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

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Presentation on theme: "Overview of the New Financial Architecture in Oracle E-Business Suite Release 12 Mary Burns."— Presentation transcript:

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 What we set out to address

5 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 Doing Business Globally is Complex Top Drivers of Complexity Direct impact on Finance Source: PWC, 9 th 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: 9 th Annual Global CEO Survey – Globalization and Complexity; PwC 2006

6 Make it Simpler to do your job Control Costs by Managing Complexity 50% Senior executives say simplification is driving the Finance agenda Major Focus Standardizing operating practices and controls 69% Standardizing policies and business rules 66% Standardizing and integrating finance systems 59% Adopting best practices58% Optimizing the finance organization and its reporting structure 52% Reducing reliance on spreadsheets33% Source: PWC Management Barometer

7 Make it Easier to do Your Job 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 47% 26% 27% The Agile CFO, IBM Business Consulting Services, 2005 * Deloitte Consulting, 2006 How Finance Spends its Time % Yet To…

8 Controlled Transaction Entry Comprehensive and compliant processing Comprehensive and compliant processing Transparent Audit, Reconciliation & Drilldown Easy Reporting Analytics 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 Financial Data for Management - and Compliant National Compliance Local Regulation National COA Local Calendar Corp. Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar $ Joint Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar A$+$ € Parent Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar €+$ +

9 WORK GLOBALLY To Be More Competitive WORK GLOBALLY To Be More Competitive THINK GLOBALLY To Make the Right Decisions THINK GLOBALLY To Make the Right Decisions MANAGE GLOBALLY To Lower Cost & Increase Performance MANAGE GLOBALLY To Lower Cost & Increase Performance How Financials Release 12 Can Help The Global Business Release Financial Control & Reporting Credit-to-Cash Procure-to-Pay Treasury & Tax Performance Management Profitability Management Business Intelligence Integration Data Management Reporting Governance, Risk & Compliance Asset Management Travel & Expense Global: 1.Of, relating to, or involving the entire earth; worldwide: global peace; global monetary policies, etc. 2.Comprehensive; total: a... global, generalized sense of well-being

10 Release Twelve The Global Business Release: A New Financial Architecture

11 Global Financial Architecture Bank Model Tax Engine Inter Company General Ledger Ledger & Ledger Sets General Ledger Ledger & Ledger Sets Subledger Accounting (SLA) Dr Cr Projects Receivables Inventory Work in Process Purchasing Payables Multi-Org Access Control 6 Major Initiatives 1.Ledger and Ledger Sets 2.Multi-Org Access Control 3.Subledger Accounting 4.Tax Engine 5.Intercompany 6.Bank Model

12 Multi-Org Access Control ThinkWorkManage

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

14 Purpose Built Cross OU “Desks” Shared Services Shared Service Product Reference Order Management Dunning, Collections, Billing Receivables Requisition, Demand & Purchase Orders Procurement Receiving & Drop Ship Supply Chain Management Invoice Receipt, Disbursement Payables Customer Data Management Trading Community Architecture Accounting Setup Accounting Setup Manager

15 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

16 Multi-Org Access Control In practice Classify Organization as operating unit Select Operating Unit classification Select Operating Units In daily use Run Reports Across Operating Units

17 Subledger Accounting ThinkWorkManage

18 ProjectsProjects ReceivablesReceivables PayablesPayables 3 rd Party Systems InventoryInventory Centralized Accounting Policies Greater Control, Transparency and Auditability Internal control and compliance with multiple accounting policies through user-defined accounting rules 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 Streamline closing process with common posting engine Auditable and transparent entries accessible with full drilldown Centralized Accounting Model, Rules, Engine and Repository Centralized Accounting Model, Rules, Engine and Repository Dr Cr General Ledger Work in Process PurchasingPurchasing

19 Subledger Accounting Centralized Rules, Common Repository: Global Control Payables Invoice French Rules Plan Comptable French Calendar EUR Ledger Subledger Accounting Dr Cr Faster, Easier Reconciliation Corporate Rules = Accounting Standardization Local Rules = Improved Local Compliance Automate “Apples to Apples” Adjustments Improved Audit- ability Improved Internal Control Some Benefits Accounting Rules SarBox & 8 th 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 What it is

20 Subledger Accounting Transaction Level Compliance Event Class: Invoices Event: Invoice Approved Ledger: France (EUR) GL Date:20-Sep-2005 Description: Office supplies Type Account Description DebitCredit Asset purchase Paris: furniture10,000 Misc expense Paris: supplies 400 Misc expense Nantes: supplies 100 Misc expense Nice: supplies 300 VAT ,836 Accounts Payable ABC Supplies12,63612,636 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 Reconciliation Platform “In accordance with the Underlying Records”

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

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

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

24 Ledgers and Ledger Sets ThinkWorkManage

25 Ledger One Repository of Financial Truth US GAAP US COA US Calendar EUR Ledger B Reporting Currency Implements the 4 C’s: Accounting Method Chart of Accounts Calendar Currency 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 )

