Designing a Chart of Accounts for a Global Company going to Oracle E-Business Suite Release 12. Helene Abrams CEO eprentise

Transcription

1 Designing a Chart of Accounts for a Global Company going to Oracle E-Business Suite Release 12 Helene Abrams CEO eprentise habrams@eprentise.com

2 Webinar Mechanics Open and close your panel. View, select, and test your audio. Submit text questions. Raise your hand. Q&A addressed at the end of the session. Everyone will receive an within 24 hours with a link to view a recorded version of today s session. Polling questions will be presented during the session. If you want CPE credit for this webinar, you must answer all of the polling questions. 2

3 Learning Objectives After completion of this program you will be able to: Objective 1: List the five fundamental design criteria for creating a forward-thinking chart of accounts. Objective 2: Explain how to design a chart of accounts to accommodate future growth. Objective 3: Describe how a good design enables you to reduce costs, streamline reporting, and provide global visibility. Objective 4: Identify how to leverage Release 12 features like subledger accounting and ledger sets. 3

4 Agenda Introduction Chart of accounts (COA) basics Designing a good COA 5 fundamental criteria for a good COA design Accommodating future growth Reduced costs, streamlined reporting, and global visibility Leveraging Release 12 features Global visibility, local compliance 4

5 : Transformation Software for E-Business Suite Company Overview: Established 2006 l Helene Abrams, CEO eprentise Can Consolidate Multiple EBS Instances Change Underlying Structures and Configurations Chart of Accounts, Other Flexfields Inventory Organizations Operating Groups, Legal Entities, Ledgers Calendars Costing Methods Resolve Duplicates, Change Sequences, IDs Separate Data So Our Customers Can: Reduce Operating Costs and Increase Efficiencies Shared Services Data Centers Adapt to Change Align with New Business Initiatives Mergers, Acquisitions, Divestitures Pattern-Based Strategies Make ERP an Adaptive Technology Avoid a Reimplementation Reduce Complexity and Control Risk Improve Business Continuity, Service Quality and Compliance Establish Data Quality Standards and a Single Source of Truth 5

6 Chart of Accounts Basics: The Flexfield Example Structure Segments, Values, Code Combinations Company Business Unit Cost Center Region Account East West 2222 Values East.1111 Code Combination 6

7 Chart of Accounts Basics: Segments The EBS accounting flexfield accommodates up to 30 segments for categorizing transactions Structurally analogous to columns in a table Have defined lengths for the values they contain Answering the questions Who, What, Where, Why, and possibly How helps identify segments that will give your accounting flexfield the ability to classify each transaction Common segment examples: Cost Center, Department, Fund, Location, Product Line 7

8 Flexfields in the Form Code Combinations Accounting Key Flexfield Value Descriptions 8

9 Chart of Accounts Basics: Hierarchy The accounting flexfield incorporates parent-child relationships among values Roll-up Groups A collection of parent values for a given segment Used to create summary accounts The most detail is at the lowest level Summary Accounts Hierarchical rollup of children and/or parents Faster reporting Account balance inquiries 9

10 5 Fundamental Criteria for a Good COA 1. There is only one type of information in each segment. 2. Information in the chart of accounts is not repeated from other modules. 3. There is enough room to expand within each segment. 4. Summary accounts and rollup groups fall naturally within ranges. 5. You are able to report on critical business components with standard reports without resorting to spreadsheets. FSGs and other reports should be easy to create. 10

11 Criteria 1: One Type of Information Information should not overlap across segments. If each segment contains one (and only one) type of information, you: Reduce the maintenance of keeping information accurate in two places Reduce the possibility of introducing errors into your accounting Case: If your cost center has the same type of information as a business unit segment, there is no need to implement both. Case: You shouldn t have a Department segment value such as HR Sacramento, CA if there is also a Location segment in the chart. 11

12 Criteria 2: Information Not Repeated The accounting flexfield should not repeat information that exists in other modules of EBS. Reduced maintenance and errors (similar to Criteria 1) Case: If you are implementing Oracle Projects modules, there is no need to have a project segment in your accounting flexfield. Case: If you are implementing Receivables, then there is no need for a customer segment. 12

