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Using Automated Tools with Oracle Applications to Manage Period Close Processing 

 

By John McClain

 

Introduction

With the introduction of the Sarbanes-Oxley act of 2002, all publicly held corporations in the United States, that meet certain financial targets,  are required to have well-documented and auditable financial controls for their business. 

One of the key business processes supporting Sarbanes-Oxley compliance is accurate Corporate financial reconciliation, reporting and accountability. 

 

Closing the books in the Oracle ERP environment is a carefully orchestrated process coordinated between many organizations within IT and Finance.  Information Technology organizations typically play a critical role in error detection and remediation, the technical processing of the close activities and generation of key close reports for the business.  The Finance organizations are typically responsible for managing the reconciliation, preparation and communication of period reconciliations. 

 

Depending on the number of business locations, sets of books, operating units and inventory organizations in the Enterprise, and the implementation architecture, the technical close process can be a 24-hour activity on the first day of the close. 

 

Develop a Plan

The key to a successful financial close business process is a strong, well tested and executed Period Close business, technical and communication plan.  Each plan should have an assigned owner who is responsible for orchestrating the specific plan.   The resulting plan should be integrated into the overall close calendar activities for the company.

 

Technical

The technical plan outlines how the technical close activities will be executed, in which order (predecessor matrices), at which times, and by whom.  The technical plan must be generated in conjunction with the business plan to ensure that all technical activities are completed to support the business activities at the appropriate time(s) required.

 

Business

The business plan outlines how the business close activities will be executed, in which order, at which times and by whom.  It is used to ensure that the company meets all reporting guidelines and requirements.

 

Communication

A strong communication plan between key stakeholders, managers and executers during the close process is critical, especially during the first months after implementation, to ensure that the close process completes successfully on-time and has appropriate escalation paths in case issue arise. 

 

Technical Close Activities

 

Users should consider a transaction cut-off in the development of their close plan. A clean transaction cut-off is key to the successful period close.   Since the Oracle applications are tightly coupled modules linked together through the use of interfaces, the Oracle application interfaces be monitored thru-out the period.

 

Technical Close Activities

Besides ensuring that all interfaces are clear (or transactions accounted for) there are several key technical activities that are completed during the early phases of the close process that must be completed prior to the financial reconciliations being completed. 

 

AR, Inventory, WIP, Purchasing, AP and Fixed asset transactions must be transferred from the subledger to general ledger and then posted to the General Ledger before any financial reconciliations or reporting can commence.

 

Reporting and Reporting Environments

 

Once the technical processing is complete, the financial reconciliation reports can be generated that will be used to allow the users to reconcile their subledgers to the general ledger.   Oracle has a number of standard reports that are used to manage the close process. Depending on the structure of the technical close, reporting can either be run in a scheduled manner or ad-hoc by users.  In either case, proper planning needs to be completed to ensure that performance issues are not generated that prevent the close from continuing. 

 

The larger the implementation (number of OU’s and Inventory Orgs) the more reporting controls need to be in place during the close to ensure processing occurs within the required time frame.  There are a number of considerations that help to ensure that other reporting portion of the close processes run smoothly.  Users should consider:  Production vs. Replica Reporting and Batch Scheduling requirements in their plan

 

Reporting

 

Typical General Financial Reconciliation Activities

Once reporting is completed, users can begin the task of performing financial reconciliations in the respective organization to ensure financial integrity of the environment.   All unbalanced transactions must be reconciled. The unbalanced reconciliation process can be time consuming and complex depending on the complexity of the client’s implementation.  This task is typically managed manually with hard copy reports and spreadsheets.

 

Automated Tools in support of the Financial Close

 

Scheduling and Automation Software for Technical Close Processing

Technical close processing can be a highly manually intensive process.  Large numbers of Operating Units and/or Inventory Organizations can increase the complexity and timeliness of the period close process.  There are several tools available that can automate the technical close process.  A product called Appworx (www.appworx.com) allows organizations to automate those manual processes and reduce the number of technical resources required to perform the task.  Appworx is a scheduling and execution tool that performs the close tasks automatically.  It requires monitoring to ensure that all processes are completing normally, but it requires much less resources than the manual process.

 

If an automation tool is implemented, it is highly recommended that any tool be implemented only after a quarter of manual processing, and then in parallel for several periods.  Companies will want to perform tasks manually so that those resources supporting the automated tools fully understand the process and can resolve any issues arising during automated processing, or manually execute the close if total automation failure occurs.

 

Report Repositories

Financial close processing can generate hundreds of reports on a monthly basis.  Statutory requirements typically require that reports be stored for long periods of time (up to seven years or more).  As a result, reports must either be printed and stored, or stored electronically.  Automated reporting repositories can be used that allow Oracle to print directly to a repository directory.  Security of these environments can map directly to the Oracle Applications security module to ensure that users of the repository have no more access to information than they are allowed to by the Oracle applications.  Most tools also allow users to view/search and select data from the reports on-line.

 

 

 

 


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