A practical guide to re-architecting your Oracle EPM environment for IFRS 18
IFRS 18 is not just a financial reporting standard change. For companies using Oracle Financial Consolidation and Close Service (FCCS) or Oracle Planning and Budgeting Cloud Service (PBCS), it is a system re-architecture project – and the scope of that project depends heavily on how your current environment was built.
This article outlines the key areas Oracle EPM users need to assess and, in many cases, redesign to achieve IFRS 18 compliance.
1. Account hierarchy and the three-category structure
The most fundamental change required is at the account dimension level. IFRS 18 requires all income and expense items to be classified as Operating, Investing, or Financing. In Oracle FCCS and PBCS, this means:
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Adding or restructuring top-level account hierarchy nodes to reflect the three categories.
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Reclassifying existing accounts that currently sit in ambiguous positions – for example, interest income from cash deposits, or foreign exchange gains on non-operating items.
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Ensuring that the mandatory subtotals (Operating Profit and Profit before Financing and Income Tax) can be derived directly from the account hierarchy without custom calculation members.
For environments where the account hierarchy was migrated from HFM or built incrementally over time, this review often reveals reclassification needs that are more extensive than expected.
2. Mandatory subtotals in FCCS
Oracle FCCS uses a hierarchical account structure where subtotals are typically derived through parent-child rollups. To support IFRS 18’s mandatory subtotals, you will need to ensure that:
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Operating Profit is a formally defined rollup point in your account hierarchy – not a calculated member, but a structural parent.
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Profit before Financing and Income Tax is similarly structured.
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The rollup logic correctly excludes Investing and Financing items from the Operating subtotal.
This may seem straightforward, but in practice many FCCS environments use a mix of rollups and calculation rules that can produce the right number in the current structure but will not survive a category restructure without careful redesign.
3. Management Performance Measure reconciliation workflows
If your organisation reports non-GAAP measures – adjusted EBITDA, headline earnings, normalised operating profit – IFRS 18 requires formal, auditable reconciliations from those measures back to IFRS line items. In Oracle EPM, this requires:
- A structured MPM reconciliation form or report in PBCS or FCCS that captures adjustments and traces them back to the relevant IFRS subtotal.
- A clear audit trail – adjustment descriptions, amounts, tax effects, and NCI impacts – that can be included in external reporting.
- Integration with Narrative Reporting (EPRCS) if you use Oracle’s disclosure management module.
4. Data Integration and source system mapping
If you use Oracle Data Integration (ODI or FDMEE/Data Management) to load source data into FCCS or PBCS, your integration mappings will need to be reviewed. Source system account codes that currently map to general P&L accounts will need to map to category-specific accounts or carry category metadata that FCCS can use to classify them correctly.
This is particularly relevant for groups with multiple ERP source systems, where different entities may use different chart of accounts structures.
5. Comparative period considerations
IFRS 18 requires comparative period restated financials in the year of first adoption. That means your Oracle environment needs to be capable of storing and reporting both current-period IFRS 18 data and prior-period restated data in parallel. Plan your dimension design and data storage accordingly.
Where to start
The most efficient starting point is a structured gap assessment – a systematic review of your current FCCS and PBCS configuration against IFRS 18 requirements. This produces a prioritised list of changes, effort estimates, and a sequenced implementation plan that your team can execute without disrupting the current reporting cycle.
Futuresense has conducted these assessments across multiple Oracle EPM environments. If you’d like to discuss what one would involve for your setup, reach out to us at info@futuresense.co.za.
