1、PetroChina Requirements and design of FMIS modifications FMIS enhancement project,December 1999,Contents,1. Business requirements 3 2. Gap analysis 10 3. Overall approach and design principles 13 4. Business process overview 15 5. Overview of system changes 18 6. New data files and associated proces

2、ses 24 7. System processes for consolidation and reporting 29 Appendix A - Report formats 32,2,System Design for FMIS Modification,3,Business requirements,Chapter 1,4,To be able to do an IPO, PetroChina need to be able to produce certain key financial reports,To produce these reports, some changes t

3、o FMIS needs to be implemented.,Business requirement overview,The FMIS system need to be able to produce the following reports: Annual consolidation reports as required by China Finance Ministry based on the PRC GAAP for joint-stock company. Quarterly consolidation of reports of the overall ListCo b

4、ased on the IAS is required for publicly listed companies. Disclosure items are also required by IAS and PRC GAAP for joint-stock company. Some other information is required to support annual auditing. All the above reports (except the audit information) will need to be produced along the new PetroC

5、hina organization structure as described in the following page. The above reporting requirements are detailed in the next pages.,5,PetroChina,Level 1 PetroChina,Level 2 Specialized Co/Business Group,Level 3 Segment,Level 4 Type,E Provision; Deductions; Balance at end of period Movement report of PPE

6、 Ending balance Loans Analysis Report Directors remuneration report Salaries, allowances and other benefits Contribution to retirement benefit scheme,9,FMIS also need to produce certain information that is required to facilitate annual audit.,Business requirements for annual audit,The required infor

7、mation for accounts receivable, long-term equity investment, long-term non-equity investment has been listed in disclosure requirement. The only remaining items for annual audit are listed below: Short-term investment Investment type, investee, security type, par value, historical cost, rate, due da

8、te, interest receivable or dividends receivable, premium /discount and its amortisation Notes receivable Notes type, par value, rate, drawer, due date Other receivable Debtor, amount, post due days Assets revaluation Assets class, book value before revaluation, book value after revaluation Short-ter

9、m loan Loaner, amount, rate, due date Notes payable Owner, par value, rate, due date,10,Gap analysis,Chapter 2,11,Changes in financial reporting process,PetroChina needs to implement a large scale change in its financial reporting process.,Current,Consolidation is done by the auditors using spreadsh

10、eets and manual data collection and manipulation FMIS report is not compliant with PRC accounting standard for joint-stock company. IAS report is produced by the auditors using manual method Reporting is done for the whole CNPC with the current org structure Use current chart of accounts,Future,Cons

11、olidation will be done by PetroChina accountants as part of the regular accounting process using FMIS FMIS report will be compliant with PRC accounting standard for joint-stock company. AS report is produced by Petrochina accountants using FMIS Reporting structure for PetroChina will be separated fr

12、om the old CNPC. New org structure will be put in place New chart of accounts will be in effect,12,Systems issues,The following systems issues are identified as critical to the ability for PetroChina to be able to do consolidation and produce the required reports,REQUIREMENT Reconciliation of transa

13、ctions that occurs across different accounting entities. Some detailed information need to be passed up the corporate reporting structure.,SYSTEM ISSUE This is difficult to do with the current FMIS since FMIS treats each accounting entity as independent from other accounting entities. This is not po

14、ssible in the current FMIS since FMIS only transfer reports, not detailed information.,CONSOLIDATION PROCESS,REQUIREMENT IAS report have some different grouping of accounts compared to PRC reports In the interim, CNPC requires reporting based on locations in addition to the “normal” reporting proced

15、ure along segment Disclosure items need to be produced and rolled up,SYSTEM ISSUE Current FMIS aggregates report up the hierarchy and it is not possible to see or reconstruct the individual accounts, therefore it is not possible to regroup accounts at higher level. Currently FMIS reporting hierarchy

16、 follows a strict tree pattern with one entity reporting to only one parent. Current FMIS can not produce this data nor roll it up,REPORTING PROCESS,13,Overall approach and design principles,Chapter 3,14,Design principles / goals,The design has to be implementable prior to the IPO Modified FMIS must

17、 be able to produce all required reports with minimal manual work Avoid major changes in business process Avoid major changes in FMIS which needs long development time and/or high risk of destabilizing FMIS Marginal changes to FMIS is preferred to marginal change in business process Changes in busin

18、ess process or FMIS should have minimal dependency on short-term improvement to IT infrastructure. Due to current limitations in telecommunication, the amount of data that needs to be transferred should be minimized. To ease transition, the modified FMIS need to have data compatibility with current

19、FMIS,The following principles have been followed in creating the design for the new system:,15,Business process overview,Chapter 4,16,Location Level 5,Segment Level 3,HQ Corp Level 1,Lgr,Lgr,Lgr+,Lgr+,IAS,IAS,PRC,Segment A,Segment B,Elim,Elim,PRC,Elim IAS,Elim IAS,Elim,IAS,Lgr+,Lgr+,IAS,IAS,Elim IAS

20、,Elim,IAS,IAS,Different segment, different location,Same segment, different location,Same segment, same location,Different segment, same location,Data flow diagram of rollup process,PRC,PRC,Lgr,Lgr,Notes: Lgr+ = ledger report plus some other special reports.,17,Roll up and consolidation process char

21、t,1.1 Enter transactions for Level 6 HO,1.5 Enter same- segment, same-location elimination entries,1.4 Import reports from level 6 HO ledgers,1.2 Create reports for Level 6 HO ledgers,1.3 Receive reports Adjusted debit amount of one report item(account) = Consolidated debit amount of the report item

22、(account) + Total debit amount of all adjustment entries; Adjusted credit amount of one report item(account) = Consolidated credit amount of the report item(account) + Total credit amount of all adjustment entries 3. Produce the IAS report from the IAS adjusted temporary ledger report. This is done

23、by creating the reports using the IAS adjusted temporary ledger report as the source. After the IAS report is created, it is recommended that the report be stored for long-term record and archive.,IAS reporting process is performed by applying IAS adjustment entries to the consolidated ledger report,Consolidated Ledger Reports,F4 IAS adjust