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Webinar jan 28 2016 learn to improve period-end close process with effective controls in oracle

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Oracle EBS customers rely on user security, system configuration, profile options and workflows to ensure effective controls over the financial close process. However, these controls can become ineffective over time with unintended system updates through patching, unauthorized change to system configuration and unapproved user access to sensitive functions.
In this training session you will learn to test key financial controls in Oracle EBS, to eliminate the errors and bottlenecks that can slow down your close activities and can also cause unreliable financial results.

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Webinar jan 28 2016 learn to improve period-end close process with effective controls in oracle

  1. 1. Leverage Technology: Turn Risk into Opportunity™ Risk and Compliance Financial Reporting Internal Audit Controls Catalog Application Security Advanced Analytics A Leader in Risk Based Enterprise Controls Management Solutions Copyright ©. Fulcrum Information Technology, Inc.Give me a lever long enough and a fulcrum on which to place it, and I shall move the world - Archimedes Learn to improve Period-End Close Process with effective controls in Oracle E-Business Suite Educational Webinar January 28 , 2016 Adil Khan Managing Director
  2. 2. www.fulcrumway.comPage 2Copyright © FulcrumWay Learn to improve Period-End Close Process with effective controls Statements Introduction Oracle General Ledger Controls Overview Configurations that impact financial close Oracle EBS Controls Assessment Approach Oracle EBS Period-End Close Process - A Case Study Q&A Agenda
  3. 3. www.fulcrumway.comPage 3Copyright © FulcrumWay FulcrumWay™ Insight Thought Leadership Co-Authored GRC Book: First book on GRC for Oracle Applications FLOAUG Innovate 16 - February 12th – Orlando: Oracle Role Based Security and Oracle Cloud Educational Webinar – February 23rd – Self Service User Provision Educational Webinar – March 22nd – Procure to Pay Process Optimization with Controls Monitoring Collaborate 16 – April 11th, 2015 Las Vegas GRC Client Appreciation Dinner Educational Webinar – May 24th – Hire to Retire Controls in Oracle Fusion HCM Oracle Open World – Annual GRC Dinner on September 19th, 2016 - San Francisco, CA LinkedIn –FulcrumWay Risk, Compliance and Audit Software Group International GRC Round Tables – Sydney, London, Johannesburg, Dubai See events page for details Proven Expertise
  4. 4. www.fulcrumway.comPage 4Copyright © FulcrumWay FulcrumWay Client StudiesSuccessful Track Record Government Oil and Gas Healthcare Communications Financial Services Transportation Natural ResourcesManufacturing Retail High TechMedia/Entertainment Life Sciences
  5. 5. www.fulcrumway.comPage 5Copyright © FulcrumWay Oracle EBS R12 General Ledger Configurations to Ensure Reliable Financial Statements Introductions Oracle General Ledger Controls Overview Configurations that impact financial close Assessment Approach for Oracle EBS Controls Oracle EBS Period-End Close Process - A Case Study Q&A Agenda
  6. 6. www.fulcrumway.comPage 6Copyright © FulcrumWay Oracle EBS R12 Period-End Close Controls GL Controls Overview  Close Oracle Payables before you close Oracle Inventory and Oracle Assets.  Close Oracle Payables before you close Oracle Purchasing to account for purchasing accruals at period end.  Close Oracle Cash Management before you close Oracle Receivables, as bank reconciliation in cash management will create miscellaneous receipts in Oracle receivables.  Finally, close all the subledgers before we close the General Ledger.
  7. 7. www.fulcrumway.comPage 7Copyright © FulcrumWay Oracle EBS R12 Import JournalsEBS GL Controls
  8. 8. www.fulcrumway.comPage 8Copyright © FulcrumWay Oracle EBS R12 Concurrent Request: Period-End – AP Trial Balance EBS GL Controls
  9. 9. www.fulcrumway.comPage 9Copyright © FulcrumWay Period End ReportsEBS GL Controls
  10. 10. www.fulcrumway.comPage 10Copyright © FulcrumWay Oracle EBS R12 Concurrent Request: Create Accounting EBS GL Controls Check the Subledger Accounting rules that will be invoked by the process. Options Are: a) Create Final Accounting Post to GL b) Create Final Accounting c) Create Draft Accounting.
