OAUG GL SIG Webinar Series
• OAUG GL SIG is a global community of
  financial management and control users with
  focus on...
R12 Global Financials




Leveraging a Dual Accounting GL Baseline
      Managing the IFRS Vs USGAAP Transition



       ...
Fiscal Landscape - IFRS
     America Vs World - Reporting Standards Challenges


      Federal America                    ...
Global Accounting Standards
                  FAS Vs IFRS Convergence




                          IFRS Vs FAS
          ...
Impact on US Companies
               Proposed implementation timeline from the SEC


2009: Limited group of              ...
IFRS Compliance
                     R12 IFRS Footprint – Financial Ledgers
IFRS Financial Requirements – US and rest of t...
Achieving IFRS Compliance
             US GAAP Vs IFRS GAAP Ledger Solutions


Solution Options – Evaluate, Discuss and St...
Bridging the GAAP’s
         USGAAP Vs IFRS/Local GAAP Ledger Usual Solution

Create a Local IFRS /Country based COA and 2...
Bridging the GAAP’s
                                   IFRS Vs USGAAP Solutions
        US Parent consolidation with Forei...
Bridging the GAAP’s
                                      Corporate Vs Local IFRS Ledger Solutions
Solution Option 1 – Mos...
Bridging the GAAP’s
                      IFRS Compliance Controlling Factors
General Ledger Chart of Accounts Design Chal...
Why bother with a Prototype?
                                    R11i Vs R12 Analyses
Technology Changes – R12
•   New Dat...
Designing the Prototype
         Prototype Scope – Rapid Upgrade or re-implement?

Install Base - Prototype for Upgrade or...
Prototyping R12 Features and Solutions
                 The Prototype Strategy & Audience
Release 12 – Prototype Purpose
•...
Designing the Prototype
            Corporate Vs Local GAAP Ledger Alternative Solutions

The objectives – Solutions Archi...
Prototyping - Bridging the GAAP’s
                                  IFRS Controlling Factors
 General Ledger Design Consid...
Bridging the GAAP’s
           Dual Corporate USGAAP and IFRS Ledger Solution
Using an Adjustment Company for IFRS mapping...
General Ledger Design
                                               IFRS Vs USGAAP Ledger Solutions
Solution Option 2 - U...
IFRS Compliance Reporting
                    Consolidation to a single currency baseline
Ledger Reporting - Design Consid...
Designing the R12 Prototype
                                 Intercompany Matrix
Intercompany Trading - Design Considerati...
Q&A
Presented by:

Alex Somers – Solution Architect
   asomers@esolutionsgroup.com/alex.somers@apps360.com
Contact:

Marc ...
Bridging the GAAP’s
                     Global Controlling Factors – Solution Architect Design
Transition IFRS Reporting ...
Bridging the GAAP’s
                                  IFRS Vs USGAAP Solutions

                  Scenario: US Parent with...
Bridging the GAAP’s
                                            Corporate Vs Local IFRS Ledger Solutions
Solution Option 3...
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Dual Acct IFRA presentation