13 Criteria 3: Enough Room to Expand Define your segment lengths to be long enough to accommodate future values added. Note: Although it likely won t be an issue, the maximum number of characters for a code combination string is 240, so there are upper limits on how long you can define your segments. When designing values be sure to allow enough room for future growth within each rollup group Increment by at least 5 within each group Increment by 10 if the group is likely to be a high growth area. Example: If you have a location segment, allow enough room to add ten additional values between each of your lowest levels. Your Location segment hierarchy might look like this: US Midwest Detroit Metropolitan Area Ann Arbor Canton Plymouth Canada 13

14 Criteria 4: Use Logical Ranges Ranging your values logically promotes streamlined reporting, security, and maintenance. Include a whole range of values in your rule (cross validation, security) and FSG report definitions Exclude specific values if needed Minimize the number of cross validation rules needed (under 50 using logical ranges compared to hundreds or thousands when not using logical ranges) Use numbers only randomly. Avoid using intelligent numbers For items with embedded intelligent numbers like Products, introduce non-intelligent numbers as well 14

15 CVR Implications on COA Design Out of Range Cross-validation rules can get messy if your chart of accounts values are not organized in logical ranges. Rule elements are much more complex due to the inability to rely on value ranges for exclusion Example Goal: Prevent revenue account values between and from being used with any department values other than the following 5 values (we ll begin with the familiar global Include element):

16 CVR Implications on COA Design Example Goal: Prevent revenue account values between and from being used with any department values other than the following 5 values (we ll begin with the familiar global Include element):

17 CVR Implications on COA Design Cont. Example Goal: Prevent revenue account values between and from being used with any department values other than the following 5 values (we ll begin with the familiar global Include element):

18 CVR Implications on COA Design

19 Criteria 5: No Reliance on Spreadsheets Be able to get the information you need from built-in EBS reports. Real-time value No errors introduced by use of spreadsheets Streamlined workflow, lower resource requirements, and reduced maintenance No need to integrate with 3 rd party reporting applications Capitalize on a master row set for FSG reports. Allows you to generate different reports without having to rewrite each report 19

20 A Global Chart of Accounts Primary ledger is single source of truth for all accounting, reconciliation, and analytical reporting Consistency but flexibility to accommodate different requirements External reporting without relying on a separate financial consolidation system Drill down to individual transactions in the subledgers without translation Transparency (3-5 years) to meet IFRS standards and international auditing requirements Common metrics and reporting structures with common interpretation Enterprise Visibility with Subledger Accounting and Secondary Ledgers 20

21 A Global Chart of Accounts Reduced Costs Reduce complexity of configurations Cross validation rules Security rules Reporting within ranges No conversions required for data warehouse queries, drill-down to subledgers, ad-hoc reporting Facilitate movement to shared service centers Single COA to manage Standardized training Enterprise governance and control of new combinations Reduce redundancies 21

