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Prepared by Hans Kolbe
Partner-Celantra Systems
Effective international Implementation with
Localizations & Multi-country solutions
International Local Statutory accounting,
COA, Calendar, GAAP rules, Transaction Details and electronic Audit
Reports (Example France)
New Challenges and Solutions from the Field
2
■ Introduction
About the Presenters
Company Information
Understanding the Range of Legal Requirements
Reporting entities, Areas and Elements,
Oracle EBS’ Compliance Tools
■ Multi-Country Solutions in Practice – Qualcomm
■ Oracle Localization Structure Detail R12
■ Celantra Experience & Recommendations
■ Questions & Answers
Global Implementations and Process
Alignment: Plan, Design, and Execute
Celantra Systems provides innovative solutions
to today’s most vexing issues in multi-national
ERP configurations.
3
Celantra Compliance Rule Engine (CCRE) and Compliance Sequencing Utility
Celantra has released a number of automated compliance tools, based on the Celantra
Compliance Rule Engine (CCRE)
Celantra Sequencing Utilities supports Oracle clients with international operations. We
ensure gapless date sequenced numbering for VAT and statutory journal reporting.
Automated audit trails and reporting are provided.
Visit Celantra Systems Exhibit Table: Location 21
www.celantrasystems.com
Slide 4
About the Presenter: Hans Kolbe Hans Kolbe has managed and advised global
software implementation projects for over 15 years. His extensive knowledge on Oracle applications is combined with a formal background as a German attorney, trained in international and comparative law.
Chair of Multi-National SIG Group
Specialist in Intercompany and multi-org configurations, international compliance and transaction tax
www.celantrasystems.com
415-730-1131
Visit Celantra Systems Exhibit Table: Location 21
4
5
Range of Legal Compliance Elements
- Fiscal Reporting: Income Statement/Balance Sheet / GAAP
Rules
- Transaction Tax: VAT, Sales Tax, GST,
- Intercompany
- Banking
- Customs / Trade
- Property/Other Assets
- Labor: Payroll, Contractors, (Withholding, Benefits, Contributions)
- Other Regulatory Agencies:
- Shareholder Protection (SEC in US) - GAAP
- Data Privacy, Union/Workers Councils
- Safety Regulations and Reports (Environmental, Work Place, Transportation,
Product Safety)
6
Fiscal Reporting, who reports?
- The Enterprise:
Global Level – Consolidated across all subsidiaries
Accounting rules of global enterprise
- The Subsidiary (two distinct perspectives):
a) For Country Reporting: Per local rules and
currency
b) For Enterprise reporting: foreign entity’s results at
enterprise rules, normally in foreign currency.
(exception per FASB52)
7
Fiscal Reporting, who reports?
Company Type may determine what is
reported
– Publicly Traded Company
• Registered and Listed on Stock Exchange
– Limited Liability Company
• Registered and unlisted on Stock Exchange
– Foreign Branch
• Registered in one country with a permanent
establishment in another
– VAT Registration only
8
Fiscal Reporting, what to report?
- Income Statement and Balance Sheet: to
determine corporate income tax liability
- Format: allow tax inspector to easily validate the accounting
entries and results. Local common country formats maybe either
required or expected.
- New Electronic Submission of all Journal Details (see below)
- Frequency: Yearly, quarterly, rarely monthly. (electronic –
monthly or upon Audit)
- Backup of Results and Audit Trail: Ledger
and sub-ledger journals, reconciliation to source transaction and
intermediary sub-system.
9
VAT Reporting, what to report?
- Transaction Detail: Detailed Listing of all “VAT-table” transactions,
selling and buying.
- Grouping and Sequencing: by country specific criteria, invoices vs.
credits, DOM versus Non-DOM and European Union.
- Timeliness: VAT transaction periods are strictly enforced.
- Reconciliation: to financial reporting, also see Sequencing
- Format: allow tax inspector to easily validate the accounting entries
and results. Local common country formats maybe either required
or expected. Electronic formats to be used in many countries.
