FSAH and AGIS Intercompany Implementation thoughts

Written by David Haimes

As Intercompany transactions are very likely to cross systems they are a good candidate for integration in a 'Hub' of some sort.

In R12 the Financials Services Accounting Hub (FSAH) allows integration of third party systems to Oracle and is incredibly powerful and flexible.

Let's use a simple example:

Company A and B both use two different Ledgers. A Sales Invoice is issued by Company A (to Company B) for $5,000

The accounting needs to be created as below, they need to be booked with the same accounting date in the same period.

In Company A

Debit Intercompany AR $5,000
Credit Intercompany sales $5,000

In Company B

Debit Expense or inventory (per content), $5,000
Credit Intercompany AP, $5,000

So there's a number of options that come to mind (in no particular order).

1) Using Oracle Accounting Hub you can account for transactions form third party systems, it uses the Subledger accounting engine to process accounting events defined for the third party system. If your invoice systems are third party applications, you could create 2 events (one for each company/ledger/party to the transaction) for the sales invoice and get the full accounting out of the single system integration.

2) Enter these transactions in AGIS, the specific accounting will be entered/generated and approvals from company A and B obtained before AGIS either books it direct to GL or generates the Invoice for company A and B if required.

3) It may not be ideal to force users to navigate to a different screen (or change some import process, EDI, XML feed etc) to issue Intercompany invoices from other invoices as in 2) above. So continue to enter in your regular sales invoice system but run a process which detects an invoice is Intercompany and cancels it, then generates a transaction for it in AGIS (via the Open Interfaces) or FSAH.

I don't think any one of these is right for all situations, detailed analysis of the particular implementation environment and requirements needs to be done to figure out the best approach. If you have any thoughts, better suggestions or experience then please share them in the comments.

Financials Sessions at Oracle Open World 2008

A lot of people are asking when various sessions are, readers of this blog are probably interested in Oracle EBS financials, Helle posted on Oracle Mix a couple of useful links. I recommend looking at this pdf which lists all the financials sessions including demogrounds, apps lounges, presentations etc.

My session is listed there, I look forward to seeing some of your there.

Thursday 25th, 3:00 p.m.

Moscone West 2006

Are Intercompany Processing and Reconciliation Currently Pain Points for Your Enterprise?

David Haimes, Oracle; Helle Hennings, Oracle

I blogged last year about the meet the Experts Lounge, well this year it has been renamed to Applications Lounge. I haven't been asked to attend this year, so if you want to ask me any questions or provide feedback you'll have to come to the session above, find me at the DEMOgrounds, the Blogger Meetup or follow me in twitter, or use this blog all year round - remember customer interaction is not just for Oracle Open World, it's for life.

Advanced Global Intercompany System R12 White Paper

There is a white paper available on metalink (metalink note 418649.1) that describes in detail each set up step you need to perform to set up AGIS.  It is a very nice document with screen shots to show you every step of the way and there are also some viewlets that show you the set up in progress.

This is a pretty good starting point if you are setting up AGIS

Fixed Assests Intercompany in R12

[caption id="attachment_182" align="alignleft" width="258" caption="Fixed Asset?"][/caption]

Something I often forget to mention is the enhancement of Intercompany functionality in Fixed Assets (FA) that has been provided in R12. So here is my attempt to explain it, based on an old email discussion with the FA team, I wouldn't describe myslef as an FA expert, but if there are any comments or questions I might be able to find an FA expert to get an answer. :)

In 11i FA stores reference accounts in two setup entities; Book Controls and Categories. The intercompany Payables and Receivables accounts were stored directly on the book, only the natural accounts segment were stored for these two accounts. The Account Generator definition would combine the natural account with other sources to get a full account combination. Out of the box, those sources were a default ccid which is also on the book and a ccid from the asset assignment. So the balancing segment is derived from the asset assignment, the natural account from the values on the book, and other segments from the default account.

The intercompany would kick in for two transaction types "Transfer" and "Unit Adjustment". However, other transactions could result in intercompany impacts, but they would not be generated in FA so GL would do the balancing when the accounting was posted there.

