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Overview of the New Financial Architecture inOracle E-Business Suite Release 12

Mary Burns

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The following is intended to outline our generalproduct direction. It is intended for informationpurposes only, and may not be incorporated into anycontract. It is not a commitment to deliver any

material, code, or functionality, and should not berelied upon in making purchasing decisions.The development, release, and timing of anyfeatures or functionality described for Oracles

products remains at the sole discretion of Oracle.

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What we set out toaddress

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National and International Laws & Regulations

Actions by Competitors

Changing Customer Requirements

Industry Standards and Regulations

Tax Codes

Changing Workforce Attitudes

International Reporting Standards

Language and Cultural Differences

1

Doing Business Globally is ComplexTop Drivers of Complexity

2

3

4

5

6

7

8

Direct impact on Finance

Source: PWC, 9th Annual Global CEO Survey

Globalization is unstoppable.Regardless of geography, industry orincome, companies are globalizing to

gain new customers and access newmarkets. Is this a good thing? Nearlytwo-thirds of the CEOs we surveyed

are positive about the impact thatglobalization will have on their

organizations over the next threeyears.

Source: 9thAnnual Global CEO SurveyGlobalization and Complexity; PwC 2006

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Make it Simpler to do your jobControl Costs by Managing Complexity

50%Senior

executives saysimplificationis driving theFinance

agenda

Major Focus

Standardizing operating practices andcontrols

69%

Standardizing policies and businessrules

66%

Standardizing and integrating financesystems

59%

Adopting best practices 58%

Optimizing the finance organization andits reporting structure

52%

Reducing reliance on spreadsheets 33%

Source: PWC Management Barometer

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ControlledTransactionEntry

Comprehensiveand compliant

processing

TransparentAudit,

Reconciliation& Drilldown

Easy Reporting

Analytics

Customers:Centralize, Simplify, Standardize

Work Globally,

to be more competitiveThink Globally,to make the right decisions

Manage Globally,to lower cost and increase performance

FinancialData for

Management- and

Compliant

National ComplianceLocal RegulationNational COALocal Calendar

Corp. ComplianceUS GAAP / IAS-IFRSCorp COACorp Calendar

$

Joint ComplianceUS GAAP / IAS-IFRSCorp COA

Corp CalendarA$+$

Parent ComplianceUS GAAP / IAS-IFRSCorp COACorp Calendar

+$

+

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Release Twelve

The Global Business Release:A New Financial Architecture

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Multi-Org

Access ControlThinkWork Manage

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Legal Entity Legal EntityLegal Entity Order Management

Dunning, Collections,Billing

Requisition, Demand &Purchase Orders

Receiving & Drop Ship

Invoice Receipt,Disbursement

Customer DataManagement

Accounting Setup

Operating Unit Operating Unit Operating Unit

MOAC: Multi-Org Access ControlRole based access to Operating Units

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Multiple Organization Access ControlSummary of Changes

Security Profiles for data security MO: Security Profile

List of operating units for a responsibility

Defined in HR

OU field on UI all transactions

setup data specific to OU, like transaction type

Enhanced Multi-Org Reporting and Processing Ledger/Ledger Set parameter on accounting reports and processes

OU parameter on other standard reports and processes

For example: submit the Payables Open Interface Import w/OUparam null to import all records across all OUs

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Multi-Org Access ControlIn practice

ClassifyOrganizationas operating

unit

SelectOperating Unitclassification

SelectOperating

UnitsIn daily use

Run ReportsAcross

OperatingUnits

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Subledger Accounting

ThinkWork Manage

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Subledger AccountingCentralized Rules, Common Repository: Global Control

Faster, EasierReconciliation

Corporate Rules =Accounting

Standardization Local Rules =

Improved LocalCompliance

Automate Apples toApples Adjustments

Improved Audit-ability

Improved InternalControl

Some Benefits

Accounting Rules SarBox & 8th Dir. User Editable

Subledger Daybooks(Journals)

Subledger Balancing Reports, inquiries, open

items, et cetera

Multiple

Representations Common Posting to GLLedgers

Real time or Periodic

What it is

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Subledger AccountingTransaction Level Compliance

InvoicesInvoice Approved

France (EUR)

20-Sep-2005

Office supplies

Asset purchase 01.9100010.100 Paris: furniture 10,000Misc expense 01.9100020.100 Paris: supplies 400

Misc expense 01.9100020.200 Nantes: supplies 100

Misc expense 01.9100020.300 Nice: supplies 300VAT 01.3100060.000 VAT@17% 1,836

Accounts Payable 01.7000010.000 ABC Supplies 12,636

National Daily Journal Requirements Internal Control: Central Definitions, Eliminate overrides

