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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.
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
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 markets. Is this a good thing? Nearly
Tax Codes
6 Changing Workforce Attitudes
7 International Reporting Standards
8 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
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
69%
50%
Standardizing policies and business rules 66% Senior executives say
simplification is
driving the Finance
Standardizing and integrating finance 59%
systems agenda

Adopting best practices 58%

Optimizing the finance organization and 52%

its reporting structure

Reducing reliance on spreadsheets 33%

Source: PWCManagement Barometer

Make it Easier to do Your Job

How Finance Spends its Time

% Yet To…
50 Improve processes or
rationalize
26% 47% % technologies
60 Standardize policies,
rules, and processes
% across the entire
enterprise
27%
Transactional Activities Implement a shared
Control Activities
73
services model *
DecisionSupport, PerformanceMgmt %
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 Corp. Compliance
US GAAP / IAS-IFRS
Think Globally, $ Corp COA
to make the right decisions Corp Calendar

Manage Globally, Joint Compliance

US GAAP / IAS-IFRS
to lower cost and increase performance Corp COA
A$+$ Corp Calendar

Easy Reporting
Parent Compliance
Transparent US GAAP / IAS-IFRS
Audit, €+$ Corp COA
Reconciliation Financial
Financial Analytics Corp Calendar
& Drilldown Data
Data for
for
Management
Management
+ National Compliance
-- and
and Local Regulation
Compliant
Compliant
€ National COA
Comprehensive Local Calendar
and compliant Controlled
processing Transaction
Entry
How Financials Release 12 Can Help
The Global Business Release

WORK THINK MANAGE

GLOBALLY GLOBALLY GLOBALLY
To Be More To Make the Right To Lower Cost &
Competitive Decisions Increase
Financial Control &
Performance Management Performance
Integration
Reporting

Credit-to-Cash Profitability Management Data Management

Procure-to-Pay Business Intelligence Reporting

Treasury & Tax

Global:
1. Of, relating to, or involving the entire earth;
Travel & Expense
worldwide: global peace; global monetary
policies, etc.
Asset Management
2. Comprehensive; total: a... global, generalized
Governance, Risk & sense of well-being
Compliance
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Release Twelve
The Global Business Release:
A New Financial Architecture
 Global Financial Architecture

6 Major Initiatives
1. Ledger and General
Ledger Ledger
& Ledger
Ledger Sets Sets

2. Multi-Org
Dr Cr
Access Subledger Accounting (SLA)
Control
3. Subledger Tax Inter Bank
Accounting Engine Company
Mod
el
4. Tax Engine
5. Intercompany
Multi-
6. Bank Model Org
Access
Control Inventor Receivables Projects
y

Work in Purchasing Payables

Process
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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
Functional Tasks
Legal Entity Legal Entity Legal Entity  Order Management
 Dunning, Collections,
Billing
Belgium Holland Denmark  Requisition, Demand &
Operating Operating Operating Purchase Orders
Unit Unit Unit  Receiving & Drop Ship
Responsibility
SingleResponsibility
ResponsibilityResponsibility  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 & Procurement

Purchase Orders
Receiving & Drop Ship Supply Chain Management

Invoice Receipt, Disbursement Payables

Customer Data Management Trading Community Architecture

Accounting Setup 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

Run Reports
Select
Across
Operating
Classify Unit
Organization Operating
classification
as operating Units
unit
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Subledger Accounting

Work Think Manage

 Centralized Accounting Policies
Greater Control, Transparency and Auditability

• Internal control and

compliance with multiple
accounting policies through
General
GeneralLedger
Ledger
user-defined accounting rules
3rd • Single source of truth for all
Party
System subsystem accounting
s activity with a common data
Dr Cr Centralized Accounting
Model, model and repository
Rules, Engine and Repository
• Accounting, reconciliation
and reporting facilitated by
centralized data model
• Streamline closing process
Invento Receivable Project
ry s s
with common posting engine
3rd
Party
System • Auditable and transparent
s Work in Purchasin Payable entries accessible with full
Process g s
drilldown
Subledger Accounting
Centralized Rules, Common Repository: Global Control

