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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.

• 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

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What we set out to address

Doing Business Globally is Complex
Top Drivers of Complexity

1 2 3 4 5 6 7 8

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
Direct impact on Finance

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

Source: PWC, 9th Annual Global CEO Survey

Make it Simpler to do your job Control Costs by Managing Complexity Major Focus Standardizing operating practices and controls Standardizing policies and business rules Standardizing and integrating finance systems Adopting best practices Optimizing the finance organization and its reporting structure Reducing reliance on spreadsheets Source: PWC Management Barometer 69% 66% 59% 58% 52% 50% Senior executives say simplification is driving the Finance agenda 33% .

and processes across the entire enterprise Implement a shared services model * 27% 73% Transactional Activities Control Activities Decision Support. 2005 * Deloitte Consulting. rules. 2006 . Performance Mgmt 80% Adopt best practices or simplify processes across the entire enterprise The Agile CFO. IBM Business Consulting Services.Make it Easier to do Your Job How Finance Spends its Time 26% % Yet To… 47% 50% 60% Improve processes or rationalize technologies Standardize policies.

Customers: Centralize. to lower cost and increase performance A$+$ Easy Reporting Transparent Audit.and Compliant Analytics €+$ + € Comprehensive and compliant processing Controlled Transaction Entry . to be more competitive Think Globally. to make the right decisions Manage Globally. Standardize Work Globally. 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 $ Financial Data for Management . Reconciliation & Drilldown Corp. Simplify.

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

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

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

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

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

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

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 .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.

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

<Insert Picture Here> Subledger Accounting Work Think Manage .

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 3rd Party Systems Work in Process Receivables Projects • Streamline closing process with common posting engine • Auditable and transparent entries accessible with full drilldown Purchasing Payables .Centralized Accounting Policies Greater Control. Rules. Transparency and Auditability • Internal control and compliance with multiple accounting policies through user-defined accounting rules 3rd Party Systems Dr Cr General Ledger General Ledger Centralized Accounting Model.

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

100 Underlying Misc expense 01.7000010.3100060.836 ABC Supplies 12.000 Paris: supplies 400 Nantes: supplies 100 Nice: supplies 300 VAT@17% 1.9100020.000 Accounts Payable 01.000 Description Debit Credit Paris: furniture 10.200 Records” Misc expense 01.Subledger Accounting Transaction Level Compliance • National Daily Journal Requirements • Internal Control: Central Definitions.636 12.9100010.636 .300 VAT 01.636 12.9100020. 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 01.100 Misc expense 01.9100020.

000 3.000) (75. etc.000 General Ledger SLA Detail Payables Vendor Vendor Vendor Vendor Total I II III IX (250.000 200.000 3.400.000 300.000 250.000 300.000 3.000) (200.000 50.000) (300.000.000 750.000 775.000 Debit Credit 150.000 1.500.000 300.700.000 2.000 150.000 100.000 150.200.000) .000) (501.100 500.000.000 300.000 150.500.000 300.000 1.000 - Opening Balance SUBLEDGER ACCOUNTING Receivables Customer Customer Customer Customer Customer Total One Two Three Four Five 250.000 500.000 300.000) (501.000 750.000 - 24.750.500.000 50.000) (100.) sources 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 Closing Balance Opening Balance Debit Credit Closing Balance 100 1.000 24.000 500.000.000) (650.000 900.000) 1.000 300.000 3.000 975.000 2.000.000 450.500.000.000) (150.000 (150. payment.000 725.500.000 400.000 150.000 1. and that both tie to the document (invoice.000 100.000.000) (100.000 2.000 2.000 1.000.000) (750.000 500.500.000 200.000 3.700.000 1.500.000.000) (250.000.800.000 1.100) (3.000 10.000 2.000.000 1.000 800.000) (100.000 300.000 75.000 150.Ticked & Tied SLA Controls that GL Balances and SLA Balances tie.000 (650.000 100.000) (250.000 1.500.000 (750.000 1.000) 1.000) (225.000 150.800.000 300.000 100.000 200.500.000 10.000 350.100) - 3.

Multiple Accounting Representations Global Compliance – Statutory and Stock Market Ledger A French Rules Plan Comptable French Calendar Ledger B US GAAP US COA US Calendar Multiple Ledgers EUR 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. GL in synch Subledger Balances .SLA keeps the Subledgers & GL tied out Keep the auditors happy! Subledger Applications Accounting Configurations Journal Entry Setup General Ledger Accounting Events Accounting Program Subledger Journal Entries GL Journal Entries and Balances Subledger Accounting Service Reconciled: Transactions (& adjustments) Docs.

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

2M Eur (Currency) on March 31.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. 2006 (Calendar) according to IAS/IFRS definitions (Accounting Method) Reporting Currency .

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

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

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] .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.

