Examples from the broadest scope currency … Turkey Nov 2004_Markus...SD Salel s & D s r bution WF...
Transcript of Examples from the broadest scope currency … Turkey Nov 2004_Markus...SD Salel s & D s r bution WF...
November 29, 20041
Examples from the broadest scope currency conversion: EURO
Examples from the broadest scope currency conversion: EURO
Markus HeinenMarkus Heinen
November 29, 20042
AgendaAgenda
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
November 29, 20043
The Euro and its influence on the companyCompany strategy
Timing of Euro introMarketingLogisticsPurchasingPricing etc.
Legal requirementsEuropean and national legislation'sAccounting Principles
Organisational requirementsNew or changed proceduresCommunication- and training requirementsOrganisational Preparation for Euro introduction
IT-requirementsSW/HW adaptionsInterfacesResources for Conversion projects
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Affected areas within the companiesExternal AccountingFinancial Statements
Controlling HumanResources
Tax and Legal
Purchasing andLogistics
Sales andDistribution
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Affected areas (Examples I)
ExternalAccounting
• Changeover of financial accounting• Adjust reporting, notifications and payment
• Adjust planning activities/ budgets• Changeover of orders, projects and internal transfer prices• Changes to the controlling strategy - more transparency
Controlling andinternal reporting
HumanResources
• Change payroll and personal administration systems • Changeover of travel expense systems
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Affected areas (Examples II)• Legal procedures, contracts• Taxes, customs• Long-term contracts
Tax and Legal
Logistics
• Changeover of supplier master, Reconciliation with suppliers• Valuation of Material stock, Small price impacts• Purchasing conditions, Contracts
Sales and Distribution
• Conversion of sales prices, change to new threshold values• Changeover of customer master, Reconciliation withCustomers
• New Sales conditions, changes of invoices, New Price Lists• Changes of Front-End systems (POS, ATM, cash systems)
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AgendaAgenda
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
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Changeover principleChangeover principleBasic principle
– Currency translation according to tax and commercial regulations (six digits are cut off)
Problem– Due to the conversion rules, there will be rounding
differences between the total of the converted line items and the converted total amounts
Consequence– Reconciliation and correction activities are required
when changed over
Basic principle– Currency translation according to tax and commercial
regulations (six digits are cut off)Problem
– Due to the conversion rules, there will be rounding differences between the total of the converted line items and the converted total amounts
Consequence– Reconciliation and correction activities are required
when changed over
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Changeover - Major risksChangeover - Major risks
IT system architecture
R/2R/2
RFRF
RKRK
RARA
RVRV
RMRM
R/3R/3Client / ServerClient / Server
ABAP/4ABAP/4
FIFIFinancialFinancial
AccountingAccounting
COCOControllingControlling
PSPSProjectProjectSystemSystem
MMMMMaterialsMaterials
Mgmt.Mgmt.
SDSDSales &Sales &
DistributionDistribution
WFWFWorkflowWorkflow
HRHRHumanHuman
ResourcesResources
AM/AAAM/AAFixed AssetsFixed Assets
Mgmt.Mgmt.
ISISIndustryIndustry
SolutionsSolutions
Legacy systems
Legacy systems
Criticalprocesses
Financial reporting processes
CARGOFAF1
MilleniumFAF1
R/3-EDIFAF1
FuhrparkFAF3
PAISYFAF3
Fz-FaktuFAV1
GW-LOCFAV1
NW-LOCFAV1
IPAS-KDFAV2
AutoPartFAV3
FELFAF1
FSI-SSTFAP1
RM-INVFAP3
LVRFAP3
Bestandsabgl.FAP3
FSI-VGWFAP1
IPS100FAV3Vertriebsber.