  11. 11. www.fulcrumway.comPage 11Copyright © FulcrumWay Oracle EBS R12 Account Reconciliation EBS GL Controls
  12. 12. www.fulcrumway.comPage 12Copyright © FulcrumWay Oracle EBS R12 General Ledger Configurations to Ensure Reliable Financial Statements Introductions Oracle General Ledger Controls Overview Configurations that impact financial close Assessment Approach for Oracle EBS Controls Oracle Advanced Controls – A Case Study Q&A Agenda
  13. 13. www.fulcrumway.comPage 13Copyright © FulcrumWay Configuration ChecklistGL Configurations Item Configuration Control Risk 1 GLDI: Force Journals to Balance" profile option Set to “Yes” Inaccurate journal entries are posted to the GL, resulting in misstatements in account balances. 2 Freeze Flexfield Definition Set to “Yes” Changes in key flexfield definitions could cause inconsistent transaction accounting and data corruption issues, resulting in misstatements in account balances. 3 Enable Journal Approval Enable Invalid or incorrect journal entries could result in misstatements in account balances. 4 Require Journal Approval Enable Invalid or incorrect journal entries could result in misstatements in account balances. 5 Journal Authorization limits Valid Limits Invalid or incorrect journal entries could result in misstatements in account balances. 6 Freeze Journals Set to “Yes” Unreconciled journals between subledger and General Ledger may occur. 7 The "Method (Sequence Assignment) for Ledgers “A” (Automatic) Journal entries might not be entered completely resulting in incomplete financial statement. 8 Allow Dynamic Inserts Cross Validate Segments Set to Yes Set to Yes Invalid account code combinations could result in journals being posted to incorrect general ledger accounts resulting in misstatements in account balances. 9 Security Rule and Security Rule Elements Define Security Rule Elements Transactions may be processed by users against account segments they are not authorized to process in resulting in account misstatements.
  14. 14. www.fulcrumway.comPage 14Copyright © FulcrumWay Configuration ChecklistGL Configurations Item Configuration Control Risk 10 MRC: Maximum days to roll forward conversion. Define Currency conversion rates may become outdated and incorrect, resulting in misstatements in account balances. 11 Freeze Rollup Groups Yes Changes to Rollup Groups would affect how individual chart of account values, used within journal entries, are consolidated for financial statement reporting. 12 GL: Income Statement Accounts Revaluation Rule profile Define Income statement accounts may not be appropriately revalued each period, causing gain or loss amounts to be inaccurate. 13 Budgetary Control Enabled Yes Ledgers may not be included in the budget process causing budget monitoring to be non-existent. 14 GLDI: Converted Entry Threshold Define An Excessive Threshold amounts might lead to inaccurate postings to GL. 15 Flexfields:Validate On Server profile option Yes Inaccurate journal entries are posted to the GL, impacting the accuracy of financial reporting. 16 SLA: Enable Data Access Set Security in Subledger profile option. Yes Transactions could be processed resulting in potential misstatement of accounts. 17 GL: Number of formulas to validate for each MassAllocation batch" profile option "GL: Number of formulas to validate for each Recurring Journal batch" profile option Define Mass Allocations and Recurring Journals may not be processed accurately and inappropriate formulas may be used.
  15. 15. www.fulcrumway.comPage 15Copyright © FulcrumWay Configuration ChecklistGL Configurations Item Configuration Control Risk 18 SLA: Enable Subledger Transaction Security in GL" profile option was set to "No" at the site and organization levels. Set to “Yes” Subledger transactions can be accessed by unauthorized users through General Ledger responsibilities. 19 "Access Set Type" Full Inappropriate configuration and assignment of definition access sets may result to invalid journals being posted. 20 Default Average Rate Type and Default End Rate Type were not defined. Define Adjustments from currency translation or revaluations may not be appropriately accounted for, resulting in inaccurate financial reports. 21 GL Rollup Groups Define Inappropriately defined rollup groups may provide management with inaccurate summary information. 22 Super User Definition Access Set Define If definition access sets are not appropriately designed, inappropriate users may gain access to sensitive functionality. This could result in financial misstatement. 23 Segment Value Qualifiers Define If posting is not restricted, users can post journals direct to General Ledger accounts. This can lead to unreconciled differences between the subledger and the general ledger. 24 Period Status Open current period All prior and future accounting periods (except the current period) should have a status of Closed. 25 Enable Security configuration for all accounting calendars, autopost criteria sets, COA mappings, and journal reversal criteria sets. Set to Yes If definition access sets are not appropriately designed, inappropriate users may gain access to sensitive functionality. This could result in financial misstatement. 26 The Reversal Period for different journal reversal categories. Define Journal entries may be reversed in an inappropriate period affecting cut off in the financial statements.