- Frequency: monthly with yearly reconciliation
- Backup of Results and Audit Trail: Ledger and sub-ledger
journals, reconciliation to source transaction and intermediary sub-
system.
Country specific COA recommended or
demanded in many countries (France, Spain,
Belgium, Greece, China, Korea, Japan, Brazil).
Rules for Depreciation, Accruals, Payroll differ
from country to country
Year End closing cycle and adjustment
regulations are different
Many US GAAP accounting principles are not
recognized in the same manner (good will,
revenue recognition, bad debt)
GAAP Rules
11
Key Consideration - Your Records need to prove:
- Completeness: No transactions are omitted. Proof through
numbering, sequencing, reconciliation, drill-down, audit trail.
- Timeliness: Transactions are recorded within a reasonable time of
occurrence. Proof through periods and dating.
- Accounting according to the rules: Applicable
accounting regulations (GAAP) are applied in a consistent manner.
Burden of Proof is on the business, not the tax authority. “when in doubt, you are in trouble”
(different from criminal law)
12
Example - Electronic Detail Journal Audit File (FEC - France)
Oracle Doc ID 1604003 - Overview
Effective January 1, 2014, new rules will require all companies subject to tax in France
and under audit by the French tax authorities to produce a file of all accounting entries
lines per Legal Entity and per fiscal year in a prescribed electronic format. This is a
new statutory requirement that complements the printed mandatory journals required
by law; this electronic audit File along with journals must use the French GAAP (PCG
99).
FEC is the new required Audit File that must contain all accounting entries lines from
initializing balances journal entries to closing fiscal year journal entries, in sequenced
order. Companies can be asked to provide this file for the last 3 fiscal years. More
Details in Small Print below.
This journal audit file must be submitted in French COA and French GAAP. Similar
requirements have been or are being implemented in other countries such as
Germany, Spain, Italy, Mexico, Chile, Brazil, China, India.
Level 1 Account Description
CLASSE 1 :
10
11 Report à nouveau (solde créditeur ou débiteur)
12 Résultat de l'exercice (bénéfice ou perte)
13 Subventions d'investissement
14 Provisions réglementées
15 Provisions pour risques et charges
16 Emprunts et dettes assimilées
17 Dettes rattachées à des participations
18 Comptes de liaison des établissements et sociétés en participation
CLASSE 2 :
20 Immobilisations incorporelles
21 Immobilisations corporelles
22 Immobilisations mises en concession
23 Immobilisations en cours
25 Parts dans des entreprises liées et créances sur des entreprises liées
26 Participations et créances rattachées à des participations
27 Autres immobilisations financières
28 Amortissements des immobilisations
29 Dépréciations des immobilisations
CLASSE 3 :
31 Matières premières (et fournitures)
32 Autres approvisionnements
33 En-cours de production de biens
34 En-cours de production de services
35 Stocks de produits
36 Compte à ouvrir, le cas échéant, sous l'intitulé " stocks provenant d'immobilisations "
37 Stocks de marchandises
French COA – Plan Comptable
CLASSE 4 :
40 Fournisseurs et comptes rattachés
41 Clients et comptes rattachés
42 Personnel et comptes rattachés
43 Sécurité sociale et autres organismes sociaux
44 État et autres collectivités publiques
45 Groupe et associés
46 Débiteurs divers et créditeurs divers
47 Comptes transitoires ou d'attente
48 Comptes de régularisation
49 Provisions pour dépréciation des comptes de tiers
CLASSE 5 :
50 Valeurs mobilières de placement
51 Banques, établissements financiers et assimilés
52 Instruments de trésorerie
53 Caisse
54 Régies d'avance et accréditifs
58 Virements internes
59 Provisions pour dépréciation des comptes financiers
For Example:
Section 4: Accounts Payable, Accounts Receivable
Section 5 – Bank Accounts and current assets
14
Oracle’s Legal Compliance Tools:
• E Bus-Tax
• Sub-Ledger Accounting (SLA)
• Secondary Ledger and Reporting
Ledgers (MRC)
• Globalizations / Localizations (New
Features)
• COA Mapping and Consolidation
• R12 Sequencing Tools (New Features)
How do we fit these solutions into our global implementation approach? What questions to ask?