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

27 Ledger Sets Global Information At A Glance Ledger Set 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 US GAAP US COA US Calendar USD Ledger C US GAAP US COA US Calendar EUR Ledger B French Rules Plan Comptable French Calendar EUR Ledger A Share: Chart of Accounts Calendar Share: Chart of Accounts Calendar Ledger D Reporting Currency US GAAP US COA US Calendar AUD

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

30 Ledger Considerations

31 Ledger Sets – Work them your way Corporate Ledger Set adjustments eliminations UK Ledger Set US Ledger Set Legal Ledger UK1 Legal Ledger UK2 Adj Ledger Corporate Adjustment Ledger UK Adjustment Ledger US Legal Ledger US1 Legal Ledger US3 Legal Ledger US2 Management Ledger Set 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 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 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

32 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

33 Global Business Functions ThinkWorkManage

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

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

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

37 Where LE fits in… Transaction Taxes - Complies & Files, Pays Actual Registered Companies, etc. Et Cetera, 11i Maintains its Subledger Documents in many OUs Default Legal Context (DLC) Accounts for itself in a Ledger or BSVs Legal Entity Ledger Business Group GRE/LE Operating Units Registrations with Authorities Files Establishments Registrations with Authorities Legal Entity: Vehicle for compliance Legal Entity: Vehicle for compliance Exists Locally

38 Transaction Taxes - Complies & Files, Pays Actual Registered Companies, etc. Et Cetera, 11i Maintains its Subledger Documents in many OUs Default Legal Context (DLC) Accounts for itself in a Ledger or BSVs Legal Entity Ledger Business Group GRE/LE Operating Units Registrations with Authorities Files Establishments Registrations with Authorities Exists Locally Legal Entity: Vehicle for compliance Legal Entity: Vehicle for compliance Get the LE Right Compliance Falls Into Place 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

39 Accounting Setup Manager (ASM) ThinkWorkManage

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

41 E-Business Tax ThinkWorkManage

42 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 Business Needs Solution Local Compliance Tax registrations and tax reporting codes Tax lines determine applicable taxes Configurable tax reporting templates Centralized Global Tax Less Complex Global Tax Compliance 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 Tax Transactions Taxes, Rules Taxes, Rules Oracle E-Business Tax Processing taxes for transactions and reporting Determine Regimes Taxable Basis Calculate Tax Amount Tax Status & Rate Applicable Taxes Single Interface for Transactions Transparent Integration with Tax Partner Services Parties Places Products Processes Payables Receivables Purchasing Transactions Sales Orders … Tax Reports - PDF, HTML, RTF - Security enabled  Extensible  Service Oriented Architecture  Compliance, Assurance  Efficiency, Global Visibility

44 Advanced Intercompany (AGIS) ThinkWorkManage

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

46 Inter Company AGIS at Work Rebilling a Corporate Cost from an USA HQ California Company New York Company Illinois Company Italy Company France Company Subledger Invoices & Documents General Ledger Entries GL Entries created for US subsidiaries AP and AR Invoices created for France and Italy

47 Banking Model ThinkWorkManage

48 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 Assets Projects Receivables Payables Purchasing Projects Receivables Payables Inventory Plus Centralized Credit Card Model Credit Card Encryption Supplier & Customer Banks in TCA Centralized Banking Shared Services Disbursements Work in Process LE OU A OU B OU C

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

50 Banks Legal Entity Operating Units

51 Sharing Services ThinkWorkManage

52 Shared Service Infrastructure (Serves Informal and Formal) Organizational Access Cross Org Processes Banking Model Inter Unit Accounting All Together: Easier To Share Services Central processing, Distributed impact SSCs (Formal) SLAs & Tax Inter-LE Formal SSCs At home or overseas Call Centers, Outsourcing Offshoring, SAS 70, On Demand Informal Service Sharing Process Efficiency Decentralized Depts. Centralized Depts.. Normal Business Practice Ledgers & Ledger Sets Ledgers with Balancing Segments MOAC across OUs Intercompany Bank Model Tax Ledger and Ledger Sets Subledger Accounting Intercompany, Tax Engine MOAC across LEs, Bank Internal Controls Manager

53 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 What the Architecture Gets You Release 12 Subsidiary LEs …. … account for themselves in Ledgers, and … Ledger Set Company Projects Receivables Inventory Work in Process Purchasing Payables Multi-Org Access Control manage their subledger data in Operating Units

54 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 Assets Projects Receivables Payables Purchasing Projects Receivables Payables Inventory Work in Process Ledgers in Ledger Sets, New OUs MOAC Inventory Work in Process Assets Projects Receivables Payables Purchasing Projects Receivables Payables Inventory Work in Process

55 MOAC, +300 Features MOAC, +300 Features SLA, Tax SLA, Tax Ledger Sets, Ledgers XML Publisher Reporting Profitability Mgr, EPB Profitability Mgr, EPB Subledger 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 DBI, FCH Intercompany, Bank, Payments Intercompany, Bank, Payments General Ledger Transactions OICM TCA, LE National Compliance Local Regulation National COA Local Calendar Corp. Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar $ Joint Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar A$+$ € Parent Compliance US GAAP / IAS-IFRS Corp COA Corp Calendar €+$ +

56 A Q & Q U E S T I O N S

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