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Oracle Financials Release 12 Close Process and Reconciliation

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Agenda
Financials Period Close and Reconciliation Process Changes and Dependencies Close Process for Financials products How to identify and resolve reconciliation differences in EBS R12 Financials Recommended practices Summary Q&A

Financials Period Close and Reconciliation

What is the importance of reconciliation at period close? Effective management of account reconciliation activities greatly increases executives ability to proactively identify and resolve issues that could result in misstatements in financial accounting and reporting records and lead to substantial write-offs.
How to Improve Account Reconciliation Activities White Paper by Price Waterhouse http://www.pwc.com/extweb/pwcpublications.nsf/doci d/F5C72129D2DD9D5985257367006606EC
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Financials Period Close and Reconciliation

What do organizations expect from ERP systems? Increase data quality and auditability Improve reporting capabilities Reduce reconciliation effort by streamlining the closing process Reduce staff for reconciliation; enable staff to focus on proactive business operations Produce reliable financial statements & reports, reducing misstatements & write-offs
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Process Changes and Dependencies Release 12

EBS Release 12 Business Process

Create Accounting Subledger Accounting General Ledger

Projects

Inventory

Other

Cash Mgmt

Payables

Assets

Intercompany
Purchasing Receivables

Process Change - Close

Release 11i
Transactions

Release 12
Transactions Distributions
Product Period Close

Distributions

Balancing Lines SLA Journals

Product Period Close

Balancing Lines GL Journals

GL Journals GL Balances GL Balances

Close Dependencies
PO Inv AP PA AR OM CE XTR GL FA

Process Change - Reconciliation

11i
Transactions
Transactional Reports

R12
Transactions Distributions Balancing Lines Balancing Lines SLA Journals

Distributions

GL Journals

Accounting Reports

GL Journals GL Balances

GL Balances

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Close Process for Financials Products Release 12

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Close Process General Steps

1. 2. 3. 4. 5. 6. Complete transactions Create accounting Reconcile transactions Post to General Ledger Reconcile accounting Close period

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Close Check Lists Oracle Financials Products Release 12

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Oracle Cash Management

Close Checklist 1. Load & reconcile bank statements
a. Auto-Reconciliation Execution Report

2. Resolve exceptions 3. Create miscellaneous transactions* 4. Resolve unreconciled lines

a. Bank Statement Detail Report b. Transactions available for Reconciliation Report

5. Reconcile to General Ledger*

a. GL Reconciliation Report b. Account Analysis Report for Cash Account
* Highlights a changed process in Release 12

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Oracle Treasury
Close Checklist 1. 2. 3. 4. 5. Complete daily trading activities Perform revaluation Generate accrual and amortization Generate journals Transfer journals to General Ledger

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Oracle Receivables
1. 2. 4. 5. 6. 7. 8. Close Check List Complete transactions Review unapplied receipts Reconcile receipts to bank statement Change period status to Close Pending Create accounting* Review Unposted Items Report* Reconcile transaction activity*
a. b. c. d. e. Transaction Register Sales Journals Receipt Register Receipt Journals Report Journal Entries Report

* Highlights a changed process in Release 12

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Oracle Receivables
Close Check List 9. Reconcile outstanding customer balances*
a. b. c. d. e. f. g. Aging Report (last period) Transaction Register Adjustments Register Invoice Exceptions Applied Receipts Register Unapplied Receipts Register Aging Report (this period)

10. Post Receivables transactions in General Ledger* 11. Print invoices 12. Print statements
* Highlights a changed process in Release 12
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Oracle Receivables
Close Check List 13. Reconcile Receivables activity to General Ledger*
a. b. c. d. AR Reconciliation Report AR-GL Reconciliation Report Third Party Balances Report Account Analysis Report

14. Close Receivables period*

a. Subledger Close Exceptions Report b. Change Period Status to Closed c. Open Next Period

15. Tax reporting 16. Print dunning*

* Highlights a changed process in Release 12
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Oracle Payables
Close Check List 1. Complete transactions
a. Invoices On Hold Report

2. 3. 4. 5.

Approve invoices Complete payments Reconcile payments / bank statements Resolve potential accounting issues*
a. Create accounting b. Journal Entries Report c. Unaccounted Transactions Report

6. Post Payables transactions in General Ledger* 7. Review accounting*

a. Payables Accounting Process Report b. Posted Invoices Register c. Posted Payments Register * Highlights a changed process in Release 12
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Oracle Payables
Close Check List 8. Unaccounted Transactions Sweep* 9. Close Payables period
a. Subledger Period Close Exceptions Report*

10. Accrue un-invoiced receipts 11. Reconcile Payables activity to General Ledger*
a. AP Trial Balance Report* (Account definition, Data Mgr Program) b. Third Party Balances Report* c. Account Analysis Report*

12. Tax reporting 13. Mass addition transfer to Oracle Assets

* Highlights a changed process in Release 12

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Oracle Assets
Close Check List 1. Complete transactions
a. b. c. d. e. Additions Adjustments Retirements Transfers Reinstatements

2. 3. 4. 5. 6. 7.