Policy Enforcement in Volume Processing

Transparent Accounting Rules

Debits & Credit at the point of the event

Automate Foreign Operation adjustments

ReconciliationPlatform

In accordance

with theUnderlyingRecords

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Opening

Balance Debit Credit

Closing

Balance

SUBLEDGER ACCOUNTING

Receivables

Customer One 250,000 150,000 400,000 -

Customer Two 350,000 250,000 450,000 150,000

Customer Three 100,000 1,500,000 1,400,000 200,000

Customer Four 100,000 800,000 750,000 150,000Customer Five 200,000 300,000 500,000 -

Total 1,000,000 3,000,000 3,500,000 500,000

Payables

Vendor I (250,000) 1,000,000 900,000 (150,000)

Vendor II (100,000) 75,000 50,000 (75,000)

Vendor III (150,000) 725,000 775,000 (200,000)

Vendor IX (250,000) 1,000,000 975,000 (225,000)

Total (750,000) 2,800,000 2,700,000 (650,000)

Opening

Balance Debit Credit

Closing

Balance

GENERAL LEDGER

Cash 100 3,500,000 2,750,000 750,100

Receivables 1,000,000 3,000,000 3,500,000 500,000

Inventory 500,000 1,200,000 1,500,000 200,000

Assets 100,000 100,000

Prepayments 1,000 1,000Payables (750,000) 2,800,000 2,700,000 (650,000)

Accruals (250,000) 50,000 (300,000)

Shares (100,000) (100,000)

Previous Results (501,100) (501,100)

Balance Sheet - 10,500,000 10,500,000 -

Sales 3,000,000 (3,000,000)

COGS 1,500,000 1,500,000

R&D 300,000 300,000

S&M 300,000 300,000

G&A-Fin 300,000 300,000

G&A-IT 150,000 150,000

G&A-HR 150,000 150,000Period Income 300,000 300,000

Income Statement - 24,000,000 24,000,000 -

Ticked & Tied

General Ledger

SLA Detail

SLA Controls that

GL Balances andSLA Balances tie,and that both tieto the document

(invoice, payment, etc.)sources

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Multiple Accounting RepresentationsGlobal Compliance Statutory and Stock Market

or

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SLA keeps the Subledgers & GL tied outKeep the auditors happy!

GLJournalEntries

and

BalancesTransactions(& adjustments)

SubledgerApplications

AccountingEvents

Reconciled:Docs, SLA, GL in synch

AccountingConfigurations

Journal EntrySetup

AccountingProgram

Subledger

JournalEntries

SubledgerBalances

Subledger AccountingService

GeneralLedger

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Ledgers and Ledger Sets

ThinkWork Manage

L d

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LedgerOne Repository of Financial Truth

The balance on Creditors (COA)

is 4.2M Eur (Currency)on March 31, 2006 (Calendar)

according to IAS/IFRS definitions (Accounting Method)

L d S

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Ledger SetsGlobal InformationAt A Glance

L d S t

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Ledger SetsGlobal InformationAt A Glance

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Currency in Release 12

Transaction Currencies

Accounting Currency in Primary Ledger

Reporting Currency in Primary Ledger

More Accounting Currencies in Secondary Ledgers For every transaction OR

For SLA Posting level / GL activity level

Balance level Translation or Remeasurement inLedgers within Ledger sets, run at one click

Balance & Activity level Translation or

Remeasurement in Financial Consolidation Hub Enhanced Revaluation [Functional Currency term dropped: conflicts with IAS 21 / FAS 52]

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Ledger Considerations

L d S W k h

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Ledger Sets Work them your way

CorporateLedger Set

adjustmentseliminations

UK Ledger Set

US Ledger Set

Legal LedgerUK1

Legal LedgerUK2

Adj LedgerCorporate

AdjustmentLedger UK

AdjustmentLedger US

Legal LedgerUS1

Legal LedgerUS3

Legal LedgerUS2

Management

Ledger Set

Automate GAAP / IASadjustments in an adjusting ledger

Eliminate within a Set with GCS

Consolidate Formally in FCH

Map from a non-conforming COAwith a GCS Ledger

Set of 26 Ledgers in one country

Euro Zone in One Ledger Set

My Corporate Set in US GAAP

Statutory Set for Country Y Subs

Division X Worldwide Ledger Set

Wh t S d L d

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When to use a Secondary Ledger, anAdjusting Segment or an Adjusting Ledger?

