普华永道--中石油财务信息系统设计报告

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 processes 24 7. System processes for consolidation and reporting 29 Appendix A - Report formats 32 2 System Design for FMIS Modification System Design for FMIS Modification 3 Business requirements Chapter 1 System Design for FMIS Modification 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 to 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 based 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 PetroChina organization structure as described in the following page. The above reporting requirements are detailed in the next pages. System Design for FMIS Modification 5 PetroChina Level 1 PetroChina Level 2 Specialized Co/Business Group Level 3 Segment Level 4 Type E&P . . . Level 5 Business Units . . Gas & Pipeline Downstream Oil&Gas E&P Natural gas (inc. gas pipeline) Refining & Marketing Petrochemicals & marketing Others Refining PetroChina reporting structure Marketing R&D China oil HQ Beijing E&P HuaBei G&P HuaBei Refinery HuaBei North China Petr.Trade China O&G research institute Level 6 Operations Units Level 7 Suboperations Units Oil field #1 Oil field #2 Oil field #3 District 1 District 2 District 3 System Design for FMIS Modification 6 PRC GAAP consolidation report requires the following data: Business requirements for PRC consolidation Individual PRC GAAP reports of all entity involved in consolidation. Balance sheet ( PRC GAAP) Income statement Cash flow statement Internal transactions reports Internal transaction list Internal product sales or purchase report Internal rendering of service report or internal service purchase report Internal long-term equity investment report, capital structure report Internal payable or receivables Required information for internal transactions Counterpart, transaction type, period, beginning balance, credit amount, debit amount, ending balance System Design for FMIS Modification 7 There are two types of changes that need to be made to comply with IAS Business requirements for IAS consolidation PRC consolidated financial statements with specific details Individual PRC reports listed earlier Ledger report Transactions with different accounting treatment in IAS and PRC GAAP Development costs - E&P segment specific Cost of successful well ( succeeded in the period ) Assets and depreciation ( straight line method vs UOP) and related tax credit Assets 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 class ) Deferred business initial cost ( pre-operation expenditures ) Beginning balance, ending balance Monthly 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), long-term deposit( foreign currency), other long-term monetary assets or liabilities. System Design for FMIS Modification 8 IAS and PRC GAAP requires the following items for disclosure purpose: Business requirements for disclosure purposes C u r r e n c y L o a n s f o r o i l f i e l d s d e v e l o p m e n t& r e f i n i n g p l a n t s c o n s t r u c t i o nW o r k i n g c a p i t a l l o a n A v e r a g er a t eR M BU S $YEN Aging report of accounts receivable ( PRC GAAP ) Long-term equity investment ( PRC GAAP ) Investee, stock type, share number of stock, share percentage, amount, remarks Long-term bond investment ( PRC GAAP ) Bond type, par value, rate, purchased amount, due date, interest of this year, accumulated interest, remarks Other non-equity long-term investment ( PRC GAAP ) Debtor, principal, rate, due date, interest income of current period, accumulated interest, remarks Long-term loan ( PRC GAAP ) Loaner, amount, due date, rate, term (If foreign loan) Foreign currency amount, RMB amount by exchange rate of balance sheet date Bonds payable ( PRC GAAP ) Bond name, par value, issued date, issued amount, due date, interest expense of current year, accumulated interest Related party transactions ( PRC GAAP & IAS) All data listed in internal transaction reports, only different entity name Income analysis report(IAS) Special deductions relating to exploration and production activities, Income not subject to tax; Expenses not deductible for tax purposes Movement of allowance for doubtful accounts Balance at beginning of period, Provision, Deductions, Balance at end of period Movements in allowance for diminution in value of inventories Balance at beginning of period; Provision; Deductions; Balance at end of period Movement report of PPE & accumulated depreciation Cost: Beginning balance, additions, disposals, ending balance; Accumulated depreciation: Beginning balance, charge for the year, disposals, ending balance Movement of allowance of investment value diminution Beginning