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Slide 3 - Oracle Financials Cloud

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Slide notes

Hello, my name is Navin. Welcome to training for Oracle Lease Accounting in Oracle Financials Cloud.

In this session we talk about Amendments and related topics & Accounting Sweeps.

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For the enhancements covered in this training, we’ll give an overview, followed by more detail to explain how you can use them, and what business value they bring.

Then we’ll walk you through a demonstration.

Next we’ll explain what you need to consider before enabling these features in your business, and what you need to know to set them up.

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Amendments Flow is provided above.

Lease selected for Amendment

Provide amendment related information on Create popup

Create a new version of the active lease and perform all the allowed changes on this version.

Validate all the changes on the lease by selecting ‘Validate’ action from dropdown on the amendment version of the lease.

Correct your errors spotted in validation

Lease version which was in ‘Working’ status moves to Validated post validation.

Use existing discount rate for Scope No Change type of amendments and Discount rate existing on Amendment Commencement Date for Scope Increase type of changes.

Perform recalculations using above derived rate when the user selects ‘Generate’ from actions dropdown on a version of lease which is being amended.

Lease Version changes to ‘Completed’ from Validated status.

User can view Summary schedules in Schedules tab after successful generation of schedules.

User can ‘Discard’ an amendment at any stage before the amendment version is submitted for Activation.

If all the changes are acceptable, user can select ‘Activate’ from action dropdown list of actions.

User can select ‘Generate Lease Details Report’ which now appears as a button on the lease header. On clicking this, the Lease Detail Report is generated, and it replaces all the generated schedules on the schedules tab.

The latest version goes into ‘Finalized’ status.

Earlier lease version is historized.

All the previous versions of the lease are historized in the History tab of the lease and the user can navigate and open any version by clicking the version number.

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User can initiate Amendment by searching for a Lease and selecting ‘Amend’ Lease from Actions dropdown.

A Create amendment popup as displayed above is provided to the user to initiate amendment.

User can select the following types of Amendments for 21A:

Edit- Non-Financial changes(more about this later)

During Scope Increase for 21A, users can only:

Extend an Asset/assets or Lease life.

Add New asset/assets.

Add any Option other than ‘Termination’ type of Option

Add payments

Add/update DFFs, Notes, Descriptions

Perform all actions allowed under Scope No change and ‘Edits’

During Scope No Change for 21A, users can only:

Add Options(other than Termination and Renewal Options)

Add Payments

Add/update DFFs, Notes, Descriptions

Perform all actions allowed under Scope No change and ‘Edits’

Discount Rate: For Scope No Change type of Amendments, discount rate existing on the lease is used for calculations/recalculations. For Scope Increase, discount rate existing on Amendment Commencement Date is used for all the calculations.

Create Amendment Popup:

Users will have to provide:

Amendment Name for identification of the amendment transaction later

Subtype of Amendment(Edit, Scope Increase and Scope No Change for 21A)

Amendment Commencement Date(ACD)- A very important date for amendments. Changes can be performed with an effective date only after ACD. All calculations/recalculations are performed as of this date.

Prepared By: List of Users

Notes: Add your notes explaining the need, timing, purpose etc of the amendment.

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Use Edit when you have to change non financial data on the lease.

There is no regeneration of schedules and balances in Edit.

Use Edit to update the following information on the lease:

Description of the Lease

Assigned to

Asset Model Number

Employee on the asset

All DFF values

Updates to Attachments

Code Combination values updates

Document End Date

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User can initiate Amendment by searching for a Lease and selecting ‘Amend’ Lease from Actions dropdown.

User can

View Amendment

Resume Amendment

Or Discard an amendment in progress

User can view amendment details in a new section for

Amendment Commencement Date

Amendment Name

Prepared By

Type of Amendment

Subtype of Amendment

Date Signed on for Amend

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Through View Amendment, you can view working version of the lease in Read Only.

You can resume your Amendment either selecting Resume Amendment or by selecting View Amendment and starting Resume Amendment by clicking on Resume Amendment.

You can discard any amendment by selecting ‘Discard’ from dropdown of actions on the lease.

On Discard, the working version of the Lease is lost, and last Active version is available to the user for further actions.

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As explained earlier:

Amendment pushes Lease Version to ‘Working’ from earlier ‘Finalized’ version.

On successful Validation of the lease, Lease Version moves to ‘Validated’

On successful generation of schedules, lease version moves to ‘Completed’

User can submit ‘Activate’ to activate the lease version and it moves to ‘Booked’ status.

On selection of ‘Attach Lease Detail Report’, Lease Version moves to ‘Finalized’ status.

Lease Details Report is attached to the lease in the Schedules Tab against a particular version.

Throughout the process, lease status remains in ‘Active’ status.

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As explained earlier:

Amendment pushes Lease Version to ‘Working’ from earlier ‘Finalized’ version.

On successful Validation of the lease, Lease Version moves to ‘Validated’

On successful generation of schedules, lease version moves to ‘Completed’

User can submit ‘Activate’ to activate the lease version and it moves to ‘Booked’ status.

On selection of ‘Attach’ Lease Detail Report, Lease Version moves to ‘Finalized’ status.

Throughout the process, lease status remains in ‘Active’ status.

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History Tab:

Creation of an amendment generates a new version of Lease in ‘Working’ status.

Activation of Amendment pushes Lease Version to ‘Finalized’ from earlier ‘Finalized’ version of active lease. Activation also historizes previous active version of the lease. Hence multiple amendments create multiple historized versions of the lease.