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Dual Acct IFRA presentation

  1. 1. OAUG GL SIG Webinar Series • OAUG GL SIG is a global community of financial management and control users with focus on Record to Report (RTR) processes. • We continue our 2010 webinar series with a very interesting, informative and timely presentation on preparing for IFRS transition. • A copy of the presentation will be available on the GL SIG website at http://glsig.oaug.org www.esolutionsGroup.com
  2. 2. R12 Global Financials Leveraging a Dual Accounting GL Baseline Managing the IFRS Vs USGAAP Transition www.esolutionsGroup.com
  3. 3. Fiscal Landscape - IFRS America Vs World - Reporting Standards Challenges Federal America IFRS Europe / World • US General Accepted • International Financial Reporting Accounting Standards (GAAP) Standards – #102 FRS Currently • 163 Current FAS Statements • EU 8th Company Law Directive + • Member State based Annual • Harmonized Annual Accounts Accounts reporting Standards Reporting Standards • Proscribed Reporting Chart of Accounts in some Member States • FAS Regulations • Proscribed Depreciation Methods in some Member States/Nations • Variable State based Taxation • Variable Nation based Taxation • Multi Currencies • National Language/Cultural www.esolutionsGroup.com
  4. 4. Global Accounting Standards FAS Vs IFRS Convergence IFRS Vs FAS GAAP Differentials  Leasing  Finance Charges  Pension Fund  Amortisation  Inventory Valuation  Forex Gains/Losses  Revenue Recognition Countries that require or permit IFRSs for Public Company filing Countries seeking convergence with the IASB or pursuing adoption of IFRSs www.esolutionsGroup.com
  5. 5. Impact on US Companies Proposed implementation timeline from the SEC 2009: Limited group of 2014: Large 2016: Non- large US firms are accelerated accelerated permitted to use IFRS filers begin filers begin on an optional basis for filing in filing in IFRS fiscal periods ending on IFRS or after Dec 15, 2009 2009 2010 2011 2012 2013 2014 2015 2016 2011: SEC evaluates achievement of roadmap milestones 2015: and decides whether to Accelerated adopt a mandatory filers to begin approach for IFRS filing in IFRS Source: SEC Announcement, Aug 2008 www.esolutionsGroup.com
  6. 6. IFRS Compliance R12 IFRS Footprint – Financial Ledgers IFRS Financial Requirements – US and rest of the World  IFRS 1 Format standard based filings for P&L and Balance Sheet  Proscribed National Account Segment & Language Reporting => Proscribed Account values  Proscribed National Account ranges in France, Belgium, Spain, Italy, Hungary, Japan etc  Source transactions need to be IFRS compliant => Need to refurbish R12 COA  Different IFRS COA Account values Vs USGAAP for reporting => Need to refurbish R12 COA  Local Reporting requirements – Corporate and Local Taxes  Different formats for IFRS Countries and European States => IFRS S/L Baseline required?  Additional Globalization requirements for each country [Subledgers & GL]  Withholding Tax (DAS2 France and Netherlands)  Document Sequencing  VAT Specific reporting requirements  Different formats for each European State  Statistical globalisations for Payables, Receivables and General Ledger => SIC Codes  Asset Treatments and Reporting vary by country  Movement Reports  Proscribed Depreciation Methods and term basis www.esolutionsGroup.com
  7. 7. Achieving IFRS Compliance US GAAP Vs IFRS GAAP Ledger Solutions Solution Options – Evaluate, Discuss and Strategise … 1) Establish a second Legal Entity with a Local Chart of Accounts Full copy of all transactions to replicate ledger and top-side adjustments to achieve IFRS reporting [Stand-Alone Ledger = IFRS Full Filing] 2) Establish an IFRS Adjustment book to achieve Local compliance Adjustment company only features compensating entries to achieve IFRS compliance [Corporate Book + Adjustment Book = IFRS full filing] 3) Establish a Dependant Local Account segment to achieve IFRS and USGAAP dual compliance (Solution Option 3 – inclusion ; time permitting) Mapping global corporate(s) accounts to a local IFRS account equivalent [thereby automating two reporting disciplines within the same prime ledger and transaction set] www.esolutionsGroup.com
