SAP BusinessObjects Financial Consolidation

8/10/2019 SAP BusinessObjects Financial Consolidation

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SAP BUSINESSOBJECTS FINANCIALCONSOLIDATION 7.5 STARTER KIT FOR US GAAP

SP1Simplified Configuration Description

2010-04-28


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Contents

Chapter 1 Foreword .................................................................................................................................. 5

Chapter 2 Data collection ........................................................................................................................ 7

Data entry format ...................................................................................................................... 7

Account typology .............................................................................................................. 7

Customizing the chart of accounts ................................................................................... 7

Data package configuration ...................................................................................................... 8

Package Summary ........................................................................................................... 8

Links between reports in the package .............................................................................. 9

Data entry principles ................................................................................................................. 9

Order of package data entry ............................................................................................. 9

Breakdown by flow .......................................................................................................... 10

Data package validation ......................................................................................................... 10

Types of control .............................................................................................................. 10

Set and subsets of controls ............................................................................................ 10

Main types of control....................................................................................................... 10

Control levels .......................................................................................................................... 11

Chapter 3 Consolidation process ......................................................................................................... 13

Overview of the consolidation process in SAP BusinessObjects Financial Consolidation ..... 13

Consolidation definition .................................................................................................. 13

Consolidation processing ............................................................................................... 13

Configured automatic entries .................................................................................................. 14

Chapter 4 Analysis process .................................................................................................................. 15

Reports typology and organization ......................................................................................... 15

Consolidated Financial statements ................................................................................. 15

Accounting reports .......................................................................................................... 15

Ledger by audit-ID .......................................................................................................... 15

Smart Links between reports .......................................................................................... 16

Flat Balance sheet .......................................................................................................... 16

Consolidating Balance sheet .......................................................................................... 16

Map of links between reports .......................................................................................... 17

End of analysis Debit-Credit Ledger ............................................................................... 17

Analyzing data with the audit trail ........................................................................................... 18


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Contents

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Standard audit-trail .................................................................................................................. 18

Analysis of a balance sheet account .............................................................................. 18

Cash Flow audit-trail ............................................................................................................... 20

Illustration of how you can analyze a CFS line item ....................................................... 20

Monitoring and controlling the consolidation process ............................................................. 21

Summary reports for end-users ...................................................................................... 21

Control report for the administrator ................................................................................. 21

Consolidation control dashboard .................................................................................... 21

Appendix 1 Entry Balance .......................................................................................................................... 23

Appendix 2 Financial statements .............................................................................................................. 27

Appendix 3 Default naming convention .................................................................................................... 31


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Foreword

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ForewordThe SAP BusinessObjects Financial Consolidation (FC) starter kit assists you in setting up your application

in order to adhere to US GAAP.

It enables you to collect data at the reporting unit level in order to produce, retrieve and understand yourconsolidated accounts via pre configured common consolidation rules, financial statements and acomprehensive set of audit trail reports.


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Foreword

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Data collection

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Data collection

Data entry format

Account typology

The Starter Kit for US GAAP chart of accounts is based on the US GAAP XBRL Taxonomy published bythe SEC in December 2007.

It enables you to retrieve a balance sheet with the current / non current primary breakdown and an IncomeStatement classified by function. Some disclosure accounts are also included in the configuration toanalyze headcounts movements and the breakdown by employee category.

The chart of accounts is presented in the appendix.

Customizing the chart of accounts

Enhancing the chart of accounts

The chart of accounts has been designed to be easily enriched with your industry-specific accounts.

In the Starter Kit for US GAAP, accounts are defined with a behaviour-based method. In this dynamicimplementation, the characteristics that are attached to an account define its behaviours throughout theconsolidation process: for instance data collection schedule, analysis by flow, or position in the accounthierarchy, etc.

Creating an account with the save as feature from a template account allows you to assign theappropriate attributes automatically to the new account. Characteristic values can also be imported from an

Excel spreadsheet along with account codes and labels, either by copy and paste from an Excelspreadsheet, or by importing a flat file.

The behaviour-based implementation principles have been used for data entry and analysis reports as wellas consolidation rules to integrate new accounts in the consolidation process in a dynamic way.

Adapting the naming convention for codes

The Starter Kit for US GAAP is provided with a default naming convention for accounts codes (Cf.appendix).Howeverthis convention can be changed with no impact on the configuration. This is becauseSAP BusinessObjects Financial Consolidation does not use short codes to identify accounts and definewhere they are used in the application. It uses an internal identifier. More generally this applies to anyconfiguration objects.

Therefore your naming convention will be fully taken into account in the whole starter kit and notably in theinput schedules and the output reports.