balance; Provision; Deductions; Ending balance Loans Analysis Report Directors remuneration report Salaries, allowances and other benefits Contribution to retirement benefit scheme System Design for FMIS Modification 9 FMIS also need to produce certain information that is required to facilitate annual audit. Business requirements for annual audit The 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: Short-term investment Investment type, investee, security type, par value, historical cost, rate, due date, 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-term loan Loaner, amount, rate, due date Notes payable Owner, par value, rate, due date System Design for FMIS Modification 10 Gap analysis Chapter 2 System Design for FMIS Modification 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 spreadsheets 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 Consolidation 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 from the old CNPC. New org structure will be put in place New chart of accounts will be in effect System Design for FMIS Modification 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 transactions 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 possible 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 procedure 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 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 System Design for FMIS Modification 13 Overall approach and design principles Chapter 3 System Design for FMIS Modification 14 Design principles / goals The design has to be implementable prior to the IPO Modified FMIS must 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 business 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 FMIS The following principles have been followed in creating the design for the new system: System Design for FMIS Modification 15 Business process overview Chapter 4 System Design for FMIS Modification 16 Location Level 5 Segment Level 3 HQ Corp Level 1 Lgr Lgr Lgr+ Lgr+ IAS IAS PRC Segment ASegment BElim Elim PRC Elim IAS Elim IAS Elim IAS Lgr+ Lgr+ IAS IAS Elim IAS Elim IAS IAS Different segment, different location Same segment, different location Same segment, same location Different segment, same location LEGEND Ledgers Reports Modified report/consldtn system Consolidation entry Consolidation file Data flow diagram of rollup process PRC PRC Lgr Lgr Notes: Lgr+ = ledger report plus some other special reports. System Design for FMIS Modification 17 Roll up and consolidation process chart 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 & import data from level 7 (district) 1.8 Produce IAS adjustment file (IAS file) 1.7 Produce BU segment PRC report 1.6 Determine IAS adjustments 1.9 Send PRC BU segment report and IAS file to Beijing Business group Finance 2.1 Receive PRC report from BU Location segments 2.2 Enter different-segment same-location elimination entries 2.4 Send different-segment, same-location elimination file to Beijing H.Q. 2.3 Produce Location PRC report 3.1 Receive BU segment PRC report and IAS file 1.10 Send PRC report to Location HO finance 3.2 Enter same-segment, different-locations elimination entries 3.3 Produce bus. group PRC report and IAS adjusted report 4.1 Receive PRC report and segment IAS file 4.2 Receive different-segment, same-location elimination files 4.3 Enter different-segment, different-location elimination entries 4.5 Produce corporate PRC reports and IAS reports BU Location Location HO Finance Segment Finance (Beijing) Corp Finance 3.4 Send business group PRC report and IAS file to corp 4.4 Enter IAS adjustments (corporate level) Level 5 Level 3 Level 1 System Design for FMIS Modification 18 Overview of system changes Chapter 5 System Design for FMIS Modification 19 Data flow diagram - Transaction system Some changes are required in the FMIS Transaction system to collect required data from all accounting entities Existing functionality Transaction DB Enter accounting entries to FMIS Produce Ledger report T1 Special disclosure items Ledger reports file F2 Disclosure & IAS supporting data file F1 Internal transaction data file New functionality P4 Produce special disclosure items report P2 Produce internal transactions data file P3 Enter special disclosure & IAS support data P1 For internal transactions, enter customer/ supplier code System Design for FMIS Modification 20 New or modified functionalities - Transaction system New data file F1 - Internal transaction data file F2 - Disclosure & IAS supporting data file New tables T1 - Special disclosure items New system processes P1- Internal transaction data entry P2 - Internal transaction file export