  8. 8. Bridging the GAAP’s USGAAP Vs IFRS/Local GAAP Ledger Usual Solution Create a Local IFRS /Country based COA and 2nd Local Ledger • Used in countries with proscribed chart of accounts and significant US GAAP to IFRS differentials • Primary Ledger currency in USD, secondary Ledger in Local currency (EURO) • Transactions replicated from Primary to Secondary via GCS feature • Triangulate exchange rate VAT from USD to Local currency Pro’s and Cons • Solves the issue! --- At what cost? • Multiple chart of accounts created and maintained • High degree of manual intervention and maintenance • Reconciliation overhead – prime transaction audit trail possibly compromised • Different versions of the truth >> Corporate Vs Statutory • Replication of entire GL transaction base from Corporate to Local Ledger www.esolutionsGroup.com
  9. 9. Bridging the GAAP’s IFRS Vs USGAAP Solutions US Parent consolidation with Foreign Subsidiaries Option 1 – Most Common Solution adopted Solution  Local or US Currency R12 Local Corporate  US GAAP Set of Books GCS Consolidated  Corporate Chart of Accounts Corporate Book Baseline  Copy Again R12 Subledgers 100% Replication of transactions Transaction Baseline [via Subledger Accounting module] GCS  Enter Compensating US  100% Replication of GAAP Adjustments Transaction Baseline  Eliminate Interco Profits  Now Local COA  Translation Result: Costly! R12 Local Set  Local Proscribed COA of Books 200% transaction  or IFRS based COA Local COA Replication  Local Currency Local Currency Multiple replicated Ledgers to Manage  Local IFRS Adjustments www.esolutionsGroup.com
  10. 10. Bridging the GAAP’s Corporate Vs Local IFRS Ledger Solutions Solution Option 1 – Most Common Solution adopted Method - 100% Ledger Replication and Top-Side adjustments Ledger 1 -------copy ------> Ledger 2 Replicate Ledger 2 Journal Ledger 2 Final Totals US GAAP IFRS IFRS IFRS US Dollars Prime Ledger Journal Ledger Debit Credit Debit Credit Debit Credit Debit Credit Profit and Loss Revenue 2,000,000 2,000,000 2,000,000 Cost of Sales 1,000,000 1,000,000 25,000 975,000 R&D Expense 200,000 200,000 200,000 Sales & Marketing 250,000 250,000 250,000 G&A Expense 200,000 200,000 200,000 Other Income 150,000 150,000 150,000 Balance Sheet Cash 1,000 1,000 1,000 Receivables 500,000 500,000 500,000 Inventory 450,000 450,000 25,000 475,000 Fixed Assets 200,000 200,000 200,000 Accumulated Depreciation 100,000 100,000 100,000 Payables Control 150,000 150,000 150,000 Accrued Expenses 100,000 100,000 100,000 Tax provisions 100,000 100,000 100,000 Capital 1,000 1,000 1,000 Retained Earnings 500,000 500,000 500,000 TB Totals 2,951,000 2,951,000 2,951,000 2,951,000 25,000 25,000 2,951,000 2,951,000 US GAAP Profit/Loss = 200,000 IFRS Profit/Loss = 225,000 www.esolutionsGroup.com
  11. 11. Bridging the GAAP’s IFRS Compliance Controlling Factors General Ledger Chart of Accounts Design Challenges – Single or Multiple COA’s? • Design Challenge – Solution for Management, Fiscal & Statutory Reporting Disciplines • Design Challenge - R12 new features, Business Intelligence analyses capability and Subledger constraints • Design Challenge - Proscribed reporting European/SE Asian Chart of Accounts in France, Spain, Belgium, Hungary, Japan etc. (National GAAP Rules) • Design for future R12 eBusiness Suite tax engine requirements • Design for downstream Analyses – Discoverer slice/dice – BI Dimensional – Design for multiple segment compensating and combination analyses Proscribed Local Chart of accounts Design Challenge – Replicate or Compensate? • Possible Solution - Use a dependant local segment mapped to