Model Your Financial Reporting Structure

Scenario

Your company, InFusion Corporation, is a multinational conglomerate that operates in the United States (US) and the United Kingdom (UK). InFusion has purchased an Oracle Fusion Enterprise Resource Planning (ERP) solution including Oracle Fusion General Ledger and all of the Oracle Fusion subledgers. You are chairing a committee to discuss creation of a model for your global financial reporting structure including your chart of accounts for both your US and UK operations.

InFusion Corporation

InFusion Corporation has 400 plus employees and revenue of 120 million US dollars. Your product line includes all the components to build and maintain air quality monitoring systems for homes and businesses. You have two distribution centers and three warehouses that share a common item master in the US and UK. Your financial services organization provides funding to your customers for the start-up costs of these systems.

The following are elements you must consider in creating your model for your financial reporting structure.

Your company is required to report using US Generally Accepted Accounting Principles (GAAP) standards and UK Statements of Standard Accounting Practice and Financial Reporting Standards. How many ledgers do you plan to have to achieve proper statutory reporting?
Your financial services line of business has a different year end. Do you need a different calendar? Your financial services entity must report with average balance sheets. This feature of Oracle Fusion General Ledger provides you with the ability to track average and end-of-day balances, report average balance sheets, and create your own reports using both standard and average balances.
Your corporate management requires reports showing total organizational performance with drill-down capability to the supporting details. Do you need multiple balancing segment hierarchies to achieve proper rollup of balances for reporting requirements?
Legal entity balancing options: Do you produce financial statements by one or more than one legal entity? Can you record multiple legal entities in one ledger or do you require multiple ledgers? Are you upgrading to Oracle Fusion Applications or a new install? If an upgrade, is your current financial reporting structure meeting your reporting needs?

Global Financial Reporting Model

The following figure and table summarize the model that your committee has designed and uses number values to provide a sample representation of your financial reporting structure. The model includes the following recommendations:

Creation of three separate ledgers representing your separate legal entities:
- InFusion America Inc.
- InFusion Financial Services Inc.
- InFusion UK Services Ltd.
Data security is controlled by balancing segment values using Oracle Fusion General Ledger data access sets

Recommendations for the chart of accounts design include:

Segments required for cost centers with hierarchical rollups to departments providing reporting at both the detail (cost center) and summary (department) level.
Accounts configured to provide drill down capability to the subledger transactions, enabling analysis of data.

This figure illustrates a an example of your financial reporting structure.

InFusion Corporation is the enterprise and has two divisions, InFusion United States (US) and InFusion United Kingdom (UK). InFusion US has two legal entities, InFusion America, Inc. and InFusion Financial Services, Inc. each with its own ledger. InFusion UK has one legal entity, InFusion UK Systems, Ltd. which has on primary ledger in Great Britain Pounds (GBP) and a Reporting Currency representation in United States Dollar (USD). Each legal entity has its own business unit (BU). InFusion America also has a BU that processes general and administrative transactions across all legal entities. InFusion Corporation has a US and a UK distribution center with three associated warehouses. InFusion Corporation shares one common item master.

This table contains a summarization of the plan that your committee has designed, and uses number values to provide a sample representation of your financial reporting structure.

Decision	InFusion America, Inc.	InFusion Financial Services, Inc.	InFusion UK Systems, Ltd.
Type of Ledgers	Primary	Primary	Primary with the use of Reporting Currency functionality
Legal Entity Codes	US Legal Entity 1: US Corporate US Legal Entity 2: US Systems	US Legal Entity 3: US Financial Services	UK Legal Entity 4: UK Systems
Balancing Segments	101: US Corporate 201: US Systems Components 202: US Systems Installations 203: US Systems Maintenance	102: US Financial Services	103: UK Systems 301: Components 302: UK Systems Installations 303: UK Systems Maintenance
Currencies for Reporting	US Dollar (USD)	US Dollar (USD)	Great Britain Pounds Sterling (GBP) US Dollar (USD)
Calendar Ending Date	December 31st	April 30th	December 31st
Business Units (BU)*	BU 1: US Systems BU 4: Corporate (Shared Service Center)	BU 2: Financial Services	BU 3: UK Systems
Balances Storage Method	Standard Balances	Average and Standard Balances	Standard Balances
Locations represented by cost centers in the chart of accounts.	Headquarters US Distribution Center (BU 1) US Warehouse West US Warehouse East	Headquarters	UK Distribution Center (BU 3) UK Warehouse

Note: In the chart of accounts, cost centers, with hierarchical rollups, represent business units. InFusion Corporation is also a legal entity but isn't discussed in this example.