  16. 16. www.fulcrumway.comPage 16Copyright © FulcrumWay Oracle EBS R12 General Ledger Configurations to Ensure Reliable Financial Statements Introductions Oracle General Ledger Controls Overview Configurations that impact financial close Assessment Approach for Oracle EBS Controls Oracle EBS Period-End Close Process - A Case Study Q&A Agenda
  17. 17. www.fulcrumway.comPage 17Copyright © FulcrumWay A Risk Based Approach to ERP Controls Analyze Control Defects Prepare Remediation Plan Correct Control Defects Monitor Application Controls Scope Application Controls Snapshot Application Data Source Manage Exceptions Setup Mitigating Controls Control Experts/ ERP Managers/ Control Owners Risk Advisors/ Control Owners Control Owners/ ERP Managers Assess Control Risks AnalyticsControls Catalog Controls Workbench ERP Controls Experts/ ERP Managers Process Rules ManagerDataProbe Design Application Controls Controls Monitor
  18. 18. www.fulcrumway.comCopyright © FulcrumWay People: Reconciliation requires clear communication and effective collaboration Account Reconciliation Executives Administrators Auditors Preparers & Reviewers Risk Assessment
  19. 19. www.fulcrumway.comCopyright © FulcrumWay People: Reconciliation requires clear communication and effective collaboration Account Reconciliation Executives Administrators Auditors Preparers & Reviewers Lack of insight – Are there any surprises during account reconciliation? Lack of real time status. Too much time for audit & review Missing work papers on key account balances Disconnected control testing – redundant efforts No standard definition for “reconciled”. Account Reconciliation not based on Risks such as potential for fraud or misstatement, turnover, account history, materiality, volume of transactions, significant judgment, need for regular manual posting or adjustments, etc Delinquent reconciliations – No Action plan for Account owner to remediate delinquent reconciliations Risk Assessment
  20. 20. www.fulcrumway.comPage 20Copyright © FulcrumWay Process: Financial Close is Complex Monitor Financial Close Controls Sub Ledger Close General Ledger Close Data Assurance Consolidation Internal Reporting External Reporting Filling Close PO Close Project Billing and Costing Run post process for PO, Projects, etc Close AR sub ledger Close AP sub ledger Close Inventory sub ledger Close HCM sub ledger Close Assets sub ledger Run revaluation/re-measurement Run GL post process for AP,AR, FA, etc. Reconcile sub ledgers to GL Reconcile Bank Accounts Reconcile all accounts Approve adjustments Clear suspense accounts Post accruals Run allocations Gather non actuals data from reporting (lease, credit line, headcount, plan, etc) Gather and validate complete data sets to support all financial reporting needs (i.e. Legal Entity, Segments, Management, Tax, Sustainability Metrics, Tax, etc Run summary allocations Run consolidation to summary ledgers Make Topside Entries Run reports for FASB Run reports for KPI’s Run reports for FX Run reports for Retained Earnings Run period-end management reports Review reports for business performance and realignment Generate external reports Compile Disclosure Items Gather other financial information Deliver XBRL/Edgar filings to the SEC Deliver statutory filings such Tax Risk Assessment
  21. 21. www.fulcrumway.comPage 21Copyright © FulcrumWay Monitor Financial Close Controls Sub Ledger Close General Ledger Close Data Assurance Consolidation Internal Reporting External Reporting Filling Close PO Close Project Billing and Costing Run post process for PO, Projects, etc Close AR sub ledger Close AP sub ledger Close Inventory sub ledger Close HCM sub ledger Close Assets sub ledger Run revaluation/re-measurement Run GL post process for AP,AR, FA, etc. Reconcile sub ledgers to GL Reconcile Bank Accounts Reconcile all accounts Approve adjustments Clear suspense accounts Post accruals Run allocations Gather non actuals data from reporting (lease, credit line, headcount, plan, etc) Gather and validate complete data sets to support all financial reporting needs (i.e. Legal Entity, Segments, Management, Tax, Sustainability Metrics, Tax, etc