Performance, Image & Exposure - To excel your Appraisal rating.

Performance, Image & Exposure

We often evaluate performance ourselves disappoints after looking at our manager’s results which would not at par with our own expectation evaluation. It happens to the new entries to corporate world, also who are not aware of corporates’ performance evaluation system.

One should know the concept when u just starts your career with corporate career and is followed to evaluate your appraisal or performance; PIE model – Performance, Image and Exposure.

Typically this represents a pyramid diagram or a pie chart and each segment represents is as follows;

v  Performance: The actual work you do the results you deliver.

v  Image: The impression that others have of you.

v  Exposure: The people who get to know about your results and your image.

You do 100% hard work but lacking other two segments, no wonder you fail. On the other hand, if you are excellent in creating image and good exposure, you will gear up excellent rating; performance is not 100% though.

This is how your success formula is. If you have one element without others, you can end up on the slow road to success. Here are some example personalities we will all recognize from the work place end up with wired results.

• The Worker Bee:  You know this person, perhaps you are this person. They come in early, stay late and crunch all the important numbers for the big meeting. The Worker Bee knows a lot, but ask yourself how often these folks get noticed for their work in a big way. That’s right, almost never. They have the performance, but the wrong image or limited exposure to move ahead. If you don’t have the image or charisma of a leader, or the exposure to get noticed, then the credit for great performance will often go to others.

• Mr. Important:  This is the person that walks around all day looking important and making connections while the real performers toil away with little recognition, and bitter feelings. They have the image down correctly, but they have very little ability to make great decisions and lead when needed. Mr. Important often gets promoted. However, one day, they get shown up; sometimes in a very public and excruciatingly painful way. They are great negotiators and they delegate well. Many of them get very far with this persona. Secretly though, their staff ends up leaving their team in order to find better leadership elsewhere.

• The Rock Star:  This person is known and liked by all, including the management team. They have a great image and tons of exposure. Unfortunately, there is often not enough substance to get the job done and they are not seen to have the right “leadership image” for the company. Rock Stars often get great perks, but there is ceiling to their success in certain office environments. So, while this image may look like the one to be, the Rock Star cannot succeed without a wingman with substance.

Whether you like it or not, only a limited number of people will get to work with you directly. Even those that do will get a fairly narrow view of the real results that you deliver. On the other hand, many more people will form an image in their minds of what you’re like — perhaps that you’re a safe pair of hands, maybe that you’re very smart or very ambitious. Some may form a very negative image — that you’re a scrap or unreliable or untrustworthy. The combination of that image that people have of you (Image) and the groups of people that share that view of you (Exposure) can make or break your career.

SoX (Sarbanes–Oxley Act)

Sox an Overview:

The Sarbanes–Oxley Act also known as the 'Public Company Accounting Reform and Investor Protection Act' and 'Corporate and Auditing Accountability and Responsibility Act'  and commonly called Sarbanes–Oxley, Sarbox or SOX. It is a United States federal law enacted on July 30, 2002, which set new or enhanced standards for all U.S. public company boards, management and public accounting firms. It is named after sponsors U.S.

The bill was enacted as a reaction to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, Peregrine Systems and WorldCom. These scandals, which cost investors billions of dollars when the share prices of affected companies collapsed, shook public confidence in the nation's securities markets.

It does not apply to privately held companies. The act contains 11 titles, or sections, ranging from additional corporate board responsibilities to criminal penalties, and requires the Securities and Exchange Commission (SEC) to implement rulings on requirements to comply with the new law.

Titles and Sections:

Sarbanes–Oxley contains 11 titles that describe specific mandates and requirements for financial reporting. Each title consists of several sections, summarized below.

Public Company Accounting Oversight Board (PCAOB)

Title I consists of nine sections and establishes the Public Company Accounting Oversight Board, to provide independent oversight of public accounting firms providing audit services ("auditors").

Sec. 101. Establishment; administrative provisions.

Sec. 102. Registration with the Board.

Sec. 103. Auditing, quality control, and independence standards and rules.

