1、1Contents1.Business requirements32.Gap analysis103.Overall approach and design principles134.Business process overview155.Overview of system changes186.New data files and associated processes247.System processes for consolidation and reporting29Appendix A-Report formats321System Design for FMIS Modi
2、fication2Business requirementsChapter 13To be able to do an IPO,PetroChina need to be able to produce certain key financial reportsTo produce these reports,some changes to FMIS needs to be implemented.Business requirement overviewThe FMIS system need to be able to produce the following reports:nAnnu
3、al consolidation reports as required by China Finance Ministry based on the PRC GAAP for joint-stock company.nQuarterly consolidation of reports of the overall ListCo based on the IAS is required for publicly listed companies.nDisclosure items are also required by IAS and PRC GAAP for joint-stock co
4、mpany.nSome other information is required to support annual auditing.All the above reports(except the audit information)will need to be produced along the new PetroChina organization structure as described in the following page.The above reporting requirements are detailed in the next pages.4PetroCh
5、inaLevel 1PetroChinaLevel 2SpecializedCo/Business GroupLevel 3SegmentLevel 4TypeE&P.Level 5BusinessUnits.Gas&PipelineDownstreamOil&GasE&PNatural gas(inc.gas pipeline)Refining&MarketingPetrochemicals&marketingOthersRefiningPetroChina reporting structureMarketingR&DChina oilHQBeijingE&PHuaBeiG&PHuaBei
6、RefineryHuaBeiNorth ChinaPetr.TradeChina O&GresearchinstituteLevel 6OperationsUnitsLevel 7SuboperationsUnitsOil field#1Oil field#2Oil field#3District 1District 2District 35PRC GAAP consolidation report requires the following data:Business requirements for PRC consolidationlIndividual PRC GAAP report
7、s of all entity involved in consolidation.nBalance sheet(PRC GAAP)nIncome statementnCash flow statementlInternal transactions reportsnInternal transaction listInternal product sales or purchase reportInternal rendering of service report or internal service purchase reportInternal long-term equity in
8、vestment report,capital structure reportInternal payable or receivablesnRequired information for internal transactionsCounterpart,transaction type,period,beginning balance,credit amount,debit amount,ending balance6There are two types of changes that need to be made to comply with IASBusiness require
9、ments for IAS consolidationlPRC consolidated financial statements with specific detailsnIndividual PRC reports listed earliernLedger reportlTransactions with different accounting treatment in IAS and PRC GAAPnDevelopment costs-E&P segment specificCost of successful well(succeeded in the period)nAsse
10、ts and depreciation(straight line method vs UOP)and related tax creditAssets class,accumulated depreciation amount based on reevaluated carrying amount by straight line method;depreciation amount based on un-reevaluated amount by unit of production method or straight line method(depend on assets cla
11、ss)nDeferred business initial cost(pre-operation expenditures)Beginning balance,ending balancenMonthly revaluation of non-current monetary assets&liabilities(foreign currency item)Historical value(calculated by exchange rate of occurring date),reevaluated value of long-term loan(foreign currency),lo
12、ng-term deposit(foreign currency),other long-term monetary assets or liabilities.7IAS and PRC GAAP requires the following items for disclosure purpose:Business requirements for disclosure purposesCurrencyLoans for oil fields development&refining plants constructionWorking capital loanAveragerateRMBU
13、S$YENlAging report of accounts receivable(PRC GAAP)lLong-term equity investment(PRC GAAP)Investee,stock type,share number of stock,share percentage,amount,remarkslLong-term bond investment(PRC GAAP)Bond type,par value,rate,purchased amount,due date,interest of this year,accumulated interest,remarksl
14、Other non-equity long-term investment(PRC GAAP)Debtor,principal,rate,due date,interest income of current period,accumulated interest,remarkslLong-term loan(PRC GAAP)Loaner,amount,due date,rate,term(If foreign loan)Foreign currency amount,RMB amount by exchange rate of balance sheet datelBonds payabl
15、e(PRC GAAP)Bond name,par value,issued date,issued amount,due date,interest expense of current year,accumulated interestlRelated party transactions(PRC GAAP&IAS)All data listed in internal transaction reports,only different entity namelIncome analysis report(IAS)Special deductions relating to explora
16、tion and production activities,Income not subject to tax;Expenses not deductible for tax purposeslMovement of allowance for doubtful accountsBalance at beginning of period,Provision,Deductions,Balance at end of period lMovements in allowance for diminution in value of inventoriesBalance at beginning
