Oracle IFRS AwarenessWebcast EPM Final

8/13/2019 Oracle IFRS AwarenessWebcast EPM Final

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Preparing for the Transition to International Financial Reporting

Standards (IFRS) with Oracle EPM


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Agenda

IFRS Overview

Oracle EPM Managing the Transition Hyperion Enterprise Customers

Recommended Demo Script

Summary


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Global Momentum Towards IFRS

Source: IASB, Dec 2007

Countries seeking convergence with the IASB or pursuing adoption of IFRSs

Countries that require or permit IFRSs


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Expected Benefits from IFRS ConvergenceA single standard for global business

More efficient accessto capital

Reduced cost offinancial reporting

Improvedtransparency for

investors

Its Not About Accounting; Its About Capital Markets


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2009 2010 2011 2012 2013 2014 2015 2016

Impact on US CompaniesProposed implementation timeline from the SEC

2009: Limited groupof large US firms arepermitted to use IFRS

on an optional basisfor fiscal periodsending on or after Dec15, 2009

2011: SEC evaluatesachievement ofroadmap milestonesand decides whether toadopt a mandatoryapproach for IFRS

2014:Largeaccelerated

filers beginfiling inIFRS

2015:Acceleratedfilers to beginfiling in IFRS

2016: Non-acceleratedfilers begin

filing in IFRS

Source: SEC Announcement, Aug 2008


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Companies are required to retrospectivelyapply IFRS to all periods presented as if they

had always been in effect.

Cumulative Reporting

Requirements

During the transition period from US GAAP toIFRS, firms must continue to report in USGAAP and any local statutories, as well as

begin tracking IFRS equivalents.

Multi-GAAP During Transition

A study comparing of the impact of IFRSadoption in the UK reveals that net income

generally rose by 39% while equity declined by23%. UK GAAP is considered close to US

GAAP in most areas.

Potential Impact on Bottom Line

Dont Know9%

Within 3years55%

Within 7years

8%

Within 5years26%

Growing awareness of complexrequirements

drives preference for early planningand assessment

Impact on US CompaniesThe value of starting early

Sources: European Financial Reporting Research Group; Deloitte Touche Tomatsu

More than 7years

2%

No one anticipated how big it was goingto be. Every company was too late andtoo slow in preparing even the goodones.

Ken Wild, Global IFRS Leader, Deloit te

Within what timeframe would your companyadopt IFRS if given a choice?

Source: Deloit te, 2007


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2009 2010 2011 2012 2013 2014 2015 2016

Impact on US CompaniesStart early for transition period with multi-GAAP

2009: Limited groupof large US firms arepermitted to use

IFRS on an optionalbasis for fiscalperiods ending onor after Dec 15, 2009

2011: SEC evaluatesachievement ofroadmap milestones

and decides whetherto adopt a mandatoryapproach for IFRS

2014:Largeaccelerate

d filersbegin filingin IFRS

2015:Acceleratedfilers tobegin filingin IFRS

2016: Non-acceleratedfilers begin

filing in IFRS

Source: SEC Announcement, Aug 2008

Transit ion Date?While IFRS requires 2years of comparatives,

best practice is 5 years


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US GAAP vs IFRS: Whats Different?You can make a living cataloging the differences

IFRS: 250 PagesUS GAAP: 25,000 Pages


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But There are DifferencesUS GAAP is always more specif ic, plus:

Approach

(Some Examples)

IFRS US GAAP

Fair Market Revaluation Fixed Assets &

Investments

Only Certain Fixed

Assets

Extraordinary Items None Rare

(Negative Goodwill)

Consolidation Control 2 Models

Joint Ventures Proportional OK Only Equity

Research & Development Capitalized Expensed

Inventory No LIFO LIFO OK

Impairment 1 Step, Reversible 2 Step, No Reversal


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IFRS Adoption in North AmericaIncludes Interim Quarterly Results

201120092008

Canada

2010

First

Reporting

Date

2012

United States

2010 2011 201320092008 2014

Transition

Date?

Transition

Date?