FAV1
Schad-Stat.FAV2
GW-KostenFAV2
Markt-Stat.FAV2
HDBFAV1
PES-SAPFAF1
EXC-NWFAV1
IMP-SAP
PWS-Vehicles
PWS-WWS
PAG-Systeme
Mandanten-Systeme
IMP-SAP FI/COFAG2
PWS-VMSFAG2
PWS-ASIFAG2
PWS-WWSFAG2
IDCSFAG2
Teilevw/Regr.FAV2
Betreu.PauschFAV1
PC-ShopFAI
WWSFAV2
TASFAV3
LUZIAFAP2
PATENTFAP2
Prod-Entsch.FAP2
PreislisteFAV1
VAUDIS-PFAV3
PC-Anw.FAI
SAP-R/3 (CO, FI, HR, MM, PM, PP, PS, QM, SD) mit Buchungskreisen PAG, PIF, PIKS,PoCons, (PES)
AktionenFAV2
PETFAV3
Stammdat.Preise
BWLv.Liefererg.PreiseSo-Preise
Inl.Händler
Händl./Imp.Lieferanten
GW-Antr.
GW-Antr.
GW-Antr.Gutschr.FI/CO
PreisbandKontrakt
ImporteurePWS-Vehic.Ausfuhrerk l.PVA (RVS)
PAG-kritisch
KER (VW)
Fracht-ReLieferant
Lieferant-Re
Fax,Internet
ASCING-Leas
3.1H
Frachtbriefe
VDA-DFÜ
Frachtbr.
Frachtbr.Re-Buchg
ExterneinterneSchnittstelleSAP-Schnittstelle€-fähigbuchungsrelev .
Ablösung geplant
Masken-/Listenänd . erf.Keine Prog-Änderung erf.Nur Datenkonvertierung
Bestellung
PAG-kritisch
VALMET
Log-DBFAP3
Fz-PreisPriv.Sachbez.
Fremdsystem
Importeure
Papier
Bewegunge
OFAFAV1
Papier
DFÜ
WWS
1. Legal requirements (tax and commercial) are not fulfilled2. Business processes concerning functional capability /
availability are jeopardized - Going concern
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The Ernst & Young Risk ModelThe Ernst & Young Risk ModelConversion Risk Model
External business risksCompetitors Market Industry Law Politics Availability of capital Shareholder relations
Process risks
Project management• Project organization• Timing and scope• Staff capacity• Other projects
Organization• Authorities / service providers• Internal coordination /
communication• International links
Processes• Classification / prioritizing• Control portfolio / ICS• Test blueprints• Contingency planning
Technology• Technical capacity• Modifications / add-ons• New releases• Interfaces / non-IT
Information, decision and documentation risk
Reporting• Old fiscal year documentation• Control and reconciliation
reports• User reports
Project documentation• Project plan• Error correction
documentation • Changeover documentation
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AgendaAgenda
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
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Common Sources of ErrorCommon Sources of Error
• High changeover costs are incurred through substantial dependency on other systems or migrations that has to be done before
• Insufficient coordination with / flow of information to other areas (other projects, user departments, internal communications, external consultants)
• No project plan that considers all affected areas and technical / organizational conditions
• Lack of detailed knowledge about the actual changeover process and associated risks
• Ensure that all reports are complete in order to create legally compliant documentation (document journal and account journal isnot sufficient)
• High changeover costs are incurred through substantial dependency on other systems or migrations that has to be done before
• Insufficient coordination with / flow of information to other areas (other projects, user departments, internal communications, external consultants)
• No project plan that considers all affected areas and technical / organizational conditions
• Lack of detailed knowledge about the actual changeover process and associated risks
• Ensure that all reports are complete in order to create legally compliant documentation (document journal and account journal isnot sufficient)
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Common Sources of ErrorCommon Sources of Error
• Timing of conversion issues can be different (Purchasing, Sales area, Accounting, Payroll) and is misunderstood very often
• Organizational preparation for changeover (closing date for entries, final transfer of interfaces, billing document runs, close of development for the transport of fixes)
• Underestimation of live system inconsistencies - consequently, comprehensive error analysis and repair must be performed in thepreparation phase to the changeover
• No consideration given to individual tables/reports in the IT-Systems developed by the companies
• Lack of contingency planning• No consideration given to capacity bottlenecks• No appropriate test blueprint to ensure functional capability
• Timing of conversion issues can be different (Purchasing, Sales area, Accounting, Payroll) and is misunderstood very often
• Organizational preparation for changeover (closing date for entries, final transfer of interfaces, billing document runs, close of development for the transport of fixes)
• Underestimation of live system inconsistencies - consequently, comprehensive error analysis and repair must be performed in thepreparation phase to the changeover
• No consideration given to individual tables/reports in the IT-Systems developed by the companies
• Lack of contingency planning• No consideration given to capacity bottlenecks• No appropriate test blueprint to ensure functional capability
