Monthly Archives: July 2014

Managing Multiple Accounting & Reporting Standards

Many of our multi-national clients have the same challenge – local reporting on one accounting standard (normally local GAAP);  group reporting (normally a flavour of IFRS) on another; as well as specific reporting requirements for regulators in certain verticals.

The difference between accounting standards can be summarised as follows:

  • Differences in report definitions (for example, the balance sheet may be presented in an different order, granularity or definitions); and
  • Differences in accounting policy (say development cost may be expensed under one standard and capitalised under another).

From my experience as an auditor, report definitions should be treated as an integral part of a company’s financial reference data, as they are one of the major reasons for material disclosure errors. Oracle Hyperion Data Relationship Manager (DRM) is a dedicated financial metadata management tool that we have implemented successfully at our clients to govern metadata and report definitions.

Historically differences in accounting policies are normally tackled by using adjustment ledgers or separate ledgers. This often introduces a governance problem, in that different subsets of a chart needs to be shared across multiple ledgers, and kept aligned.

Oracle Hyperion DRM is adept at defining these types of business rules and controlling the complete ERP metadata. It is application independent and can therefore integrate with ERP’s from any vendor. We have found it to be a very useful and flexible tool to manage multiple accounting and reporting standards, as well as many other historically challenging scenarios.

 

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Seismi Case Study | Anglo American plc

Firstly apologies that 3 weeks have passed since we last updated our weekly blog.  Like many others Seismi’s team have been taking some well earned leave, as well as meeting other development deadlines.

We wanted to bring to your attention a case study that Oracle has published on their website that highlights an example of a project that we have recently delivered. Our client was Anglo Copper a USD4 billion division of Anglo American plc and the environment was relatively complex with many applications and over 200,000 account codes.

The case study is a good example of the type of project that Seismi team have delivered for their clients. It also provides a good example of the flexibility of Oracle Hyperion Data Relationship Manager (DRM) tool and how it can be adapted to meet key business issues.

Not only were Seismi able to allow Anglo Copper to resolve some significant issues within their finance applications architecture but it has also provided their finance team with a robust and flexible platform that will be able to adapt to Anglo Copper’s business as its strategy evolves, including the ability to integrate acquisitions effectively.

In addition we were able to implement the solution over a rapid a 6-month timetable. Seismi are continuing to provide second line support to Anglo Copper’s user base.

You can read the brief case study here and please get in touch if you would like to hear more of the detail.

Also if there any specific topics you would like us to cover then do reach out. 

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The Carrot or the Stick | Governance and Integration

In the UK the FSA’s Code of Corporate Governance and in the US the SOX Act, require companies to ensure that their financial statements are an accurate representation of their underlying transactional and forecasting systems.

In most companies, the flow of data from the diverse ledgers and forecasting systems, through group consolidation and into the financial statements is a highly manual process. It is not possible to certify from a governance or internal-control perspective, so most companies require that the financial controller of each division sign off on their respective data once they have manipulated it into a single repository on a single standard. However, this passing of the corporate buck has no legal effect on the company’s, CEO’s or CFO’s responsibility! In our experience , it is also a very unreliable and inefficient method of identifying errors…

The alternative is to integrate a company’s diverse ledgers, forecasting, consolidation and reporting systems. One option to achieve this is to convert all of your systems to the same chart and platform. However, Seismi’s preferred route in the right instance, such as when the principle aim is to standardise business reporting, is to: understand and define the business rules to align the reference data across these multiple standards; centralise and govern this masterdata; and finally distribute the refined masterdata to the relevant systems and applications thereby creating the necessary standard reporting. The benefits of this method of standardisation extend way beyond avoiding the legislative stick.

Imagine your organisation where someone from head office can drill through the group financial statements to the divisional data balance, and then to a specific transaction, to understand who and why an accrual was raised, without the normal month-end ‘please explain..’. Converting bean counters into bean farmers, well almost…

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