16
Considerations / Approach
1. Build generic compliance solutions for local compliance – assign
countries to each solution
- Simple
- Medium
- Difficult
2. Identify area of Local Legal Compliance in scope/out of scope
3. Identify international subsidiary types of business (selling,
production, holding…) and align ERP footprint / modules
Slide 18
About the Presenter: Dan Chaffer Dan Chaffer is a Senior Manager at Qualcomm and
has led the team that expanded Oracle from one country and 19 Operating Units to over 45 countries and over 80 Operating Units
Board member Multi-National SIG Group
Specialist in Global Oracle rollout strategy, Intercompany, SOX (GRC) solutions and a passionate advocate for continuous process improvement
[email protected] [email protected]
4
Country-specificLocal GAAP Ledger
General Ledger
Fixed Assets
Scope
Qualcomm standard international functionality
Provides financial control standardization
Normalizes financial results and enhances visibility
Secondary statutory ledger provided, when necessary
Local Currency – US GAAP Ledger
General Ledger
Fixed Assets
Operating Unit
Accounts Payable
Purchasing
Project Accounting
ExtensityTravel
BottomLine (or Custom)
Electronic Pmts
MarkviewAP Imaging
iProcurement
Payroll
MySourceHR Data
QtimeLabor Tracking
20
Accelerated Implementation Structure for International Locations
Coordinated Project Structure
Single Requirement Gathering and validation process across a
group of countries
All Local variations are incorporated into a generalized
solution for global foot print: - Document sequencing - Banking & payment solution - local statutory ledger with COA mapping.
Results:
9 Countries, 10 Legal Entities and a new Statutory Ledger for
France
Qualcomm Europe
QCOM EURO
EUR
Euro Ledger
Primary
Ledger
Rollout
Schedule
“Euro A”
January 2012
“Euro B”
May 2012
“Euro C”
Sep 2013
QC Eur.
Inc.
(Spain
Branch)
LE 171
QC Eur.
Inc.
(France
Branch)
LE 169
QC Eur.
Inc. (Italy
Branch)
LE 170
QC
Finland
OY
LE 109
QC
CDMA
Tech
GMBH
LE 47
QC
Atheros
GMBH
LE 234
QCA
Tech.
Finland
OY
LE 232
QC
France
SARL
LE 277
Legal
Entities
LE ID
(aka Div ID)
Reporting
Ledger
Secondary
Ledger
Fixed
Assets
US GAAP Only
Euro
“Euro D”
Feb 2014
QT
Technologie
s Ireland
Limited –
Ireland
LE 282
Xiam
Technologie
s Limited-
Ireland
LE 101
QC Austria
Research
Center
GmbH –
Austria
LE 125
QC
Technologies
Netherlands
BV–
Netherlands
LE 275
QC Europe,
Inc., Belgium
Branch
Office –
Belgium
LE 274
QC Europe,
Inc., Greek
Branch
Office –
Greece
LE 279
QCT
Comm’s
SARL –
France
LE 286
Euro D & EMEA A – Geographic Scope
Seven Operating Units
Six new Countries into
Existing Euro Ledger
“EMEA A”
May, 2014
France PCG
FR GAAP
EUR
Switzerland
US GAAP
CHF
QC Wireless
GmbH –
Switzerland
LE 217
QC International,
Inc.. UAE
Internet City
Branch Office
LE 163
QC International,
Inc., South
African Branch
Office
LE 158
UAE
US GAAP
AED
South
Africa
US GAAP
ZAR
No Operating Unit
Consolidation & MJE
only
French PCG COA &
Calendar
To be used for all
French Legal Entities
US GAAP
FA
CHF
US GAAP
FA
AED
US GAAP
FA
ZAR
Three Operating Units
Three Countries
Statutory ledger for French companies
22
Cross-European Challenges & Solutions
Local Chart of Accounts – single global solution
Document Sequencing – single global solution (GL, AP, VAT-Sequencing)
VAT
- Established Standard European E-BusTax configuration
- Created a Standardized VAT Report
Fiscal Reporting with Journal Details – Standardized Extract
Fixed Asset Dual Depreciation – single solution
Payment Formats – SEPA (with country variations)
Single PO Print Format and Program
NO LOCALIZATIONS REQUIRED FOR EUROPE
