple Ledgers for Rules & Currencies Set Accounting Rules for All EBS Apps One Place to manage Your Global Accounting Rules, Currencies, Ledgers, And Ledger Sets <Insert Picture Here> E-Business Tax Work Think Manage Centralized Global Tax Less Complex Global Tax Compliance Business Needs Solution • Tax content for certain countries Automation • 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 • Tax registrations and tax reporting codes Local Compliance • Tax lines determine applicable taxes • Configurable tax reporting templates • Single set up for all Oracle applications Information Visibility • Use of E-Business Suite components such as trading partner geography, trading partner classification, legal entity, inventory item categorization, and accounting event. Oracle E-Business Tax Processing taxes for transactions and reporting Transactions Purchasing Parties Compliance, Assurance Efficiency, Global Visibility Single Interface for Transactions Payables Places Products Sales Orders Processes Determine Applicable Regimes Taxes Tax Status & Rate Taxable Basis Transparent Integration with Tax Partner Services Extensible Service Oriented Architecture Receivables … Calculate Tax Amount Tax Reports - PDF, HTML, RTF - Security enabled Tax Transactions Taxes, Rules <Insert Picture Here> Advanced Intercompany (AGIS) Work Think Manage Advanced Global Intercompany System Address the Top Barrier to a Fast Close Advanced Global Intercompany System Web UI Subledger Invoices & Documents Open Interfaces / API Generate subledger invoices Control transaction entry with Intercompany Calendar Excel (Web ADI) Online Reconciliation Reporting Fully Configurable Approval Rules Flexible Security Model Centrally defined Intercompany Accounts Dr General Ledger XML Publisher Reports Cr Subledger Accounting Receivables Payables AGIS at Work Rebilling a Corporate Cost from an USA HQ Inter Company • AP and AR Invoices created for France and Italy California Company General Ledger Entries Illinois Company • GL Entries created for US subsidiaries New York Company Subledger Invoices & Documents France Company Italy Company <Insert Picture Here> Banking Model Work Think Manage Centralized Banking Shared Services Disbursements • Bank account is now associated with LE entity rather than Operating Unit LE OU A Inventory Work in Process OU B OU C Receivables Purchasing Payables Projects Assets • Single bank account serves multiple Operating Units • Any and all Operating Units associated with a ledger can be permitted to use the bank account Plus Centralized Credit Card Model Credit Card Encryption Supplier & Customer Banks in TCA Bank Model: Example of What You Can Do Pay invoices from different OUs with 1 instruction • New Payments Module • New Bank Model OU A • New Bank & Credit Card Features OU B Single Payment Instruction OU C Bank Sub Ledger Accounting Invoices Payments Banks Legal Entity Operating Units <Insert Picture Here> Sharing Services Work Think Manage All Together: Easier To Share Services Central processing, Distributed impact Formal SSCs At home or overseas Call Centers, Outsourcing Offshoring, SAS 70, On Demand SSCs (Formal) SLAs & Tax Inter-LE Ledger and Ledger Sets Subledger Accounting Intercompany, Tax Engine MOAC across LEs, Bank Internal Controls Manager Informal Service Sharing Ledgers & Ledger Sets Process Efficiency Ledgers with Decentralized Depts. Balancing Segments Shared Service Centralized Depts.. MOAC across OUs Infrastructure Normal Business Intercompany (Serves Informal and Formal) Organizational Access Practice Bank Model Cross Org Processes Tax Banking Model Inter Unit Accounting What the Architecture Gets You • Work Globally • • • • Global Order Desk Global Procurement Global Billing Global Dunning • Think Globally • Global Ledger Sets – worldwide insight • Global Reporting • Manage Globally • Global Accounting Rules • Global Set-up • Global Integration Release 12 Subsidiary LEs…. Company Company Company …account for themselves in Ledgers, and… Ledger Set manage their subledger data in Operating Units Multi-Org Access Control Inventory Work in Process Receivables Purchasing Payables Projects Share Services, maintain privacy Exploit Cross-OU Processes Yesterday: An LE Group in 1 SoB with 1 OU - no partitioning R12: Introduce partitioning without sacrificing processes Ledgers in Ledger Sets, New OUs MOAC Inventory Inventory Work in Process Work in Process Receivables Purchasing Projects Payables Assets Inventory Work in Process Receivables Purchasing Projects Payables Assets Release 12: The Global Business Release Work Globally, to be more competitive $ Think Globally, to make the right decisions Manage Globally, to lower cost and increase performance OICM XML Publisher Reporting DBI, FCH Ledger Sets, Ledgers Profitability Mgr, EPB General Ledger Subledger SLA, Tax A$+$ MOAC, +300 Features TCA, LE + € Transactions Intercompany, Bank, Payments €+$ Corp. Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar Joint Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar Parent Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar National Compliance Local Regulation National COA Local Calendar QUESTIONS