22 A Global Chart Location CCY Location Op Unit BalSeg BalSeg GPS Book BalSeg Bk Seg BalSeg GPN Book BalSeg Seg Bk of Accounts Reduced Complexity US Canada Sri Lanka Singapore Philippines Maldives China India Taiwan USD CAD USD LKR USD EUR GBP AUD SGD USD PHP USD USD CNY USD INR USD TWD USD US Comerica Canada Canada Sri Lanka Sri Lanka Sri Lanka Sri Lanka Singapore Philippines Sri Lanka Maldives Singapore Philippines Taiwan China India China India NAm USD NAm CAD AsiaPac LKR AsiaPac EUR AsiaPac GBP AsiaPac AUD AsiaPac SGD AsiaPac PHP AsiaPac USD AsiaPac CNY AsiaPac INR GPS LKR GPS US GPS CNY GPS INR GPS TWD GPS MOP GPS MYR US SOB GPN PHI GPN CHN GPN IND GPN TWN GPN MAC GPN MLS Macau MOP Taiwan AsiaPac TWD GPS BND GPN BRU Streamline the month- and year-end closing processes No more messy financial consolidations using spreadsheets R12 eliminates the need for using and maintaining multiple charts of accounts Hong Kong Malaysia Brunei UK Russia DolEx US DloEx Mexico DolEx Guatemala HKD MYR BND GBP EUR USD SGD CAD AUD HKD CHF DKK JPY NOK NZD SEK RUB USD MXN GTQ Macau Hong Kong Malaysia Brunei UK UK UK UK UK UK UK UK UK UK UK UK UK AsiaPac MOP AsiaPac HKD AsiaPac MYR AsiaPac BND Europe GBP Europe EUR Europe USD Europe SGD Europe CAD Europe AUD Europe HKD Europe CHF Europe DKK Europe JPY Europe NOK Europe NZD Europe SEK GPS CAD GPS EUR GPS GBP GPS AUD GPS SGD GPS HKD GPS CHF GPS DKK GPS JPY GPS NOK GPS NZD GPS SEK GPS 301 US CAN SOB GPN SRL GPN SNG GPN HK UK SOB GPN RUS DOLEX US DOLEX MX DOLEX GT RUS DLX US SOB Eurofil EUR GPN EUR EUR Muzo CZK GPN MZO MZO 22

23 R12 Features Ledger Sets Open/Close periods Create journals Allocations across ledgers Recurring journals for all ledgers Elimination sets for all ledgers Translate and revalue balances View information without changing responsibilities View journals and account balances across ledgers Submit standard reports Create financial statements that include data for multiple ledgers 23

24 Global Visibility Local Compliance with R12 Subledger Accounting, Accounting Methods Builder Replaces Global Accounting Engine 24

25 Global COA Design Recommendations Add an intercompany segment take advantage of AGIS Add a segment to accommodate local requirements Ranges, rollups defined for each country to use Local bank accounts Statutory reporting Location segment (optional) but helps with security, cross validation Implement other modules for detailed tracking at a local level (through an OU) Project Accounting Collections Implement Multiple Reporting Currencies, secondary ledgers to report in different currencies 25

26 How Do You Leverage AGIS? Advanced Global Intercompany System Intercompany Balancing Intercompany Invoicing Intercompany Reconciliation/Eliminations Manual Intercompany Transactions Netting Process Common Chart of Accounts Intercompany Segment 26

27 Leveraging the Chart of Accounts for Global Operations Two ways to handle local/regulatory requirements Separate Segment Each country can use a range of values for their statutory requirements Analysis Segment Ranges Values Descriptions France Crédit Agricole Bank Account Droits D'enregistrement Tax Italy Intesa Sanpaolo Bank Account UK Barclays Bank Account VAT Tax Secondary Ledger 27

28 Conclusions Use the transition to R12 to redesign your COA if it is not optimized or to adopt a single COA if your organization is currently using multiple charts. As you are redesigning your COA, focus on the 5 fundamental criteria. One type of information per segment No repeated information from other EBS modules Leave room for future expansion and flexibility Use logical ranges Make sure you can get the reporting you need straight from the flexfield structure Design your chart with Ledger Sets, Secondary Ledgers, Subledger Accounting, AGIS in mind. 28

29 Transformation Software Solutions Two Product Lines FlexField Change chart of accounts in EBS Built-in Rules Changes data in all subledgers Retain all historical transactions Quick, easy project, low price point eprentise Software that remodels any setup data Reorganizes configuration, master, and transaction data Maintains all history resulting in a single source of truth Based on a source that is transformed into a target Enterprise-level scope project Metadata Analysis and intelligent knowledge repository 29

30 FlexField Software Process Flow Create new COA in E-Business Suite (Structure, Qualifiers) Install FlexField software (client/server) Run current baseline report set Pair accounting flexfields Map either segments and values or code combinations Create mapping file from software Add new values, combinations in Excel Load csv file into FlexField Software Resolve Exceptions Execute Changes Transform CCIDs Apply changes to history, subledgers Align balances Print audit report Run report set to reconcile 30

