if rse bsf a nav canada 1340636902

Implementation of IFRS Standards in Oracle EBS Fixed Assets at NAV CANADA

# 10487

Angela PeggLouise Guigue

Please complete evaluation forms at the end of the session # 10487

Louise Guigue [email protected]�Manager – Accounts Payable and Capital Asset Accounting�Certified General Accountant with 25+ years in Accounting and

Finance�Worked with SAP and Oracle Financials

Angela Pegg [email protected]�Manager – Finance and Corporate Services Solutions, IM�Certified Management Accountant�Over 18 years experience with Oracle EBS Suite, 10 yrs Finance

Agenda�Introductions, NAV CANADA�IFRS Background�High Level Requirements�Options for Asset Book Setup�Asset migration methodology�Transition Process�Lessons Learned, Tips�Conclusion�Q & A

NAV CANADA is the second largest Air Navigation Service Provider (ANSP) in the world

NAV CANADA�4800 employees�12 million aircraft movements per year�40,000 customers , $1 Billion + Annual Revenue �18 million sq. km of airspace over Canada and the Oceans�Private sector, non-share capital, funded by publicly traded debt�One of the best safety systems in the world -received the IATA Eagle Award 3 times

Our Mission is

to prevent …

NAV CANADA Oracle Footprint�Substantial but not complex, consisting of 6 entities but only 1 operating unit:

�Oracle EBS v 11.5.10.2

�Financials: GL, AP, AR, CM, OM, FA, PO, iExpense, INV, ADI

�HRMS: iRecruitment, Oracle Learning Management, Compensation Workbench, Oracle Standard Benefits, Employee and Manager Self-Service

�UPK

NAV CANADA Fixed Assets Profile

�One Corporate Book based on Canadian GAAP

�Over 37,000 individual assets

�NBV $1.4 Billion at August 31, 2011

�Majority of assets are constructed instead of bought (radar towers, weather observation systems, towers, monitoring systems)

IFRS Background

�Set of accounting standards developed by the International Accounting Standards Board (IASB)

�Becoming the global standard for the preparation of public company financial statements

�All listed EU companies have been required to use IFRS since 2005

�Considerable debate around it’s adoption in the US

IFRS Background (con’t)

�In Canada: effective for fiscal years beginning on or after January 1, 2011

�NAV Canada’s first official year of reporting under IFRS is fiscal 2013 which closes on August 31st and includes comparatives for fiscal 2012

�Fiscal year 2012 is to be externally reported under Canadian GAAP - requires one year of dual reporting: September 2011-August 2012

Key changes required in FA at NAV CANADA

�Deemed Cost

�Elements of Cost

�Identification of Components

�Reconciliation of the Carrying Amounts (NBV)

�Capture of Borrowing Costs

IFRS Specific Oracle features�Specific Oracle functionality developed to support IFRS requirements for FA:

�Impairment of Assets: Accelerated method of depreciation for physical assets or asset write-off for non-tangible assets and impairment worksheet.

�Asset Componentization: Parent/Child assets with migration process (Web ADI Worksheet).

High Level Requirements

� The fixed asset transactions must be recorded in the Oracle Ledger using the deemed cost basis starting September 1, 2011

� Assets must also be tracked on Canadian GAAP basis for the duration of the dual reporting period (September 1, 2011-August 31, 2012)

� The original cost, date placed in service and units must be available under both IFRS and GAAP

� Need to update both the GAAP and IFRS books regularly with new additions, disposals, adjustments, etc.

� The ongoing update and management of both books should be automated to the greatest extent possible to minimize the additional workload of maintaining assets under two accounting methods

� Need the ability to easily and quickly report under both methodsand facilitate ongoing reconciliation

High Level Requirements (con’t)

Analyzing the Options for setup of the Asset Books

�Major factors in our decision were

� the amount of time it would take to set up and migrate data

�Amount of work to maintain dual ledgers

�Minimal work at the end of the dual reporting period

�Six Options were identified *

�For illustration purposes , assume �

*see white paper for detailed pros and cons

DEP = Original GAAP Book

IFRS = IFRS Book

Tax = Tax Book

Options for setup of the Asset Books – Option 1

�Continue with existing GAAP Corporate book

�New Corporate Book for IFRS, manage each separately

DEPCorporate

DEPCorporate

IFRSCorporate

IFRSCorporate

GL�Too much manual maintenance



�Adjust in GL via journal entries for IFRS values

DEPCorporate

DEPCorporate

GLIFRS

�Too much manual maintenance , requires eventual IFRS setup


�Adjust existing GAAP Corporate book to reflect IFRS

�Track GAAP assets outside the system

DEP -> IFRSCorporate


GL

GAAP

�Complex adjustments for IFRS

�Too much manual maintenance

X



�Create an associated IFRS Tax book

DEPCorporate

DEPCorporate

IFRSTax

IFRSTax GL

�Dep’n adjustments complicated – significant effort to adjust to IFRS values

�Does not allow mass adds to Tax Book post-dual reporting period


�Process changes in the existing Corporate book to reflect IFRS requirements

�Create new, associated GAAP tax book

GAAP Tax

GAAP Tax



GL�Dep’n adjustments complicated –significant effort to adjust to IFRS values

X


�Create a new Corporate IFRS book

�Track GAAP assets in a related Tax book

DEPCorporate

DEPCorporate

GAAP Tax Book

GAAP Tax Book

GL

IFRSCorporate

IFRSCorporate

�Selected OptionX

Options for Setup of the Asset Books – Option 6�We chose to set up a new Corporate Book for IFRS and a related Tax Book for Canadian GAAP :

�Met all current requirements for asset processing and reporting for IFRS and GAAP

�Allowed for smooth transition to full IFRS after dual reporting period

Short term pain for long term gain!