17、 of period;Provision;Deductions;Balance at end of periodlMovement report of PPE&accumulated depreciationnCost:Beginning balance,additions,disposals,ending balance;nAccumulated depreciation:Beginning balance,charge for the year,disposals,ending balancelMovement of allowance of investment value diminu
18、tionBeginning balance;Provision;Deductions;Ending balancelLoans Analysis ReportlDirectors remuneration reportSalaries,allowances and other benefitsContribution to retirement benefit scheme8FMIS also need to produce certain information that is required to facilitate annual audit.Business requirements
19、 for annual auditThe required information 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:nShort-term investmentInvestment type,investee,security type,par value,hi
20、storical cost,rate,due date,interest receivable or dividends receivable,premium/discount and its amortisationnNotes receivableNotes type,par value,rate,drawer,due datenOther receivableDebtor,amount,post due daysnAssets revaluationAssets class,book value before revaluation,book value after revaluatio
21、nnShort-term loanLoaner,amount,rate,due datenNotes payableOwner,par value,rate,due date9Gap analysisChapter 210Changes in financial reporting processPetroChina needs to implement a large scale change in its financial reporting process.CurrentlConsolidation is done by the auditors using spreadsheets
22、and manual data collection and manipulationlFMIS report is not compliant with PRC accounting standard for joint-stock company.lIAS report is produced by the auditors using manual methodlReporting is done for the whole CNPC with the current org structurelUse current chart of accountsFuturelConsolidat
23、ion will be done by PetroChina accountants as part of the regular accounting process using FMISlFMIS report will be compliant with PRC accounting standard for joint-stock company.lAS report is produced by Petrochina accountants using FMISlReporting structure for PetroChina will be separated from the
24、 old CNPC.New org structure will be put in placelNew chart of accounts will be in effect11Systems issuesThe following systems issues are identified as critical to the ability for PetroChina to be able to do consolidation and produce the required reportsREQUIREMENTReconciliation of transactions that
25、occurs across different accounting entities.Some detailed information need to be passed up the corporate reporting structure.SYSTEM ISSUEThis is difficult to do with the current FMIS since FMIS treats each accounting entity as independent from other accounting entities.This is not possible in the cu
26、rrent FMIS since FMIS only transfer reports,not detailed information.CONSOLIDATION PROCESSREQUIREMENTIAS 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 procedure along segmentDisclo
27、sure items need to be produced and rolled upSYSTEM ISSUECurrent 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 follows a strict tree patte
28、rn with one entity reporting to only one parent.Current FMIS can not produce this data nor roll it upREPORTING PROCESS12Overall approach and design principlesChapter 313Design principles/goalslThe design has to be implementable prior to the IPOlModified FMIS must be able to produce all required repo
29、rts with minimal manual worklAvoid major changes in business processlAvoid major changes in FMIS which needs long development time and/or high risk of destabilizing FMISlMarginal changes to FMIS is preferred to marginal change in business processlChanges in business process or FMIS should have minim
30、al dependency on short-term improvement to IT infrastructure.lDue to current limitations in telecommunication,the amount of data that needs to be transferred should be minimized.lTo ease transition,the modified FMIS need to have data compatibility with current FMISThe following principles have been
31、followed in creating the design for the new system:14Business process overviewChapter 415LocationLevel 5SegmentLevel 3HQ CorpLevel 1LgrLgrLgr+Lgr+IASIASPRCSegment ASegment BElimElimPRCElimIASElimIASElimIASLgr+Lgr+IASIASElimIASElimIASIASDifferent segment,different locationSame segment,different locat
32、ionSame segment,same locationDifferent segment,same locationLEGENDLedgersReportsModified report/consldtn systemConsolidation entryConsolidation fileData flow diagram of rollup processPRCPRCLgrLgrNotes:Lgr+=ledger report plus some otherspecial reports.16Roll up and consolidation process chart1.1 Ente
33、r transactionsfor Level 6 HO1.5 Enter same-segment,same-locationelimination entries1.4 Import reportsfrom level 6HO ledgers1.2 Create reports forLevel 6 HO ledgers1.3 Receive reports&import datafrom level 7(district)1.8 Produce IASadjustment file(IAS file)1.7 Produce BU segmentPRC report1.6 Determin
34、e IAS adjustments1.9 Send PRC BU segment reportand IAS file to Beijing Business group Finance2.1 Receive PRC reportfrom BU Location segments2.2 Enter different-segmentsame-locationelimination entries2.4 Send different-segment,same-location eliminationfile to Beijing H.Q.2.3 Produce Location PRC repo