Sec. 104. Inspections of registered public accounting firms.

Sec. 105. Investigations and disciplinary proceedings.

Sec. 106. Foreign public accounting firms.

Sec. 107. Commission oversight of the Board.

Sec. 108. Accounting standards.

Sec. 109. Funding.

Auditor Independence

Title II consists of nine sections and establishes standards for external auditor independence, to limit conflicts of interest. It also addresses new auditor approval requirements, audit partner rotation, and auditor reporting requirements. It restricts auditing companies from providing non-audit services (e.g., consulting) for the same clients.

Sec. 201. Services outside the scope of practice of auditors.

Sec. 202. Preapproval requirements.

Sec. 203. Audit partner rotation.

Sec. 204. Auditor reports to audit committees.

Sec. 205. Conforming amendments.

Sec. 206. Conflicts of interest.

Sec. 207. Study of mandatory rotation of registered public accounting firms.

Sec. 208. Commission authority.

Sec. 209. Considerations by appropriate State regulatory authorities.

Corporate Responsibility

Title III consists of eight sections and mandates that senior executives take individual responsibility for the accuracy and completeness of corporate financial reports. It defines the interaction of external auditors and corporate audit committees, and specifies the responsibility of corporate officers for the accuracy and validity of corporate financial reports.

Sec. 301. Public company audit committees.

Sec. 302. Corporate responsibility for financial reports.

Sec. 303. Improper influence on conduct of audits.

Sec. 304. Forfeiture of certain bonuses and profits.

Sec. 305. Officer and director bars and penalties.

Sec. 306. Insider trades during pension fund blackout periods.

Sec. 307. Rules of professional responsibility for attorneys.

Sec. 308. Fair funds for investors.

Enhanced Financial Disclosures

Title IV consists of nine sections. It describes enhanced reporting requirements for financial transactions, including off-balance-sheet transactions, pro-forma figures and stock transactions of corporate officers. It requires internal controls for assuring the accuracy of financial reports and disclosures, and mandates both audits and reports on those controls. It also requires timely reporting of material changes in financial condition and specific enhanced reviews by the SEC or its agents of corporate reports.

Sec. 401. Disclosures in periodic reports.

Sec. 402. Enhanced conflict of interest provisions.

Sec. 403. Disclosures of transactions involving management and principal stockholders.

Sec. 404. Management assessment of internal controls.

Sec. 405. Exemption.

Sec. 406. Code of ethics for senior financial officers.

Sec. 407. Disclosure of audit committee financial expert.

Sec. 408. Enhanced review of periodic disclosures by issuers.

Sec. 409. Real time issuer disclosures.

Analyst Conflicts of Interest

Title V consists of only one section, which includes measures designed to help restore investor confidence in the reporting of securities analysts. It defines the codes of conduct for securities analysts and requires disclosure of knowable conflicts of interest.

Sec. 501. Treatment of securities analysts by registered securities associations and national securities exchanges.

Commission Resources and Authority

Title VI consists of four sections and defines practices to restore investor confidence in securities analysts. It also defines the SEC’s authority to censure or bar securities professionals from practice and defines conditions under which a person can be barred from practicing as a broker, advisor, or dealer.

Sec. 601. Authorization of appropriations.

Sec. 602. Appearance and practice before the Commission.

Sec. 603. Federal court authority to impose penny stock bars.

Sec. 604. Qualifications of associated persons of brokers and dealers.

Studies and Reports

Title VII consists of five sections and requires the Comptroller General and the SEC to perform various studies and report their findings. Studies and reports include the effects of consolidation of public accounting firms, the role of credit rating agencies in the operation of securities markets, securities violations and enforcement actions, and whether investment banks assisted Enron, Global Crossing and others to manipulate earnings and obfuscate true financial conditions.

Sec. 701. GAO study and report regarding consolidation of public accounting firms.

Sec. 702. Commission study and report regarding credit rating agencies.

Sec. 703. Study and report on violators and violations

Sec. 704. Study of enforcement actions.

Sec. 705. Study of investment banks.

