Designing a Chart of Accounts for a Global Company Going to Oracle E-Business Suite Release 12

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A useful chart of accounts provides flexibility for recording and reporting financial information, brings structure for managing uniformly, and enhances communication. Five fundamental criteria for chart of accounts design in Oracle E-Business Suite will allow your business to create a forward-thinking chart of accounts to optimize growth and flexibility, while minimizing maintenance. eprentise founder and CEO Helene Abrams goes over the five fundamental design criteria and how to design your own chart of accounts.

Watch the webinar recording: https://vimeo.com/82202289
Website: www.eprentise.com
Twitter: @eprentise
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Designing a Chart of Accounts for a Global Company Going to Oracle E-Business Suite Release 12

  1. 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. 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. Answers will be posted within two weeks on our new LinkedIn Group, EBS Answers: http://www.linkedin.com/groups/EBS-Answers4683349/about  Everyone will receive an email 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. 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. 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. 5. : Transformation Software for E-Business Suite Company Overview: Established 2006 l Helene Abrams, CEO eprentise Can… …So Our Customers 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  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. 6. Chart of Accounts Basics: The Flexfield Example Structure Segments, Values, Code Combinations Company Business Unit Cost Center Region Account 01 100 150 East 1111 02 100 210 West 2222 Values 01.100.150.East.1111 | 6 Code Combination
  7. 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. 8. Flexfields in the Form Code Combinations Accounting Key Flexfield Value Descriptions | 8
  9. 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. 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. 11. Criteria 1: One Type of Information per Segment, and Only One Type of Information in a Single Segment  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. 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. 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: 10000 US 11000 Midwest 11100 Detroit Metropolitan Area 11110 Ann Arbor 11120 Canton 11130 Plymouth 20000 Canada | 13
  14. 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. 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 30000 and 40000 from being used with any department values other than the following 5 values (we’ll begin with the familiar global Include element):  3001  5057  6124  8537  9905 | 15
  16. 16. CVR Implications on COA Design  Example Goal: Preventwith— 6account values betweenthan theand Exclude being used revenuedepartment Required 30000 Elements any Steps values other 40000 from following 5 values (we’ll begin with the familiar global Include element):  Need Exclude elements for all the values above and below each of  5057  6124  8537values 3001 the department  9905 And finally, this prevents all departments below 3001 from being This statement statement prevents all departments greater than This statement prevents all departments greater than 5057 and 8537 3001 6124 less than 6124 from being used: 99059905 being used: 8537 5057 from used: | 16
  17. 17. CVR Implications on COA Design
  18. 18. 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 3rd party reporting applications  Capitalize on a master row set for FSG reports.  Allows you to generate different reports without having to rewrite each report | 18
  19. 19. 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 | 19
  20. 20. 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 | 20