AdjustingSegment AdjustingLedger SecondaryLedger

Corp. wants GL balancesper Parent GAAP

Corp. wants Just the

adjustments, thank you

Corp. wants a completeParent GAAP & Currencyedition of the Subs books

Subsidiary books are

pretty similar to parents

Mapping gets us most of

the way to Parent

Subsidiary books are quite

alien to parents

No inventoryInventory is the big

differenceInventory is one of the big

differences

National chart of accountsis clearly related to IAS

IFRS or GAAP balances

Manageable series ofreclassifications

National chart of accountsis radically different from

corporateNational Controllership

- Corp GAAP knownRegional Controllership

- Corp GAAP administeredParent Controllership

Mexico plant, US parent

Balances are enough(Full drill down available)

See theyve been properly

adjusted to our rulesEvery petty cash slip

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Global BusinessFunctions

ThinkWork Manage

L l E tit Y R i t d C i

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Legal Entity: Your Registered Companies

Legal AuthoritiesCountries, States, Local,

Agencies, Taxation,Registrars, Regulators...

Legal EntitiesRegistered Companies,Funds, Partnerships

Inc. LLC. Ltd. SA. GmBH. Etc.exist in the outside world

Management OrgsDivisions, LOBS, Plants,Cost Centers, Whatever =

Decision Making Tags

Regulates

Managed & analyzed by

PublicCompany

(ultimate parent)

PublicCompany

SubsidiaryCompany

(regional parent)

SubsidiaryCompany

(business parent)

SubsidiaryCompany

SubsidiaryCompany

SubsidiaryCompany

SubsidiaryCompany

SubsidiaryCompany

Parent companies (LEs) own orcontrol subsidiaries (LEs)

No outside ring - must pick an LE

LEs create commercialtransactions

Complies

LE Wh d Wh t?

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LEs: Why and What?

LEs pay the taxes- need tax registrations

Trade between LEs

needs intercompany LEs own the money

and bank accounts

LEs file the accounts,take care of accounting

LEs comply withwhatever needscompliance: legal in LE

Why We Care

Addresses, Officers, etc.

Enabled First Partystamp

Added Establishments:map Registrations toAuthorities

GRE/LE not touched

Authorities as TCAparties

LE Configurator

What weve done

Tab late o r Registered Companies

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Setup and maintain: Legal Entities, Establishments, Jurisdictions, Legal Authorities, Legal Addresses

Tabulate your Registered Companiesand other forms of LE

Wh LE fit i

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Where LE fits in

Transaction

Taxes -Complies &Files, Pays

Actual Registered

Companies, etc.

Et Cetera, 11iMaintainsits SubledgerDocumentsin many OUsDefault LegalContext (DLC)

Accountsfor itself

in a Ledger

or BSVs

Legal

Entity

Ledger

Business

Group

GRE/LE

OperatingUnits

Registrations

with Authorities Files

Files

Establishments

Registrationswith Authorities

Legal Entity:Vehicle for compliance

ExistsLocally

Get the LE Right

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Transaction

Taxes -Complies &Files, Pays

Actual Registered

Companies, etc.

Et Cetera, 11iMaintainsits SubledgerDocumentsin many OUsDefault LegalContext (DLC)

Accountsfor itself

in a Ledger

or BSVs

Legal

Entity

Ledger

Business

Group

GRE/LE

OperatingUnits

Registrations

with Authorities Files

Files

Establishments

Registrationswith Authorities

ExistsLocally

Legal Entity:Vehicle for compliance

Get the LE RightCompliance Falls Into Place

Lets put LEs to work Isolate legal compliance from management needs Track your registered companies Make your compliance flow more easily

Accounting Setup Manager

Assign books, bookkeeping rules and currency managementto your registered companies

EBusiness TaxHave your registered companies calculate, file, and pay thetransaction taxes they owe

Intercompany

Do business between and across your registered companieswith full legal documentation

Bank ModelHave your registered companies use their money to paytheir bills, et cetera

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Accounting SetupManager (ASM)

ThinkWork Manage

Centralized Set up

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Centralized Set-upAccounting Setup Manager

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E-Business Tax

ThinkWork Manage

Centralized Global Tax

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Automation

Tax content for certain countries

Vertex and Taxware integration for U.S.

Integrity checks during setup process

Constant Changes in

Tax Laws andRegulations

Date effective setup

Tax rules flow for change or creating rules Tax simulator for setup, rules, and transactions

Business Needs Solution

Local Compliance

Tax registrations and tax reporting codes

Tax lines determine applicable taxes

Configurable tax reporting templates

Centralized Global TaxLess Complex Global Tax Compliance

Information Visibility

Single set up for all Oracle applications

Use of E-Business Suite components such as trading partner geography,trading partner classification, legal entity, inventory item categorization,and accounting event.