23
Document Sequencing
Solution in Production
AP Document Sequencing (VAT) - Meets Italian requirements (most difficult)
- Will apply to all Euro OU’s (existing & future)
GL Journal Sequencing - In US GAAP and Local GAAP ledger as required)
24
E-Bus Tax Transaction Tax
Single Default VAT calculation configured
- Based on Vendor “Ship From” on invoice and LE “Ship To” location
- Should reduce errors in coding
VAT Rates, Recovery
- Standard E- BTax setup created for all countries requiring transaction taxes going forward
- Retroactive setup for in process
- French VAT rates change Jan 1, 2014
Generic VAT Reporting Format
- 4-5 additional columns added VAT report
- In production
- Statutory Journal Extract - (France-FEC, Germany-GDPdU)
- Data for statutory journal reporting (Libro Giornale, Libro Diario)
- Predefined VAT Configurations - Most European/ Many Asian Countries
Release 12
27
• Global Technology Platform
provides consistent technology support for global requirements across all
application
• Globalization Capabilities
are delivered through rules-based engines (Setups)
• Localizations
enhance the globalization capabilities by providing support for country specific
legislative and business requirements
• Product Localizations
Delivered in the Product by development team
• Add on Localizations
Delivered via Oracle Support by patches
• Partner Localizations
3rd party software delivered by Oracle's Partners
© 2012 OAUG Multi-National SIG
Globalizations/Localizations Structure Overview
Provides technology support for global requirements like:
• Data formats
National Language Support (NLS)
• Languages
Multiple Language Support (MLS)
• Time Zones
• Reporting and Desktop Integration
• BI (Business Intelligence)
• SOA (service-oriented architecture)
© 2012 OAUG Multi-National SIG
Globalizations/Localizations Global Technology Platform
Provides ability to implement global and local requirements via rule based Setups:
• Global Architecture
Accounting Engine
Bank Model
Ledgers
Legal Entities
Payment engine
Tax engine
• Applications
Financial Management
Human Capital Management
Supply Chain Management
© 2012 OAUG Multi-National SIG
Globalizations/Localizations Globalization Capabilities
• Product Localizations
Delivered together with the product and may require country specific setup
• Add on Localizations
Delivered thru Oracle support patches
May require prerequisites like
Specific globalization or product localization Setups
Additional Personalization Setups
Language requirements
• Partner Localizations
3rd Party software from Oracle Partners
© 2012 OAUG Multi-National SIG
Globalizations/Localizations Localizations
• Support document “E-Business Suite Globalization Center [ID 973912.1]”
Country Specific Feature Data Sheets
→ Delivery type: “Global Capability”
Documentation available in E-Business suite standard product documentation
→ Delivery type: “Product Localization”
Oracle Financials for Europe User Guide
Oracle E-Business Tax Reporting Guide
→ Delivery type: “Add-on Localization”
Support document: “Introduction to Add-On Localizations for R12 [ID
429042.1]”
→ Country Specific links to Notes
“R12 EMEA Add-on Localizations - …Country..
Patches and Setup documentation
→ Delivery type: “Partner”
→ Contact 3rd Party Oracle’s Partner
• E-Business Suite Financials Legislative Updates Center [ID 871204.1]
© 2012 OAUG Multi-National SIG
Globalizations/Localizations Documentation
E-Business Suite Globalization center
Let’s look at Oracle Solutions for Brazil specifically
Country Specific Feature Data Sheets
Add-On Localizations