the main corporate natural account segment – Many Corporate values to one proscribed statutory equivalent or Replicate entire GL transaction base in an additional local ledger • Dual Use Solution - Use the Corporate to Local account mapping to resolve USGAAP to IFRS accounting treatments automatically as a transition option (Solution Option 3) General Ledger Chart of Accounts Design considerations – Refurbish Vs Clean Sheet? • Different GL Accounting treatments at transaction Level USGAAP Vs IFRS – Mitigation by Design; Add to existing Corporate Account segment values or • Redesign Natural Account Segment Values to streamline prime IFRS reporting baseline. • Serialised Journal numbering and assurance of Subledger’s prime audit trail www.esolutionsGroup.com
  12. 12. Why bother with a Prototype? R11i Vs R12 Analyses Technology Changes – R12 • New Database Engine to support OLTP and BI • New Data Model for application schemas • New Application technology layer – Forms, Reports, OA Framework (No Mod PL/SQL) • New Application Integration Architecture ;Fusion Middleware – Verticals, SOA, API’s • New Discoverer BI version • eBusiness Suite now 45% bigger – Can consume 50% more Server resources Functionality Enhancements – Finance – R12 • Redesign of GL – Data Access Sets, Ledger Sets, Intercompany, Mass Allocations • Subledger Accounting Module introduction • Payables – Multi-Org Access Control (MOAC) • eBusiness Suite Tax Engine – VAT, Corporation, Social Taxes Centralized – Setup by Country, Tax Regime, Jurisdiction, Legal Entity/Global • Ledger Design now Legal Entity centric to support Interco, Tax, allocations R11i.10 to R12 Upgrade cycle • What survives from R11i baseline? – Only your core transactional data; nothing else • How easy is the upgrade process – complex, time consuming and fraught • How expensive is the upgrade process – can 25% to 33% of original implementation cost (Approx) www.esolutionsGroup.com
  13. 13. Designing the Prototype Prototype Scope – Rapid Upgrade or re-implement? Install Base - Prototype for Upgrade or re-implementation scenario • RapidInstall new installation for both scenarios • Building stage area – 4 Hours – Installation on 4 processor machine 3 hours • Install Vision 12.04 and Fresh Database x2 – 8 hours Configuration – Modules • Analyse Supplier, Customer Base, Assets and GL Ledgers by Legal Entity/Organization  Load 20 Representative Suppliers (by Goods, Services)  Load 20 Customers (by Transaction type)  Load 100 Assets (by several Categories)  Configure GL Ledgers by Legal Entity Intercompany trading and Allocation requirements  Load 2 Months previous years Trial Balance summaries by month (Reporting Budgeting etc) • GL multi-currency Design and Configure (4 Ledgers Multi Currency)  Value Sets /COA Upload - 2 Day  Tax/VAT – 2 Day  Intercompany Matrix, Mass Allocations – 3 days • Multi-Currency Subledgers  Configure Purchasing/iProc – 3 Days  Configure Payables/iExpenses/Banks/MOAC – 4 Day  Configure Receivables – 2 Days  Configure Assets – 2 Days www.esolutionsGroup.com
  14. 14. Prototyping R12 Features and Solutions The Prototype Strategy & Audience Release 12 – Prototype Purpose • To inform future corporate strategy and integration within the current IT estate prior to upgrading to R12 in a co-operative workshop environment. • To determine IFRS transition /option strategy • To determine IFRS and USGAAP dual reporting options during transition period. • To rationalise the IT best of breed estate • Early prototyping reduces costs in the upgrade lifecycle by a significant factor • To inform, demonstrate and educate stakeholders, Key Users and Executives of key features (existing or new!) and standard functionality of eBusiness Suite 12 Release 12 – Prototype Method 1) Conduct a strategic study of current IT estate; Determine cost and efficiency improvements that can be realised with R12 features. 