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Results from Project Reviews -Examples of Individual Risk FactorsResults from Project Reviews -Examples of Individual Risk Factors
• Availability of resources - in particular regarding creation of financial statements
• Internal communication/coordination of preparation activities
• Consideration of all affected systems/interfaces and projects
• Overview of internal control scenarios and available test blueprints
• Consideration given in release strategy to introduction of new modules/systems, and the changeover
• Company-wide planning to take account of legal requirements affecting changeover
• SAP systems placed in non-participating countries
• Availability of resources - in particular regarding creation of financial statements
• Internal communication/coordination of preparation activities
• Consideration of all affected systems/interfaces and projects
• Overview of internal control scenarios and available test blueprints
• Consideration given in release strategy to introduction of new modules/systems, and the changeover
• Company-wide planning to take account of legal requirements affecting changeover
• SAP systems placed in non-participating countries
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AgendaAgenda
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
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Changeover OpportunitiesChangeover Opportunities
Create consistency across systems/modules
Optimize control portfolioin Internal Control System
Harmonize the control/test systemto create Europe-wide / multinational system
Design a cross-arearisk assessment for business processes
Design a comprehensive test blueprintfor future release upgrades / migrations
Functional capability Legal compliance
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AgendaAgenda
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
• Introduction• Changeover Risks• Common source of errors• Changeover Opportunities• Summary
November 29, 200419
SummarySummary• The changeover to the euro on a key date was not just a problem of
rounding differences, and not primarily a matter for the IT department to deal with
• Nevertheless it was essential to take the IT infrastructure into account (data backup, system availability, disk capacity, etc.)
• If business processes are highly dependent on the IT system, it is essential that the IT system should work properly after the changeover, therefore minimum of 2-3 test conversions are required
• A proper changeover must attach great importance to verifiability. Corrections and changes in the system must be appropriately documented and the documentation must be kept in a safe place
• It was essential to consider the following before the changeover:– Type of modules used and Degree of integration– Inhouse developments (e.g. add-ons/modifications) that affect the
changeover
• The changeover to the euro on a key date was not just a problem of rounding differences, and not primarily a matter for the IT department to deal with
• Nevertheless it was essential to take the IT infrastructure into account (data backup, system availability, disk capacity, etc.)
• If business processes are highly dependent on the IT system, it is essential that the IT system should work properly after the changeover, therefore minimum of 2-3 test conversions are required
• A proper changeover must attach great importance to verifiability. Corrections and changes in the system must be appropriately documented and the documentation must be kept in a safe place
• It was essential to consider the following before the changeover:– Type of modules used and Degree of integration– Inhouse developments (e.g. add-ons/modifications) that affect the
changeover
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SummarySummary• Project management is imperative
• Organizational / technical interdependency of all company areas has to be taken in mind and leads to increased changeover costs
• Ensure that the changeover complies with all relevant laws
• Experience shows that if a changeover from a local currency is performed correctly, rounding errors remain small
• There is a chance to use the work for the technical conversion to improve and harmonize the internal control system
• Project management is imperative
• Organizational / technical interdependency of all company areas has to be taken in mind and leads to increased changeover costs
• Ensure that the changeover complies with all relevant laws
• Experience shows that if a changeover from a local currency is performed correctly, rounding errors remain small
• There is a chance to use the work for the technical conversion to improve and harmonize the internal control system
The Euro introduction was not only a MUST The Euro introduction was not only a MUST --
it was also used as a CHANCE it was also used as a CHANCE !!