Five Criteria for Designing a Chart of Accounts - eprentise · Five Criteria for Designing a Chart...
Transcript of Five Criteria for Designing a Chart of Accounts - eprentise · Five Criteria for Designing a Chart...
© 2014 eprentise. All rights reserved.
Five Criteria for Designing a Chart of Accounts
Helene Abrams CEO
eprentise [email protected]
© 2014 eprentise. All rights reserved.
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Webinar Mechanics
• Submit text questions. • 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-Answers-4683349/about
• Everyone will receive an email 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.
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Learning Objectives After completion of this program you will be able to:
Objective 1: Explore the five fundamental design criteria for creating a forward-thinking chart of accounts.
Objective 2: Learn how a good design reduces costs, streamlines reporting and provides global visibility.
Objective 3: Understand how to leverage Release 12 features like subledger accounting and ledger sets.
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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
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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
: Transformation Software for E-Business Suite
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
Company Overview: Incorporated 2007 Helene Abrams, CEO
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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 Code Combination
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Chart of Accounts Basics: The Flexfield
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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
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Chart of Accounts Basics: Segments
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Flexfields in the Form
Accounting Key Flexfield
Code Combinations
Value Descriptions
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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
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Poll Question
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5 Fundamental Criteria for a Good COA 1. There is only one type of information in each segment and only
one segment for each type of information.
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.
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Criteria 1: One Type of Information per Segment, and One Type of Information Only 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.
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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.
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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
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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
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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
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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
Exclude Elements — 6 Steps Required Need Exclude elements for all the values above and
below each of the department values
This statement prevents all departments greater than 3001 and less than 5057 from being used:
This statement prevents all departments below 3001 from being used:
This statement prevents all departments greater than 5057 and less than 6124 from being used:
This statement prevents all departments greater than 6124 and less than 8537 from being used:
This statement prevents all departments greater than 8537 and less than 9905 from being used:
And finally, this statement prevents all departments greater than 9905 from being used:
CVR Implications on COA Design
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CVR Implications on COA Design
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Poll Question
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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
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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
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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
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A Global Chart of Accounts – Reduced Complexity
Taiwan
Malaysia
China
India
UK
Russia
DolEx US
DloEx Mexico
DolEx Guatemala
Eurofil
Muzo
Hong Kong
Maldives
Singapore
Sri Lanka
Philippines
Brunei
US
Canada
Macau
USDEURGBPAUD
PHPUSD
BND
TWDUSD
MYR
CNYUSD
INRUSD
GBPEURUSDSGDCADAUDHKDCHFDKKJPY
MOP
HKD
USD
SGDUSD
LKR
NOKNZDSEK
RUB
USD
MXN
USD
CADUSD
GTQ
EUR
CZK
AsiaPac LKR
AsiaPac AUD
AsiaPac EUR
AsiaPac GBP
AsiaPac BND
AsiaPac PHP
AsiaPac MYR
AsiaPac INR
AsiaPac TWD
AsiaPac CNY
Europe GBP
Europe EUR
Europe USD
Europe SGD
