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.

Quiet Period Over

I was hoping that I'd find time to blog regular updates during the Open World week, but this proved a lot more difficult than I anticipated. There was simply so much going on during the days and evenings plus I had to continue with my day job; building Fusion GL and Intercompany Applications (that's the day job I can't blog a lot about). So to summarize my Open World, I saw a lot of people, talked a lot about Oracle, presented an Intercompany Session, spent some time on the DEMO booth and was exhausted at the end of it all.

I was going to attempt to write a review of the week, but there's so much to say and so many people to remember to give a mention that now is not the time. I will focus on one particular area, the DEMO grounds; working here is IMO the hardest job at Open World

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.

The end of US GAAP?

As reported in the Wall Street Journal today, the SEC is proposing to pull the plug on US Generally Accepted Accounting Principles (GAAP) and move to the International Financial Reporting Standards(IFRS) which is used in many countries around there world already, notably in Europe. A few weeks ago I blogged about this change that's been brewing for some time and plugged the IFRS Oracle Mix group, the power of my blog increased membership by over 65%. Yes, there are now 5 members up from from 3. Why am I surprised people are not excited about accounting standards?

If you're sitting around wondering if Oracle is going to release an IFRS patch, that won't be necessary, Release 12 has all the tools you will need and Oracle has a White Paper explaining what tools it has to get you ready for IFRS, which I recommend as a good starting point.

If you want more join the mix group, I'll post information there as I find it and the members though small in number are all top notch including Sanjit Anand who you may know from Oracle Apps Hub, one of the richest sources of information on Oracle Financials.

Pull up a chair

[caption id="attachment_194" align="alignleft" width="300" caption="Have a seat"][/caption]

As Meg mentioned last week, we've been clearing out old chairs and sprucing up our offices in 300 building at HQ over the last few months.  I am very pleased with my office move and the view is pretty good.

The other morning I took this snap as they unloaded an entire truck full of office chairs, one of these Meg is enjoying now and giving thanks for.

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

International Financial Reporting Standards (IFRS)

International Financial Reporting Standards (IFRS) is a set of standards that are gaining momentum. There is market pressure to have a single language for companies to communicate financial results, globalization of companies and markets make this inevitable. There is also some regulatory pressure likely to come in the US as the SEC are having a round table today, the Wall Street Journal discusses it today too.

I notice the group on Oracle Mix to discuss IFRS has just three members, so I wonder if this is on the radar of the Oracle community yet.

First Party? Third Party? Which Party am I?

Written by David Haimes

This is from an email sent to me by Amazon

==============================================

The following items have been shipped to you by Amazon.com:
---------------------------------------------------------------------
Qty      Item                           Price  Shipped  Subtotal
---------------------------------------------------------------------
Amazon.com items (Sold by Amazon.com, LLC):
1     Seventh Generation Chlorin...   $42.99      1   $42.99

===================================================

It tells me the Legal Entity that I have a contract with, if those Diapers don't arrive as advertised I know it is Amazon.com, LLC that I need to drag through the Legal System, it will also tell me something about

Intercompany Accounts with All Other-All Other Rules

I recently had a question about what Balancing Segment Value (BSV) to enter in the accounts for the All Other All Other rule and I have to admit it could be a little confusing. There is a technical limitation with the flexfield infrastructure we use to capture and store accounts which means we have to have some value for BSV and Intercompany Segments, even though we will substitute in the real BSV when we generate the Intercompany accounting.

Here is an example (chart of accounts is balancing-natural account-intercompany)

I define the following rule

Debit BSV		Credit BSV		Debit Account		Credit Account
All Other		All Other		99-4000-99		99-2000-99

Then I enter a journal

Larry is in the building

When I looked out of my office window this morning I noticed somebody had a left a great big yacht outside 500 building. It is still there, nobody towed it and I didn't see any parking tickets on it, so I assume Larry parked it there. I wonder if it's his new ride to work; anyone can show up in a Porsche 911, Ferrari Testarossa or Toyota Sienna but if you really want to turn heads park your 62 foot Americas Cup yacht outside the office.

I was curious to check it out so I did my lap of the lake. If you have ever been to Oracle HQ you will have observed this phenomenon, we all like to walk around the lake after our lunch and this week there has been a bit of a crowd near the Yacht, I was one of the sad characters taking photos.

Tax Avoidance, Planning, Mitigation and Evasion

What is the difference between Tax Avoidance, Planning, Mitigation and Evasion? The first three of these are legal and the last one isn't. With the recent conviction of Wesley Snipes, tax has been in the news quite a lot and over in the UK there has been some interesting stuff written about the country's largest retailer, Tesco and it's tax situation. The guardian newspaper responded today to a writ issued by Tesco, over an article in the guardian back in February.  The article talks about how Tesco has been moving assets to different companies in a variety of jurisdictions.

Global corporations have complex legal structures and whenever any assest or liability moves to a different Legal Entity, that is Intercompany and there may be tax involved. The complex and ever changing laws in this area mean it is increasingly important that you have tight control on your intercompany and it is documented because auditors and tax authorities may need to take a close look.

Product Development 2.0

I had dinner with the Appslab crew last night, they've been at the Web 2.0 Expo doing their thing; I expect Jake will blog about th conference soon. I enjoyed listening to their ideas and figuring out how they fit into not only our products but our development process. I've been thinking a lot recently about how web 2.0 concepts fit into my daily work in product development and have come up with the phrase "Product Development 2.0".

So what is Dev 2.0? Dion Hinchcliffe talks about it as business reaching out to customers over the web and letting them influence the direction of products. An example he uses is XM radio station playing records voted for by it's users over the web or by sending in text messages. I think customer input is important and tools like this blog and Oracle Mix are great ways to engage customers, but my vision of development 2.0 has a totally different angle, I am looking at the daily life of a software developer or product manger in a large software shop and how we can add web 2.0 into the mix

Oracle has thousands of employees in product development and communication is always a huge issue in an organization of that size. We need to make maximum use of the latest tools to ensure the hard work put in by a person in the org to figure out the best way to do something doesn't go to waste and that knowledge is available to people who need it. Traditionally we rely a lot on informal networks, for example if I need info on BI Publisher, I call Tim, I used to work with him and know him. I have 10 years worth of contacts like that, dozens of favors I owe and am owed, friends of friends people I know from the gym, car pool partners, snowboarding friends etc etc. This is the 'phone a friend' model, when I am stuck I call a person who will know an answer and who will take my call (This reminds me of a trick I use when people are not taking my calls - dial an outside line and then call their number so the caller ID does not show as you, they pick up and get a shock when they hear your voice). The problem with this model is it just doesn't scale, I need a way to let other's tap into the knowledge networks and web 2.0 is all about connecting people, to each other and to information.

Example of Development 2.0 in action are blogging by subject matter experts, social networks inside the firewall, user docs and standards guides on wikis, annotation tools to comment on others work, digg like sites where you can vote on the most useful information, the list goes on. This is something sagar talked with passion about when he was at Oracle and I think in Apps development many people really get it and the the word is spreading.

However Product Development 2.0 should not just be about technology that enables communication on a scale never possible before, it has to be about changing the attitudes and mindsets of people. We need to be committed to sharing what we know making it part of our daily job to add to the common knowledge base of organization. There is probably a full post on that in my head, but ironically I don't have the energy to share my ideas and knowledge on that right now (it's after midnight and I've been up since 7am).

So what does product development 2.0 mean to you? Do you see it on your organization? If you are in development at Oracle, do you agree with my opinion that things are changing? Share your wisdom in the comments.

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

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

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.