First

Reporting

DateAdd New IFRS OpeningBalance Sheet

Add New IFRS Opening

Balance Sheet


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IFRS No.1: Disclosures and Reconciliations

IFRS Statement No. 1 requirescompanies to include a number ofreconciliations in their first financialstatements presented under IFRS, asfollows:

A reconciliation of the companysequity previously reported underGAAP as of its transit ion date to itsequity restated under IFRS at that date;

A reconciliation of the companysequity as of the entitys most recentannual financial statements under

GAAP to its equity restated under IFRSat that date; and

A reconciliation of its last published USGAAP total comprehensive incomewith its restated IFRS comprehensive

income for the same period.For all three of the reconciliationsrequired, companies must distinguishbetween GAAP differences andcorrection of errors.


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Agenda

IFRS Overview

Oracle EPM Managing the Transition Hyperion Enterprise Customers

Recommended Demo Script

Summary


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Communications Media Financial Services Consumer Technology

Energy Industrial Retail Life Sciences Services/Other

Oracle Financial Management Solutions Customers1,500+ worldwide, with 40% in Europe
http://www.post.ch/SiteOnLine/DE/Accueil/1,1727,3205,00.htmlhttp://www.hyatt.com/http://www.metlife.com/Applications/Corporate/WPS/CDA/PageGeneratorhttp://www.alcoa.com/global/en/home.asphttp://www.textron.com/http://www.goldmansachs.com/http://www.comcast.com/default.htmlhttp://www.bt.com/index.jsp?BV_SessionID=@@@@0465278720.1086302531@@@@&BV_EngineID=cccjadcljfhiihecflgcefkdffndfnn.0&obsOID=30777&obsPage=/index.jsp&vStore=1128&obsType=LINK&obsNoSee=true


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There were fewer adjustments at the reporting unit level than we had expected and they

tended to be relatively minor. They mainly related to acquisitions, intangibles, leases, and joint

ventures. Adjustments at headquarters were more significant and more complex and relatedto pensions, share option expenses, deferred tax, and financial instruments. Given this relatively

straightforward framework, the group was able to quickly establish a unified chart of accounts in

Hyperion Financial Management covering UK GAAP, U.S. GAAP, and IFRS. It was then a

simple matter to post the adjustments against these accounts as required.

We had total visibility of the process and could instantly see the effect of changes posted

anywhere in the group. Also, if we needed to maintain the central modelfor example, to collect

more datawe could effect the change, and it was immediately available throughout the group.

We could not have managed this so easily using our old business consolidation system.

Andrew Midgley

Head of Financial Reporting

Pearson


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At first we simply added U.S. GAAP to the existing custom dimensions and put

through the larger adjustments at a consolidated level. But laterwe were able to push

responsibility for U.S. GAAP adjustments down to the reporting level. OraclesHyperion Financial Management was also vital in allowing us to reconcile results

between reports based on U.S. GAAP and IFRS so that we could explain the

differences.

The most outstanding benefit of Hyperion Financial Management is its flexibility. We

were able to accommodate U.S. GAAP when it was suddenly sprung on us and

prepare profit forecasts in the application very quickly and relatively easilywithout

incurring big costs. This really was a key benefit.

Dr. Dietmar Scheja,

Head of Corporate Financial Analysis

Wella AG


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All Stages: Apply Policy and Control Management

Determine impacton accounting in

subsystems

Configureaccounting rules

and set up ledgers

Process and reportusing dualaccounting

Milestone 3Transactions Recorded

in Multiple GAAPs

Stage 3

RecordTransactions

in both GAAPS

Milestone 1Completed Preliminary

Study

Stage 1

Study Impact &Determine Strategy

PerformPreliminary Study

Assess Impact

DetermineStrategy

Determinechanges to

business model

Transformoperations using

IFRS results

Report IFRSresults, increase

shareholder value

Stage 4

Transform YourBusiness &

Win with IFRS

Milestone 4Business Model

Optimized

Your IFRS Action PlanAchieve early mover advantage

Collect GAAPFinancial Results

Adjust andConsolidate

Under GAAP &IFRS

Report, Reconcileand Audit Results

Milestone 2IFRS Reports Produced

Stage 2

Enable Top EndReports


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Oracle Enables Key Stages in IFRS Action Plan