Run summary allocations Run consolidation to summary ledgers Make Topside Entries Run reports for FASB Run reports for KPI’s Run reports for FX Run reports for Retained Earnings Run period-end management reports Review reports for business performance and realignment Generate external reports Compile Disclosure Items Gather other financial information Deliver XBRL/Edgar filings to the SEC Deliver statutory filings such Tax Numerous ERP modules involved (INV,OM, AP,AR,GL) Control interdependencies between applications and departments Interdependent processes that must run in parallel Large volume of incomplete transactions in interface tables must be manually resolved Large volume of incomplete transactions in interface tables must be manually resolved Lack of issue identification and remediation Coordination of key personnel Simultaneous audit of the close, during the close SOX certifications should precede financial reporting Compressed reporting period Penalties for late reporting Steps must be completed in the right order Difficult to see bottlenecks within critical Lack of time for internal due diligence Risk Assessment Process: Financial Close is Complex
  22. 22. www.fulcrumway.comCopyright © FulcrumWay Technology: Oracle EBS R12 Sub-ledger Transaction ControlsRisk Assessment  Invalid – Accounting errors exist; Fix Errors and re-run Create Accounting program  Incomplete – Transactions can’t be accounted yet; Run Validation Program  Unprocessed – Transaction hasn’t been accounted; Run Create Accounting Program  Final – Accounted in SLA but not transferred to GL; Run Transfer Journal Entries to GL
  23. 23. www.fulcrumway.comCopyright © FulcrumWay Oracle EBS R12 General Ledger Configurations to Ensure Reliable Financial Statements Introductions Oracle General Ledger Controls Overview Configurations that impact financial close Assessment Approach for Oracle EBS Controls Oracle EBS Period-End Close Process - A Case Study Q&A Agenda
  24. 24. www.fulcrumway.comCopyright © FulcrumWay Global Fortune 500 Industrial Leader Ensures Reliable Financial Statement with Smart Controls Our Client Founded in 1883, today a global supplier of paints, coatings, optical products, specialty materials, glass and fiber glass Employs more than 40,000 people worldwide Generated over $15B in revenue last year External Auditor PWC. Challenges Reduce costs and “audit fatigue” related to management controls Reduce risk associated with the current state highly manual, fragmented process Need Enterprise-wide visibility into the Financial Close Controls and Compliance processes Leverage investments in technology to provide a foundation for global management controls Solutions Oracle EBS R12, FulcrumWay Smart Controls FulcrumWay Risk Advisory, Smart Controls and Dataprobe. Successes Reduced audit findings by 70% and remediation effort by 80% by configuring and testing ERP controls Improved management visibility into financial close controls by providing real time reporting on GL Controls across the regions. Reduced financial misstatement risk by replacing manual, spreadsheet based error-prone process with automated controls Streamlined financial close steps be ensuring period end tasks are performed according to journal dependencies checklist Case Study
  25. 25. www.fulcrumway.comCopyright © FulcrumWay Case Study Record to Report Process Flow
  26. 26. www.fulcrumway.comCopyright © FulcrumWay SafePaaS Application Controls ManagerProduct Application Controls Manager Access Manager • Provision Users • Manage User Access Self Service Request • Certify User Access Roles Manager • Design Roles & Responsibilities • Analyze Role Configuration • Simulate SOD Control Test • Generate Role Configuration Control Ontology • Manage data objects • Manage configuration objects • Manage Transaction objects Oracle E-Business Suite Setups Forms/PagesMaster Tables Profile Options User Security Controls Workbench • Manage Access Rules • Manage Configuration Rules • Manage Transaction Rules • Manage Master Data Rules Control Monitor • Control Analytics • Monitor Setup Changes • Monitor Transaction Errors • Monitor Master Data Change Segregation of Duty Monitor • SOD / Security Analytics • Manage SoD Rules • Manage App Environment • Manage SoD Test