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Data collection

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Data package configuration

The data package groups together schedules that are used for entering data at the reporting unit level

(financial statements).The data entry schedules are grouped into books by type of information: Balance &Equity, movement Analysis, Intercompany breakdown, Statistical and disclosures.

A homepage has been created to guide the user through data entry steps. In order to facilitate the dataentry, links between schedules have been implemented to provide intercompany or movements details in afaster way.

Package Summary


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Data collection

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Links between reports in the package

Data entry principles

Order of package data entry

A step-by-step approach for entering data is configured in the package thanks to its architecture and the

links that have been created between the schedules. This approach is summarized in the packagehomepage.

The steps are as follows:

1. Enter (manually or importing) the closing balance (balance sheet and income statement)

2. Enter the period movements of the balance sheet items (investments, intangible and tangibleassets, depreciation, net equity etc.)

3. Enter intercompany balances

4. Enter headcounts


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Data collection

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Other disclosure schedules can easily be created and inserted into the package folder and linked to thepackage homepage.

Breakdown by flowFlow entries allow you to identify variations in the balance sheet between the opening and closing balanceand therefore automatically generate the statement of cash flows.

The flows available in the package may be classified into two categories:

Flows for usual transactions

Flows for specific transactions (reclassification, internal mergers )

Data package validation

Types of control

There are two types of control:

Blocking controls: if these are not valid, the status of the data package cannot be validated. Allthese controls must be valid.

Non-blocking controls:these controls are just warnings and do not prevent the data package frombeing validated.

Set and subsets of controls

In the package, controls are organized into subsets within a set of controls. Each subset corresponds to abook.

Main types of control

AIM EXAMPLE

Check main balancesAssets = Liabilities + Equity

Net income as per P&L = Net income as per Balance Sheet

Gross value of asset >= DepreciationGross value of Properties, Plants and Equipment >= depreciation atclosing

Analysis by partner of an IC accountmust = account total

Analysis by partner of Accounts receivables, Intercompany must =account total

Changes on flows must be analyzedChanges of Properties, Plants and Equipment must be analyzed(F15 = 0)

Internal investments must be analyzed Investments in subsidiaries must be fully broken down by held company


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Data collection

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Control levels

4 levels of control have been created in the US GAAP Starter Kit to activate more or less controlsdepending on the reporting time period:

Level 1Income statement

Level 2Income statement and balance sheet positions

Level 3Income statement and balance sheet, including movement

Level 4Period end disclosure (Income Statement, full Balance sheet and disclosures)

The control levels check from the minimum level (LEV1: submission of the income statement only) to themaximum level corresponding to a full package (LEV4: complete submission).

Note:

Each control is linked to a level;

The level of control to be reached is set by the central administrator when the package is generated;

When a level is required to be reached (e.g. level 3), all the controls attached to lower levels must alsobe valid (e.g. level 1 to 3).


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Data collection

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Consolidation process

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Overview of the consolidation process in SAPBusinessObjects Financial Consolidation

Consolidation definition

The settings of a consolidation definition are:

A category and a data entry period: selection of the data to be consolidated

A scope

A version

A consolidation currency

The version parameter is a technical dimension that allows different consolidation settings to be selectedfor a given category, a given data period and a given currency:

Set of consolidation rules

Scope (pro-forma statements)

Exchange rates table (pro-forma statements)

Consolidation processing

Two processing modes exist: full processing and incremental processing.

During the course of full processing, the software executes the following steps:

Read the scope

Load data: data of the period (package data and manual journal entries) and the opening balance, ifany

Convert package data and manual journal entries

Run the rules of the selected set of rules (see below)

For incremental processing, the software executes the same steps as described above only

for the manual journal entries recorded since the last consolidation;

for new packages.

The conversion of data entered in foreign currency is carried out as follows (using the closing rate method):

The closing balance of the balance sheet is converted using closing exchange rates, except for netequity which is recorded using historical exchange rates (calculation and recording of the currencytranslation adjustment)

The net income of the period is converted using average exchange rates

Since they are automatically calculated from balance sheet movements and profit and loss accounts,cash flow statement items are calculated at the average exchange rates of the period.


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The starter kit handles the full consolidation method. However it can be enhanced easily to allow you tobook manual journal entries related to the equity method.

Note:

FC includes features to manage the equity consolidation method automatically, notably rule settings andcategory scenario options. These features have not been used in the Starter Kit for US GAAP to keep theconfiguration simple.

The scope changes handled by the Starter Kit for US GAAP set of rules are:

Subsidiaries entering the scope

Subsidiaries leaving the scope

Acquired companies as part of internal mergers

Flows generated during the consolidation process allow you to retrieve changes due to currency translationdifferences and to changes in scope consolidation (incoming/outgoing entities, etc.). They enable theconfiguration to automatically produce analyses of changes in Equity and the Cash Flow statement.