Corporate and Criminal Fraud Accountability

Title VIII consists of seven sections and is also referred to as the “Corporate and Criminal Fraud Accountability Act of 2002”. It describes specific criminal penalties for manipulation, destruction or alteration of financial records or other interference with investigations, while providing certain protections for whistle-blowers.

Sec. 801. Short title.

Sec. 802. Criminal penalties for altering documents.

Sec. 803. Debts non dischargeable if incurred in violation of securities fraud laws.

Sec. 804. Statute of limitations for securities fraud.

Sec. 805. Review of Federal Sentencing Guidelines for obstruction of justice and extensive criminal fraud.

Sec. 806. Protection for employees of publicly traded companies who provide evidence

of fraud.

Sec. 807. Criminal penalties for defrauding shareholders of publicly traded companies.

White Collar Crime Penalty Enhancement

Title IX consists of six sections. This section is also called the “White Collar Crime Penalty Enhancement Act of 2002.” This section increases the criminal penalties associated with white-collar crimes and conspiracies. It recommends stronger sentencing guidelines and specifically adds failure to certify corporate financial reports as a criminal offense.

Sec. 901. Short title.

Sec. 902. Attempts and conspiracies to commit criminal fraud offenses.

Sec. 903. Criminal penalties for mail and wire fraud.

Sec. 904. Criminal penalties for violations of the Employee Retirement Income Security

Act of 1974.

Sec. 905. Amendment to sentencing guidelines relating to certain white-collar offenses.

Sec. 906. Corporate responsibility for financial reports.

Corporate Tax Returns

Title X consists of one section. Section 1001 states that the Chief Executive Officer should sign the company tax return.

Corporate Fraud Accountability

Title XI consists of seven sections. Section 1101 recommends a name for this title as “Corporate Fraud Accountability Act of 2002”. It identifies corporate fraud and records tampering as criminal offenses and joins those offenses to specific penalties. It also revises sentencing guidelines and strengthens their penalties. This enables the SEC to resort to temporarily freezing transactions or payments that have been deemed "large" or "unusual".

Sec. 1101. Short title.

Sec. 1102. Tampering with a record or otherwise impeding an official proceeding.

Sec. 1103. Temporary freeze authority for the Securities and Exchange Commission.

Sec. 1104. Amendment to the Federal Sentencing Guidelines.

Sec. 1105. Authority of the Commission to prohibit persons from serving as officers

or directors.

Sec. 1106. Increased criminal penalties under Securities Exchange Act of 1934.

Sec. 1107. Retaliation against informants.

Drop shipment Invoice - Meaning, Types and Accounting methodology

Meaning - Drop shipment

Drop shipments are used when a customer orders items that are not stocked by the seller or when an item is required in large quantities. Drop ships are economical for the supplier to ship the required items directly to the customer.

Drop shipments enable a supplier to fulfill a sales order where the seller is not required to handle stock or deliver the items. Drop shipments also help in meeting urgent customers.

Drop shipment occurs when a customer urgently needs an item that is not normally stocked or a customer needs a large quantity of an item that is not available at your warehouse.  You also use drop shipments when it is more economical when the supplier ships the item directly to the customer.

Types – Drop shipment

There are three drop shipments:

Full Drop shipment: - Seller sends the purchase order to the supplier for the item that the customer has ordered.

Normal Shipment Partial Drop shipment: - Seller has only part of the quantity ordered; the seller supplies the available quantity to the customer. Then seller creates a purchase order for the rest of quantity.

Normal shipment and Full drop shipment: - Seller ships some goods from the inventory to the customer. The rest of the goods are shipped from the supplier.

Accounting Methodology – Drop shipment

Drop shipments are created as sales orders in ORDER MANAGEMENT MODULE and are indicated as drop shipments when their source type is entered as External. The purchase release concurrent [program or work flow in ORDER MANAGEMENT MODULE creates rows in the requisition import tables in the purchasing module. The requisition import progress in purchasing creates requisitions. After a requisition is approved, a purchase order is generated and the source type is entered as supplier. Next the purchase order is sent to the supplier and arrange for the delivery of the items to the customer.