So in R12 FA uses the AGIS Intercompany balancing feature, which is

Intercompany Session at Oracle Open World

The content catalog is available so you can go and search for sessions.

There's an Intercompany session (S299151), it is not scheduled yet and as I am one of the presenters I can tell you it definitely isn't written yet, next week I'll get started on that with my copresenter from strategy, Helle.  the details of the session are below.  If you have any suggestions about what we should cover, how we might cover it or anything else for the session it would be great to hear from you - add them to the comments and let's see if we can try and tailor the presentation to the audience a little.

Session ID:	S299151
Session Title:	Are Intercompany Processing and Reconciliation Currently a Pain Point for Your Enterprise?
Session Abstract:	Having problems reconciling your intercompany activity? Would you like better documentation and visibility into your various intercompany activities? Are acquisitions or changing legal structures making intercompany processing more expensive and time-consuming? Attend this session, which discusses and demos capabilities of Oracle Advanced Global Intercompany System in Release 12 and implementation options such as using this application as a standalone hub for all your intercompany activity across multiple ERP instances from multiple vendors.
Track:	APPLICATIONS, Oracle E-Business Suite
Focus Areas:	Not Applicable
Session Type:	Conference Session
Product Area:	Financial Management
Duration:	60 minutes
Room:	Rm 2006
Speaker(s)/Company:	David Haimes, Oracle.; Helle Hennings, Oracle

R12 Best Practices White Paper

I noticed today on Stephen Chan's blog that this White Paper is available on metalink

Best Practices for Adopting Oracle E-Business Suite, Release 12 (Metalink Note 580299.1)

I haven't reviewed the document yet, despite there being a section on AGIS. As soon as I resolve the problem I'm having with my metalink login I will take a look. I understand it was pulled together by Anne Carlson, who I know reads this blog becasue she mailed me just today with a question about it, I'm hoping some of the useful posts from this blog made the cut.

I want to use this opportunity to plug two other guides that are new in R12 and I highly recommend you read if you are looking at upgrading to R12.

Oracle Financials Concepts Guide, Release 12 (Part No. B28873-01

Oracle Financials and Oracle Procurement Functional Upgrade Guide: Release 11i to Release 12 (Part No. B31543-01)

I discuss them a little more along with a few other resources in this post.

UPDATE (June 16th):

I reviewed the White Paper and the AGIS section is fairly sparse - I will be contacting the author to try and get more detail in there.

However on the whole I think it's a great document and essential reading for anyone looking to implement  or upgrade to R12.  Now if we can just publish that information on a blog, then we'll truly have a living document, I'll ask that question of the document owners.

What does that radio button do?

I try to be clever and/or funny by putting a cryptic title for my posts, I think it's my attempt to make Financial Software sound fun, perky and exciting (which it is of course). Probably the real result is for some people to get here from google (or Yahoo - do they still do search?) and be very disappointed, in fact they are probably hitting the back button right now. Wordpress can show me what searches people did that got them to my page and without going into the details let me tell you that my posts about the Intercompany Periods feature (why do I need another Period?) and my musings about clearing my desk to move office (Cleaning out my Closet?) have probably been read by many confused young people and I apologize to them if they are now here reading this too. Right now those of you who know this is a blog about Oracle Financials are probably wondering when they can stop skimming the preamble and I might get to something of use or interest, so without further ado...

I was working with some AGIS users creating an Intercompany transaction from the entry screen when somebody asked "What does that radio button do?" I realized nobody in the room fully understood the feature.

Financial Services Accounting Hub (FSAH)

Financial Services Accounting Hub or FSAH (pronounced F-saa apparently) is a great product and is not only for Financial Services companies either, I understand we'll sell it to anyone.

From a (very) high level perspective it allows you to use Oracle SLA and GL to perform the accounting for third party applications. Companies the Financial services industry tend to build a lot of highly complex applications (e.g. loan systems, trading systems) in house, but they want the final accounting of transactions form these disparate system to end up in the same place and it will be nice if they can re-use the same accounting rules too.