2) Conduct a IFRS Vs USGAAP differential analyses to determine filing exposure and strategise. 3) Determine how the Subledgers and General Ledger design will be effected by IFRS adoption. 4) Present impact analyses, options and recommended strategy to project board and executives. 5) Agree/Decide whether to baseline the ledgers in IFRS and adjust to USGAAP or vice-versa 6) Agree scope of upgrade/implementation vision with Executives and Project board 7) Build and populate the Discovery Prototype to strategic vision presented 8) Present Prototype (P2P, Order to Cash, Assets, GL, Interco, Allocations, Consolidatation etc) to executives in co-operative workshop sessions to finalise scope and baseline by consensus. 9) When overall scope and strategy determined by project board – Schedule workshops with stakeholders and representative user communities to fine tune scope 10) Document the finalised scope and the prototype configuration build www.esolutionsGroup.com
  15. 15. Designing the Prototype Corporate Vs Local GAAP Ledger Alternative Solutions The objectives – Solutions Architect approach (5 Year Horizon ROI) • Think Global – Design Local !! - Design from the end game backwards • Many new features of R12 will be unavailable without a Global COA => Data Access & Ledger Sets • Design a global chart of accounts that addresses IFRS, US and Local GAAP differentials. • Design a Ledger structure that supports local statutory reporting and DUAL Corporate reporting without replicating the GL transaction base • Design a efficient ledger structure that reduces or eliminates human intervention • Design your ledger solutions to leverage R12 new features [MOAC, Data Access & Ledger Sets] • Reduce the options of miscoding manual Journal transactions • Design cost effective solutions and avoid customisations • Design for existing downstream systems and future reporting capabilities – 5 Year Plan • Avoid compromising the prime drilldown audit trail – minimise the use of the Subledger Accounting Module [all accounting methods builder rule(s) will require a custom report build] • Centralised Solution Design and deployment for R12 implementation. • Develop a Corporate Mandate for harmonised Business Processes & Reporting – Rationalise and standardise all user and control documentation and procedures on the 90/10% exception rule [Cost Savings for SOX and EC Directive compliance] www.esolutionsGroup.com
  16. 16. Prototyping - Bridging the GAAP’s IFRS Controlling Factors General Ledger Design Considerations – One Global Chart of Accounts • Leverage Statutory, Fiscal and Management reporting Dimensions within the same Prime Transaction set • Avoid Replication with a 3 Way Chart of Accounts within the same set of books Function Entity Cost Corporate Local Stat Intercompany Project Product Analysis Centre Account Account Statutory   Corporate Fiscal     Corporate Management        STATUTORY & EXTERNAL CORPORATE FISCAL REPORTING MANAGEMENT REPORTING REPORTING Cost Centre & Contribution Analyses, Who, Why What, When and Where ? Annual Financial Statement Intercompany trading, Inventory Control Full Operational detailed analyses Balance Sheet & Notes Group Accounts – Operating Statements Profit and Loss Account Cashflow, Balance Sheet NO MANAGEMENT SEGMENTS => Source and Application of Internal Control Landscape  No downstream Summary Reporting Funds  No BI/OLAP Cube analyses available VAT and Tax Reporting  No Revenue Vs Cost Analyses www.esolutionsGroup.com