Europe CAD
Europe AUD
Europe HKD
Europe CHF
Europe DKK
Europe JPY
Europe NOK
Europe NZD
Europe SEK
GPN RUS
AsiaPac MOP
AsiaPac HKD
AsiaPac SGD
DOLEX US
DOLEX MX
DOLEX GT
GPN EUR
GPN MZO
NAm USD
AsiaPac USD
NAm CAD
021
023
911912913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106105103107
022
960
961
962
963
001
005002
Hong Kong
Singapore
TaiwanChinaIndia
Sri Lanka
Sri Lanka
Sri Lanka
Sri Lanka
Brunei
Philippines
Malaysia
India
Taiwan
China
UK
UK
UK
UK
UK
UK
UK
UK
UK
Canada
Sri LankaMaldives
SingaporePhilippines
Macau
UK
UK
UK
UK
US
CanadaComerica
GPS LKR
GPS AUD
GPS EUR
GPS GBP
GPS BND
GPS MYR
GPS INR
GPS TWD
GPS CNY
GPS CHF
GPS DKK
GPS JPY
GPS NOK
GPS NZD
GPS SEK
GPS MOP
GPS HKD
GPS SGD
GPS US
GPS CAD
021
023
911912913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106105103107
022
960
961
962
963
001
005002
021
023
911912913
025
401
201
301
024
027
028
029
030
031
951
952
953
954
955
956
957
958
959
006
106105103107
022
960
961
962
963
001
005002
Location CCY Op Unit BalSegLocation GPS Book BalSegBalSeg
GPS US
201301401
Bk Seg
GPN SRL
GPN BRU
GPN PHI
GPN MLS
GPN IND
GPN TWN
GPN CHN
UK SOB
GPN MAC
GPN HK
GPN SNG
US SOB
CAN SOB
525
575
585
505
570
804
802
803
801
915
565
545
851
205
021
023
911
912
913
025
024
027
028
029
030
031
951952
953
954
955
956
957958959
006
106
105
103
107
022
960961962963
001
005002
GPN Book BalSegBalSeg
201301401
US SOB
205
565
570
801
802
803
525
575
585
505
804
915
545
851
DLX
RUS
EUR
MZO
Seg Bk
Streamline the month- and year-end closing processes
No more messy financial consolidations using spreadsheets
R12 eliminates the need for using and maintaining multiple charts of accounts
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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
View information without changing responsibilities
View journals and account balances across ledgers
Submit standard reports Create financial statements that include
data for multiple ledgers
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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
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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
Secondary Ledger
Analysis Segment Ranges Values Descriptions
000000-001000 France 000321 Crédit Agricole Bank Account
000544 Droits D'enregistrement Tax
001001-002000 Italy 001321 Intesa Sanpaolo Bank Account
002001-003000 UK 002321 Barclays Bank Account
002584 VAT Tax
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Under Chart of Accounts Mapping, select Create Mapping or query “Chart of Accounts Mapping from Oracle’s navigation window
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Define the Mapping title and description and add a Source and Target Chart of Accounts
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Target and Source fields above will populate with the segments from the defined COA’s
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Available segment rules available under action options
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For each segment selected, additional rule options will populate, in this instance providing a transfer of detail ranges
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Global Visibility – Local Compliance with R12 Subledger Accounting, Accounting Methods Builder Replaces Global Accounting Engine
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Poll Question
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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
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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.
Conclusions
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Questions?
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Thank You!
- One World, One System, A Single Source of Truth -
Helene Abrams, CEO www.eprentise.com
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Additional Slides
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Transformation Software Solutions Two Product Lines
FlexField®
Change chart of accounts in EBS
Built-in Rules
Changes data in all subledgers
Retain all historical transactions
Quick, easy project, low price point
eprentise®
Software that remodels any setup data
Reorganizes configuration, master, and transaction data
Maintains all history resulting in a single source of truth
Based on a source that is transformed into a target
Enterprise-level scope project
Metadata Analysis and intelligent knowledge repository
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FlexField Software – Process Flow
• Run report set to reconcile
• Pair accounting flexfields • Map either segments and values or code combinations • Create mapping file from software • Add new values, combinations in Excel® • Load csv file into FlexField Software • Resolve Exceptions • Execute Changes
• Transform CCIDs • Apply changes to history, subledgers • Align balances