�ADI/webADI

�Dataload

�FA Mass Additions and FA Tax Interface APIs

�FA Mass Additions and FA Tax Interface tables via SQL load

Choosing the Asset Loading Methodology

Choosing the Asset Loading MethodologyWe chose to use SQL to load the FA Mass Additions and FA Tax Interface tables as well a Dataload

�The FA Mass Additions table was used to load the IFRS Corporate Book from the existing Corporate book

�The FA Tax Interface tables were used to process adjustments to the IFRS and Tax books

�Dataload to re-create the link between parent and child assets

IFRS Transition Process

�Finalize the ending balances as of August close and freeze the asset environment

�Completed a full extract of the existing assets & the details required for loading into the new books

�The Fixed Asset Business Process Owner (BPO) validated the completeness and accuracy of the extract

IFRS Transition Process�Assets loaded into the IFRS book in 4 sections using FA_MASS_ADDITIONS tables, reconciling after each load

�Assets with 0 cost 0 NBV;

�Assets with cost, but 0 NBV (fully depreciated assets);

�Assets with cost & NBV; and

�Assets that had to be loaded manually (assets with negative value or multiple locations)

IFRS Transition Process�After completion of the IFRS book load, we used the Initial Mass Copy to load the assets to the Tax book

�Adjustments to the Tax book using FA_TAX_INTERFACE tables for the useful life (the mass copy defaults asset life based on the category depreciation method).

�We fully reconciled the 3 books (DEP, IFRS, TAX) which were all the same at this point for capitalized assets

IFRS Transition Process�Using the FA_TAX_INTERFACE tables, we made the following adjustments to the IFRS assets:

�Adjusted to deemed cost value

�Changed the Date Placed in Service for each asset

�Changed the Useful Life, such that depreciation would be the same in both books after conversion

�The project team validated the NBV in both books as well as depreciation calculations to ensure they were equal

IFRS Transition Process

�Recreated the link between parent and child assets using Dataload

�Created GL journal entries to reverse the existing balances fromthe original Corporate book (the balances from the asset additions of the new IFRS books had doubled the asset value in the GL)

�After successfully transitioning to the IFRS/TAX books, we end dated the original Corporate book. Note: once you end date the book this cannot be undone!

Lessons Learned, TipsSolution Design / Testing

�Plan to go through multiple test runs until all parties are comfortable with the expected results

�Use an iterative approach for solution design and testing -the functional analyst, developer and business worked very closely together

�Use multiple test environments if possible. Testing is faster and prevents having to make changes to data loading scripts

Lessons Learned, TipsAsset Conversion

�Analyze the FA_MASS_ADDITIONS and FA_TAX_INTERFACE tables to look for how to populate mandatory and optional columns

�Create a full extract of your assets for review and analysis by both the business and technology team

�Load your asset data from the original Corporate book into interim tables with data selected from your closed month-end balances

Lessons Learned, Tips

Asset Conversion

�The Asset Number and the Tag Number for each asset had to be changed – no duplicate values allowed across Corporate books

�We used the FA_TAX_INTERFACE table to adjust the IFRS and Tax books rather than the FA_MASS_ADDITIONS table (simpler to use and supported by Oracle)

Lessons Learned, TipsTransition Process

�Setup new books in advance of the close to save time at transition

�Lock down the Fixed Assets ledger for the opening period under IFRS for IFRS conversion activity only

�Delay the processing of the first month’s transactions to the next month - allows reconciliation of the data without risk of daily transactions being populated into the asset base & facilitates reporting

Lessons Learned, TipsReporting

�Review existing custom reports to ensure that they will work with the newly created asset books

�The following reports were very useful for verification: Reserve Summary Report, Reserve Detail Report, Cost Summary Report, preliminary depreciation and rollback

�FA Extract Report (this is a custom report we had to export data into Excel)

Lessons Learned, TipsPost-implementation

�When making ongoing cost adjustments - ensure the amortize adjustment box is checked on the cost adjustments tab to prevent different values being created in the IFRS book versus the Tax book

�Differences in the cost & accumulated depreciation in both books requires manual adjustments each month for retirements and transfers of converted assets

�5 business days to transition

�No surprises

Conclusion … a smooth landing

Additional Resources

IFRS Info:

�http://www.ifrs.com/index.html

�US: http://www.sec.gov/spotlight/globalaccountingstandards.shtml

�Canada: http://www.cica.ca/IFRS/

�Canada: http://www.ifrsincanada.com/

�Canada: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/frs/menu-eng.html

Oracle and IFRS:

�http://www.oracle.com/us/solutions/corporate-governance/ifrs/061917.html

�http://www.oracleappshub.com/jumpstart/basic-accounting/a-bit-on-ifrs/

Q & eh’s

if rse bsf a nav canada 1340636902

Documents

oracle ebs fixed assets

oracle ledger

impairment of assets

oracle ebs suite

parentchild assets

physical assets

majority of assets

oracle learning management