  27. 27. www.fulcrumway.comCopyright © FulcrumWay Standard + Smart Controls Financial Roles Sub-Ledger Accounting Journal Import Generate Close Tasks Manual Journal Entry ApprovalsPrevent access to sensitive setups Notify Account Fluctuations GL Transaction Threshold Transaction Risks Fine- grained User Access Configuration Snapshots & Audit Trial Risk Based Account Analysis Fuzzy Logic, ‘similar values’ Smart Monitor Controls Standard ERP Controls Approval Hierarchies Journal Sources Smart Controls
  28. 28. www.fulcrumway.comCopyright © FulcrumWay Discover ERP Application RisksDataProbe RA™ 1 2 3MS Windows Install Login with Licensed Credentials Connect to EBS Database
  29. 29. www.fulcrumway.comCopyright © FulcrumWay Application Risk Factors Risk Threshold AR AP GL INV INV PR HR OM PO FA List of Apps Primary Process Enabler Financial /Sensitive Data Custom Code Freq. of Changes Audit Logs Risk Rating GL 8 9 5 9 8 34 AP 7 7 6 8 9 32 AR 7 7 9 9 7 39 FA 5 5 5 5 5 25 PO 5 5 4 6 4 24 AP GL AR Risk Scale: Highest 10 Risk Threshold: Over 30 Assess Risks
  30. 30. www.fulcrumway.comCopyright © FulcrumWay ERP Control Methods Monitor Controls Mitigate Remediate & Prevent Accept High Risk Medium Risk Medium Risk Low Risk Low High High I M P A C T PROBABILITY Treat Risk
  31. 31. www.fulcrumway.comCopyright © FulcrumWay Access Controls Access Control Risk Description Process ERP App Risk Type Risk Rating Enter Journal and Post Journal Can cause frauds or errors resulting in over or under stated financial statements R2R GL Fin High Create Suppliers and Create Invoices - R12 Can lead to an overstatement of liabilities if fictitious suppliers are created and invoiced. P2P AP Fin High Create Customer and Create Sales Order - R12 Can lead to an overstatement of revenues. O2C AR Fin High FulcrumWay Controls Catalog Control Risk FulcrumWay SOD Monitor FulcrumWay DataProbe
  32. 32. www.fulcrumway.comCopyright © FulcrumWay Configuration Controls Configuration Control Risk Description Process ERP App Risk Type Risk Rating Journal Authorization Limits Authorization limits for employees. R2R GL Fin High Payment Adjustment Controls Adjustments made to invoice distributions after payment is issued can cause errors in reconciliation … P2P AP Fin High Define Credit Usage Rules In Credit Management, credit usage rule sets ensure that all transactions for the specified currencies are converted to the credit ... O2C AR Fin High FulcrumWay Controls Catalog FulcrumWay Data Monitor FulcrumWay DataProbe Control Risk
  33. 33. www.fulcrumway.comCopyright © FulcrumWay ERP Transaction Controls Transaction Control Risk Description Process ERP App Risk Type Risk Rating Exchange Rates Identify transactions after the fact monitoring of manual inputs of system exchange rates that are …more than 10% +/- R2R GL Fin High AP Invoice Over PO Invoice payments in excess of PO / user Invoice approval limit P2P AP Fin High AR Invoices Over Threshold Control monitor returns a record of each customer invoice that is valued in excess of a specified threshold. O2C AR Fin High FulcrumWay Controls Catalog FulcrumWay Data Monitor FulcrumWay DataProbe Control Risk
  34. 34. www.fulcrumway.comCopyright © FulcrumWay Monitor Key Configurations in ERPSmart Controls
  35. 35. www.fulcrumway.comCopyright © FulcrumWay Transaction Controls Detect unusual Invoice Entries (duplicate invoices) Smart Controls
  36. 36. www.fulcrumway.comCopyright © FulcrumWay Close Monitor DashboardSmart Controls
  37. 37. www.fulcrumway.comCopyright © FulcrumWay Case Study Results and Benefits
  38. 38. www.fulcrumway.comCopyright © FulcrumWay Leverage Advanced Controls for Oracle EBS R12 to streamline your Record to Report process Introductions Top Financial Close Challenges Overview of Financial Controls Advanced Controls for Record to Report Case Study Q&A Agenda
  39. 39. www.fulcrumway.comCopyright © FulcrumWay Download Dataprobe to assess your Period-End Risks Q & A Download Dataprobe for 30 days Free Evaluation

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