P3 - Special disclosure items & IAS supporting data entry P4 - Special disclosure items & IAS supporting file export Changes to FMIS Transaction system is summarized in the following list: System Design for FMIS Modification 21 F3 Elimination data file Data flow diagram - Reporting system New functionality Lower level Reports Ledger report files Aggregation P7 Elimination process Existing functionality Aggregated Reports Consolidated Ledger Report P16 Export /print consolidated ledger report T2 Elimination F2 Disclosure & IAS supporting data file F1 Internal transaction data file T4 Internal Transaction P13 Export remaining internal transaction Elimination Entries Internal transaction & elimination reports &queries Analyze info and determine required elimination P5 Query, view, print P14 Export disclosures & IAS supporting data P8 Export Elimination entries F4 IAS adjustment entry file F3 Elimination data file Ledger report files F2 Disclosure & IAS supporting data file F1 Internal transaction data file F4 IAS adjustment entry file P12 Export IAS adjustment P15 Print IAS reports T3 IAS adj IAS adjustment entries Analyze info and determine required IAS adjustment P9 Query IAS adjustment data IAS adjustment info reports Some major changes are required in the FMIS Reporting system P19 Import internal transaction P6 Enter elimination entries P18 Import elimination entries P17 Import IAS adjustments P10 Enter IAS adjustments P15 Print PRC reports P20 Import disclosure /IAS support data T5 Consolidation account pair System Design for FMIS Modification 22 New or modified functionalities - Reporting system New data file F1 - Internal transaction data file F2 - Disclosure & IAS supporting data file F3 - Elimination data file F4 - IAS adjustment entry file New data tables T2 - Elimination entry table T3 - IAS adjustment entry table T4 - Internal transaction table T5 - Consolidation account pair table The changes to the FMIS Reporting system is shown in the following list: New system processes P5 - Query info for elimination P6 - Enter elimination entries P7 - Elimination process P8 - Export elimination P9 - Query info for IAS adjustment P10 - Enter IAS adjustments P11 - IAS adjustment process P12 - Export IAS adjustments P13 - Export remaining internal transactions P14 - Export disclosure & IAS support data P15 - Print IAS report P16 - Print / Export PRC report P17 - Import IAS adjustments P18 - Import elimination entries P19 - Import internal transactions P20 - Import disclosure / AIS support data System Design for FMIS Modification 23 Required new / modified reports PRC report & disclosure requirement PRC Income statement report modification PRC Balance sheet modification PRC Cash flow statement modification Internal transaction report Aging report of accounts receivable Long-term equity investment report Long-term bond investment report Other long-term investment report Long-term loan report Bonds payable report Related party transaction report IAS report & disclosure requirement IAS income statement definition IAS balance sheet definition IAS cash flow statement definition Statement of owners equity Note 4 Employee compensation costs Note 5 interest expense Note 6 Income before income taxes Note 7 Income taxes Note 8 Cash and cash equivalents Note 9 Accounts receivable Note 10 Inventories Note 11 Prepaid expenses and other current assets Note 12 Property, plant, and equipment Note 13 Investments Note 14 Intangible and other assets Note 15 Accounts payable and accrued liabilities Note 16 Debt Note 17 Deferred income taxes Note 22, 23, 24 Auditing required reports Short-term investment report Notes receivable report Other receivable report Short-term loan report Notes payable report In addition to the system changes, the following reports must be developed and produced System Design for FMIS Modification 24 New data files and associated processes Chapter 6 System Design for FMIS Modification 25 Reporting system Transaction System F1 - Internal transaction data file and associated processes P1. Modification to voucher entry in transaction system need to be done. Currently the transaction table has a field to record customer/vendor codethat is only used for A/R or A/P. The system needs to be modified to make the customer/vendor code applicable for all internal transaction types. The system should make customer/vendor code entry mandatory for all internal transactions. P2. When counterpart codes of all internal transactions have been recorded, transaction system will be able to export data of internal transactions and transfer the data up to the higher levels. P5. The reporting syste