AGIS Out of the Box

When I was about 10 years old I got a new electric train set for Christmas, but before I got to play with it I had to pinch a plug from one of my siblings toys and fit the only available (and dangerously mismatched) fuse in it. Then I had to read a complicated set of instructions to assemble a delicate set of parts and it was a minor miracle that I had it working before the New Year.

Now when I buy something new, the first thing I do is open the box, turn it on and press buttons to work out how to use it, if I get stuck I maybe look to see if they have a quick start guide. Consumer goods manufacturers make things very intuitive and ready to work right out of the box these days and we have grown to expect that. Remember that iMac add? step 1: plug into power, step 2: plug into a phone line, step 3: - there is no step 3! Wow can I have an ERP system like that please?

When designing AGIS for R12 we tried to minimize the time it would take to get started entering transactions in an initiative we internally called 'AGIS out of the Box'. I have to give credit to this idea to my former bosses Joe and Terrance for initiating this, but the whole team stopped, sat down and thought about what we could do to allow users to open the box and start using AGIS right away.

We came up with a few ideas

1) No profile options

Intercompany Invoicing in AGIS

One of the key features introduced with the new Advanced Global Intercompany (AGIS) in R12 of Oracle E-Business Suite is the ability to create documentation for Intercompany transactions. The correct documentation is required in many countries for Intercompany trading, this essentially means I need to provide a Receivables Invoice for the Legal Entity Providing the goods or service and a payables invoice for the receiving Legal Entity. These invoices should have any taxes that are applicable in the jurisdictions, for that type of service.

We do not firce you to create invoices for all Intercompany Activity, you can still create just a GL Journal entry if you prefer. The AGIS transactions flow is illustrated in the diagram below.



You can see that we check if invoices are required and there are two places that we look for that.

Using BIP for Interactive Reconciliation Reports

Written by Bidisha Silveira

I'm going to give a little more detail on how the Interactive Financial reports David described here were put together. In 4 simple steps (with pictures!)

Step 1:

The Reconciliation Data Extract background program is submitted which collects all the data and generates an xml file

Step 2:

To view the reconciliation data we use a page built in OAFramework. The BI Publisher region to view the formatted report is embedded in this page.

When you click submit the xml file generated from Step 1 along with details of the layout template and the type of output required (eg Excel or html or pdf) is passed to the BI Publisher engine. The BI Publisher engine processes this information and displays the formatted output on the current page.



Now you are ready to go. The first report displays the summary of the Payables and

Welcome Rohit and Bidisha

I am very happy to say we have some new contributors to the blog, who I hope will be posting now ad again to help keep this blog fresh.

Rohit Kathuria is a product manager here at Oracle, working specifically on the Advanced Global Intercompany System (AGIS) product in R12.

Rohit was the main author of this article on Intercompany Balancing and I hope he'll be blogging here about some common questions and gotchas that come to him from the field and interesting enhancements or features that are added.

He was a Company Secretary by profession and a post graduate in commerce. His home town is Bareilly, a small town in Uttar Pradesh. Like Anthony from the AppsLab team he enjoys Table Tennis.

Bidisha Silveira is too shy to let me put a picture of her, she is one half of a husband and wife team working in Apps development in our UK development centre (if it was in the US it would be a center). She has worked on my team for a number of years and knows the real nitty gritty technical details of AGIS. She's writing the follow up piece to my overview of how we used BI Publisher to create interactive online reports, which I promised to Tim back in December

Defining Intracompany Balancing Rules

Written by Rohit Kathuria and David Haimes

In order to take advantage of the automatic Intercompany balancing during GL posting and SLA Accounting you first need to define the accounts you want us to use.