Ledger What it is Some Benefits

French Rules
Plan • Accounting Rules • Faster, Easier
Comptable • SarBox & 8th Dir. Reconciliation
French
Calendar
• User Editable • Corporate Rules =
• Subledger Daybooks Accounting
EUR
(Journals) Standardization
Dr Cr • Subledger Balancing • Local Rules =
• Reports, inquiries, open Improved Local
Subledge items, et cetera Compliance
r • Multiple • Automate “Apples to
Accounti
Representations Apples” Adjustments
ng • Improved Audit-
• Common Posting to GL
Ledgers ability
• Real time or Periodic • Improved Internal
Control
Payables Invoice
 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
• Reconciliation Event Class: Invoices
Event: Invoice Approved
Platform Ledger: France (EUR)
GL Date: 20-Sep-2005
• “In accordance Description: Office supplies
Type Account Description Debit Credit
with the
Asset purchase 01.9100010.100 Paris: furniture 10,000
Underlying Misc expense 01.9100020.100 Paris: supplies 400
Misc expense 01.9100020.200 Nantes: supplies 100
Records” Misc expense 01.9100020.300 Nice: supplies 300
VAT 01.3100060.000 VAT@17% 1,836
Accounts Payable 01.7000010.000 ABC Supplies 12,636
12,636 12,636
 Ticked & Tied Opening
Balance Debit Credit
Closing
Balance

GENERAL LEDGER
Cash 100 3,500,000 2,750,000 750,100
SLA Controls that Receivables
Inventory
1,000,000
500,000
3,000,000
1,200,000
3,500,000
1,500,000
500,000
200,000

GL Balances and Assets

Prepayments
100,000
1,000
100,000
1,000

SLA Balances tie, Payables

Accruals
(750,000)
(250,000)
2,800,000 2,700,000
50,000
(650,000)
(300,000)

and that both tie Shares

Previous Results
(100,000)
(501,100)
(100,000)
(501,100)

to the document Balance Sheet

Sales
- 10,500,000 10,500,000
3,000,000
-
(3,000,000)

(invoice, payment, etc.) COGS

R&D
1,500,000
300,000
1,500,000
300,000

sources S&M
G&A-Fin
300,000
300,000
300,000
300,000
G&A-IT 150,000 150,000
G&A-HR 150,000 150,000
Period Income 300,000 300,000
Income Statement - 24,000,000 24,000,000 -

Opening Closing
Balance Debit Credit Balance

SUBLEDGER ACCOUNTING
Receivables
Customer One 250,000 150,000 400,000 -
Customer
Customer
Customer
Two
Three
Four
350,000
100,000
100,000
250,000
1,500,000
800,000
450,000
1,400,000
750,000
150,000
200,000
150,000
General Ledger
Customer Five 200,000 300,000 500,000 -
Total 1,000,000 3,000,000 3,500,000 500,000

Payables
Vendor
Vendor
Vendor
I
II
III
(250,000)
(100,000)
(150,000)
1,000,000
75,000
725,000
900,000
50,000
775,000
(150,000)
(75,000)
(200,000)
SLA Detail
Vendor IX (250,000) 1,000,000 975,000 (225,000)
Total (750,000) 2,800,000 2,700,000 (650,000)
Multiple Accounting Representations
Global Compliance – Statutory and Stock Market
Ledger A Ledger B Multiple Ledgers
French Rules US GAAP
Plan US COA
Comptable US
French Calendar
Calendar EUR
EUR
or
Dr Cr

Subledge
r Single
Accounti subledger
ng transaction
Chose to use an
can create
alternative
multiple
Ledger -
accounting
or just an
representations
Adjustment
Payables Invoice and in multiple Ledger or
currencies
segment
 SLA keeps the Subledgers & GL tied out
Keep the auditors happy!

Subledger Accounting Journal Entry General

Applications Configurations Setup Ledger

Subledger
Accounting Accounting Journal
Events Program Entries
GL
Subledger Accounting Journal
Service Entries
and
Transactions Reconciled: Subledger Balances
(& adjustments) Docs, SLA, GL in synch Balances
 <Insert Picture Here>

Ledgers and Ledger Sets

Work Think Manage

Ledger
One Repository of Financial Truth

Ledger B
US GAAP Implements the 4
US COA C’s:
US Accounting
Calendar Method
EUR Chart of
Accounts
The balanceCon Creditors (COA)
alendar
is 4.2MCEur (Currency)
urrency
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 US GAAP
Plan US COA
Comptable US
French Calendar
Calendar EUR
EUR

Reporting
Currency
 Ledger Sets
Global Information At A Glance
Share:
Ledger Chart of
Set Accounts
Calendar
Ledger C

