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

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

• Mary Burns

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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
Oracles products remains at the sole discretion
of Oracle.
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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

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What we set out to address
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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
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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
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Direct impact on Finance
Source PWC, 9th Annual Global CEO Survey
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Make it Simpler to do your job Control Costs by
Managing Complexity
Major Focus
Standardizing operating practices and controls 69
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
Reducing reliance on spreadsheets 33
50 Senior executives say simplification is
driving the Finance agenda
Source PWC Management Barometer
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Make it Easier to do Your Job
How Finance Spends its Time

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
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The Agile CFO, IBM Business Consulting Services,
2005 Deloitte Consulting, 2006
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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
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How Financials Release 12 Can HelpThe Global
Business Release
WORK GLOBALLY To Be More Competitive
THINK GLOBALLY To Make the Right Decisions
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
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Release Twelve The Global Business Release A New
Financial Architecture
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Global Financial Architecture

• 6 Major Initiatives
• Ledger and Ledger Sets
• Multi-Org Access Control
• Subledger Accounting
• Tax Engine
• Intercompany
• Bank Model

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Multi-Org Access Control
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MOAC Multi-Org Access ControlRole based access
to Operating Units
Perform multiple tasks across operating units
without changing responsibilities
Holland Legal Entity
Denmark Legal Entity
Belgium Legal Entity
Belgium Operating Unit
Denmark Operating Unit
Holland Operating Unit
Responsibility
Responsibility
Responsibility
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Purpose Built Cross OU DesksShared 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 Payables
Customer Data Management Trading Community Architecture
Accounting Setup Accounting Setup Manager
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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

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Multi-Org Access ControlIn practice
SelectOperating Units In daily use
Run ReportsAcrossOperating Units
Select Operating Unit classification
Classify Organization as operating unit
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Subledger Accounting
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Centralized Accounting PoliciesGreater 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

3rd Party Systems
Payables
Purchasing
Work in Process
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Subledger AccountingCentralized Rules, Common
Repository Global Control
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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

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Ticked Tied
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Multiple Accounting RepresentationsGlobal
Compliance Statutory and Stock Market
Ledger B
Ledger A
Multiple Ledgers
US GAAPUS COA US Calendar EUR
French Rules Plan Comptable French 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
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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
ReconciledDocs, SLA, GL in synch
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Ledgers and Ledger Sets
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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
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Ledger Sets Global Information At A Glance
Ledger A
French Rules Plan Comptable French Calendar EUR
Reporting Currency
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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
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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

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Data Access, Definition Access

• Data Access Sets
• Grant and tailor access to Ledgers and Balancing
  Segment Values (i.e. Companies, Stores, Branches,
  etc.)

• Definition Access Sets separate from data
  security
• Share, restrict definitions privileges to view,
  modify, etc.

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Ledger Considerations
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Ledger Sets Work them your way
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When to use a Secondary Ledger, an Adjusting
Segment or an Adjusting Ledger?
Adjusting Segment AdjustingLedger SecondaryLedger
Corp. wants GL balances per Parent GAAP Corp. wants Just the adjustments, thank you Corp. wants a complete Parent GAAP Currency edition of the Subs 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 ControllershipMexico plant, US parent
Balances are enough(Full drill down available) See theyve been properly adjusted to our rules Every petty cash slip
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Global Business Functions
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Legal Entity Your Registered Companies
Legal Authorities Countries, States,
Local,Agencies, Taxation,Registrars,
Regulators...
Regulates
Complies
Legal Entities Registered Companies,Funds,
PartnershipsInc. 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
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LEs Why and What?

• Addresses, Officers, etc.
• Enabled First Party stamp
• Added Establishmentsmap 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 weve done
Why We Care
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Tabulate your Registered Companies and other
forms of LE
Setup and maintain Legal Entities,
Establishments, Jurisdictions, Legal Authorities,
Legal Addresses
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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
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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
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Accounting Setup Manager (ASM)
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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
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E-Business Tax
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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.

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Oracle E-Business TaxProcessing taxes for
transactions and reporting
Transactions

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Advanced Intercompany (AGIS)
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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)
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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
New YorkCompany
IllinoisCompany
ItalyCompany
FranceCompany
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Banking Model
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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 A
OU B
OU C
Projects
Receivables
Projects
Receivables
Inventory
Plus
Work in Process
Assets
Payables
Purchasing
Payables

• Centralized Credit Card Model
• Credit Card Encryption
• Supplier Customer Banks in TCA

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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

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Banks

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Sharing Services
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All Together Easier To Share ServicesCentral
processing, Distributed impact
Formal SSCsAt home or overseas Call Centers,
OutsourcingOffshoring, SAS 70, On Demand
Ledger and Ledger Sets Subledger
Accounting Intercompany, Tax Engine MOAC across
LEs, Bank Internal Controls Manager
SSCs(Formal) SLAs Tax Inter-LE
Shared Service Infrastructure(Serves Informal
and Formal) Organizational Access Cross Org
ProcessesBanking ModelInter Unit Accounting
Informal Service SharingProcess
Efficiency Decentralized Depts. Centralized
Depts.. Normal BusinessPractice
Ledgers Ledger Sets Ledgers with Balancing
Segments MOAC across OUs Intercompany Bank
ModelTax
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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-OrgAccessControl
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Share Services, maintain privacyExploit Cross-OU
Processes

• Yesterday An LE Group in 1 SoB with 1 OU - no
  partitioning

• R12 Introduce partitioning without sacrificing
  processes

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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
XML Publisher Reporting
OICM
DBI, FCH
Ledger Sets,Ledgers
Profitability Mgr, EPB
Subledger
SLA, Tax
MOAC, 300 Features
Intercompany, Bank, Payments
ü
TCA, LE
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