31 Mapping the Accounting Flexfield Either Segments and Values or Code Combinations New Mapping Must be Derived from Old Segment Values Segments Current Segment Current Segment Current Segments Company Cost Center Product Line + Cost Center Values or Code Combinations Current Value Current Values Current Value Company 01 Cost Centers CO-CC-ACT Company Cost Center New Segment + Location New Segments Line of Business Company 100 Activity 101 New Value New Value CO-CC-ACCT-LOC New Value New Segment 1:1 1:M* M:1 *Segment Level Only 1:1 M:1 31

32 Select the Source and Target Flexfield 32

33 FlexField Software to Change your EBS Chart of Accounts Map Segments and Values or Code Combinations Segment Mapping 1 1 Mapping M 1 Mapping 1 M Mapping 33

34 FlexField Software to Change your EBS Chart of Accounts Changes CCID everywhere All setups All subledgers All history Looks as though the new chart of accounts was part of the original implementation Full audit trail, drill down, roll up Built in exception reporting 34

35 Create Mapping Files Current Company Segment Values and Descriptions 1:M Mapping of Company to (Company and Business Unit) Current Region, Account, and Product Segment Values and Descriptions A B C D E F New CO New BU CO Description CO New CO Description Value Value Value New BU Description 1 01 North America Company 01 New Company 101 New Business Unit 2 02 Overseas Distribution 02 New Distribution Company 102 Overseas Operations BU 3 03 French Company 03 French Manufacturing Company 103 Project Mfg BU 4 27 Consulting Services Company 04 New Vision Consulting Ltd 104 Vision Consulting BU 5 95 Operation Elimination 05 Intercompany 195 Operations Elimination BU 6 99 Corporation (Vision Consolidation) 99 New Vision Consolidation 199 Vision Consolidation BU M:1 Mapping of (Region, Account, Product) to Account A B C D E F G H New Reg Reg Account Product Product New Account Account Description Account Value Description Value Value Description Description Value 1 01 Southwest 1400 SALES COMMISSIONS 001 computer SALES COMMISSIONS GENERAL 2 01 Southwest 1405 SALES COMMISSIONS - OTHER 002 hard drive SALES COMMISSIONS HARD DRIVE 3 02 Northeast 1410 SALES COMMISSIONS - RESERVE 001 computer SALES COMMISSION GENERAL 4 02 Northeast 1415 SALES COMMISSIONS SERVICES - SALES COMMISSION Services SUPPORT SERVICES 5 02 Northeast 1415 SALES COMMISSIONS SERVICES - SALES COMMISSION Services WARRANTY SERVICES 6 03 Southeast 1410 SALES COMMISSIONS - RESERVE 002 hard drive Exceptions: Account Type Mismatch Multiple Descriptions Splitting Balancing Segment Length of Value SALES COMMISSIONS - RESERVE New Company and Business Unit Segment Values and Descriptions New Account Segment Values and Descriptions 36

36 Create Mapping File from FlexField 37

37 Load Mapping Files into FlexField Overwrites existing segment value mappings Repeat Loading until you are satisfied with mappings and have no exceptions 38

38 Apply Changes to Database 39

39 Align Accounts 40

40 Merging Balances Balance Tables (GL, AX, XLA etc.) Unique constraint on code combination ID Forces one balance per code combination No other tables are affected Many old CCIDs mapped to the same new code combination Old CCID Entity Cost Center Account Interco Future Use Balance $100, $10, ($7,432.84) $102,

41 Export Current and New Code Combinations 42

42 Post-Change Steps (Not covered by Software) Hard-Coded (RICE Activities) Interfaces to third-party systems Data Warehouse Reports Workflows OFA Oracle Financial Analyzer Uses Ranges Approval Assignments Budget Assignments New EBS Features New Modules/Functionality Some Configuration New CoA, Ledgers Upgrade to R12 Definition of Target Testing and Cutover Strategy & Execution Rules (Use Business Logic) Cross Validation Consolidation Account Derivation Rules Accounting Generator Roll-up Groups Security Rules Summary Templates Mass Allocations Costing and Revenue Recognition Rules 43

43 Questions? 44

44 Thank You! Helene Abrams CEO - One World, One System, A Single Source of Truth - 45