US GAAP
US COA
Ledger A Ledger B US Calendar
French Rules US GAAP USD
Plan US COA
Comptable US
French Calendar Ledger D
Calendar EUR US GAAP
EUR US COA
US
Calendar
Key benefits to many Ledgers in one AUD
set
•Decision-driving business information
always available
Reporting
•Simpler processing and General Ledger Currency
management
•Data and definitions that can be shared
 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 Write
GL Manager 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
Corporate
US Ledger Set Ledger Set
Legal Ledger Legal Legal Ledger Adjustment
US1 Ledger US3 Ledger US
adjustments
US2 eliminations
UK Ledger Set
Legal Ledger Legal Ledger Adjustment Adj Ledger
UK1 UK2 Ledger UK Corporate

• Automate GAAP / IAS • Set of 26 Ledgers in one country

adjustments in an adjusting ledger
• Euro Zone in One Ledger Set
• Eliminate within a Set with GCS
• My Corporate Set in US GAAP
• Consolidate Formally in FCH
• Statutory Set for Country Y Subs
• Map from a non-conforming COA
with a GCS Ledger • Division X Worldwide Ledger Set
 When to use a Secondary Ledger, an
Adjusting Segment or an Adjusting Ledger?
Adjusting Adjusting Secondary
Segment Ledger Ledger
Corp. wants GL balances Corp. wants “Just the Corp. wants a complete
per Parent GAAP adjustments, thank you” Parent GAAP & Currency
edition of the Sub’s books
Subsidiary books are pretty Mapping gets us most of the Subsidiary books are quite
similar to parents way to Parent alien to parents
No inventory Inventory is the big Inventory is one of the big
difference differences
National chart of accounts is Manageable series of National chart of accounts is
clearly related to IAS IFRS reclassifications radically different from
or GAAP balances corporate
National Controllership Regional Controllership Parent Controllership
- Corp GAAP known - Corp GAAP administered Mexico plant, US parent
Balances are enough See they’ve been properly Every petty cash slip
(Full drill down available) adjusted to our rules
 <Insert Picture Here>

Global Business
Functions

Work Think Manage

Legal Entity: Your Registered Companies
Public
Legal Authorities Company
(ultimate parent)
Countries, States, Local,
Agencies, Taxation,
Registrars, Regulators... Subsidiary Subsidiary
Public
Company Company
Company
Regulates Complies (regional parent) (business parent)

Legal Entities Subsidiary Subsidiary Subsidiary

Registered Companies, Company Company Company
Funds, Partnerships…
Inc. LLC. Ltd. SA. GmBH. Etc.
“exist in the outside world” Subsidiary Subsidiary
Company Company
Managed & analyzed by
• Parent companies (LEs) “own or
Management Orgs control” subsidiaries (LEs)
Divisions, LOBS, Plants, • No outside ring - must pick an LE
Cost Centers, Whatever =
“Decision Making Tags” • LEs create commercial
transactions
LEs: Why and What?

Why We Care What we’ve done

• LEs pay the taxes • Addresses, Officers, etc.

- need tax registrations
• Enabled First Party
• Trade between LEs stamp
needs intercompany
• Added Establishments:
• LEs own the money map Registrations to
and bank accounts Authorities
• LEs file the accounts, • GRE/LE not touched
take care of accounting
• Authorities as TCA
• LEs comply with parties
whatever needs
compliance: “legal” in LE • 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 Actual Registered Business

Taxes Companies, etc. Group
-Complies &
Files, Pays GRE/LE
Maintains Et Cetera, 11i
Registrations Files
Legal its Subledger
Documents Operating
with Authorities
Entity in many OUs
Default Legal
Units
Exists
Locally Context (DLC)
Accounts
for itself
Establishments in a Ledger
or BSVs
Files Legal Entity:
Registrations Ledger
Vehicle for compliance
with Authorities
 Get the LE Right
Compliance Falls Into Place
Transaction Let’sActual
put LEsRegistered
to work Business
Taxes• Companies, etc.
Isolate legal compliance from management needs Group
-Complies & your registered companies
• Track
Files, Pays GRE/LE
• Make your compliance flow more easily
Maintains Et Cetera, 11i
Registrations Accounting Legal
Setup Manager its Subledger
Filesbooks, bookkeeping rules and Documents Operating
Assign currency management
with Authorities
Entity
to your registered companies
in many OUs
Default Legal
Units
Exists
EBusiness Tax
Locally Context (DLC)
Have your registered companies
Accounts calculate, file, and pay the
transaction taxesfor
theyitself
owe
Intercompanyin a Ledger
Establishments
Do business between and across your registered companies
or BSVs
with full legal documentation
Files
Bank Model
Legal Entity:
Registrations Have your registered Ledger
companies use their money to pay
Vehicle for compliance
with Authoritiestheir 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
One Place to manage
Define Multiple Ledgers
for Rules & Currencies Your Global
Accounting
Rules, Currencies,
Set Accounting Rules Ledgers,
for All EBS Apps 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 • Date effective setup