  17. 17. Bridging the GAAP’s Dual Corporate USGAAP and IFRS Ledger Solution Using an Adjustment Company for IFRS mapping • Refurbish your Chart of Accounts to accommodate IFRS prime entries • Create an adjustment ledger within the same ledger set as the Prime ledger • Pass adjustment journal into this ledger to transition ledger entries to IFRS compliance • Using Data Access Sets you can control all data input and transparent reporting options [USGAAP Ledger Access or IFRS Adjustment Ledger or both for natural IFRS reports ] • In adjustment Ledger – IFRS entries passed to same account segment combinations to assure transparency and audit provenance Pro’s and Cons • Solves the issue!; - no transaction replication only compensating entries passed • Chart of Accounts is both US GAAP and IFRS compliant • High degree of automation opportunities to streamline close (Automate journals, mass allocations etc to either prime or adjustment ledger) • Resultant reconciliation overhead minimal – prime transaction audit trail demonstrable and not compromised • Single version of the truth >> Local Ledger + Adjustment Ledger = Corporate Ledger OR >> US Corporate Ledger+ Adjust Ledger = IFRS Filing Ledger • Prime transaction SOX Audit trails not compromised and IFRS entries clearly demonstrable across multiple ledgers • Introduce a Global Consolidation Adjustment Ledger => Instant Consolidation option – DAILY! www.esolutionsGroup.com
  18. 18. General Ledger Design IFRS Vs USGAAP Ledger Solutions Solution Option 2 - Using a compensating Adjustment Ledger Method - No Ledger Replication and Top-Side adjustments ONLY in an Adjustment Ledger; same Global Chart of Accounts structure Ledger 1 Prime Adj Ledger Journal Ledger + Adj Final SUM of Prime US GAAP US Dollars Prime IFRS Journal IFRS Ledger Debit Credit Debit Credit Debit Credit Ledger plus Profit and Loss Adjustment Revenue Cost of Sales 1,000,000 2,000,000 25,000 975,000 2,000,000 Ledger generates IFRS R&D Expense Sales & Marketing 200,000 250,000 200,000 250,000 reporting G&A Expense 200,000 200,000 Other Income 150,000 150,000 Balance Sheet Cash 1,000 1,000 R12 Design - All Receivables Inventory 500,000 450,000 25,000 500,000 475,000 adjustments can be fully automated Fixed Assets 200,000 200,000 Accumulated Depreciation 100,000 100,000 using Allocation /Recurring or Payables Control 150,000 150,000 Accrued Expenses 100,000 100,000 Skeleton Journals Tax provisions 100,000 100,000 across ledgers and Capital 1,000 1,000 Entities Retained Earnings 500,000 500,000 TB Totals 2,951,000 2,951,000 25,000 25,000 2,951,000 2,951,000 US GAAP Profit/Loss = 200,000 IFRS Profit/Loss = 225,000 www.esolutionsGroup.com
  19. 19. IFRS Compliance Reporting Consolidation to a single currency baseline Ledger Reporting - Design Consideration Options • Use of second R12 Reporting currency option USD ? – General Ledger / All Sub-Ledgers • General Ledger 3 Way Reporting capability retained – Management, Financial and Statutory • Transaction Replication only on Consolidation [Option 1] or NOT [Option 2] • FSG /Discoverer/Cognos Aggregation in Consolidation Currency with drilldown maintained 1 2 All Local USGAAP or Sets of IFRS EUR-US Books Adjustment GAAP YEN Adjustment EURO Group-Wide Consol Corporate Adjusts & All Local Eliminations GCS Consolidated Sets of Book Books All Local Euro Sets of US Dollars  Translation Books  Revaluation  Full Consolidation USD EURO  Corporate COA All Local  via FSG Sets of  or Discoverer  Local Currency Books R12/R12i  Local Statutory GAAP GBP Oracle Data Integrator  Same Global Chart of Accounts for OLAP Cube/  Proscribed reporting segment as required OBIEE / Cognos www.esolutionsGroup.com
  20. 20. Designing the R12 Prototype Intercompany Matrix Intercompany Trading - Design Considerations • Trading relationships can now be defined precisely; By Interco Debtor and Creditor • Intercompany Relationships can be restricted (Debtor/Creditor/Both) between legal entities • Extended to Subledger transactions (Payables/Receivables) in addition to GL • May need to design a Chart of Accounts structure to maximise efficiency & Control • Most assured way is to use a dependant segment (Automatic summary to B/S Interco Accts) Balance Sheet Natural Account Intercompany Segment Segment [dependent to Natural Account segment] [Independent] 61000 1007 Intercompany France LE Debtor 1009 Net Accounts Allowed Trading Spain LE 1010 Balance = Summary Relationships – Mirrored in UK LE Intercompany Ledger Setup Interco Position 81000 1020 Intercompany Germany LE Creditor 1009 Italy LE 1010 UK LE www.esolutionsGroup.com