Oracle E Business Tax

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TaxTransactions

Taxes,Rules

Oracle E-Business TaxProcessing taxes for transactions and reporting

DetermineRegimes

TaxableBasis

CalculateTax

Amount

Tax Status& Rate

ApplicableTaxes

Single Interface for Transactions

Transparent Integration with Tax Partner Services

Parties

Places

Products

Processes

Payables

Receivables

Purchasing

Transactions

Sales Orders

Tax Reports

- PDF, HTML, RTF- Security enabled

Extensible Service Oriented Architecture

Compliance, Assurance Efficiency, Global Visibility

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Advanced Intercompany(AGIS)

ThinkWork Manage

Advanced Global Intercompany System

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Web UI

OpenInterfaces /

API

Excel

(Web ADI)

Advanced Global

IntercompanySystemSubledgerInvoices &Documents

Generate subledger invoices

Control transaction entry withIntercompany Calendar

Fully Configurable Approval Rules

Flexible Security Model

Centrally defined IntercompanyAccounts

Online

ReconciliationReporting

XMLPublisherReports

Advanced Global Intercompany SystemAddress the Top Barrier to a Fast Close

AGIS at Work

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AGIS at WorkRebilling a Corporate Cost from an USA HQ

CaliforniaCompany

New YorkCompany

IllinoisCompany

ItalyCompany

FranceCompany

SubledgerInvoices &

Documents

GL Entries created forUS subsidiaries

AP and AR Invoicescreated for Franceand Italy

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Banking Model

ThinkWork Manage

Centralized Banking

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Bank account is now

associated with LE entityrather than Operating Unit

Single bank account

serves multiple Operating

Units

Any and all Operating

Units associated with a

ledgercanbe permitted to

use the bank accountProjectsReceivables

Payables Plus Centralized Credit Card Model

Credit Card Encryption

Supplier & Customer Banks in TCA

Centralized BankingShared Services Disbursements

Bank Model: Example of What You Can Do

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Bank Model: Example of What You Can DoPay invoices from different OUs with 1 instruction

OU A

OU B

OU CBank

SinglePayment

Instruction

Invoices

Payments

New Payments Module

New Bank Model New Bank & Credit Card

Features

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Sharing Services

ThinkWork Manage

All Together: Easier To Share Services

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Shared ServiceInfrastructure

(Serves Informal and Formal)

Organizational AccessCross Org Processes

Banking ModelInter Unit Accounting

All Together: Easier To Share ServicesCentral processing, Distributed impact

SSCs(Formal)

SLAs & TaxInter-LE

Formal SSCsAt home or overseasCall Centers, OutsourcingOffshoring, SAS 70,On Demand

Informal Service SharingProcess EfficiencyDecentralized Depts.Centralized Depts..Normal BusinessPractice

Ledgers & Ledger SetsLedgers with

Balancing SegmentsMOAC across OUs

IntercompanyBank Model

Tax

Ledger and Ledger SetsSubledger Accounting

Intercompany, Tax EngineMOAC across LEs, Bank

Internal Controls Manager

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Share Services maintain privacy

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Share Services, maintain privacyExploit Cross-OU Processes

Yesterday: An LE Group in 1SoB with 1 OU - no partitioning R12: Introduce partitioning

without sacrificing processes

Assets

ProjectsReceivables

PayablesPurchasing

ProjectsReceivables

Payables

Inventory

Work inProcess

Inventory

Work inProcess

Assets

ProjectsReceivables

PayablesPurchasing

ProjectsReceivables

Payables

Inventory

Work inProcess

Release 12: The Global Business Release

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MOAC,+300 Features

SLA,Tax

Ledger Sets,Ledgers

XML PublisherReporting

Profitability Mgr,EPB

Subledger

Release 12: The Global Business Release

Work Globally,to be more competitive

Think Globally,to make the right decisions

Manage Globally,to lower cost and increase performance

DBI, FCH

Intercompany,Bank, Payments

GeneralLedger

Transactions

OICM

TCA, LE

National ComplianceLocal Regulation

National COALocal Calendar

Corp. ComplianceUS GAAP / IAS-IFRS

Corp COACorp Calendar

$

Joint ComplianceUS GAAP / IAS-IFRSCorp COACorp CalendarA$+$

Parent ComplianceUS GAAP / IAS-IFRSCorp COACorp Calendar

+$

+

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