Tax Laws and • Tax rules flow for change or creating rules
Regulations • 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

• Use of E-Business Suite components such as trading partner geography,
Information Visibility
trading partner classification, legal entity, inventory item categorization,
and accounting event.
 Oracle E-Business Tax
Processing taxes for transactions and reporting
Transactions

Purchasing
 Compliance, Assurance  Efficiency, Global Visibility
Parties
Single Interface for Transactions
Payables Places
Calculate
Determine Applicable Tax Status Taxable Tax
Products Regimes Taxes & Rate Basis Amount
Sales Orders
Processes
Transparent Integration with Tax Partner Services

 Extensible  Service Oriented Architecture

Receivables
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 Subledger
Web UI
Invoices &
Documents

Open
Interfaces /
API
 Generate subledger invoices Online
 Control transaction entry with Reconciliation
Excel Reporting
Intercompany Calendar
(Web ADI)  Fully Configurable Approval Rules
 Flexible Security Model
 Centrally defined Intercompany XML
Accounts Publisher
Reports

Dr Cr

General Subledger
Ledger Accounting Receivable Payable
s s
 AGIS at Work
Rebilling a Corporate Cost from an USA HQ

• GL Entries created for

Inter US subsidiaries
Company
California • AP and AR Invoices
Company created for France
and Italy

Subledger
General Invoices &
Ledger Documents
Illinois Entries New
York France Italy
Company Company Company Company
 <Insert Picture Here>

Banking Model

Work Think Manage

Centralized Banking
Shared Services Disbursements
• Bank account is now
associated with LE
LE entity rather than
Operating Unit
OU A OU B OU C
• Single bank account
serves multiple
Operating Units
• Any and all Operating
Units associated with a
Inventory Receivable
Receivabl
es
s
Projects
Project
s
ledger can be
permitted to use the
Plu
Work in
Process Purchasin
g
Payables
Payables Assets
bank account
s
 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
OU A • New Bank Model
• New Bank & Credit Card
Features
OU B

OU C Single
Payment Bank Payments
Instruction

Sub Ledger
Accounting
Invoices
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 Ledger and Ledger Sets

At home or overseas Subledger Accounting
Call Centers, Outsourcing SSCs Intercompany, Tax Engine
(Formal)
Offshoring, SAS 70, MOAC across LEs, Bank
SLAs & Tax
On Demand Inter-LE Internal Controls Manager

Informal Service Sharing Ledgers & Ledger Sets

Process Efficiency Shared Service Ledgers with
Decentralized Depts. Infrastructure Balancing Segments
Centralized Depts.. (Serves Informal and Formal) MOAC across OUs
Normal Business Organizational Access Intercompany
Cross Org Processes
Practice Bank Model
Banking Model
Tax
Inter Unit Accounting
 What the Architecture Gets You

• Work Globally Release 12 Subsidiary LEs….

• Global Order Desk Company Company Company
• Global Procurement
• Global Billing …account for themselves in Ledgers,
• Global Dunning and…
• Think Globally Ledger Set
• Global Ledger Sets –
worldwide insight
manage their subledger data in Operating
• Global Reporting Units
• Manage Globally Multi-
• Global Accounting Org
Access
Inventor Receivables Projects
Rules Control
y

• Global Set-up
Work in Purchasing Payables
• Global Integration Process
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, MOAC
New OUs
Inventory
Inventory Inventory Receivable Projects
Receivable Projects
s s
Work in
Process Work in
Work in
Process Assets Process Purchasing Payables Assets
Purchasing Payables
 Release 12: The Global Business Release

Work Globally, Corp. Compliance

to be more competitive US GAAP / IAS-IFRS
Corp COA
$
Think Globally, Corp Calendar
to make the right decisions
Joint Compliance
Manage Globally, US GAAP / IAS-IFRS
Corp COA
to lower cost and increase performance A$+$ Corp Calendar

XML Publisher Parent Compliance

Reporting US GAAP / IAS-IFRS
OICM DBI, FCH
€+$ Corp COA
Corp Calendar
Ledger Sets,
Ledgers General
General
Profitability Mgr,
EPB + National Compliance
Ledger
Ledger
Subledger
Local Regulation
SLA, € National COA
Transactions
Tax Local Calendar

MOAC,
Intercompany,
+300 Features
Bank, Payments
TCA, LE
Q&
QUESTIONS