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

<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 Adjustment Ledger UK Adj Ledger Corporate • Automate GAAP / IAS adjustments in an adjusting ledger • Eliminate within a Set with GCS • Consolidate Formally in FCH • 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 • Map from a non-conforming COA with a GCS Ledger • Division X Worldwide Ledger Set .

an Adjusting Segment or an Adjusting Ledger? Adjusting Segment Corp. wants “Just the adjustments.Corp GAAP known Balances are enough (Full drill down available) Adjusting Ledger Corp.Corp GAAP administered See they’ve been properly adjusted to our rules Secondary Ledger Corp.When to use a Secondary Ledger. wants a complete Parent GAAP & Currency edition of the Sub’s books Subsidiary books are quite alien to parents Inventory is one of the big differences National chart of accounts is radically different from corporate Parent Controllership Mexico plant. US parent Every petty cash slip . thank you” Mapping gets us most of the way to Parent Inventory is the big difference Manageable series of reclassifications Regional Controllership . wants GL balances per Parent GAAP Subsidiary books are pretty similar to parents No inventory National chart of accounts is clearly related to IAS IFRS or GAAP balances National Controllership .

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

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

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

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

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

and pay the Accounts transaction taxesfor itself they owe Legal Entity in a Ledger Establishments business between and across your registered companies Do Files with full legal documentation Intercompany Bank Model or BSVs Legal Entity: Ledger their money to pay Registrations Have your registered companies useVehicle for compliance with Authorities their bills. etc. et cetera . • Isolate legal compliance from management needs Group Complies & your registered companies • Track GRE/LE Files. Pays • Make your compliance flow more easily Maintains Et Cetera. file. 11i its Subledger Accounting Setup Manager Registrations Documents Operating Files Assign books.Get the LE Right Compliance Falls Into Place Transaction Actual Registered Let’s put LEs to work Business Taxes Companies. bookkeeping rules and 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.

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

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

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

legal entity. inventory item categorization.Centralized Global Tax Less Complex Global Tax Compliance Business Needs • Tax content for certain countries Automation • Vertex and Taxware integration for U. • 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.S. and accounting event. 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. rules. Solution .

RTF .PDF.Security enabled Tax Transactions Taxes. Global Visibility Single Interface for Transactions Calculate Tax Amount Tax Status & Rate Taxable Basis Transparent Integration with Tax Partner Services  Extensible  Service Oriented Architecture Receivables … Tax Reports . Assurance  Efficiency. HTML.Oracle E-Business Tax Processing taxes for transactions and reporting Transactions Purchasing Parties Payables Places Products Sales Orders Processes Determine Applicable Regimes Taxes  Compliance. 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 Excel (Web ADI)  Control transaction entry with Intercompany Calendar  Fully Configurable Approval Rules  Flexible Security Model  Centrally defined Intercompany Accounts XML Publisher Reports Online Reconciliation Reporting Dr Cr General Ledger Subledger Accounting Receivables Payables .

AGIS at Work Rebilling a Corporate Cost from an USA HQ • GL Entries created for US subsidiaries • AP and AR Invoices created for France and Italy Inter Company California Company General Ledger Entries Subledger Invoices & Documents Illinois Company New York Company 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 OU C LE OU A OU B • Single bank account serves multiple Operating Units • Any and all Operating Units associated with a ledger can be permitted to use the bank account Inventory Receivables Projects Work in Process Purchasing Payables Assets 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 OU A • New Payments Module • New Bank Model • New Bank & Credit Card Features OU B OU C Single Payment Instruction Bank Payments Sub Ledger Accounting Invoices .

Banks Legal Entity Operating Units .

<Insert Picture Here> Sharing Services Work Think Manage .

Outsourcing Offshoring. Bank Internal Controls Manager SSCs (Formal) SLAs & Tax Inter-LE Informal Service Sharing Ledgers & Ledger Sets Process Efficiency Ledgers with Decentralized Depts. Distributed impact Formal SSCs At home or overseas Call Centers.All Together: Easier To Share Services Central processing. SAS 70. 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 .. Balancing Segments Shared Service Centralized Depts. Tax Engine MOAC across LEs. On Demand Ledger and Ledger Sets Subledger Accounting Intercompany.

and… • Think Globally • Global Ledger Sets – worldwide insight • Global Reporting Ledger Set manage their subledger data in Operating Units Multi-Org Access Control • Manage Globally • Global Accounting Rules • Global Set-up • Global Integration Inventory Receivables Payables Projects Work in Process Purchasing . Company Company Company …account for themselves in Ledgers.What the Architecture Gets You • Work Globally • • • • Global Order Desk Global Procurement Global Billing Global Dunning Release 12 Subsidiary LEs….

Share Services.no partitioning R12: Introduce partitioning without sacrificing processes Ledgers in Ledger Sets. maintain privacy Exploit Cross-OU Processes Yesterday: An LE Group in 1 SoB with 1 OU . New OUs Inventory Inventory Work in Process Work in Process Receivables Projects Inventory Work in Process Receivables Projects MOAC Purchasing Payables Assets Purchasing Payables Assets .

to make the right decisions Manage Globally. Tax €+$ Profitability Mgr. Ledgers SLA. Payments MOAC. 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 A$+$ OICM Ledger Sets. to be more competitive Think Globally. Bank. FCH General Ledger $ Corp. +300 Features TCA. LE . to lower cost and increase performance XML Publisher Reporting DBI.Release 12: The Global Business Release Work Globally. EPB + € Subledger Transactions Intercompany.


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