  21. 21. Q&A Presented by: Alex Somers – Solution Architect asomers@esolutionsgroup.com/alex.somers@apps360.com Contact: Marc Downes – US Sales Manager mdownes@esolutionsgroup.com For IFRS updates, future webinars or a copy of this presentation. +1 800 505 ESOL (3765) or 212-230-1155 ext 105 www.esolutionsGroup.com
  22. 22. Bridging the GAAP’s Global Controlling Factors – Solution Architect Design Transition IFRS Reporting Option – Incorporating a Local segment into your Global COA • Use the Subledger accounting module features to augment GL detail (Supplier Name etc) [ [rather than using it for replicating transactions into a secondary reporting COA and Ledger] • Introduce a dependant Local Account segment to report in proscribed account format • Map US corporate natural account to Local statutory account on a many-to-one basis • Only Legal Entities requiring Statutory Reporting Account will require proscribed account • Local/IFRS equivalent statutory account controlled by Security or Cross-Validation rule • Only setup mapping once; All transactions Locally compliant; No Replication, No Human Intervenion Balance Sheet Natural Account Segment Statutory Local Segment [Independent/Parent] [dependent / Child to Account segment] Account:1000 Product F702000 (Ventes de produits) Revenue France LE Auto- population Account:1010 Controlled E60009 (Rédito Producto) Contracts by Legal Spain LE Revenue Entity based security rule Many Natural Accounts 0 (No Statutory Mapping) values to One Local Segment value UK LE [mapping basis ] www.esolutionsGroup.com
  23. 23. Bridging the GAAP’s IFRS Vs USGAAP Solutions Scenario: US Parent with Foreign Subsidiaries Option 3 – No Transaction Replication and Integrated IFRS Compliance The Solution Architect’s approach …. Using the Local Segment to Bridge USGAAP to IFRS => dual reporting automated baseline Balance Sheet Natural Account Local Statutory Segment Segment [dependent to Natural Account segment] [Independent] 61000 Leasing US GAAP Net Accounts Debtor IFRS Balance = F206000 (Droit au Bail) Nett 50,000 Account Bal Dr 100,000 France LE Lease O/S = o/s Lease 50,000 Liability 81000 Leasing Creditor Account Bal Cr 50,000 Account Bal Cr 150,000 www.esolutionsGroup.com
  24. 24. Bridging the GAAP’s Corporate Vs Local IFRS Ledger Solutions Solution Option 3 – Using an Integrated Local Segment Method - Using a Local Dependant Segment for IFRS mapping Corporate Segment IFRS Local Segment Ledger 1 Prime Ledger 1 IFRS Ledger1 Final US GAAP SOLUTION ADVANTAGE US Dollars Prime Debit Credit IFRS Journal Debit Credit IFRS Reporting Debit Credit Full Flexibility Profit and Loss Report in IFRS or Revenue 2,000,000 2,000,000 USGAAP simultaneously Cost of Sales 1,000,000 25,000 975,000 Facilitates a non-human R&D Expense 200,000 200,000 dependant SOFT and Sales & Marketing G&A Expense 250,000 200,000 250,000 200,000 HARD Month-end CLOSE Other Income 150,000 150,000 Procedure Inventory valuation (Gain) 25,000 Inventory valuation (Loss) 25,000 Balance Sheet Cash 1,000 1,000 Receivables 500,000 500,000 NO TOP-SIDE ADJUSTMENTS REQUIRED Inventory 450,000 25,000 475,000 Fixed Assets 200,000 200,000 Once relationship set between Corporate Accumulated Depreciation 100,000 100,000 Payables Control 150,000 150,000 Account and Local IFRS Accrued Expenses 100,000 100,000 Tax provisions 100,000 100,000 Account ONCE - all Capital 1,000 1,000 transitions are Retained Earnings 500,000 500,000 automatically journalled TB Totals 2,976,000 2,976,000 25,000 25,000 2,951,000 2,951,000 to correct USGAAP and IFRS destinations US GAAP Profit/Loss = 200,000 IFRS Profit/Loss = 225,000 www.esolutionsGroup.com

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