Assign distribution lines to all assets Calculate gain/loss Run depreciation* Create accounting* Rollback depreciation* for adjustments Run depreciation* to close the period
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* Highlights a changed process in Release 12

Oracle Assets
Close Check List 8. Create accounting * 9. Post Asset transactions in General Ledger* 10. Reconcile Assets & General Ledger*
a. Reserve Ledger Reports 1) General Ledger Reserve Report 2) Tax Ledger Reserve Report 3) Account Reconciliation Reserve Ledger Report b. Balances Reports 1) Cost Detail/Summary 2) CIP Detail/Summary 3) Reserve Detail/Summary 4) Revaluation Detail/Summary c. GL Reports 1) Journals Posted/Unposted 2) Account Analysis * Highlights a changed process in Release 12
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Oracle General Ledger

Close Check List 1. Ensure next period is Future Enterable or Open 2. Import & post SLA & feeder systems*
a. Import journals 1. Journal Import Execution Report 2. Delete journals in Error 3. Correct via Correct Journal Import Data 4. Re-import b. Post journals

3. Post all journals (after correcting posting errors) 4. Run and review journals reports 5. Run the Period Close Exceptions Report *
* Highlights a changed process in Release 12

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Oracle General Ledger

Close Check List
6. Run revaluation 7. Run translation 8. Reconcile Intercompany* 9. Close General Ledger period 10. Consolidate Ledgers* 11. Run final reports

* Highlights a changed process in Release 12

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How to Indentify and Resolve Reconciliation Differences

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Identify and Resolve Reconciliation Differences

By creating and putting in place appropriate reconciliation and information management processes, and improving organization, training and automation, companies can gain assurance over their general ledger balances.
From How to improve account reconciliation activities white paper by Price Waterhouse http://www.pwc.com/extweb/pwcpublications.nsf/docid/F5C72129D2DD9D5985257367006606EC

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Subledger Accounting Reconciliation

The most important step of the Month End Close RECONCILIATION !

Do I still need my hat and magnifying glass in R12?

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New Functionality in Release 12

Subledger Accounting Inquiry
Subledger Journal Entries Accounting Events Supporting Reference Balances

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New Functionality in Release 12

Subledger Accounting Reports

Subledger Journal Entry Report Subledger Account Analysis Payables Third Party Balances Open Account Balances Listing

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Subledger Journal Entry Inquiry

Accounting Entries on a Control Account

Ability to view Detailed Transaction and Full Journal Entry Outcome can be exported to Excel

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Journal Entries Report

Detailed Header & Line information for Subledger and General Ledger journal entries by Source & Category

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Account Analysis Report

Transactions transferred to & posted to a GLaccount for a period or range of periods

More information in description possible through SLA functionality

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Third Party Balances Report

Third Party Balances for Third Party Control Accounts

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Open Account Balances Listing

Definition Open Account Balances Listing can be defined by Segment or Accounting Flexfield

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Open Account Balances Listing Summary

Multiple output formats available: Detail/Summary by Accounts/Third Party.

Report to be added

GL balance and Subledger Balance side by side

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Open Account Balances Listing - Detail

Shows only Open Transactions. AP Invoice of $20869.50 has One Payment of $10000 applied. Transaction is still Open.

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Example: Payables Reconciliation

Open Account Balances Listing Report

Third Party Balance Report

GL Account Inquiry

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Example Payables Reconciliation

Difference in our example is 668,286 645,146 = 23,140

Difference Open Account Balances Listing Report Third Party Balances Report
Accounted on control account instead of expense account for the expenditure of the payables invoice Can be found through SLA Journal Entry Inquiry

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Subledger Journal Entry Inquiry

Item Expense erroneously posted to control account Accounting Class is NOT Liability (invoice expense erroneously posted to liability) Option to view Detailed Transaction and Full Journal Entry Outcome can be exported to Excel

Total 23,140.00
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Example Payables Reconciliation

Difference in our example is 645,146 630,350 = (14,796)

Difference Third Party Balances Report GL Account Balance

Entry on payable account through other source (webadi, other interfaces) Can be found through GL Account Inquiry making use of folder functionality

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Interface Entries on a Control Account

User defined folder to query entries for sources not equal to Payables

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Recommended Practices Release 12

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Recommended Practice
Improve Subledger Reconciliation at Period End

Run accounting for subledger transactions daily

Review and resolve exceptions listed in Subledger Accounting Program report daily

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Subledger Accounting Program Report

Errors & Solution Suggestion

Error message and solution suggestion

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Recommended Practice
Improve Subledger Reconciliation at Period End

Import all subledger transaction journals in General Ledger daily

At period end run the Subledger Period End Close Exception report

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Subledger Period Close Exception Report

Incomplete: Not ready for accounting, Run Subledgers validation programs!

Invalid: Accounting errors, re-account! reFinal: Accounted in SLA, not available in GL. Run Transfer Journal Entries to GL!

Unprocessed: Transactions exist but have as yet not been accounted.

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Recommended Practice
Benefit

Resolve exceptions quickly so that exceptions are not left to slow down the period-end close

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Summary
CHALLENGES CAPABILITIES VALUE

Increase data quality

Centralized repository

and auditability
Reduce reconciliation

for subledger accounting entries

Exceptions reporting

Easy to analyze subledger data from a single place Faster identification of reconciliation differences Lower risk of misstatements and write-offs Enable staff to focus on pro-active business operations

effort
Improve reporting

and subledger accounting inquiry

New subledger

capabilities
Streamline close

accounting reports
Period Close

process

Exceptions Report

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More Information on EBS

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MetaLink: Advisor Webcast Program

50+ Live Webcasts on Release 12 MetaLink / Knowledge / Tools and Training / Training (Web Seminars)

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Q U E S T I O N S A N S W E R S

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