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

info@celntrasystems.com

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

hanskolbe@celantrasystems.com

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

dchaffer@qualcomm.com danchaffer@gmail.com

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

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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

Thank you – Questions and

Suggestions, please

Contact:

Hans Kolbe hanskolbe@celantrasystems.com