35、rt3.1 Receive BU segmentPRC report and IAS file1.10 Send PRC report to Location HOfinance3.2 Enter same-segment,different-locationselimination entries3.3 Produce bus.group PRC report andIAS adjusted report4.1 Receive PRCreport and segmentIAS file4.2 Receive different-segment,same-location eliminatio
36、n files4.3 Enter different-segment,different-locationelimination entries4.5 Produce corporatePRC reports andIAS reportsBU LocationLocation HOFinanceSegment Finance(Beijing)CorpFinance3.4 Send business group PRC report andIAS file to corp4.4 Enter IAS adjustments(corporate level)Level 5Level 3Level 1
37、17Overview of system changesChapter 518Data flow diagram-Transaction systemSome changes are required in the FMIS Transaction system to collect required data from all accounting entitiesExistingfunctionalityTransactionDBEnter accountingentries to FMISProduceLedger reportT1Special disclosureitemsLedge
38、rreports fileF2Disclosure&IASsupportingdata fileF1Internal transactiondata fileNewfunctionalityP4Producespecial disclosureitems reportP2Produce internaltransactions data fileP3Enter specialdisclosure&IASsupport dataP1For internal transactions,enter customer/supplier code19New or modified functionali
39、ties-Transaction systemNew data fileF1-Internal transaction data fileF2-Disclosure&IAS supporting data fileNew tablesT1-Special disclosure itemsNew system processesP1-Internal transaction data entryP2-Internal transaction file exportP3-Special disclosure items&IAS supporting data entryP4-Special dis
40、closure items&IAS supporting file exportChanges to FMIS Transaction system is summarized in the following list:20F3Elimination data fileData flow diagram-Reporting systemNewfunctionalityLowerlevelReportsLedgerreportfilesAggregationP7EliminationprocessExistingfunctionalityAggregatedReportsConsolidate
41、dLedgerReportP16Export/printconsolidatedledger reportT2EliminationF2Disclosure&IASsupportingdata fileF1Internal transactiondata fileT4InternalTransactionP13ExportremaininginternaltransactionEliminationEntriesInternal transaction&eliminationreports&queriesAnalyze info anddetermine requiredelimination
42、P5Query,view,print P14Export disclosures&IAS supportingdataP8Export EliminationentriesF4IASadjustmententry fileF3Elimination data fileLedgerreportfilesF2Disclosure&IASsupportingdata fileF1Internal transactiondata fileF4IASadjustmententry fileP12Export IAS adjustmentP15PrintIAS reportsT3IAS adjIAS ad
43、justmententriesAnalyze info anddetermine requiredIAS adjustmentP9Query IAS adjustmentdataIAS adjustmentinfo reportsSome major changes are required in the FMIS Reporting systemP19Import internaltransactionP6Enter eliminationentriesP18Import eliminationentriesP17Import IASadjustmentsP10Enter IASadjust
44、mentsP15PrintPRC reportsP20Import disclosure/IAS support dataT5Consolidationaccount pair21New or modified functionalities-Reporting systemNew data fileF1-Internal transaction data fileF2-Disclosure&IAS supporting data fileF3-Elimination data fileF4-IAS adjustment entry fileNew data tablesT2-Eliminat
45、ion entry tableT3-IAS adjustment entry tableT4-Internal transaction tableT5-Consolidation account pair tableThe changes to the FMIS Reporting system is shown in the following list:New system processesP5-Query info for eliminationP6-Enter elimination entriesP7-Elimination processP8-Export elimination
46、P9-Query info for IAS adjustmentP10-Enter IAS adjustmentsP11-IAS adjustment processP12-Export IAS adjustmentsP13-Export remaining internal transactionsP14-Export disclosure&IAS support dataP15-Print IAS reportP16-Print/Export PRC reportP17-Import IAS adjustmentsP18-Import elimination entriesP19-Impo
47、rt internal transactionsP20-Import disclosure/AIS support data22Required new/modified reportsPRC report&disclosure requirementPRC Income statement report modificationPRC Balance sheet modificationPRC Cash flow statement modificationInternal transaction reportAging report of accounts receivableLong-t
48、erm equity investment reportLong-term bond investment reportOther long-term investment reportLong-term loan reportBonds payable reportRelated party transaction reportIAS report&disclosure requirementIAS income statement definitionIAS balance sheet definitionIAS cash flow statement definitionStatemen
49、t of owners equityNote 4 Employee compensation costsNote 5 interest expenseNote 6 Income before income taxesNote 7 Income taxesNote 8 Cash and cash equivalentsNote 9 Accounts receivableNote 10 InventoriesNote 11 Prepaid expenses and other current assetsNote 12 Property,plant,and equipmentNote 13 Inv
50、estmentsNote 14 Intangible and other assetsNote 15 Accounts payable and accrued liabilitiesNote 16 DebtNote 17 Deferred income taxesNote 22,23,24Auditing required reportsShort-term investment reportNotes receivable reportOther receivable reportShort-term loan reportNotes payable reportIn addition to