The supplier notifies the seller that the items have been shipped to the customer though an invoice or an EDI or and advance shipment notice. The seller then generates an invoice to be sent to the customer. Additionally the seller creates a receipt for the shipped items after receiving the confirmation of the drop shipment. This creates inbound and outbound material transactions in the system for account purpose.

Subledger Accounting concept in Oracle

Before going into any detail, let me take you into accounting world for a brief moment. Fundamentally accounting is based on two methods: Cash Basis or Accrual Basis.

Accrual Basis Accounting

Under the accrual basis accounting, revenues and expenses are recognized as follows:

AR:

·         Revenue recognition: Revenue is recognized when both of the following conditions are met:
    a. Revenue is earned.
    b. Revenue is realized or realizable.

·         Revenue is earned when products are delivered or services are provided.

·         Realized means cash is received.

·         Realizable means it is reasonable to expect that cash will be received in the future.

AP: Expense recognition: Expense is recognized in the period in which related revenue is recognized (Matching   Principle).

Cash Basis Accounting

Under the cash basis accounting, revenues and expenses are recognized as follows:

AR: Revenue recognition: Revenue is recognized when cash is received.

AP: Expense recognition: Expense is recognized when cash is paid.

 Timing differences in recognizing revenues and expenses:

1. Accrued Revenue: Revenue is recognized before cash is received.
2. Accrued Expense: Expense is recognized before cash is paid.
3. Deferred Revenue: Revenue is recognized after cash is received.
4. Deferred Expense: Expense is recognized after cash is paid.

Till 11i the only way we represent this accounting method is by choosing accounting method in Payables Options in AP and System Options in AR. But in R12 you can see in that these options are gone from the system options of AP and AR. That is where Sub-ledger accounting comes in.

Part of the global release concept in R12, accounting methods have to be much more flexible and generation of accounting entries should be configurable.

As we know accounting is the end product of transactions and financial statements are end products of accounting. Also there is a need to separate transaction from accounting. An accounting clerk who creates an invoice has nothing to do what accounting is behind that transaction. It is the duty of the management to decide accounting behind this transaction.  

Sub-ledger Accounting is taking us in that direction.

Purpose of Sub-ledger Accounting

The end product of Sub-ledger Accounting Setups is a Sub-ledger Accounting Method that can be assigned to one or more ledgers in GL. All accounting in different Sub-ledger applications is subject to the rules defined in this accounting method.

In 11i, as mentioned earlier, the only way to choose accounting method we chose is AR and AP system options setup (Cash Vs Accrual). We used start in GL setting up the Set of books and then define the organization information like Legal Entity and Operating units and so on. And then define these accounting methods for each operating unit. As you can see operations and accounting are so closely meshed with each other. But in R12 it is not the same. In this release it is now configurable in Sub-ledger Accounting setups taking this away from system options of individual products.

Oracle seeds accounting rules for all applications. If you are satisfied with the Oracle’s seeded rules, there is no need to change any setup and you can use those existing rules (Accounting Method for Accrual is Standard Accrual and for Cash is Standard Cash). This screenshot here shows you the difference between the Accrual Basis of accounting and Cash Basis of Accounting. As you can see here, per rules, there is no accounting created when invoice is created under cash basis (no revenue is recognized until cash is received) but accounting is created when cash is realized. Invoice is accounted as soon it is completed under Accrual Method. This is configurable here where as in 11i we did not have a choice!.

If you choose this accounting method, accounting works exactly the way it works in previous releases.

Sub-ledger Accounting as a gatekeeper of Reconciliation

                                                                  

   

Starting R12 all accounting entries are generated and passed through Sub-ledger accounting application instead of directly going to GL. Hence reconciliation is already done between source to Sub-ledger Accounting and Sub-ledger Accounting to GL, reducing huge amount of time spent on reconciliation. Since these entries have to flow through the Sub-ledger accounting application, there is a need to map the source application accounting entries to Sub-ledger accounting. That is key for the setups.