Intercompany and Intracompany Accounts in R12 are defined in two different Set Up Pages, the Intracompany Balancing Rules are what we had in 11i for Intercompany Accounts (confusing I know) - this is where you will find the rules you had in 11i of you are upgrading from 11i. If you don't want to take advantage of the Legal Entity Configurator product and define Legal Entities and map them to your accounting structure, you can still go ahead and use the intracompany rules. If you start to map your Legal Entities to Ledgers and/or Balancing Segment Values (BSV) then you will want to be sure you complete the job, so there is no ambiguity in your setup. Consider the example below

New Grant based Security in AGIS

 

Managing a large number of responsibilities can become a complex, time consuming and expensive activity. It is also very frustrating for users if they have to constantly switch responsibility if they have a number of roles, this is a big issue in 11i Global Intercompany System as you could only have one Balancing Segment Value (BSV) per GIS responsibility and there can be a large number of BSV often with one person responsible for entering and approving intercompany transactions for many bsv. For example there may be a controller responsible for approving all transactions for the dozens of EMEA subsidiaries.

When we created the new Advanced Global Intercompany Product in R12 we set out to address this issue and came up with a whole new transaction security model.

Why do I need another period ?

In R12 we introduced AGIS periods that control the transactions entered in AGIS, this is a feature that is often misunderstood. The usual question is - Why do I want another period? I'll give some ideas why you might want one, but if you decide you don't need one, don't worry we made it optional so you don't have to use it. If you decide to use it just pick one of your GL Calendars to use for your Intercompany periods, if you never enter a calendar in the system options periods will not be enabled and you can enter transactions whenever you want with no interference from the system.

So, I ask again - Why do I want another period ?

Friday Night Writes

My primary reason for starting this blog was to discuss issues customers asked me a lot at about at Open World and on various forums. My rationale being that if I blog about our products we might help people understand them and a) Make informed choices implementing them, get more value from them and maybe log less support calls and bugs for us to look at; b) Learn how people use our apps, or why they can't use them and be in a position to engineer better apps. What I didn't have in mind was being able to sound off about whatever I want to on a Friday night and people actually read it and link to it from other blogs, which is dangerous because it just encourages me. I was also encouraged this week reading Meg's girl on a rant, nice to see other people getting things off their chest too. The last few days I've been thinking about what I wrote about Google last week. Why? Because on Monday I was asked by Terrance if I could go to the Google office and talk to them about Intercompany. Doh! My first question was,

What Exchange Rate to use for Intercompany

Leslie posted some excellent comments, which touched on the exchange rates to use on intercompany transactions, a very interesting and complex topic. I have discussed this at length with Seamus Moran many times, he has educated and enlightened me and I use an example of his here.

Consider Top Hat Global Corp

• The group reports to shareholders in Monopoly Money - MYM.


• Subsidiary N is a plant, and is located in Elbonia, where they use the Elbonian Enigmatic Krown, the EEK.


• They sell in all of the EUR countries.


• They ship from the plant to all of the EU countries.

Intercompany Reconciliation Reports just got Interactive

In R12 the Advanced Global Intercompany System was introduced and one of the main goals was to make the reconciliation process more efficient. Intercompany is often the top barrier to a fast period close, because you have to be sure you eliminated it all to zero, so your parent company does not report a profit from trading internally. Fail to do this and you might go to jail, I have no legal training but when it comes to accounting irregularity I understand claiming it was an honest mistake is not much of a defense.

What can we do for you ?

I have an Intercompany group on Oracle Mix and I want to invite all readers of this blog to join and start posting ideas, discussions and also sharing experiences.

It doesn't have to be specific to Oracel products, it could be ideas for new features, better collateral or whatever you want to start discussions about and maybe have voted on by other members.

So far things are quiet in there, I am reluctant to post my ideas, because frankly I think you probably have quite enough of my thoughts on this blog and those inside Oracle development probably know my thoughts by now. The Idea of Oracle mix is to have you, the customer (or potential customer) lead and join in the discussion.

R12 Intercompany Accounts Set Up

In R12 the Intercompany Accounts setup is broken out from GL and included in the Advanced Global Intercompany System (AGIS) product (Don't worry you don't need any additional license for this product). There is a separate set up screen for Intercompany and Intracompany Accounts. The same set up pages are available through the Accounting Set Up Manager as well as AGIS so you can pick your navigation path.