  21. 21. A Global Chart of Accounts – Reduced Complexity BalSeg GPS Book BalSeg 006 025 GPS LKR 025 027 AsiaPac EUR 201 001 002 001 002 Sri Lanka AsiaPac GBP 301 005 005 Sri Lanka AsiaPac AUD 401 106 105 Seg BalSeg BalSeg Seg 205 205 565 GPN Book 565 027 Sri Lanka Bk 025 AsiaPac LKR CCY Location US USD US Comerica NAm USD 002 Canada CAD USD Canada NAm CAD Sri Lanka Location Op Unit BalSeg Canada 005 001 002 LKR USD Sri Lanka EUR GBP AUD Singapore Philippines 103 SGD USD Singapore AsiaPac SGD 023 Philippines AsiaPac PHP 027 105 103 107 911 913 953 027 107 GPN PHI 570 570 912 913 953 911 912 106 US SOB 106 GPS US 107 PHP USD 005 105 912 031 GPN CHN 801 801 913 029 USD Sri Lanka Maldives GPS CNY 031 Philippines 103 107 031 CNY GPN IND 802 802 USD Taiwan 911 029 GPS INR 029 China Maldives 912 GPS TWD 030 911 030 GPN TWN 803 803 105 Singapore China AsiaPac USD   No more messy financial consolidations using spreadsheets R12 eliminates the need for using and maintaining multiple charts of accounts China AsiaPac CNY 031 022 GPS MOP 022 022 GPN MAC 545 545 USD India AsiaPac INR 029 028 GPS MYR 028 028 GPN MLS 804 804 MOP Taiwan AsiaPac TWD 030 024 GPS BND 024 024 GPN BRU 505 505 Hong Kong Streamline the month- and year-end closing processes 913 030 Macau  HKD Macau AsiaPac MOP 022 006 CAN SOB 915 915 025 106 201 GPN SRL 585 585 GPN SNG 575 575 GPN HK 525 525 UK SOB 851 851 India Taiwan INR India USD TWD Malaysia MYR Hong Kong AsiaPac HKD 021 Brunei BND Malaysia AsiaPac MYR Brunei AsiaPac BND 024 UK Europe GBP 951 UK Europe EUR Europe USD 953 GBP UK Europe SGD 954 EUR USD UK Europe CAD 955 SGD CAD UK Europe AUD 956 UK Europe HKD 006 952 UK 006 028 957 955 201 952 GPS CAD 955 GPS EUR 201 952 301 951 GPS GBP 301 951 401 956 GPS AUD 401 956 023 954 GPS SGD 023 954 021 021 957 GPS HKD 021 957 953 955 958 GPS CHF 958 951 956 959 GPS DKK 959 954 957 960 GPS JPY 960 959 960 961 GPS NOK 961 961 962 GPS NZD 962 962 963 963 GPS SEK 963 301 GPS US 201 301 401 401 US SOB 103 023 952 AUD UK HKD CHF DKK JPY NOK UK UK Europe CHF Europe DKK 958 UK Europe JPY 960 UK Europe NOK 961 UK SEK 958 959 NZD Europe NZD 962 UK Europe SEK 963 Russia RUB GPN RUS DolEx US USD RUS DOLEX US DLX DloEx Mexico MXN DOLEX MX DolEx Guatemala GTQ DOLEX GT Eurofil EUR GPN EUR EUR Muzo | 21 Bk 001 CZK GPN MZO MZO © 2013 eprentise. All rights reserved.
  22. 22. 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 | 22  View information without changing responsibilities  View journals and account balances across ledgers  Submit standard reports  Create financial statements that include data for multiple ledgers © 2013 eprentise. All rights reserved.
  23. 23. 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 | 23
  24. 24. 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 France Descriptions 000321 Crédit Agricole Bank Account 000544 000000-001000 Values Droits D'enregistrement Tax 001001-002000 Italy 001321 Intesa Sanpaolo Bank Account 002001-003000 UK 002321 Barclays Bank Account 002584 VAT Tax  Secondary Ledger | 24
  25. 25. Under Chart of Accounts Mapping, select Create Mapping or query “Chart of Accounts Mapping from Oracle’s navigation window | 27 © 2013 eprentise. All rights reserved.
  26. 26. Define the Mapping title and description and add a Source and Target Chart of Accounts | 28 © 2013 eprentise. All rights reserved.
  27. 27. Target and Source fields above will populate with the segments from the defined COA’s | 29 © 2013 eprentise. All rights reserved.
  28. 28. Available segment rules available under action options | 30 © 2013 eprentise. All rights reserved.
  29. 29. For each segment selected, additional rule options will populate, in this instance providing a transfer of detail ranges | 31 © 2013 eprentise. All rights reserved.
  30. 30. Global Visibility – Local Compliance with R12 Subledger Accounting, Accounting Methods Builder Replaces Global Accounting Engine | 32
  31. 31. 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 | 33
  32. 32. 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. | 34
  33. 33. Questions? | 35
  34. 34. Thank You! Helene Abrams CEO www.eprentise.com habrams@eprentise.com - One World, One System, A Single Source of Truth - | 36 © 2013 eprentise. All rights reserved.

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