All the historized versions of the leases are displayed on the History tab of the lease.

User can navigate to any version of the lease clicking on the hyperlink of the version number. This tab contains the following information:

Version Number

Prepared By

Date Signed On

Status

Version Type

Amendment Commencement Date

Notes

Type of Amendment

Discount Rate

Rate Adder

Lease Detail Report is added with additional information for understanding Amendment:

Amendment Commencement Date

Lease Detail Version number(latest)

Type and Subtype of Amendment

Revision transaction details added to the Transaction Section of the Report

Remeasurement of Liability and Right of Use

Adjustment Column with values added to the details section of the report.

In the period of amendment, calculations and balances are displayed into multiple rows. One row with balances before amendment. All the changed balances and amounts from amendment are shown in subsequent rows.

Forex Payment

If Lease has forex payments, then the ACD forex rates are used for the Revision event. At the same time, the ROU is revalued using forex rate on ACD with the difference going to Subledger Forex Gain/Loss Account

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Lease Accounting does not have subledger periods of its own. Hence there are chances when GL periods are closed, Lease Accounting transactions which are not Final Accounted and Transferred to GL may lie in closed periods forever.

Accounting Sweep is the solution to release those transactions which are stuck in closed periods.

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Existing ESS for Process Lease Accounting is enhanced to handle Accounting Sweep too.

Two process types values have been added:

Sweep Accounting-Review Mode.

When the program is manually run or in a scheduled run is run with these parameters, then all the transactions which have not yet been accounted or accounted in errors in a closed GL period are fetched by the report.

User can take any manual action based on the output of the report.

User can re-open some of these periods if the amounts are having significant impact.

Sweep Accounting-Update Mode.

User can Update the GL date on a transaction originating in Lease Accounting from a Closed Period to next open period. 1st day of the next open period is used for updation.

After update, the transaction can be accounted after correcting any errors on the transaction.

Output report for Sweep contains two sections Business Unitwise:

Following columns appear on the Report:

Lease Number

Transaction Type

Transaction Number

Accounting Date

Amount

Currency

Status(with both success and failed cases)

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Automate the ASC 842 and IFRS 16 lease processes, increasing productivity, and reducing risk of error

Manage change management for the leases in accordance with standards

Report effects of changes correctly and consistently

Enhance the user experience and improve efficiency with smooth and seamless process for changes

View standardized lease information in a single repository via actionable user interfaces

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Here is the summary of the features I have talked about today:

Amendments

Amend Leases

Edit Leases

View Amendments

Resume and Discard Amendments

View Lease History

Accounting Sweep:

View Transactions stuck in a closed GL period

Sweep the stuck transactions to an open GL period

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Lease Amendment for Scope Increases for 21A

Amendments with only ‘Scope Increase’ and ‘No Scope Change’

You can add-Asset, Payment, Options(other than Termination Option)

You cannot update or remove -Assets, Payments or Lease level information

Use ‘Edit’ for nonfinancial changes on the lease.

You cannot perform amendments dated prior or equal to an existing amendments

Amendment commencement date cannot be into future

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In this implementation advice section we will go through what you need to consider before enabling these features in your business, and what you need to know to set them up.

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Users will need to Opt-in Lease Amendments for Scope Increase and they can:

Amend Leases

Edit Leases

View Amendments

Resume and Discard Amendments

View Lease History

Sweep Accounting Transactions

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Feature Name

Decisions

Impact

Lease Amendments for Scope Increase

Add seeded ‘Lease Revision’ event class to your Accounting Method if Standard Accrual

Impact: Adding additional event class to Accounting Method

Run the process in ‘Review’ mode to get a list of transactions.

Impact: Opening a closed GL period can be considered before sweeping transactions

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The enablement for Lease Amendment for Scope Increases is through:

An Opt-In option: Lease Amendments for Scope Increases

Enablement steps are performed via the Functional Setup Manager>Financials>Lease Accounting

The functional area Lease Accounting

Tasks associated with this enablement:

Management Lease Accounting Configuration

Access to this new feature is through the Lease Contract Duty. You can manually add this duty to any Role

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Add seeded Lease Revision accounting event class to your accounting method to enable accounting for Lease Revision.

Add relevant Forex rates for accounting of Lease Revisions

Define the relevant periods for Lease Revisions.

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Best Practices:

Review Schedules from Schedules Tab before Activating an Amendment.

Discard an amendment if your schedules are not right.

Schedule Accounting Sweep as part of subledger period end process.

Try re-opening closed GL periods before Sweeping them to next period.

Ensure your payment templates have Liability, Right of Use, Forex Gain/Loss for successful lease revision accounting.

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This table details the shipped job roles that will access the new capabilities covered in this training.

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The business processes associated with the new capabilities covered in this training are detailed here.

Detailed business process : Asset Lifecycle Management

Activity : Maintain Asset Financial and Reporting Attributes

Task: Amend Lease Contracts

Activity : Report and Reconcile Asset Activities

ask: Account Lease Transactions

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Reports that detail these new capabilities

Lease Detail Report : Enhancements

Header Region:

Amendment Commencement Date, Types and Subtypes of Amendment and Lease Detail Version

Summary Region:

No changes

Transaction Information

Lease Version, Remeasurement to Liability, ROU and Reserve.

Detailed Amortizations

Adjustments amounts

Process Lease Accounting : Enhancements

New Output report for viewing transactions which are stuck in Closed Periods.

This concludes this presentation, thank you for listening. You can easily pause and rewind any of these slides if you require additional time to take in the detail.

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