Stage 2

Enable Top EndReports

Stage 3

RecordMulti-GAAP

Transactions

Stage 1

Study Impact &Determine Strategy

Stage 4

Transform YourBusiness &

Win with IFRS

Oracle Enterprise Performance Management

Oracle ERPFinancials

Other ERPFinancials

OracleIndustry

SpecificApplications

Oracle Governance, Risk, & Compliance Suite

Custom orLegacy

All Stages: Apply Policy and Control Management

Wh t Ch d? IFRS SOX
http://www.salesforce.com/http://www.salesforce.com/


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IFRS is Coming to US andCanada

Multi-GAAP, transitionalreporting is key

Hyperion Enterprise is not agood solution nodimensions, no docattachments

EMEAs IFRS transition in2005 was not subject to SOXbut in the U.S. SOXCompliance during thetransition is key

Therefore, need to move allEnterprise customers to HFMin next few years

Whats Changed? IFRS + SOXOracle Believes Hyperion Enterprise is Very Risky


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Gartner: Whats Required for SOX?

HFM Enterprise


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H i E i i V Ri k


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Hyperion Enterprise is Very Risky

Custom

Dimensions

Custom

dimensions for

easy trending andreconciliation

among different

GAAPs

Doc Attachments

allow for fulldocumentation of

adjustments for

use now and in

the future

Requires no

commingling of

IFRS accounts

with US GAAP

accounts

Separate

Application

Organizational

Hierarchy

Involves

incorporating

additional entitynodes within a

designated

hierarchy

Requires

commingling of

IFRS accounts with

US GAAP accounts

Significant limitation

is ability to report

across hierarchies in

terms ofperformance under

US GAAP vs. IFRS

Segregates the IFRS

corporate chart of

accounts from the US

GAAP chart

Maintenance and control

issues doubles the

maintenance

requirement and size ofdatabase.

No doc attachments

no backing detail for

IFRS adjustments

International Financial Re ortin Standards

Multiple Categories

Set up additional

Categories for

IFRS history andcurrent periods

Maintenance and

control issues

doubles the

maintenancerequirement and

size of database.

No doc

attachments no

backing detail for

IFRS adjustments

HyperionEnterpriseHFM Only


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CUSTOM DIMENSIONSEnables tracking

of GAAP vs.

IFRS

adjustments

Hyperion Financial Management FeaturesEnable Top End IFRS Reporting

Examples


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Alternative aggregations of source system

input plus various adjustments provide a

choice of views of the dataset.

The custom dimension node attributes allow easy

aggregation or difference accumulations, providing

multiple views of the dataset including variances.

On the fly aggregations combined with

ease of hierarchy creation and maintenance

allow for an easy transition from recording

one primary GAAP method to another while

retaining all necessary summary views of

the data.

Examples


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CORE CONSOLIDATION FEATURES

GAAP IFRSFlexible Rules Engine

Journal Entries and Audit

Multiple reporting standards

in a single solution

Hyperion Financial Management FeaturesEnable Top End IFRS Reporting


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Hyperion Financial Management Features


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DOCUMENT ATTACHMENTS

Creates

Electronic

Binder of all

adjustments

yp gEnable Top End IFRS Reporting


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Spreadsheet Permanently Stored in HFM as a Doc


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Attachment

Ties to HFMJournal forthe Period

Flexible Reporting


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Flexible Reporting

Net Income Trend

0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014

Years

$(0

00,

000)

USGAAP

IFRS

Difference


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Key Takeaways

Use the benefit of a realistic implementation timeline dont wait for the pressure of mandatory deadlines

IFRS resources are scarce start planning and educationsooner rather than later

Start Early

Report using IFRS principles with Oracle EPM

Push changes into general accounting with Oracle ERPFinancials

Document and test IFRS controls with Oracle GRC

Leverage

Technology

Consider how to optimize your business and gaincompetitive advantage through IFRS

Align your business model with the new capital marketmodel

OptimizeYourBusiness


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Oracle IFRS AwarenessWebcast EPM Final

Documents

Transcript of Oracle IFRS AwarenessWebcast EPM Final