• Print audit report
• Create new COA in E-Business Suite (Structure, Qualifiers) • Install FlexField software (client/server) • Run current baseline report set
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Mapping the Accounting Flexfield Either Segments and Values or Code Combinations
Segments Company Company New
Segment Current Segment
Cost Center Cost Center New Segments
Current Segment + Location
Product Line Line of Business New Segment
Current Segments + Cost Center
1:1
1:M*
M:1 Values or Code Combinations
Company 01
Company 100
New Value
Current Value
Cost Centers 01 02 03
Activity 101
New Value
Current Values
1:1
M:1
New Mapping Must be Derived from Old Segment Values
*Segment Level Only
CO-CC-ACT 01-10-1000 01-20-1500
CO-CC-ACCT-LOC 100-300-16000-200
New Value
Current Value
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Select the Source and Target Flexfield
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FlexField Software to Change your EBS Chart of Accounts
Map Segments and Values or Code Combinations
Segment Mapping Changes CCID everywhere • All setups • All subledgers • All history • Looks as though the
new chart of accounts was part of the original implementation
• Full audit trail, drill down, roll up
• Built in exception reporting
1 1 Mapping
M 1 Mapping
1 M Mapping
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Create Mapping Files 1:M – Mapping of Company to (Company and Business Unit)
M:1 – Mapping of (Region, Account, Product) to Account
A B C D E F
CO Value CO Description
New CO Value
New CO Description New BU Value New BU Description
1 01 North America Company 01 New Company 101 New Business Unit 2 02 Overseas Distribution 02 New Distribution Company 102 Overseas Operations BU 3 03 French Company 03 French Manufacturing Company 103 Project Mfg BU 4 27 Consulting Services Company 04 New Vision Consulting Ltd 104 Vision Consulting BU
5 95 Operation Elimination 05 Intercompany 195 Operations Elimination BU
6 99 Corporation (Vision Consolidation) 99 New Vision Consolidation 199 Vision Consolidation BU
Current Company Segment
Values and Descriptions
New Company and Business Unit
Segment Values and
Descriptions
Current Region,
Account, and Product
Segment Values and
Descriptions
A B C D E F G H
Reg Value
Reg Description
Account Value Account Description Product
Value Product Description
New Account Value
New Account Description
1 01 Southwest 1400 SALES COMMISSIONS 001 computer 140000 SALES COMMISSIONS GENERAL
2 01 Southwest 1405 SALES COMMISSIONS - OTHER 002 hard drive 140500 SALES COMMISSIONS HARD DRIVE
3 02 Northeast 1410 SALES COMMISSIONS - RESERVE 001 computer 140000 SALES COMMISSION GENERAL
4 02 Northeast 1415 SALES COMMISSIONS SERVICES - SUPPORT 003 Services 146000 SALES COMMISSION -
SERVICES
5 02 Northeast 1415 SALES COMMISSIONS SERVICES - WARRANTY 003 Services 146000 SALES COMMISSION -
SERVICES
6 03 Southeast 1410 SALES COMMISSIONS - RESERVE 002 hard drive 141000 SALES COMMISSIONS - RESERVE
New Account Segment
Values and Descriptions
Exceptions: • Account Type Mismatch • Multiple Descriptions
• Splitting Balancing Segment • Length of Value
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Create Mapping File from FlexField
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Load Mapping Files into FlexField • Overwrites existing segment value mappings • Repeat Loading until you are satisfied with mappings and have no exceptions
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Apply Changes to Database
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Align Accounts
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Merging Balances Balance Tables (GL, AX, XLA etc.)
Unique constraint on code combination ID
Forces one balance per code combination
No other tables are affected
Old CCID
Entity Cost Center
Account Interco Future Use
Balance
7754 02001 00965 150170 0000 0 $100,000.59
7766 02001 00965 150170 0000 0 $10,250.33
7783 02001 00965 150170 0000 0 ($7,432.84) 02001 00965 150170 0000 0 $102,818.08
Many old CCIDs mapped to the same new code combination
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Export Current and New Code Combinations
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Post-Change Steps (Not covered by Software) Hard-Coded (RICE Activities) Interfaces to third-party systems Data Warehouse Reports Workflows OFA – Oracle Financial Analyzer
Uses Ranges Approval Assignments Budget Assignments
New EBS Features New Modules/Functionality Some Configuration – New CoA, Ledgers Upgrade to R12
Definition of Target Testing and Cutover Strategy & Execution Rules (Use Business Logic) Cross Validation Consolidation Account Derivation Rules Accounting Generator Roll-up Groups Security Rules Summary Templates Mass Allocations Costing and Revenue Recognition
Rules
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