Configured automatic entries

The Starter Kit for US GAAP includes a set of consolidation rules that enable you to produce consolidateddata, using data from packages. This set of rules can be enhanced in order to meet your specificaccounting policies.

The automatic consolidation entries are:

Elimination of intercompany reciprocal operations

Elimination of investments

Calculation of the currency translation reserves on shares and equity

In addition to standard consolidation rules, some technical rules have been configured in order to:

Calculate and store the subtotal accounts

Calculate and store the cash flow statement line items

Calculate and store year-to-date consolidated amounts


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Analysis process

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Analysis process

Reports typology and organization

Consolidated Financial statements

The following central financial statements are ready to use:

A balance sheet with a current / non current format,

an income statement including intercompany accounts,

a consolidated cash flow statement,

a statement of changes in equity.

Samples of these statements can be viewed in the appendix

The financial statements are also available in the following formats:

A breakdown by segment (e.g. consolidating Income Statement) and leaf level unit

A breakdown by quarter for the whole company or a point of view in the reporting unit hierarchy. ThePerformance Management folder has been created to group these periodic reports. This might also beyour favourite folder for your custom comparison reports: multi-period, actual vs. budget vs. forecastetc.

Lastly, a report allows you to analyze the changes in headcounts both by employee category and bycountry.

Accounting reports

The accounting reports, namely balance reports and ledgers allows you to analyze consolidated data bydrilling down to the original data: package input, manual journal entry, automatic journal entry. Moreoverdedicated journal reports allow you to retrieve both automatic and manual journal entries in a Debit / Creditformat, including the breakdown by partner.

Ledger by audit-ID


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Analysis process

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Smart Links between reports

Links have been built between financial and accounting reports (balances & ledgers) providing you with:

A comprehensive audit trail from top level consolidated data to amount at input or journal entry level (cf.Audit trail below)

An intuitive access to different retrieval formats for financial statements: consolidating, by leaf level unit

Flat Balance sheet

Consolidating Balance sheet

In a few clicks, you can link to different financial views of consolidation statements or drill-down to variousbreakdown types: the input level account, leaf level units or by manual and automatic journal entries in thedebit-credit reports.


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Analysis process

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Map of links between reports

End of analysis Debit-Credit Ledger


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Analysis process

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Analyzing data with the audit trail

The Starter Kit for US GAAP contains reports for the analysis of consolidated data.

Each data item is linked to an audit ID and an entry number which makes the audit trail possible.

The audit ID allows the accounting origin to be tracked. For instance:

The 0PACK Package data audit ID tracks data that has been entered in the data packages

The 30-ICE1 audit IDs are linked to the elimination of intercompany transactions

With analysis schedules, each line of the balance sheet and income statement can be detailed by account,unit or audit-ID.

Standard audit-trail

Analysis of a balance sheet account


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Analysis process

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Analysis process

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Cash Flow audit-trail

The cash-flow statement is dynamically built during the consolidation on the basis of accounts and flowcouples defined in the balance sheet by flow.

In the Cash Flow audit trail, each line of the Cash Flow Statement can be analyzed to know whichaccount/flow pairs generates it.

Illustration of how you can analyze a CFS line item


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Analysis process

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Monitoring and controlling the consolidation process

Summary reports for end-usersSummary reports from the C-0 folder provide overviews of the consolidation process and operationalinformation to the end-user.

Control report for the administrator

The Consolidation control dashboard helps to validate high-level balances issued by the consolidation at aglance.

Consolidation control dashboard

Process overview reports Check existing

consolidations

Check acka es

Operational information reports Check Cash Flow Mapping

Check the conversion ratesthat have been used in a givenconsolidation

Check the consolidation scope


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Analysis process

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Appendix 1 Entry Balance

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Assets


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Appendix 1Entry Balance

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Liabilities and equity


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Income statement


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Appendix 1Entry Balance

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Appendix 2 Financial statements

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Consolidated Balance Sheet


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Appendix 2Financial statements

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Consolidated Income Statement


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Consolidated Cash Flow Statement


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Appendix 2Financial statements

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Appendix 3 Default naming

convention In the financial accounts, the first character indicates the account type (more detailed than the account

class)

1 = Current Assets

2 = Non Current Assets

3 = Current Liabilities

4 = Non Current Liabilities

5 = Equity accounts

6 = Revenue

7 = Cost Of Revenue 8 = Operating Expenses

9 = Non-Operating

S = Stats

The codes suffix indicates the account type

TP = External transactions, Equity - Minority interest

GR = Group Intercompany transactions, Equity - Group part

EL = Elimination accounts

GV = Gross Value

DA = Depreciation / Amortization MI = Equity - Minority interest

CO = EquityConsolidated (Group part)

TT = Total

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SAP BusinessObjects Financial Consolidation

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